Best Practices For Global Supply Chains {and Why They Are Worth It}

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Best Practices for Global Supply Chains

{and why they are worth it} by Sadaf Atashbarghi, CMS GlobalSoft Marketing Manager

Time to broaden your supply chain internationally? You wouldn’t be alone. Today’s highly competitive global marketplace demands, at minimum, some level of active involvement or participation in foreign markets due to rapidly changing market conditions, aggressive competition and dramatic growth in foreign exchange. Companies of all shapes, sizes and industries are jumping on the international business bandwagon and expanding their transportation logistics beyond borders to maximize on projected cost savings. Before you jump on your international business bandwagon, know that establishing a cross-border supply chain can be a challenging journey wrought with many logistical obstacles and that what works for your domestic supply chain may not work as well in the global arena. To competitively globalize your supply chain, you’d do well by adhering to select industry best practices—four of which include creating consistency in execution, the establishment of centralized technology and data, centralizing business rules and creating global visibility.

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Creating Consistency in Execution Overview: By virtue of the “e” in ERP, many organizations have already learned the value of managing data and processes at the enterprise level. Typically, best practices are defined, refined, and made part of the ERP solution prior to implementing or during the implementation process. Values recognized from this approach can and should be carried over to transportation management solutions as well. With global instances of the ERP, one should follow suit for all subsystems or complimentary applications to maintain consistency in execution for all the same reasons as those taken into consideration when exposing the ERP on a global basis.

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Benefit: When all of the transportation, logistics, and related service providers strive to achieve the same standards of performance, there will be more consistency in the entire global supply chain.

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Pitfalls: Without building consistency into a global supply chain’s framework, inefficiencies and duplication of efforts can impede reliability, driving up costs and reducing services.

Centralized Technology and Data Overview: Too often with geographic diversity, whether it is domestic or global, corporations have a tendency to create islands of technology. This phenomena is often seen at a high degree when growth is obtained through acquisition, where systems were in place prior to the acquisition taking place, and in an attempt to allow the flow of information to occur between the two disparate systems and organizations short term communications interfaces are developed as a quick fix, and often times not transitioned for many years. Islands of technology also create data silos which result in disparate knowledge across global supply chain operations. Benefit: When key global supply chain technology support systems and data are centralized, it becomes easy to build certain metrics into the transportation management solution of choice. Weekly performance data, for example, can be summed at a monthly level for a macro-level view and viewing several weeks (or months) at the same time provides a view of future (or past) trends. This can be helpful in managing the buying, forecasting, replenishment, demand planning, and production activities. Moreover, the aggregate of all demand and supply data into a centralized data repository delivers appropriate views to all levels of decision makers within an organization—allowing them to make critical decisions based on real-time demand.

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Pitfalls: In addition to the higher costs of maintaining multiple systems to perform basically the same functions, best practices which have been learned and managed for global supply chain management cannot be put into effect until the entire organization has the same tools and methodologies. This situation also perpetuates the existence of technology for longer than expected or desired.

Centralized Business Rules Overview: Once an application becomes an enterprise application, and only when it becomes an enterprise application, can the business rules which define and drive best practices be put in place and managed centrally. This does not limit diversity among the various factions of the entire organization, but rather allows flexibility for the facility to meet demands and expectations of both the customer and the carrier, while maintaining the integrity of the corporate governances and best practices. Benefit: Centralized business rules improve cross-functional business decisions meant to streamline global trade management initiatives while creating and fostering economies of scale. Pitfalls: The key to global trade efficiency is the consistency and sustainable repetition of defined and centralized business rules. When business rules are not centralized, costly inefficiencies and overlaps in business processes contribute to a fragmented and error-prone global supply chain frameworkcan impede reliability, driving up costs and reducing services.

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Global Visibility Overview: As the likes of manufacturing, distribution, technical and customer support move to regions of

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Business Rules: A Case in Point A skateboard distributor located in Chicago has slumping sales in California and Arizona. Marketing intelligence informs management that the market in this region is very strong for skateboards, however, so is the local competition with a distribution center in LA, who can serve the dealer with next day delivery using ground as the method of shipping. From Chicago, it takes minimally 3 days to ship ground to California and Arizona. To better compete, senior management at the skateboard distributor determines that a new policy, or business rule, should be put in place to address this issue. The rule becomes that all skateboards being shipped to California and Arizona are now shipped via an air service to compete with the local competitors’ delivery times. After further analyses by marketing managers—who note that dealers will not pay for air services—it is later determined that the margins with the skateboards are sufficient enough to allow the dealers in California and Arizona to only be charged for the equivalent of the cost of ground. So the business rule ultimately becomes: if the delivery state is California or Arizona, then automatically set the carrier to “Next Day Air” but bill the Customer (dealer) for “Ground.” This condition can also exist across the world. For example, if a UK facility is typically responsible for shipping to customers in Germany—but the organization is without product to fulfill orders for Germany from its UK Distribution center—the organization may need to fulfill the order from a different global facility but only charge the freight as if the order shipped from the UK facility. This too is a real world scenario.

the world where they can prove to be more cost effective, one must also provide the information to support these activities. This information needs to be available at the fingertips of those in these support roles. With this requirement, global visibility can only be provided by interoperability among the execution systems. And the interoperability must be real time to be effective at accomplishing visibility of any value. Old information is only valuable to historians, analysts and auditors. To support the customer or trading partner, information must be current... In addition to being timely; information needs to be presented to the person requiring this visibility through one common interface. Benefit: Companies achieving good visibility for their global supply chains can reduce lead times, inventory levels, and carrying costs, while also gaining budgetary accuracy that’s significantly higher than that of the average company. Global supply chain visibility platforms can also directly impact how successful a shipper is—or is not—when it comes to centralizing trade compliance processes. Pitfalls: Transparency across the global supply chain is becoming more and more important. Today’s global transportation executives want and demand actionable visibility information. Therefore, companies not working on improving the visibility of their cross-border supply chains tend to under-perform in comparison to competitors, experience escalating inventory costs and suffer from unpredictable and erratic delivery performance. Remember these best practices when building your global supply chain and you will be sure to reap these and other benefits, giving you a leg up on your competition and allowing you to stay competitive in today’s global market.

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