Wednesday, 19 June 2013

A Confluence of Opportunities

“One of the striking features of modern times is the emergence of men and women who have chosen the entire world as the theatre of their operations: we are the beneficiaries of this inspiring phenomenon”
Nelson Mandela, 9 April 1998 

Today’s global supply chains – a confluence of opportunities

Three trends provide significant opportunities for those in the business of managing global supply chains:

1. Pace of world economic recovery
Global recovery is a flat “U”, not a sharp “V”.

For those managing supply chains, this steady but slow upward trend means that cost effectiveness has become key. More than ever, winners are those who are able to achieve more with less.

If successful supply chain management is the optimal combination of infrastructure, processes, technology and people, then winners are those who bring these elements together with maximum output for minimum input.

Establishment of robust infrastructure, the harnessing of appropriate technology and the implementation of innovative and effective processes all require high levels of competency. As a result, salaries, wages and benefits are one of the most significant overheads for the supply chain manager, irrespective of the supply chain cluster or trade lane.

These high levels of expenditure on human capital mean that those who thrive are those who achieve the highest returns in this area.

2. Increasing pace of globalisation

Borders to international trade are crashing all around us. According to the World Trade Organisation, the value of world merchandise trade increased from USD 5.2 billion in 2002 to USD 17.2 billion in 2012 - a 231% increase. Considering the way individual country economies have slowed down, this is quite staggering.

To what may it be attributed?

Markets are seeking out the most competitive sources of supply. Any manufactured item –computers, motor vehicles, underwear for example – will be sourced from widely scattered global sources whist the end products may be sold in a number of other countries.
As expressed in a recent research paper:

“Supply chain execution and responsiveness require the tight synchcronisation of supply and demand, as well as the orchestration of the three flows of commerce – the movement of goods, information and funds – across an increasingly large number of logistics and trading partners spanning wide geographical areas.”

Aberdeen Research

Global trade is a highly specialised field: globalisation of supply chains creates an increasing demand for those who have the expertise and the systems to manage that inventory from the time an item is ordered from a supplier’s supplier until the time the manufactured product it is delivered to the final consumer in the manufacturer’s market or another country.

3. Increasing political, social and economic uncertainty

Strategic planning is no longer based on 3 – 5 year horizons (if it ever really was).
The agility needed to meet market demands that will constantly change at short notice is what distinguishes the winners in this dynamic environment.

The competitive edge thus resides in those organisations whose people are capacitated to achieve maximum flexibility from the supply chains which they manage.

The confluence of opportunity brought about  by these three trends can therefore only be exploited by those who have implemented a policy of continuous improvement through training.

Such a policy is:
  •  designed and built for alignment to the organisation’s strategic objectives;
  •  integrated throughout the organisation: across all divisions and at all levels;
  •  visible to every employee as the pathway to advancement;
  •  informed by individual gap assessments, the findings of which are consolidated into an annual plan and whose progress and achievements are reported and reviewed at top level;
  • the responsibility of a C level executive.

Is there any higher priority needed to hone and sustain your organisation’s competitive edge?