A recent study by Deloitte Research, the US-based research wing of Deloitte Consulting (part of Deloitte Touche Tohmatsu), has concluded that manufacturers could be 70% more profitable by connecting with all trade partners through the Internet.
According to the study of 850 manufacturing executives in 35 countries, manufacturers typically focus on supplier integration alone, which is resulting in an enormous amount of value destruction. The problem is that most companies don`t know where they destroy value.
"Today`s manufacturing executives were raised in a product-centric era in which competitive advantage was achieved through product branding, quality and cost," says Jim Kilpatrick, global head of Deloitte Consulting`s Supply Chain practice.
"Improving supply chain performance with a focus on the supplier is more natural for them because that is what they know. However, in this Internet era, the power has shifted dramatically to the customer, and those companies that are able to integrate their supply chain and their customer strategies will achieve breakthrough performance."
The study, Digital Loyalty Networks: e-Differentiated Supply Chain and Customer Management, supports this assertion. Only one in 10 companies have established digital loyalty networks, by integrating their supply chain with customer relationship management (CRM) to respond to individual customers and segments in real-time.
The research team found that companies concentrating exclusively on improving the supply chain or customer relationships are faring well, and the few that integrate both enjoy much greater shareholder value - 54% and 19% higher, respectively.
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