42. (Information and cost management) Consider the following excerpt about customer communication.

Companies worldwide lose millions of dollars each year because they fail to communicate with customers and suppliers. These and other supply chain inefficiencies are pointed out in the results of two surveys issued by KPMG Consulting, a part of KPMG Peat Marwick LLP.

“Most companies think they’re more efficient than they really are,” said Thomas Wilde of KPMG. “It’s either too painful to make the necessary organizational changes to become more efficient, or the benefits are not clear to them.”

Supplier and customer involvement is essential to efficient supply chain management, yet 29% of companies report their suppliers have no involvement in their inventory management, according to the survey. Another 22% of companies report no involvement from their customers when planning manufacturing requirements. “It’s as if a tire company just guessed at the number it needed to manufacture every year, without talking to auto manufacturers first,”

said Steven Y. Gold, KPMG partner.

The problem is particularly acute in consumer markets. While 96% of retailers share information with customers/suppliers, 79% are using outdated modes of communication, such as paper or fax.

SOURCE: Anonymous, “Companies Lose Millions by Ignoring Customers in Supply Chain Forecasting and Inventory Control,” Cost Management Update 87 (May 1998), p. 3.

Select a major manufacturing company in your area. For this company, prepare a table identifying specific ways in which an improved system of communications with suppliers and customers could result in specific cost savings for the manufacturing firm, its suppliers, or its customers. Organize your table in three columns as follows.

Specific Information Information Specific Cost to Be Obtained Source to Be Reduced