Report claims $3 trillion locked up in supply chains

The recommendations are contained in a new research initiative that focuses on incorporating manufacturing into supply networks.

Manufacturers need to balance costs with the ability to shape and respond to demand. This has become increasingly difficult as manufacturing operations expand to include more nodes, both domestic and offshore.

But the analyst claims that operations that are incorporated into demand-driven supply networks (DDSN) are helping reduce the $3 trillion of inventory and 20 per cent order error rate in US and European supply chains.

"Ensuring predictable quality and supply, and preparing to connect manufacturing to the product supply network to meet market demand with minimum inventory is the cornerstone of Coors Manufacturing initiatives,"​ said Doug Gray, manager of process control and manufacturing information systems at Coors Brewing.

According to AMR Research's quarterly Tech Trends Survey,​ US manufacturers expect IT spending to grow over 9 per cent in 2005, the strongest in over three years. Software applications and software infrastructure are the top priorities for 57 per cent of manufacturers surveyed.

Much of this software investment will be focused on integrating supply network operations with existing investments in ERP applications from SAP, Oracle, SSA Global and others.

"The focus on manufacturing is back and companies are increasingly realizing that manufacturing productivity is directly related to the ability to intelligently synthesize real-time information across the supply network and accordingly adapt their operations,"​ said Sudipta Bhattacharya, vice president of manufacturing solutions for SAP.

"AMR Research has identified the need for global manufacturers to undertake a fundamental top down review of how to achieve predictable product supply from distributed plant operations in today's high velocity demand driven economy. Just as they identified MES as the missing link during the 90s, AMR Research has identified the new capabilities required to manage supply network operations in emerging demand-driven supply networks."​

AMR Research has termed the evolving capabilities of incorporating manufacturing into DDSN as Supply Network Operations (SNO). AMR Research defines SNO as "the synchronised execution of compliant manufacturing and logistics processes across a dynamically reconfigurable supply network to profitably meet demand."​

AMR Research first identified the SNO evolution in an April 2004 report, "Next-Generation Manufacturing - Integrating Manufacturing into DDSN."​ As an analyst sponsor at National Manufacturing Week, AMR Research continues to provide guidance to global manufacturers on their next generation manufacturing strategies as they evolve from the autonomous management of local production operations to globally managed SNOs.

Since 1986, AMR Research has advised global manufacturers on the role of manufacturing. AMR Research coined the term MES, co-founded the Supply Chain Council and helped identify processes in the SCOR model.