Forecasting is Major Supply Chain Challenge

Planning and forecasting are seen as the greatest challenges to efficient supply chain management. Meeting market demand will become more problematic as the world changed and the pace of the change increased.

“The supposition is that only by increasing visibility in your supply chain and by improving its reactivity/flexibility, will one be able to effectively address the challenges of planning and forecasting. By increasing forward and backward visibility along the supply chain, companies will have a greater lead time to adjust their production schedules and orders, providing them with a longer window of visibility, their one and only opportunity in which they can plan and forecast with any degree of confidence,” the report of research company Terra Nova noted.

The SCIR is an annual independent and international study into the supply chain and logistics practices of emerging economies around the world. The 2009 edition saw over 200 senior company officials take part in an in-depth survey.

This year’s report incorporated the Complexity Masters theorem, which was developed and published by Deloitte in 2003, and which holds that companies in the US and Europe, with complex value chains and the capability to properly manage those complex value chains, were 73% more profitable than their peers.

To ensure that the theorem was applicable to an emerging economy such as South Africa, TerraNova incorporated several additional questions into the survey, as to address local complexity and capability issues. When the theorem was applied to the South African context, only 6% of the total number of companies surveyed were 67% more profitable than their peers.

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