Jun 21, 2008

Globalization and Supply Chains

Are the chains chaining us?

The spreading manufacturing base has brought into the dictionaries a new word - Globalization. Well before you think I'm going to rant and rave about something you already know, check this out. This article here gives us a few startling facts from a global study. Here's a sample.chains

Only 4% of firms fully achieve the benefits of globalization.

More than 50% admit they do not have the internal competency required to adequately manage their external partners.

More than 40% of companies saw no reduction in management costs or actually saw them rise.

And we were fooled into thinking that Globalization was good for ALL of us. Well it is - in a few ways. But Globalization needs planning. Only the very biggest of companies have an operational strategy in place. The smaller companies get lost in the rat race. The good news is that according to this article from Forbes, over 40% of the companies they had surveyed apparently said they had in place "global supply-chain centers of excellence". This in particular is a good thing if it is true.

Another aspect companies need to take into consideration would be the cultural impact of the different markets that globalization takes them into. For example, a company in China has an entire outsourcing city built for the clothing industry. Many companies also consider India and China as similar. Well they're not - as is the case with all sourcing locations. No two locations are completely the same. So hopefully there is some thought going into these "global supply-chain centers of excellence" towards adaptive learning (in terms of culture-specific conditions).

I think this will be a major differentiator in the business for the years to come. Companies that can adapt the quickest will be the most successful. The stage is set. Let the chains of culture break open and let the WAR begin.

Jun 21, 2008

Globalization and Supply Chains

Are the chains chaining us?

The spreading manufacturing base has brought into the dictionaries a new word - Globalization. Well before you think I'm going to rant and rave about something you already know, check this out. This article here gives us a few startling facts from a global study. Here's a sample.chains

Only 4% of firms fully achieve the benefits of globalization.

More than 50% admit they do not have the internal competency required to adequately manage their external partners.

More than 40% of companies saw no reduction in management costs or actually saw them rise.

And we were fooled into thinking that Globalization was good for ALL of us. Well it is - in a few ways. But Globalization needs planning. Only the very biggest of companies have an operational strategy in place. The smaller companies get lost in the rat race. The good news is that according to this article from Forbes, over 40% of the companies they had surveyed apparently said they had in place "global supply-chain centers of excellence". This in particular is a good thing if it is true.

Another aspect companies need to take into consideration would be the cultural impact of the different markets that globalization takes them into. For example, a company in China has an entire outsourcing city built for the clothing industry. Many companies also consider India and China as similar. Well they're not - as is the case with all sourcing locations. No two locations are completely the same. So hopefully there is some thought going into these "global supply-chain centers of excellence" towards adaptive learning (in terms of culture-specific conditions).

I think this will be a major differentiator in the business for the years to come. Companies that can adapt the quickest will be the most successful. The stage is set. Let the chains of culture break open and let the WAR begin.