Identifying risk in the manufacturing supply-chain (Market Focus)

As manufacturing supply-chains continue to develop, a range of risks are becoming clear to manufacturers as they strive for operational efficiency. While many have started to tackle the issues around mitigating supply-chain risk, in Datamonitor's opinion, there remains a considerable amount of education and support to be done by the vendor community.



Report Highlights
Trying to adapt production as quickly as possible through re-sourcing, re-designing, re-engineering and compliance documenting can be challenging and costly for manufacturing companies. The risk of new regulations being introduced, while not necessarily an 'instant' event, can be substantial.


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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Macroeconomic risks weigh heavily on the minds of manufacturers 2
Supply chain security is seen as the most important risk for manufacturers 2
Regulation will continue to be a concern for manufacturers around the world 3
There is risk associated with an increased dependency on IT 3
Security is a major concern for operational IT systems 3
The possibility of IT contract lock-ins worries some manufacturers 3
IT continuity is critical for operational uptime 4
Economic fluctuations pose considerable direct and indirect risk for manufacturers 4
The least risky macroeconomic element is political developments 4
Globalization carries with it its own set of risks for manufacturers 4
Expanding production into new regions is the most risky globalization strategy 5
There is also considerable risk associated with outsourcing to low-cost regions 6
The least risk associated with globalization is sourcing from low cost regions 6
A number of risks are associated with manufacturing supply-bases 7
Relying on a small supply-base is inherently risky 8
The difficulty of managing a large supply-base creates its own set of risks 8
Upstream merger and acquisition activity will have little bearing on manufacturers 8
Customer dynamics also create risk for manufacturers 9
Managing a large customer-base is seen as the riskiest element of customer dynamics 9
Reliance upon small customer-base is a risky strategy for manufacturers 10
Downstream merger and acquisition activity is seen as the lowest risk element of all categories 10
APPENDIX 11
Definitions 11
Methodology 11
Further reading 11
Ask the analyst 11
Datamonitor consulting 11
Disclaimer 11

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Figure 1: Supply-chain security heads the list of macroeconomic supply-chain risks 2
Figure 2: Expanding production into new regions is seen as the most risky globalization element 5
Figure 3: The riskiest supplier dynamic is relying on a small supply-base 7
Figure 4: Difficulty managing a large customer base was ranked the riskiest customer-base dynamic 9

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