Supply chains “inherently fragile”

SC RISK     JDA      SC AGILITY

Global - Global supply chains are inherently fragile, with any disruption potentially resulting in lost business and poor reactionary decision making, says a top JDA executive.

Supply chain networks that span the globe are exposed to higher risks, including negotiating variable lead times and the difficulty of collaborating with remote business partners and suppliers.

"Too often, ad hoc attempts to cope with increased transit times, more complex logistical processes, and global trade compliance issues lead to uncoordinated decision making, operational inefficiencies, higher costs and, ultimately, to erosion of sales, lower profit margins and decreased customer service," says David Johnston, JDA Software's vice president of manufacturing and wholesale distribution.

With the deepening financial crisis, CSCOs are all the more pressured to improve global supply chain visibility, and take a synchronised, cross-functional and strategic approach. Johnston lists the following key strategies based on best practices in the industry which CSCOs can adopt to attain this goal:

• Build an Integrated, Agile Global Supply Network.

Achieving an end-to-end supply chain that is driven all the way through raw material procurement requires the linking of cross-functional operations such as sourcing, purchasing, logistics, distribution, sales, customer service and finance to enable timely information flow and collaboration, he says. By establishing this integrated network, companies are more likely to improve business performance and customer service, as well as gain the flexibility within their supply sourcing network to quickly make strategic changes to leverage worldwide production capabilities, foreign trade agreements and tax compliance regulations.

"Additionally, by leveraging responsive sourcing strategies, companies can increase earnings and take advantage of favourable tax structures," he says.

• Leverage the End-to-End Plan to Collaborate with Suppliers and Transportation Providers.
  Best-in-class companies have found that by developing a time-phased, load-capacity plan and collaborating with logistics and freight providers, they are able to drive extended visibility all the way from the demand plan to the logistics plans to be more efficient, reduce supply chain risk and secure better rates, Johnston says.

• Take More Control of the Decision Making.

CSCOs need to take more control of decision making to incorporate cost-saving opportunities. "Taking more control of import planning and consolidation can enable companies to provide superior levels of service at a reduced cost, as well as achieve better integrated planning and time-phased views of their procurement, production, transportation and logistics requirements," he says.

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