Emerging economies are increasingly contributing to the ranks of manufacturing and logistics services suppliers that are already well established along the Pacific Rim. This trend not only heightens the ever-shifting economic activity between and within regions, but also the numbers of global trade end-points and transportation management complexity. For global traders, increasing logistics complexity increases levels of risk.
Coordinating global transport is mission-critical for companies contracting off-shore services, especially for high tech, consumer electronics, pharmaceutical, and retail industries, where short product lifecycles and extremely competitive markets mean that missed shipment dates can result in $millions in lost sales. The following five suggestions can bring you both short- and long-term cost savings.
1. Align cross-business-unit communications with a supply chain visibility tool to streamline connections between regional and global locations, meetings, and decision-making; and unify data governance across all reporting location networks.
2. Continually assess demand shifts and consequent optimal strategic and economic alignment of your transportation and distribution network, looking at a multi-layered approach to global, regional, and local sourcing, inventory allocation, and distribution locations. Consider a trade planning solution to build scenarios of alternative sourcing or distribution locations.
3. Assure day-to-day visibility of shipments enroute as well as field stocking allocations for servicing global customers. Extend shipment visibility to your customers and assign a global team of stakeholders to regularly monitor inventory allocations and global-to-local realignment based on regional forecast updates, as well as monitoring resulting transportation management re-allocation performance.
4. Pre-plan and develop multi-modal contingency plans for key shipments such as new product introductions.
5. Don't get caught without a fuel contingency plan. Experts are currently suggesting* that the abrupt reversal of the global economy of 2007 will bring about some fundamental changes in supply chain configurations. The biggest trend driving business today and in the future is the escalating costs of oil and energy. Despite the short-term price volatility these costs can only increase and future success depends on taking the necessary measures to reduce these costs now. Transportation is the logical starting point.
Dr. Larry Lapide, Research Affiliate for MIT Center for Transportation & Logistics, (most recently Director of Demand Management at the MIT Center for Transportation & Logistics). He recently launched MIT’s Supply Chain 2020 Project and is responsible for the Strategy Alignment Workshop.
This post was published on September 18, 2010 and updated on February 21, 2014.