Daily Archives: June 13, 2007

Global Trade Management 2007: Part II

Recently, I wrote about Aberdeen’s recent research brief on Global Trade Management in 2007 in my post Global Trade Management 2007 that highlighted this year’s focus in Global Trade Management (GTM): improving agility, trade compliance, and risk management. This brief was followed by their Global Trade Management Strategies: Surviving Growing Complexities in 2007 report.

This report found that best-in-class companies are about one and a half times as likely as all lower performing peers to report reduced lead times and lead time variability over the past two years, are twice as likely as laggards to have increased their customs clearance speed, and are twice as likely as average performers as well as almost four times as likely as laggards to be using a global supply chain visibility platform.

However, my favorite finding in the report is that laggards are twice as likely than average companies and almost three times as likely as best-in-class to report that Global Trade Management at their companies is still manual/spreadsheet-driven. Like I said in Save Billions the Easy Way. Spreadsheets are bad! Well designed on-demand supply chain applications that do what you need them to do are good.

The report had some great suggestions with respect to the creation and implementation of a visibility strategy. According to the report, top actions should include:

  • Upgrade visibility data quality by including service level agreements in your contracts with suppliers and logistics partners that focus on complete, accurate, and on-time delivery of specified documents and event milestones.
  • Push visibility upstream to capture status events at suppliers such as raw material arrival, in-process steps, and ready to ship statuses. It is less expensive to make midcourse corrections before goods are shipped.
  • Manage in-transit inventory, including setting up the ability to reroute and reallocate goods while in-transit based on updated consumer demand signals and logistics bottlenecks. Move to more drop shipping, cross-docking, and Distribution Center bypass to increase the speed of your supply chain.

The report also had some compelling statistics for laggards, average, and best-in-class companies across the process, organization, knowledge, technology, and performance competitive framework that clearly indicate which processes and systems will be most effective in helping a company improve its overall global trade management / supply chain operation.

The report concluded with some recommendations for action that are worthwhile pointing out.

  • Adopt a global supply chain visibility technology platform.
    Current visibility platform users should gradually incorporate more in-process and in-transit milestones and apply scorecards, dashboards, and analytics.
  • Combine supply chain visibility with dynamic demand signals
    to reallocate and reroute goods in process and in motion to higher points of demand. Also start implementing data quality SLAs with your carriers, forwarders, and suppliers.
  • Improve the accuracy of supply chain costing for your international transactions.
    Pay special attention to inventory and transportation related costing, which are often underestimated.
  • Institute a global trade center of excellence
    that advises the corporation on total landed cost and risk reduction actions from the point of product design and sourcing through final delivery decisions.
  • Turn trade compliance automation and the use of preferential trade agreements, free trade zones, and other duty deferral programs into profit drivers for your company.