Fulfillment/Logistics Trends
Most Read
Most E-mailed
E-mail Article
Print Article
Guest Column: Achieving Total Visibility, Mitigating Risks through a Global Supply Chain Network
Managing a successful global supply chain can deliver unprecedented results and propel companies to become industry leaders
Without question, companies today conduct business in a global environment. Whether or not companies truly operate with a global view, however, becomes a much murkier issue. Many large companies are labeled as global businesses — internally as well as externally — because they have offices, factories, customers and products offerings around the world. Yet too frequently, they operate as a series of independent, geographically dispersed divisions, often as a result of expanding their global presence and their product portfolios through acquisitions and mergers. Consequently, even as their supply chains grow in complexity, their demand management, distribution planning and production planning processes remain fragmented, with little if any integration.
For example, a company with recognizable worldwide brands, comprised of multiple divisional units and regional offices in Asia-Pacific, Eastern Europe, Western Europe, South Africa and Latin America, is considered global even though each division and region typically operates independent supply chains in which synergies are minimal. In contrast, a company that has a global view of customer demand, leverages global procurement buying power, understands its worldwide production capacities and inventories, and optimizes distribution and logistics across a global multi-tier network, can focus on building an integrated supply chain network. This approach promotes cost, supply and customer service synergies through efficiencies of scale, thus delivering a measurable competitive edge.
Success in today's fiercely competitive environment begins with developing a customer-driven consensus demand management practice across the global extended supply chain. The challenge then becomes transforming this new view of customer preferences and behaviors by market into actionable, coordinated supply chain strategies that mitigate risk and strengthen the bottom line.
With a single source of visibility across the extended supply chain, companies can identify opportunities, analyze potential synergies across geographies, lines-of-business and distribution channels, and leverage the flexibility of their entire supply chain instead of making isolated and potentially costly decisions at divisional or regional levels. Modeling, analyzing and optimizing the utilization of assets such as manufacturing plants, distribution centers and labor across the supply chain can reduce costs and boost responsiveness. For instance, a seasonally driven business that views its supply chain globally will take advantage of the fact that winter in parts of the Southern Hemisphere coincides with summer in parts of the northern hemisphere, enabling it to leverage underutilized assets in one part of the world to compensate for capacity limitations in another. By balancing its total capabilities, the company can provide better value and higher quality service to customers with a lower overall cost — wherever it is located.
Companies with an integrated global supply chain network can also capitalize on efficiencies of scale for all aspects of the business from raw materials procurement to distribution of manufactured products. Companies may determine it is cheaper to purchase certain raw materials from China, Indonesia or Latin America, and then manufacture the product in domestic plants. Or, it may make financial sense for multiple lines of business of a global company to consolidate a diverse line of products from multiple manufacturing plants or suppliers in a single port for distribution across the globe, eliminating the need to negotiate multiple shipping contracts. At the same time, a consolidated contract with a shipper strengthens negotiating power and can lead to more favorable freight rates.
For example, a company with recognizable worldwide brands, comprised of multiple divisional units and regional offices in Asia-Pacific, Eastern Europe, Western Europe, South Africa and Latin America, is considered global even though each division and region typically operates independent supply chains in which synergies are minimal. In contrast, a company that has a global view of customer demand, leverages global procurement buying power, understands its worldwide production capacities and inventories, and optimizes distribution and logistics across a global multi-tier network, can focus on building an integrated supply chain network. This approach promotes cost, supply and customer service synergies through efficiencies of scale, thus delivering a measurable competitive edge.
Success in today's fiercely competitive environment begins with developing a customer-driven consensus demand management practice across the global extended supply chain. The challenge then becomes transforming this new view of customer preferences and behaviors by market into actionable, coordinated supply chain strategies that mitigate risk and strengthen the bottom line.
With a single source of visibility across the extended supply chain, companies can identify opportunities, analyze potential synergies across geographies, lines-of-business and distribution channels, and leverage the flexibility of their entire supply chain instead of making isolated and potentially costly decisions at divisional or regional levels. Modeling, analyzing and optimizing the utilization of assets such as manufacturing plants, distribution centers and labor across the supply chain can reduce costs and boost responsiveness. For instance, a seasonally driven business that views its supply chain globally will take advantage of the fact that winter in parts of the Southern Hemisphere coincides with summer in parts of the northern hemisphere, enabling it to leverage underutilized assets in one part of the world to compensate for capacity limitations in another. By balancing its total capabilities, the company can provide better value and higher quality service to customers with a lower overall cost — wherever it is located.
Companies with an integrated global supply chain network can also capitalize on efficiencies of scale for all aspects of the business from raw materials procurement to distribution of manufactured products. Companies may determine it is cheaper to purchase certain raw materials from China, Indonesia or Latin America, and then manufacture the product in domestic plants. Or, it may make financial sense for multiple lines of business of a global company to consolidate a diverse line of products from multiple manufacturing plants or suppliers in a single port for distribution across the globe, eliminating the need to negotiate multiple shipping contracts. At the same time, a consolidated contract with a shipper strengthens negotiating power and can lead to more favorable freight rates.
RSS Feeds
