World Trade - February 2009 - (Page 46)

GLOBAL SOURCING material to 294 U.S.-based customers, and that the aver- in the West, is quite signiﬁcantly different.” age customer sticks with it for 136 days, putting it in the Such differences are particularly important in times of top 56 percent for customer loyalty. These an other data economic turmoil, when clear information about a suppoints combine to give the company a score of 89 on plier’s continued operations is vital. Even in good times, Panjiva’s rating scale, just a point below “excellent.” serious supply chain disruptions can be life threatening. Panjiva will soon supplement this data with a Web 2.0 According to a 2005 paper by Georgia Tech’s Vinod innovation: user reviews. “Customer loyalty is a great Singhal and the University of Western Ontario’s Kevin indicator of quality,” said Green. The result, he said, is a Hendricks, it usually takes at least two years to recover sort of Zagat’s guide to the global apparel industry. from a supply chain problem, resulting in a 33 to 40 perGreen and Psota began fundraising in spring 2007 cent drop in share price relative to their industry. Supply and launched the site later that year. “There wasn’t good chain failures reverberate through the entire corporate detailed information for retailers and importers about structure, affecting payroll, marketing, and reputation. the underlying nature of the facts from sourcing product. Even occasional disruptions, such as delayed shipments, In fact, most information was just ads for the [supplier] can have signiﬁcant consequences. “Yes, one major disaster companies,” said Jonathan Glick, an early backer who can wipe out a company or product line,” wrote FM Global runs the angel investment ﬁrm Edge Ideas. “What these in its recent paper. “But, so can a series of minor disrupguys are doing is absolutely revolutionary.” tions. If companies are consistently a week late meeting cusWhat did exist, Green and Glick said, was an astound- tomer demand, for example, or if retailer’s shelves routinely ing array of advertorial and middle-man sites that provided are not stocked with their products, the chances of staying biased or incomplete information in business fall precipitously.” on suppliers with little to no critiIn response, this past fall Pancal data. The website alibaba.com, What began as an effort jiva rolled out a new alert function. for example, provides basic inforSimilar to the fraud prevention mation on thousands of suppliers to help customers ﬁnd notices put out by credit card and their products—but the data companies, Panjiva Alerts notify new suppliers has comes from the suppliers themclients whenever shipping data selves. “The kind of information indicates suspicious activity by you’re going to get from a service turned into a tool to help one of their suppliers—say, a delay like that will necessarily reﬂect the in delivery, or the loss of several them keep an eye on factory’s perspective and not neccustomers. “Let’s say a company essarily the importers’ perspechas had a huge drop-off in the the suppliers they tive,” Glick said. amount it is shipping, year over Another method for analyzing year,” Green said. “That may well already have. suppliers is to contact other combe a sign that the company may be panies for leads. The problem, in trouble.” But as long as a parsays Kitty Dickerson, chair of the Textile and Apparel ticular customer is getting their shipments on time, they Management Department at the University of Missouri, is may be completely unaware of problems elsewhere. ﬁnding people to talk. “One company is often not likely to Such dynamic data analysis has also allowed Panjiva share their factory sources because, if they’ve found good to launch two related products: the Watch List, a comfactories, they do not want to share them,” she said. pendium of poorly performing suppliers, and the Pain That leaves the middle-man ﬁrms, which offer to ﬁnd Index, which it calculates by combining the percentage and introduce suppliers to customers. But these are of active suppliers that become inactive (i.e., have not still few and far between; almost no one yet has enough shipped to the U.S. in three months or more) and the expertise in both the U.S. and Chinese business worlds percentage of active suppliers on the Watch List. to be an effective sherpa. And too many of those ﬁrms Recent results are ominous. In December, the number that do exist are vague about their own relationships of active suppliers to the U.S. had dropped 70 percent in with suppliers. “We’re still in a situation where people three months, from 22,099 in July to 6,262 in October. are operating in the dark, having to take leaps of faith, Forty percent of those remaining were on the Watch List. place big bets, or work through middle men that they Green is the ﬁrst to admit that Panjiva is hardly a onecan’t necessarily trust completely,” said Green. stop shop. When looking for a new supplier, there is no What began as an effort to help customers ﬁnd new substitute for site visits, product sample analysis, and suppliers has, especially in the current economy, turned face-to-face discussions. into a tool to help customers keep an eye on the suppliBut without some idea of where to start, customers ers they already have. Five-thousand-mile supply chains often make decisions on which suppliers to consider that reach deep into foreign countries (and foreign busi- based on poor data, and they stay with faulty suppliers ness cultures) can be difﬁcult to manage. for the same reason. “People have had to tolerate a level “Quality, the very deﬁnition of quality, the deﬁnition of risk that comes with doing business across borders of timeliness, the deﬁnition of the perception of too late that is unnecessary,” Green said. WT or on time across cultures can differ signiﬁcantly,” said Kobus van der Wath of the Beijing Axis, a consulting Contributing editor Clay Risen writes on global trade issues from ﬁrm. “In China, even the meaning of time, as opposed to Washington, D.C. 46 WORLD TRADE FEBRUARY 2009 http://www.alibaba.com

Table of Contents Feed for the Digital Edition of World Trade - February 2009

World Trade - February 2009 Contents Taking Stock in America Confronting Corruption in Latin America Supply Chain Watch Tradewinds Where's the Goods? Where's the Money? Hope on the Horizon Managing Fleets in Turbulent Times The Impact of China's Economic Slowdown on U.S. Supply Chains The Fuel Volatile Supply Chain Getting the Most from On-the-Fly Transactions Managing Supply Chain Risk by Managing China Sourcing Capacity OECD Global Economic Outlook for 2009 'Natural' Agricultural Monopolies No More

World Trade - February 2009

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