Fragmented supply chains cost businesses £1.2bn a year

Oracle research highlights the huge cost of poor information flows

Businesses are losing out on £1.2bn a year in missed sales opportunities owing to fragmented supply chains, according to research released yesterday by software developer Oracle, at an industry roundtable on supply chain management.

The research also showed that 76 per cent of companies do not have an automated flow of information across their supply chain for all the data they need, and supply chain executives spend 48 per cent of their time sifting through spreadsheets, emails and databases.

"A lean supply chain relies upon a good flow of integrated data, and there has been a lack of companies using IT to do this," said Andrew Purton, managing partner at business change management firm Oliver Wight EMEA.

"Information needs to be organised by an overarching organising system, but this often requires significant investment," said Keith Edwards, supply chain manager at dairy food company Dairycrest.

Currently, one in three companies find the flow of information so fragmented that the product travels more quickly along the supply chain than information regarding the product.

"Businesses need to use technology, for example Electronic Point of Sales (EPoS), to monitor demand and feed information back on a day-by-day basis," said Andrew Spence, supply chain business development director at Oracle.

"This information then needs to be managed effectively and efficiently, through the use of business intelligence. So, for example, when a piece of important information comes through, the manager will receive a notification or an alert," he added.

Oracle estimates that the total cost to businesses in the UK of manually managing information in spreadsheets, databases and paper trails is £77m per year.

"When considering solutions to fragmented supply chains it is best to start at the front end. You need to understand demand and then feed the information throughout the supply chain," said Spence.

"The combination of people processes and technology is often separated, but this has to be an integrated approach," he added.

"This is very true, but it must be remembered that a company must not build a process around a system - the technology must support what you already do," said Edwards.