World Trade - December 2008 - (Page 39)

and in most instances today, the companies vying for 4PL business are actually business units of existing 3PLs. What would a ‘pure play 4PL’ look like? It’s tough to solve because it involves inter-ﬁrm information transfer and management. A lot of retailers still protect sales data. What will 2009 bode for near-shoring? I like to discuss several competencies that relate to the 4PL concept: the ability to manage information, relationships, integration, knowledge, and innovation. I believe the current 4PL environment is beginning to meaningfully move in these directions. If you look at the 3PL sector and its level of maturity15 years ago, you would ﬁnd that most 3PLs were in fact business units of asset-based organizations (e.g., LTL and TL carriers, warehouse management organizations, etc.). Now, the 3PL sector has evolved where there are quite a number of 3PLs that are not organizationally related to any asset-based providers. I think we’re going to see is that companies such as consulting ﬁrms and IT providers are certainly potential players in the 4PL marketplace. Given the strategic role of information technology in the supply chain, it would be a natural phenomenon. What’s the next threshold in technology going to be? Companies are going to be re-evaluating their portfolios of geographic locations of all types of activities. What will happen is that companies will be re-aligning their supply chains and locations of key facilities to have better chance of achieving lowest net landed costs. This would involve adding some near-shoring—for the U.S. that may mean locations such as Mexico, Panama, or Costa Rica; for China it may mean Vietnam, Thailand, and Malaysia, and for Europe it may mean Russia and former Soviet republics—as companies look for new portfolios of geographic locations. The second driver is that this will be consistent with need to source from global locations and also satisfy global markets. This requires a lot of balance as to where we have our facilities. How about supply chain risk management initiatives in 2009? On the Boards I serve on, we’re spending a lot of time I see two things. One is the effective integration of on enterprise risk management. Categorically there are supply chain functionality with four kinds of risk facing busicompany-wide information abilinesses and supply chains: stra“Now with so many ties. You’ve got some big players tegic, operational, ﬁnancial, and that now have some very capable compliance risks. I see a lot of things changing all at supply chain functionality—like time and attention being spent Oracle, SAP, EDS. One by one risk mitigation once—currencies, wage by companies on Nobody wants they have been developing or and elimination. acquiring supply chain funcrates—it’s a much riskier to be dealing with risk on a daily tionality and doing a better job basis if they can help it, they of integrating it with the broader want either to make it go away or business world.” business process. at least mitigate the impact. At the same time, this adds prestige and value to supply chain functionality itself. So how would you sum up what’s going to There are still a lot of people who view the supply chain, be happening in 2009? even though they distinguish it from logistics, as more of Adversity sometimes brings out the best in companies. an operational area. But if you look at the impact on your I’ve used a quote from Henry Ford recently, “whether business of professional, capable supply chain manage- you think you can or you think you can’t, in either case ment, it makes a good business case for using only the you’ll be right.” I think that’s probably a good message best, most responsive technologies that can be integrated for companies today. with corporate systems. Is it a question now of getting in the trenches and doing the algorithms or is there a new intellectual paradigm that has to be developed to further this integration? What’s the most important advice you would give a company in 2009 involving risk management? One of the areas where we still have an exceptional amount of progress to make is demand management. I’ve recently seen a study of how long it takes most companies to acknowledge point of sales information and the results are appalling. How can you have a responsive supply chain if it takes four to eight weeks for most companies to have knowledge about what’s going on at the cash register? The answer is you can’t!. Thus developing technology for demand management is a particularly tough area? “Be able to carefully manage current and future investments in order to be both effective and changeable as needed. And I would also say from a business point of view, do not underestimate the importance of having cash on your balance sheet. The debt markets and equity markets may be a little tight coming up, companies able to fund initiatives themselves are going to be better able to respond the way they would like to respond. WT For reprints of this article, please contact Cindy Williams at williamsc@bnpmedia.com or 610-436-4220 ext. 8516. WWW.WORLDTRADEMAG.COM 39 http://WWW.WORLDTRADEMAG.COM

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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