Supply-chain transparency a challenge: KPMG report

Manufacturers, globally, are currently focussed on adopting real-time processes to measure profitability and many of them plan to double their spending on R&D as they rethink their product development strategy in a changed business environment where economic volatility, geo-political instability, shifting markets and natural disasters are the new normal.

In this context, supply-chain transparency and visibility is a challenge, not the least because of inadequate deployment of IT systems as also the lack of skilled talent, KPMG's 2014 Global Manufacturing Outlook states.

The report surveyed 460 executives and found that only 12 per cent of manufacturers were very effective at determining product profitability and as high as 40 per cent had limited visibility across their supply chain. The report also indicated to the fixes-manufacturing investments are going towards predictive analytics, technology platforms that support real-time business intelligence, new supplier collaborative innovation models and 3D printing among others.  

The report, released on Wednesday, does not have India-specific details but S.V. Sukumar, partner and head of operation and supply chain at KPMG said the issues Indian manufacturers face were similar, and in many cases more complex. "Our complexities are far higher than developed economies. We have more uncertainties - because of poor infrastructure, predictability of the pipeline is an issue. Planning is the weakest element and it impacts delivery time," he said.

While 70 per cent of global respondents said they plan to up their investments in R&D in the next two years, Sukumar held that Indian manufacturers are not following their peers in advanced economies. "Manufacturers in advanced countries are focused on product innovation. Indian companies are more into process and business model innovation," he said.

While the new government may not influence where innovation dollars flow, it has its work cut out to make Indian manufacturers more competitive.  Sukumar says that in the short term, medium term and long term, the focus should be on improving road, rail and port infrastructure to ease movement of domestic and overseas goods. Resolving issues around coal and mining sectors will be the other imperative.