Seaports Magazine - Summer 2013 - (Page 27)
» guesT VieWPoinT
creating agile supply chain networks
in Today’s fast-changing World
Why successful companies in the future will no longer
re-evaluate their supply chain structures every three to five
years, but every three to five months
By Richard Sharpe CEO, Competitive Insights, LLC
ompanies will re-evaluate their supply chain operating
networks more frequently to respond to today’s fastchanging business environment. Supply chain operations are being stretched by the changes in off-shore
manufacturing and the aggressive positioning to enter new markets,
causing supply chains to be pulled in both directions like taffy. In
addition, companies constantly have to adapt quickly to the increasingly dynamic changes being driven by operating globally.
Traditional Approach for Defining Supply
chain operating networks
the strategic objective for supply chains has been to meet
all customers’ orders for required goods and services on time
and at the lowest possible total cost to serve. this cost should
include storage and handling, inventory carrying cost, inbound
and outbound transportation, in addition to sourcing and manufacturing costs.
this challenge of minimizing total costs while maintaining service levels can be a complicated process. It’s often addressed by
conducting an optimization study of the current operating network
and then examining future supply chain structures. Historically,
this type of analysis has been performed every three to five years to
respond to changes in the market, industry dynamics and operating
considerations. With the pace of change today, companies can no
longer assume their operating networks can consistently perform
using structures built every three to five years.
The realities of Today’s World
Let’s look at some of the operating dynamics impacting current
supply chain networks.
1. the expansion of the panama Canal will be a cost-effective
alternative for increased transportation from asia to the east
Coast of the U.S. and europe. Companies are evaluating the
cost-benefit to their usage of the panama Canal.
2. pressures being placed on today’s ports, which include shifting
trade routes, labor contracts, environmental regulations, bigger
ships, commuter traffic, changes in bridges and rail lines, channel depth and community response to required infrastructure
3. With global security threats and disruptions, such as Hurricane
Sandy, supply chain risk is another growing concern. eighty-five
percent of companies say they experienced at least one supply
chain disruption within a year (Zurich Financial Services Group
and Business Continuity Institute, 2011) along with an increasing
financial impact on businesses by 465 percent over three years
(penn State University, 2011).
4. Given the lackluster economies of developed countries, growth
in emerging markets is a high priority for many companies.
Seventy percent of the world’s incremental global growth is
coming from emerging markets (Columbia Management, 2013).
pricewaterhouseCoopers has stated that by 2020, emerging
countries will surpass developed countries (2013).
5. the growth of e-commerce will significantly impact how supply
chain networks will need to operate in the future. e-commerce
revenues in the U.S. will reach $279 billion by 2015 (Forrester
research, 2011) and will be surpassed by China at $360 billion
(Boston Consulting Group, 2012).
it is not Just about reducing costs
Historically, supply chain executives have concentrated on minimizing operating costs. However, with the realities of today’s dynamic
world, a shift will occur to also focus on the generation and protection
of corporate profits. this reality will force supply chain executives
to be proactive in balancing costs, profits and risks and for their
operating structures to be agile and not rely on plans established
every three to five years, but on a much more frequent basis.
supply chain operating networks
in the future
How are supply chains going to adapt to support the ongoing profitable performance of their companies? Supply chain executives will
mandate a cultural change and perform periodic operating structural
adjustments by balancing costs, profits, customer service levels and
risks. adjustments to their network must incorporate the realization
that one supply chain structure may not fit all products, channels or
customers. Many companies will succeed by taking advantage of Big
Data to understand current operating performance and to respond
to continually changing business conditions. By intelligently gaining insights from Big Data and continually refining their operating
networks, companies can continuously adapt to an ever-changing
world and win ongoing competitive advantage. When the stakes are
high, adapt and be proactive or go home.
Richard Sharpe is the CEO of Competitive Insights, LLC, a
Software-as-a-Service (SaaS) company focused on performance
visibility for smarter growth. Sharpe is a frequent speaker at
national gatherings of The Council of Supply Chain Management
Professionals (CSCMP) and other industry related forums.
Table of Contents for the Digital Edition of Seaports Magazine - Summer 2013
AA PA Headquarters
From the President’s Desk
Sourcing Near and Far
Partnering at Home to Encourage Trade Growth
Cruise Info on the Go
AA PA Gathers in D.C. for Spring Conference
Washington Poised to be Leader in Global Economy
Creating Agile Supply Chain Networks in Today’s Fast-Changing World
TTI: Costs of Delaying Channel Maintenance are High
Improving Safety and Efficiency through PORTS®
Seaports are at the Forefront of Export Growth
ACE E-Manifest Enhances Sea and Rail Security
Port Metro Vancouver Smart Fleet Trucking Strategy to Drive Efficiency, Reliability
The Buenaventura Container Terminal Invests $3.5 Million in Cargo Verification System
RFID Tags Promote Growth, Efficiency at GPA
Index of Advertisers
Seaports Magazine - Summer 2013