Are Global Goods Worth the Trip?
Consumer Goods Technology, May 2001 - By Kim Ann Zimmermann, Assistant Managing Editor

What’s New?

Perhaps not surprisingly, with ASPs making such a big splash in the e-business world recently, the latest thing in global sourcing systems is “Web-based, ASP-delivered solutions,” according to Matthew Menner, vice president for consumer goods products at Logistics.com, Inc., a transportation procurement and management technology provider to consumer goods companies including Compaq Computer Corporation, The Limited, Inc., Colgate-Palmolive Company and Quaker Oats Company.

Menner notes that the newest ASP solutions for global trade are enabling companies to enhance relationship structures, pursue competitive bidding and go beyond procurement to take advantage of opportunities in direct materials purchasing. But until recently, most consumer goods companies have overlooked global sourcing.

Ned Blinick agrees. He’s vice president of sales and marketing at Toronto-based Blinco Systems, Inc. (www.blinco.com), a top provider of global supply-chain execution systems.

“Until the past two or three years, consumer goods companies were not actively pursuing global sourcing,” he points out. But this is changing due to what Blinick calls “the rise in the ASP model.” He goes on to say that while ASP solutions can do, “fundamental tracking and tracing,” there’s also a growing demand for, “robust and fully enterprise-wide global sourcing solutions and desktop solutions integrated tightly with applications, such as accounting and finance.”

Pros and Cons

While some consumer goods companies have overlooked global sourcing opportunities, the apparel and footwear industries have sourced globally for many years, says Linda Hemphill, director of strategic alliances and product marketing for Essentus, a provider of supply-chain software solutions geared to the apparel and footwear industries. And in recent years, she observes, system support has become increasingly sophisticated, allowing companies to increase their collaborative planning and decision-making efforts. As a result, “the best sourcing decisions can be made to service the market demand at the best price,” she says.

Blinick reports that the benefits of robust, integrated global-sourcing solutions can include reduced cycle times, pipeline visibility from the vendor to the distribution center, and the ability to allocate goods in transit against future orders to increase cross-docking and reduce requirements for floor inventory. All of these lead to a more highly satisfied customer, he adds.

Raj Shenoi is director of business development for consumer goods at i2 Technologies, Inc., a leading provider of supply chain and marketplace solutions. He notes that consumer goods companies in the last six to twelve months have realized their greatest global sourcing savings by looking for and finding the best suppliers, streamlining processes and consolidating their sourcing operations – sometimes reducing the number of suppliers. As an example, his colleague John Kelley, market development director for supplier relations management, points out that a single large U.S. computer manufacturer was able to save hundreds of millions of dollars through doing more strategic sourcing.

Yet in spite of the potential benefits, many companies are not reaping the full rewards of their global sourcing solution because systems tend to be poorly integrated, Blinick maintains. This is partly because they are often implemented as an afterthought. He notes that this is partly because the U.S. has less emphasis on global trade than other nations do. “The U.S. still does much less of its GDP in global trade than do most other developed nations,” he points out.

What’s Next?

What will companies do next with global sourcing? “On a technology level, there’s no doubt that the ‘ability to correct’ is becoming more pervasive,” says Mike Wybo, Ph.D., senior vice president and managing director with Essentus. In addition, he notes, “wireless technology is starting to come into play in nations that don’t have infrastructure.”

Darren Maynard is chief operations officer at NextLinx Corporation (www.nextlinx.com), a leading global trade management solutions provider. His company recently teamed with FedEx to provide Web-based tools for determining international shipping classifications, documentation, license requirements, duties and taxes and landed cost. Maynard feels that radio frequency (RF) will play an important role in the future of global sourcing. “The whole use of RFID tags will enable companies to get an accurate view of where product is in the supply chain,” he says.

For related information, please go to:
3rdwave Retail Sourcing & Distribution
3rdwave CGD (for Consumer Goods Distributors)