Great global supply chains move product from source to destination with minimal friction. Friction in the global supply chain occurs at those points where disruption to the supply chain plan can manifest itself and impede the smooth flow of product in its international journey. In this case we are not talking about unforeseen dramatic disruptions, such as earthquakes, tsunamis, political turmoil, We are referencing those areas where expected normal operations go "off plan" and disrupt the expected flow of product and impact inventory optimization, order fulfillment or manufacturing execution.Great global supply chain execution eliminates, wherever possible, those controllable points of friction so that the shipment moves with minimized impediments from the time a purchase order is executed until the goods arrive at final destination.Great global supply chain organizations have a much higher level of perfect order execution than their peers, better inventory optimization, higher levels of customer satisfaction, and lower costs.Step 1: Overtly recognize how the global supply chain is configured. The global supply chain is highly complex and requires the management of many moving parts outside the direct control of the importer or exporter. While this is not to minimize the complexity of the domestic supply chain, the fact is that global supply chains often cover multiple diverse supply jurisdictions, complex modes of transportation, extreme time zone differences, different mother languages, and export and import customs and regulatory jurisdictions. Because of this complexity, there is a high level of opportunity for friction to occur and negatively impact the supply chain adding unexpected costs or unnecessary operational costs.Step 2: Understand where points of friction take place in the global supply chain. If one looks at a relatively simple global supply chain there are 4 critical areas where friction can take place:
- Purchase Order execution
- Account and Product compliance for international trade
- Delays in production planning and execution - poor visibility into the suppliers manufacturing processes
- Delays in shipment PO preparation for shipment - lack of visibility into shipment planning, freight booking, shipment staging and loading
- Tracking of supporting documentation - missing documents or errors on documentation
- Logistics execution
- Carrier delays in spotting equipment for shipment - poor or no visibility into carrier execution at supplier or consolidator
- Carrier performance on loading shipment as booked - poor or no visibility into shipment loading at port of departure
- Unforeseen delays in shipment schedule - lack of tracking visibility
- Trade Compliance execution
- Delays in entry filing - poor visibility into entry preparation and filing
- Account control - screening, regulatory registration control, relationship control
- Product control - classification, regulatory profiles, UoM management, country of origin (COO) determinationEntry management - customs and government agency entry preparation (pre-post entry audits), filing management (customs brokers or self-filing), post summary correction management, FTZ control
- Entry management - customs and government agency entry preparation (pre-post entry audits), filing management (customs brokers or self-filing), post summary correction management, FTZ control, License and Quota management
- Holds at the pier - poor visibility into hold execution and release management
- Pier and delivery execution
- Carrier and Customs Release visibility - poor visibility into customs status of entry execution
- Pickup delays - poor visibility into drayage company performance
- Pier Priority management - poor visibility into free-time status at pier for imports and exports
- Detention management - poor visibility into equipment delivery and return execution
For most global supply chains there is additional complexity that can be layered on to these 4 critical areas that increase the opportunity for friction.Step 3:Understand and recognizing where these points of friction take place in your supply chain. This takes some time, as the list is probably long. You might find some frustration as you list out all the places that you have identified that cause friction. Fear not - just about every company is seeing the same picture as you are. This is great, because the companies that are able to fix the problems will generate great value, while those that don't will be at a competitive disadvantage.Step 4: Understand the cost of the delays that the friction imposes on your organization. Similarly, understand how you can reduce or eliminate the points of friction, along with the costs of doing so.Step 5: Execute the changes to remove the friction. In a follow up blog, I will talk expand on points three, four and five and detail how you can get to great.
About 3rdwave:
3rdwave simplifies global trade through automation. 3rdwave is a GTM platform that delivers total global supply chain visibility, minimizes manual data entry, streamlines business process, and provides contextual information enabling its users to make informed decisions to reduce global supply chain risk. It's a cloud-based platform that requires minimal IT resources for quick implementation. 3rdwave ensures that companies meet the highest levels of GTM execution and Trade Compliance conformance.
Ned Blinick is Chief Product Officer of 3rdwave.co. He has been involved in global trade for too many decades and he loves making the global supply chain simpler for everyone. If you would like to engage with Ned he would really enjoy the opportunity of communicating with you or your boss. He can be reached at (416) 510 8800 ext 234 or at eblinick@3rdwave.co
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