I met with three different customers this week, and all three wanted to talk about the same thing –global supply chains.
These shippers represented different industries yet shared the same concerns about the challenges of building and managing supply chains that support global markets. I am wondering how many of you feel the same way.
Here is what these customers discussed with me:
- While there are exceptions, consumers are becoming more price-sensitive and less loyal to brands. Their thought was that these changes in buying preferences are driving a higher degree of commoditization and thus volatility within the supply chain.
- Shippers are convinced future market growth is in unfamiliar global geographies and are not prepared for the complexity that results from serving global customers with regionally customized products. This challenge was not isolated to technology, but also about how to structure a global supply chain organization.
- Measuring the cost of the entire supply chain and the ability to analyze cost and perform optimization studies will be critical in the future. However, in this category, the shipper customers felt they lacked, yet again, the requisite technology and expertise.
- Existing enterprises and, specifically, their component supply chain entities are not truly integrated and, in some cases, not empowered to function as global organizations – despite the fact that they are already regarded as global companies. There were comments you’d expect such as a lack of integration between sales, product development, and manufacturing, but also a lot of discussion about single companies functioning independently of each other with loyalty falling to a region.
In a few weeks, we will open our operation center in Mumbai, India. In many ways, this is a city that exemplifies some of the global challenges that supply chain professionals face. Mumbai is a mega city and experts predict that these sprawling conurbations will grow in number from 10 in 1975 to 23 over the next five years. Within the same time period, half the world’s population could be living in mega cities (for more on this see my blog “Modern Day Supply Chains, Mega Cities and the Future,” January 2010). What types of supply chains will be needed to serve these vast urban centers?
An important part of the challenge is that companies have to learn the supply chain practices followed in these geographies and, where necessary, to incorporate them in their global business strategies. For example, in South America political risk is high on corporate agendas and supply chains have to adapt quickly to the changing political landscape in the region (see Ken Cottrill’s blog “Global Shades of Risk,” December 2009).
Meanwhile, we at TMC are doing our part. With the inauguration of our Mumbai center, we will have TMS technology and infrastructure available to customers in North America, South America, Europe, Africa, and parts of Asia. By June of 2011, we will extend our technology to the rest of Asia. While these innovations won’t solve all of the above problems, they represent a small first step on a long road to more efficient supply chain management across the globe.
Is your organization trying to figure out its global supply chain? What challenges are you facing? How are you approaching the problem?
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