The integrated global supply chain exists when activities between all supply chain partners are seamlessly coordinated to achieve the optimal results for all its participants. These partners are executives, managers, co-workers, suppliers, customers, carriers, 3PLs, warehouses, government agencies, financial institutions, etc. They exist not only within the four walls of the organization, but outside of it, too. The results are achieved when extraneous costs are removed and product can optimally move from source to end-user with minimal friction.Is a fully integrated global supply chain achievable? Probably not. It would require that all actors up and down the supply chain be structured to achieve this end, and by the nature of the business, this is likely not going to happen. At least not in a timeframe acceptable to you.So, should companies strive to create their own integrated global supply chains? The answer is an unequivocal YES.
4 Foundational Ingredients Necessary to Create an Integrated Global Supply Chain:
- Acknowledge that integrating global supply chain activity is possible well beyond the current practice and has a real, measurable, and meaningful impact on the overall health of the organization. There are many points of friction within the global supply chain because of the inherent nature of competing interests among the all the actors, the lack of coordination and collaboration between the actors, and the opportunity for dislocation of activity. At each point of friction, costs are incurred and organizational value diminished.
- Understand that removing friction between the transactional parties improves the flow of product. Removing the friction across the global supply chain requires a holistic approach to the supply chain. No activity or transaction in the global supply chain is independent and therefore should not be treated that way.
- Recognize that underpinning the transaction (physical and financial) activity in the global supply chain is information. Eliminating the transactional friction is achieved through shared information among all related parties. Every activity requires information that either precedes or follows it. When information is missing, at any point in the supply chain, transactional friction is increased and value lost. The more seamlessly that information is shared, the more frictionless the supply chain.
- Influence that which is in your power. It is mission critical to get “vision” buy-in from leaders of the organization’s global supply chain practice. This is true whether the organization is a small/medium organization or a Fortune 100 company. The driver for the vision must be a person that has responsibility for the global supply chain and can envision the benefits and sell the vision and benefits to the “powers” within the organization. While you might not be the decision maker, you do have the ability to influence the behavior of others.
5 Basic Hurdles to Overcome When Creating an Integrated Global Supply Chain:
- All corporate global supply chain activity is done in organizational silos that don’t communicate with one another.
- Communication between organizations is often uncoordinated and incomplete.
- Information, the essence of communication, is siloed, reflecting the physical world.
- The volume of information is huge, and increasing, such that it is impossible to manage it effectively with current (read: legacy) systems.
- No holistic strategy exists to achieving one global supply chain platform.
Where the Real Opportunities Lie:
- Financial – Integrated global supply chains provide visibility into the financial transactions around all elements of the physical shipment. This is critical to support financial reporting, payment planning, and corporate cash flow requirements.
- Physical – Integrated global supply chains provide execution support and visibility, and more importantly visualization, into the movement of product/SKUs from the purchase order until the time the product is delivered to its destination.
- Strategic supply chain planning – Integrated global supply chains increase the opportunity for optimizing supply chain networks and maximizing inventory utilization across global supply boundaries.
- Corporate Risk management – Integrated global supply chains deliver cross-functional control and auditing of global trade risk points. Visibility across the global supply chain enhances product/SKU, financial, and trade compliance control thereby mitigating exposure to non-compliant activities
There are certain companies that understand the power of today’s technologies are enthusiastically working to streamline their global supply chains. But most companies are not. The result will be that those companies that are taking the mantle and building more integrated supply chain platforms will derive incredible value from lower total landed cost of products, improved inventory management, better customer experience, and increased financial control. The majority of companies, will not.In a nutshell, the more a company can integrate its global supply chains, the better its financial performance, its supply chain execution, and total risk management.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 of communicating with you or your boss. He can be reached at (416) 510 8800 ext 234 or at email@example.com.