I recently attended the ISM China conference, which was attended by about 200 supply chain professionals from companies like IBM, Cooper Industries, Delphi, Alcoa, Home Depot, BP, Emerson, Cardinal Health and Eaton.
The major theme of the conference was about China’s supply chain value. The general consensus at the conference was that sourcing from China was necessary and still an advantage.
Data presented from a survey 240 senior procurement professionals said 25% thought China was still the best low-cost country for sourcing, followed by the Czech Republic at 21%, Hungary at 10% and Poland /India at 9%. Other data showed that labor rates have increased in China. However, China, India and other Southeast Asian countries still have lower labor rates than Europe and other Asia regions.
The Accenture 2009 Global Risk Management Study was designed to help understand the issues around enterprise risk management in the current economic downturn. Based on this research and its experience in helping companies improve their risk management functions, Accenture outlines eight primary lessons to be drawn—and the most important keys to achieving high performance through an improved risk management function.
Given these challenges, executives (thankfully) no longer equate the Supply Chain Management discipline as simply sourcing materials at the lowest cost. Microsoft Industry and Supply Chain Solution Management teams, in surveying its customers, ISV and SI partners, and consulting with independent Industry Analysts has identified the following Supply Chain investment Megatrends..
Global risk advisers, Aon and strategic business partner, State of Flux, have published the 2009 Risk in 21st Century Supply Chain survey, in which 75% of respondents site financial failure as the greatest risk to their supply chain. Other key risks identified by 43% of firms are physical damage at a supplier’s facility and 29% highlight data security.
Globalization-the integration of the political, economic and cultural activities of geographically and/or nationally separated peoples-is not a discernible event or challenge, is not new, but it is accelerating. More importantly, globalization is largely irresistible. Thus, globalization is not a policy option, but a fact to which policymakers must adapt. Globalization has accelerated as a result of many positive factors, the most notable of which include: the collapse of communism and the end of the Cold War; the spread of capitalism and free trade; more rapid and global capital flows and more liberal financial markets; the liberalization of communications; international academic and scientific collaboration; and faster and more efficient forms of transportation. At the core of accelerated global integration-at once its principal cause and consequence-is the information revolution, which is knocking down once-formidable barriers of physical distance, blurring national boundaries and creating cross-border communities of all types.
From Asian to Global Financial Crisisto be published by Cambridge University Press in the autumn will demonstrate, the global supply chain is a network and the Asian and current financial crises are in effect network crises. First of all, Asian manufacturers learned that Metcalfe’s Law works through the cluster and economies of scale effect. Metcalfe’s Law states that the value of the network is exponentially related to the number of users. In their search for scale, Japanese, South Korean and today Chinese firms have expanded at almost any cost, very often through high leverage, incurring huge risks.
For purchasing professionals working with vendors in China, a new innovative solution will help to reduce their company's supply chain risk. Panjiva, the online resource for information on suppliers around...
In order to continue providing up-to-the moment authoritative coverage of the global supply chain, World Trade has partnered with the well respected consulting firm Grant Thornton to survey sourcing trends within leading U.S. manufacturing companies.
In the following excerpt on sourcing practices and trends, Grant Thornton reports that a substantial number of the three-quarters of major U.S. companies currently sourcing internationally have made changes or are planning to make changes to alter supply chains to source closer to home. These changes are being driven by considerations other than price, such as supply chain resiliency and responsiveness, suggesting the many more—and more complex—variables entering into supply chain decisions.
More than 80 percent of supply chain managers recently polled at manufacturing companies involved in international trade expressed concern that growing protectionism could sink the world into a global depression. Respondents also feared the current economic downturn could result in a prolonged reversal of world trade. On a somewhat brighter note, three-quarters of them believed the recession would not last more than another 12 months.
This remedy will prove particularly useful for manufacturers that are able to outsource their supply chain and farm out capital costs to service providers.
Saj Kumar, vice president of SAP Asia's discrete manufacturing industry solutions group, said manufacturers in Asia, especially those producing high-tech products and automobiles, have been badly affected primarily because the market for their goods is U.S.-centric.
Agreeing, Loh told ZDNet Asia in an e-mail that companies can outsource supply chain management (SCM) and make strategic use of SCM applications that automate transactions and information flow, and free resources to better meet fluctuating market needs.
"Apart from improving efficiencies in managing exchange of information, employing SCM helps companies remain flexible and responsive to the demands of the changing environment, which are key to survival in a recession climate," Loh said.
"How to Manage a Sustainable Global Supply Chain" was the topic explored by IBM's Vice President of Supply and Chief Procurement Officer Mr. John M. Paterson during today's Executive Forum hosted by CEIBS. Students from the MBA and Executive EMBA programmes gathered to hear Mr. Patterson's views on the topic within the context of current environmental initiatives.
HP issued its annual Global Citizenship Report, which describes the company’s policies, programs, performance and goals for fiscal year 2008. The comprehensive web-based report is available at www.hp.com/go/report.
A shorter version of the report, highlighting insights and best practices to help enterprise and public sector customers, is available at www.hp.com/go/customer.
Among the focus areas detailed in the report are ethics and compliance, human rights and labor practices, environmental sustainability, privacy and social investment. Notable accomplishments include:
HP became the first IT company to report the greenhouse gas emissions associated with its product manufacturing by publishing the emissions attributed to its first-tier suppliers.
In 2008, HP recovered for reuse 3.5 million hardware units weighing 75 million pounds (34,000 metric tonnes) and increased its recycling volume to 265 million pounds (120,000 metric tonnes) globally.
HP announced an industry-first engineering breakthrough that uses recycled content - from cartridges returned through the HP Planet Partners return and recycling program and materials such as plastic water bottles - in manufacturing new Original HP inkjet cartridges.
In 2008, HP audited 142 of its suppliers at 246 sites and found a significant reduction in incidences of nonconformance in areas such as nondiscrimination practices and worker health and safety.
HP continued implementation of its privacy accountability model, which goes beyond compliance with laws and industry norms to also take into account HP values and customer expectations and risks to its business and that of its customers.
With economic uncertainty shaking the foundation of the global supply chain, a tactical response is only natural. But buyers still need to think strategically about their sourcing decisions to ensure long-term results.
TradeBeam has created a Duty Rate Calculator, software designed to help companies manage their global tariff rates. The application provides access to current and future duty rates, both general and preferential. It collects global regulatory information to supply...
The potential to lead in international trade is a issue in China outsourcing but the online business supply chain which is supposed to get raw materials to assembly finished goods to retail units on time is an issue. ...
In global supply chains, managers have consistently struggled with sharing valuable knowledge with buyers and suppliers across borders.
Increasingly, talk of the "dark side" of collaborative relationships has left managers wondering who benefits most from knowledge-sharing activities: their companies or their partners. In order to find the answers to these questions, the authors conducted an in-depth study of more than 100 cross-national supply chain partnerships in the industrial chemicals, consumer durables, industrial packaging, toy and apparel industries in multiple locations in 19 countries.
The authors found three types of knowledge sharing within the supply chain, each offering distinct benefits to buyers and suppliers: information sharing, joint sense making and knowledge integration. They also found that no matter how "diverse" the home cultures of the buyer and supplier companies, these differences had no impact on the propensity to share knowledge.
Drawing on examples from the auto (Toyota), aerospace (Boeing, Lockheed Martin and United Technologies) and toy industries, they examine how different types of knowledge sharing can benefit buyers or sellers individually, but more importantly, how it can enhance the performance of the partnership as a whole. They conclude that, while suppliers generally benefit more from knowledge-sharing activities, both buyers and suppliers profit; understanding the benefits of absolute versus relative gains is critical when building world-class global supply chains.
Sharing knowledge effectively means understanding that a disparity in benefits is part of what it takes to build partnerships that last.
While many nations have taken the innovation challenge to heart and put in place a host of policies to spur innovation, the United States has done little, consequently falling behind in innovation policies and risking falling behind in innovation performance as well.
“Global Sourcing of Services is a powerful source of competitive advantage as economic borders become thinner... Kennedy pulls up the curtain and explains the what, why, and where of offshoring. His work with both providers and customers illuminates both the potential and the challenges of global sourcing. The Services Shift provides insights on the shifting business paradigms. This book cuts through the rhetoric and provides managers practical advice. A must read!!!”
– Anurag Jain, Managing Director, Asia Pacific; President for Applications Solutions (AS); and President of Insurance & Business Process Solutions (IBPS) for Perot Systems