Source Global – Distribute
Local … Anywhere in the World
Special Report
from D/C Expo 2002, Chicago
DC Expo Show Guide, April/May 2002 - By
Ned Blinick, V.P. Sales and Marketing, Blinco Systems Inc.
Global sourcing has become an increasingly important part
of many manufacturers, distributors and retailers’ business
strategies. By going global, organizations take advantage
of the best price for quality buying opportunities from both
domestic and international suppliers. Successfully outsourcing
design and manufacturing is a complicated process requiring
multi-departmental and multi-organizational teamwork. Building
the right processes to effectively and productively control
your environment is the challenge. The effort and investment
is significant. The opportunities for additional profitability
are many and dramatic.
The global environment includes domestic
as well as international vendors. The global environment is
so much more complex to manage than its domestic counterpart.
I will highlight what is required to support a successful
international sourcing program whose products feed into a
domestic distribution network.
To successfully manage global sourcing
programs, key departments such as Merchandising (Planning
and Forecasting), Purchasing, Logistics, Inventory Management,
Sales and Marketing, and Finance must all read from the same
playbook. The organization must be able to collaborate with
external players such as design houses, suppliers, agents,
consolidators, forwarders, carriers, customs, banks and customers.
The degree of success companies experience
in a global sourcing/local distribution environment is directly
dependent on the degree they can streamline the complex environment
by sharing common and validated information, in real-time,
on-demand.
The four keys to being successful in a
global sourcing environment are:
- Ensure complete integration and synchronization
of information – allows accurate and timely collaborative
information sharing among all partners in the supply chain.
- Have clear visibility on the status
of all SKUs across the entire supply chain – insures
the highest available-to-promise commitments to customers
while optimizing inventory across the entire supply chain.
- Supports work process across all functional
silos – delivers organizational efficiency and effectiveness
in executing tasks.
- Real cost visibility and totally flexible
profit analysis is needed so that comprehensive estimate
and actual [ELC/ALS] cost capability with accurate variance
analysis is known.
With all four keys in place your organization has the proverbial
“silver bullet” to execute, control and optimize
its entire global supply chain.
Complete supply chain control lowers cycle
times, higher available-to-promise capabilities reduces costs,
increases cash flow and increases margins.
Failure - on any level - provides limited
execution capability resulting in reduced benefit to the global
corporate program.
Collaboration is essential for optimal
supply chain efficiency and effectiveness. Collaborative planning,
forecasting, and purchase order execution is highly dependent
on access to accurate and timely information. The ability
to provide meaningful information to all members within the
supply chain is directly dependent on the underlying information
systems that support the business processes.
Few organizations have adequate or supportive
and effective global sourcing and logistics solutions in place.
The complexity of the environment and the fear of managing
it cost effectively impede the successful implementation or
growth of most global sourcing programs.
Companies that have ventured down the global
sourcing path have, in whole or part, homegrown systems or
heavily modified 3rd party software, supported where required
by Application Service Providers [ASPs]. Very few organizations
have successfully implemented global sourcing solutions and
therefore poorly control their global supply chain. Point
solutions or other sub-systems that don’t integrate
seamlessly with the ERP solutions are the major culprits.
Without highly integrated systems providing synchronized information
to all members of the supply chain team time-sensitive information
falls through the cracks.
A comprehensive global sourcing program
that supports highly effective local distribution must have.
- Full systems integration - across
the entire sourcing and logistics functions - providing
one point of data entry for any and all information. This
increases accuracy of information, increases organizational
efficiency, and provides visibility and control over the
execution of activities by trading partners and service
providers.
- Accurate track and trace capability
- absolute visibility into the total supply chain provides
real-time status on product availability anywhere in the
global pipeline.
- Exception-based dynamic event monitoring
and reporting – automated alert reports enabling merchandisers,
buyers, agents and logistics operators to focus and respond
to the 10-20% of the issues that fall outside planned parameters.
- Real Estimated Landed Cost/Actual Landed
Cost (ELC/ALC) capability – provides the ability to
evaluate competitive offers on a true landed cost basis
and accurately compare the actual costs against the estimated
costs.
- Browser-based B2B to support collaboration
among suppliers, consolidators, freight forwarders, carriers,
customs brokers, DC’s and customers.
- System flexibility, integration and
synchronization that fully supports the complex international
global sourcing environment.
Most global sourcing IT systems fail to
deliver full support to their international purchasing and
logistics organizations because they don’t fully provide
for the complexity inherent in the environment. Those solutions
that do address elements of the global sourcing environment
are designed to provide limited functionality in support of
other costly and complex ERP and supply chain solutions. Without
total understanding of the intricacies, variables and constraints
of international purchasing and logistics and their downstream
impact on local distribution, global sourcing solutions fail
to tie together all the loose ends.
Lack of total integration of any of the
variables inevitably means poor visibility into the pipeline,
incomplete costing capability and reduced operational execution.
A successful global sourcing and distribution
program requires expertise in operations based on experience,
knowledge and understanding. Visibility into its entire supply
pipeline at a granular level of detail is a fundamental requirement
to support operations in carrying our proactive business process
and decisions. Information technology that supports the workflow
of the complex global business environment is an imperative
for success. The solution must provide information that is
easily accessible, meaningful to users and available on demand.
Establishing a successful Global Sourcing
program is a significant but not insurmountable challenge.
Several IT solutions are designed specifically to provide
an enterprise solution that supports the complex global business
processes. With a comprehensive and strategic global sourcing
program will support local distribution organizations, allow
them to gain exceptional competitive price and quality advantage.
It enhances profitability, and organizational efficiency.
As global trade increases as a percent
of the world’s GDP a comprehensive global sourcing program
in support of local distribution is increasingly more important
for a company’s long-term survival. Having the right
technology to support the global strategy is becoming an imperative.
Ned Blinick is vice-president
of sales and marketing for Blinco Systems.
For additional information on 3rdwave horizontal solutions:
3rdwave
Accounting and Finance
3rdwave
Customer Relationship Management
3rdwave
Global Logistics Management
3rdwave Inventory
Management
3rdwave
Order Management
3rdwave
Supplier Relationhip Management
3rdwave Quote Management
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