Follow The Demand

Follow the demand Narendra Mulani. Logistics Management (2002). Highland Ranch: Mar 2008. Vol. 47, Iss. 3; pg. 23, 1 pgs Abstract (Summary)

In the multi-polar world, North American and European businesses remain strong. But the influence of new hubs - China, India, Brazil, Eastern Europe, and others - is skyrocketing. These countries and regions have emerged as key sources of labor and materials, but even more so as robust markets for goods and services. The bottom line is that supply chain manuals are being updated - and even rewritten - because of a refocused need to "follow the demand." Described here are five core tenets that will help guide companies as they seek to capitalize on the growth opportunities that globalization offers: 1. Focus on value, not assets. 2. Design the right organization. 3. Align and streamline decision making. 4. Position talent strategically. 5. Insist on adaptability.

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(792 words) Copyright Reed Business Information, a division of Reed Elsevier, Inc. Mar 2008 Today's companies reside in a "multi-polar world," a place with new and powerful epicenters of economic power. In the multi-polar world, North American and European businesses remain strong. But the influence of new hubs-China, India, Brazil, Eastern Europe, and others-is skyrocketing. The above countries and regions have emerged as key sources of labor and materials, but even more so as robust markets for goods and services. And it's these shifts that are spawning huge changes in supply chain management. This shouldn't be surprising, given that sales outside companies' home markets are expected to increase by 20 percent within two years and that offshore manufacturing operations will likely grow by 35 percent over the same period. The bottom line is that supply chain manuals are being updated-and even rewritten-because of a refocused need to "follow the demand." Described below are five core tenets that will help guide companies as they seek to capitalize on the growth opportunities that globalization offers. 1. Focus on value, not assets High performance on a global scale is more about managing value than about managing assets. Take the pharmaceutical industry, whose pre-multi-polar mindset was that large investments in fixed assets and infrastructure were often needed to protect intellectual property, ensure quality and maintain endto-end control. These days, Big Pharma is more likely to focus on managing value (cost, quality, and service) rather than controlling assets and operations. Toward this end, it's doing more outsourcing, developing new shared-services capabilities, creating innovative total-cost-of-ownership models, and building integrated planning systems that create value without the need to own assets that don't add value. By focusing heavily on processes and collaboration, there's less need to own and manage a complex, vertically integrated supply chain. 2. Design the right organization Companies with highly effective global operations often globalize their entire value chain, rather than individual functions such as procurement, logistics, or manufacturing. This allows them to develop local, regional, and global portfolios using supply chains that are optimized for each product line or area of business.

Because of its complexity, this is a strategy that should be implemented in bite-size pieces. Consider a European truck manufacturer, whose global objective has been to get consistently closer to its markets, thus allowing its products to meet local requirements more and more economically. As shown in Figure 1, it controlled the risks and costs by moving gradually from local to regional, and regional to global. 3. Align and streamline decision making Related components of global high performance are accountability and balance between local and global objectives. Some companies do this by making a single person or department accountable for global operations. These global overseers have direct organizational ties to local or regional leadership. This keeps global functions from being optimized at the expense of local market products or endcustomer requirements. In fact, local presence and insight are a mandatory competency regardless of how global operations are administered. Many decisions must evolve through collaboration; but policies and process designs are typically enacted at the corporate level, with daily operating decisions made locally. 4. Position talent strategically All companies need experienced managers with good local market knowledge and strong relationships with headquarters. But in a global supply chain context, this also means putting top people in regional positions. General Electric, for example, often staffs country offices with high achievers from headquarters. Over time, these individuals hire local successors to run those offices. GE's approach is common in high-growth regions, where top corporate players are often needed to identify and nurture local talent. This way, cultural nuances are increasingly understood and accommodated, and vital decisions about working with local service providers (distributors and wholesalers) are not rushed or ill-informed. 5. Insist on adaptability Global networks and markets involve more risk than those focused on domestic markets. Political and climatic upheavals are part of the reason, but the most influential factors are supply chain visibility, physical distance, and the fact that long-term forecasting is largely hit or miss. However every risk factor-from recalls to regime changes-suggests the same imperative: infusing higher levels of adaptability into companies' supply chain strategies, processes, technologies, and people. Across the multi-polar world, companies must be able to sense and respond flexibly to changing demand across multiple continents and time horizons. The above principles are neither revolutionary nor detailed enough to compose a supply chain roadmap. But insightful companies will recognize them as a good, big-picture synopsis of the marketoriented, supply chain capabilities they need to achieve high performance in the new multi-polar world. [Author Affiliation] Narendra Mulani leads Accenture's Supply Chain Management service line. He has worked across a diverse set of retail, technology, and products clients, and continues to have responsibility for Accenture's global relationship with Procter & Gamble. He has been with Accenture since 1997.

Indexing (document details)

Subjects:

Supply chains, Emerging markets, Guidelines, Globalization, Value chain

Classification Codes

5160 Transportation management, 9180 International, 9150 Guidelines

Author(s):

Narendra Mulani

Author Affiliation:

Narendra Mulani leads Accenture's Supply Chain Management service line. He has worked across a diverse set of retail, technology, and products clients, and continues to have responsibility for Accenture's global relationship with Procter & Gamble. He has been with Accenture since 1997.

Document types:

Feature

Section:

Columns; Mulani on Excellence

Publication title:

Logistics Management (2002). Highland Ranch: Mar 2008. Vol. 47, Iss. 3; pg. 23, 1 pgs

Source type:

Periodical

ISSN:

15403890

ProQuest document ID:

1448313411

Text Word Count

792

Document URL:

http://proquest.umi.com/pqdweb?did=1448313411&sid=11&Fmt=3&clientId=78175&RQ T=309&VName=PQD