Apparel recently published an article entitled Globalization is Getting Us that had a surprising number of insights on Global Supply Chain Management and best practices given the nature and brevity of the article. In brief:
- Too many companies are still using FOB as their cost metric!
When you go global, you also have to factor in tarrifs, duties, higher shipping costs, travel costs, additional personnel costs, and the costs associated with expediting or acquiring a product locally at the last minute in the case of delayed (or lost) orders.
- Even those companies that use landed costs are still missing the big picture!
When you deal with an off-shore supplier, in order to have an effective relationship, you need to make regular site visits and sometimes even have feet-on-the-ground in the country you’re buying from. These extra salaries, travel costs, and opportunity costs associated with lost time from project managers and executives flying back and forth on a regular basis can really add up!
- Price doesn’t matter as much as you think if the brand and quality are strong and customers buy.
Most of us will pay a few extra percentage points, and sometimes a few dozen extra percentage points if we know the product is a quality, supported product from a reputable company, especially if it employs sustainable best practices. After all, we drink Starbucks.
- Those who source local can turn on a dime and refocus production if demand unexpectedly spikes for a certain product.
American Apparel and Zara can get product out in less than a week. If you’re sourcing from Asia, a month would be incredible turn-around time.
- It’s easy to customize full-package offerings on-shore.
Full-package from offshore can be a lot harder.
- Not enough American companies are exporting their products.
In today’s Global Enconomy, America is second-class – the new class is international.
- Corporate Sustainability has long-term economic benefits.
In addition to the immediate cost-savings from energy-saving efforts, it creates brand loyalty, a foundation for future profits.
- Smart companies overcome the technology addiction.
Technology may be the key to the collaboration, efficiency, and visibility you need in your supply chain – but there is a difference between you driving the technology and the technology driving you. Successful companies identify exactly what they need and what a tool needs to do to be effective – and then find a solution that fits. Not the other way around.