World Trade - December 2008 - (Page 36)

SUPPLY CHAIN MANAGEMENT Nine Global Trade Predictions for 2009 & How to Capitalize on New Market Trends This year the growing interest in international markets continued, spurred on by a sluggish U.S. economy, weakened dollar and strong growth markets in Europe and Asia. While companies are now talking about near-sourcing and looking closer to home, McKinsey has projected that by the year 2025, eighty percent of all business-to-business transactions will be international business. What do businesses need to know about the global marketplace in 2009 so that they can capitalize on new trends and opportunities while preparing for challenges? Below are nine predictions related to global trade for the coming year: 1. New competition will continue to crop up from new places and impact companies across a wide variety of industries. 2. Shorter product life cycles (and the above mentioned heightened competition) will make go-to-market speed increasingly critical for companies, especially those in the healthcare, technology and retail industries. 3. Transportation mode shifting, including greater use of ocean freight, will continue due to sustained fuel costs and the need for companies to keep overall transportation and freight costs down. 4. Consumers will gain more power as they demand more from companies and as more markets and territories come into play with the rising middle class in China and other emerging markets. 5. Tightening security concerns and a changing regulatory environment will make regulatory compliance a key focus area for companies looking to do more business with overseas companies and consumers. 6. Small- and mid-sized businesses will continue to drive exports globally as new market opportunities continue to arise in other parts of the world. 7. More companies will outsource global supply chain functions as they look for ways to grow their business while managing costs and focusing on their core competencies. 8. Recent growth in “near-sourcing” will continue as companies focus on the bottom line, yet this trend will co-exist alongside global sourcing. Successful companies will pursue optimal sourcing strategies for each market they serve, and each SKU they bring to market. 9. Global trade will continue—and thrive. Matt McGee directs the global marketing strategies for the UPS supply chain and international freight product portfolios. is that they continue to change senior management. Every time they change somebody at the top, the new people bring in their own ideas and start back from the beginning. Why aren’t they doing this, re-organizing the enterprise to be supply chain centric? package—you can pay for it as you go. So companies that want to make improvement in their organization will be able to get technology quicker. I think people should run toward the on-demand technology in the next year. What other big changes do you on the horizon? Because it’s hard! I’ve been doing this for 35 years and the reality is that we’ve built bigger barriers, more silos and we still have bad practices. And, it will get more difﬁcult next year because of the global economy. Companies are going to put their efforts in other areas. They’re going to put their efforts into survival and short-term, ‘How do we get through the next two or three years?’ What do you expect people to focus on in terms of supply chain management in 2009? Unfortunately, I think ‘we survived’ is going to be the chief goal. They will say, ‘We really had to focus on cost controls.’ It will be painful, they will have had to go through head count reductions, cut out the inefﬁciencies, and become a stronger company as a result of tough times. I expect companies to take a look at more technology solutions. With on-demand, we have technology that is cheaper than ever. On-demand technology is going to be huge. Five or ten years ago the whole notion of acquiring and integrating new technology was a daunting task; today you can go out and get on-demand that is very robust, very function rich. Whether it’s transportation management system or warehouse management system, whether it’s some of the visibility tools—it’s much easier to on-board this new technology and integrate it to existing systems or have it on a stand-alone basis. And it’s cheaper because you don’t have to buy the whole 36 WORLD TRADE DECEMBER 2008 The aging and changing population is going to hit the global supply chain hard in the next few years. As this population shifts and the percentage of working population becomes smaller and also less qualiﬁed in certain countries, this will cause disruptions in production and may even bring back production to those countries better able to manage it. Take China, for example. Where are managers coming from who manage the over-seas facilities? They’re not Chinese but rather coming from the country that moves over there. What happens if that supply is insufﬁcient? We could be faced with a shortage of qualiﬁed management in the supply chain area in the near future in these emerging countries. And the area of supply chain risk management in general? I think it’s going to go on the back burner again. People will be more concerned with survival than investment. I think we will have enough transportation capacity out, at least in the short term, because of reduced demand in every facet. Companies will be looking to buy transportation on the cheap. That means ﬁnancially strong companies (road, rail, ocean, etc.) will survive because they have enough resources to survive; smaller players will be struggling to stay in business with many going out of business. There’s going to be a lot of cheap deals out there.

Table of Contents Feed for the Digital Edition of World Trade - December 2008

World Trade - December 2008 Contents The Promise of Peril The Current Reality with IP in China Supply Chain Watch Tradewinds Performance Partners: Awards of Excellence Managing With Mobility What 2009 Bodes for the Supply Chain Small Business Takes to Export Green is Here for Good Fast Fashion

World Trade - December 2008

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