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Why should a supply chain be developed?


Frequently Asked Questions

It is generally accepted that a well organised/managed supply-chain offers considerable commercial advantage to both the OEM (original equipment manufacturer) and the suppliers (subcontractors) involved. It is also suggested that the pressures arising from this approach will encourage subcontractors to strive to maintain their competencies at the highest possible levels. Such chains are characterised by close working relationships between all parties and exhibit one or more of the following features:-

  • The ability, within the chain, to handle customer-led (pull) manufacturing
  • Reduction in the overall number of suppliers per OEM
  • Greater business stability for the remaining suppliers
  • Better flow of information and knowledge across the companies involved
  • Greater specialisation by suppliers and increased awareness of the need for them to seek (and pass on) cost reductions
  • Suppliers able (and willing) to innovate and co-operate in product development
  • Increased supplier skills/capabilities opening new markets for them
  • The elimination of duplicated effort, skills and equipment by redistribution of responsibilities amongst the members of the supply-chain
  • An increased use of advanced ICT (information and communication technologies) throughout the chain, to support product design, manufacture and test
  • Improved decision-making, arising from cross-functional teams working across company boundaries

These features offer considerable opportunity for improved quality, reduced cost and quicker delivery of components, and therefore, the final product.

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