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Global?
Logistical Factors
to Consider Before
Establishing Global
Supply Chain
Operations
May 2008
WHITE PAPER
May 2008
Going Global?
Logistical Factors to Consider
Before Establishing Global Supply Chain Operations
SUMMARY
In today’s global economy, many US-centric manufacturers and distributors
are increasingly feeling the pressure to become niche, competitive play-
ers overseas as well as domestically. American-based companies seeking
to expand their product lines internationally for the first time or attempting
to enlarge their existing global footprints will need to keep up with global
trade growth and increased competitive demands. To succeed in the global
marketplace, companies wanting to capitalize on the compelling interna-
tional market’s opportunities must prepare their supply chain operations for
the onslaught of logistical challenges of foreign markets.
OVERVIEW
Before his 1492 voyage to the “New World,” Christopher Columbus spent
several years trying to explain his belief that the world was round. He
exerted all his passions, efforts and energies in convincing any and all who
would listen that the world was a sphere and not a flat landmass.
Ironically today — over 500 years after Columbus’s insistence that the
world was round — advances in transportation, technology and telecom-
munications have seemingly “flattened” the Earth once again, making com-
munications and global interaction with foreign markets highly accessible
and instantly viable.
If your company has been contemplating broadening its supply chains inter-
nationally, it would not be alone. Today’s highly competitive global market-
place demands, at the very 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. Diagram
May 2008
Diagram 1-1
From a March 2006 “Meeting the Challenges of the Global Supply Chain”
presentation by ORACLE
May 2008
SOURCING GLOBALLY
As domestically focused companies stand by in the sidelines, aggressive
and fierce competitors are going global, seeking ways to improve their
competitive edge by streamlining manufacturing production and distribution
channels worldwide.
Forrester Research’s study entitled “The State of Global Supply Chain Man-
agement,” reinforces the now ubiquitous act of sourcing globally. The study
asked 168 respondents from North American retail, manufacturing, and
other industries if they have business units based outside of North America.
Not surprisingly, an overwhelming majority do globally source to the fol-
lowing international markets:
China 67%
Asia Pacific
countries 57%
South 47%
Eastern 43%
Central 32%
America
Turkey 20%
North 18%
Africa
Diagram 1-2
— 2006 Forrester Research study, “The State of Global Supply Chain Management”
May 2008
This white paper will provide a high-level overview of key logistical chal-
lenges organizations can face as they launch their global supply chain
voyage as well as offer viable, real-world solutions to help you align and
facilitate your corporate supply chain strategies abroad.
Global supply chains are overwrought with complexities. While this is not
to say that domestic supply chains are not without their own unique set of
To achieve higher service
levels, better asset
challenges, international trade inherently tends to be more complicated.
utilization, and lower
logistics costs in the In other words...
modern supply chain, a
new breed of transportation
“Sourcing and selling internationally is an alarmingly inefficient process
management solution today,” according to Beth Enslow, Aberdeen Group’s Vice President of
is required—one that Enterprise Research. “Today’s cross-border supply chains are strapped
supports multiple modes
and many languages at a
together with disconnected, manual processes. They are buffeted by high
reasonable cost. supply chain unpredictability and continually evolving regulatory demands.
Making matters worse, we found that more than half of the companies
— Transportation
Management Solutions
Aberdeen surveyed do not even measure their global trade performance.
Forrester Research Most also lack the technology to help them do so.”
Report, January 2008
Patrick M. Connaughton — Findings from Aberdeen Group’s
“New Strategies for Global Trade Management” Report, 2005
The Aberdeen study findings as cited above were collected from a survey of
over 170 companies which were examined and surveyed about their proc-
esses for sourcing goods with overseas suppliers, selling goods internation-
ally, financing global trade, managing cross-border logistics, and complying
with increasingly stringent trade and cargo security regulations.
Long and uncertain lead times which inhibit the ability to respond to
market demands and adequately fill orders on a timely basis
May 2008
Let’s briefly examine some of the broader aspects of global logistics that
should be on your “Going Global 101” framework:
Challenged Visibility
Visibility in global logistics becomes very complex and difficult to achieve
in an international supply chain. “You need to know where the goods are,”
says Mike Peters, First V.P., ProLogis Solutions Group. This is particularly
critical in order to allow companies to manage their supply chain strategi-
cally, identifying various points throughout the supply chain where goods
can be held to reduce the risk of delays. And, with capacity issues still a
concern in North America, a delay-reduction strategy applies across the
board, resulting in the need for specific skills and expertise to manage a
global supply chain.
Inconsistent Technology
Technology and infrastructure tend to not be as sophisticated as in North
America, meaning the pace of information flow and management of cross-
border logistics in developing countries is quite challenged. Missing and
unreliable information adds risk and decreases flexibility in the international
supply chain. Often supply chain managers and the ultimate customer can’t
be sure what they’ll be receiving until the shipment actually arrives.
May 2008
BEST PRACTICES:
KEY FACTORS STEER YOUR SUPPLY CHAIN
IN THE RIGHT DIRECTION
May 2008
Consistency in Execution
By virtue of the “e” in ERP, many organizations have already learned the
GLOBAL TRADE value of managing data and processes at the enterprise level. Typically, best
MANAGEMENT TIP
-------------- practices are defined, refined, and made part of the ERP solution prior to
Institute a global trade implementing or during the implementation process. Values recognized from
center of excellence that this approach can and should be carried over to transportation management
advises the corporation on
total landed cost and risk solutions as well. With global instances of the ERP, one should follow suit
reduction actions from the for all subsystems or complimentary applications to maintain consistency
point of product design in execution for all the same reasons as those taken into consideration when
and sourcing through final
delivery decisions. exposing the ERP on a global basis.
May 2008
Global Visibility
As the likes of manufacturing, distribution, technical and customer support
move to regions of the world where they can prove to be more cost effective,
one must also provide the information to support these activities. This infor-
mation needs to be available at the fingertips of those in these support roles.
With this requirement, global visibility can only be provided by interoper-
ability 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.
COLLABORATION:
WORKING WITH TRUSTED, OUTSOURCED LOGISTICS PARTNERS
As a result, companies are turning to outsource providers who can offer the
expertise needed to keep the supply chain moving.
“Your supplier [3PL] should have a global footprint. They need to un-
derstand the region, and should have the knowledge and facilities to fix
problems,” says Jack Gross, VP & GM International, Schneider Logistics.
“Companies are now looking for help inland [on the ground in the foreign
country]. The world has never been more open to international trade; the
time is right for testing the waters once you have the right guides on board.”
May 2008
TECHNOLOGY:
ENTERPRISE-WIDE SOLUTIONS
HEIGHTEN SHIPPING EFFICIENCIES
Technology is crucial.
It speeds the supply chain Once solid management practices and trusted outsourced partners are in
and creates visibility. place, companies expanding their global footprints can further heighten their
shipping efficiencies by the deployment of technology to help streamline
logistical processes.
May 2008
May 2008
Collectively, when deployed in concert with global supply chain best prac-
tices, enterprise solutions are designed to dramatically improve your com-
petitive advantage in bottom lines in today’s global economic stage.
Flexibility
You are looking for an easily customizable GUI and/or the ability to run the
SUPPORTED solution in the background, using your system’s front end to process transac-
CMS WORLDLINK tions.
CARRIERS
--------------
FedEx® Productivity and Customer Service Enhancements
UPS™ Features that give you the ability to dramatically reduce your shipping costs,
USPS®
DHL Express® decrease your shipping turnaround time and enhance your customer service
Expeditors® offerings.
LTL & Generic
BAX Global
Purolator Courier® Global Visibility
TNT Express Allows all your worldwide shipping processes and data to be accessible by
Exel authorized personnel from anywhere in the world.
Database Flexibility
Ability to support both Oracle® and/or Microsoft SQL Server® databases.
May 2008
CMS WorldLink can easily operate with virtually any host application by
using standardized templates and communication methods hosted within
your environment including SAP®, Oracle Financials®, JD Edwards® or
any custom ERP system, allowing you to view shipping in the context of
your other functions.
CMS WorldLink provides you with the power to manage and maintain all of
May 2008
your shipping points via a single application. You will benefit by centralizing
shipping history reports, location cost reporting and carrier rules, thereby
significantly improving efficiency, cost savings and a standardized global
shipping process regardless of location(s).
To find out how CMS WorldLink can streamline your domestic and
cross-border transportation logistics, we welcome you to please
download our CMS WorldLink brochure.