The 10 Keys to Global Logistics Excellence
Supply Chain Thought Leadership Series
The 10 Keys to Global Logistics Excellence
Research Sponsored by:
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The 10 Keys to Global Logistics Excellence
Table of Contents
Global Supply Chain – You Better Be Good…………… Time and Distance……………………………..……………… Where Do the Lost Savings Go? …………………………. The 10 Capabilities of Global Logistics Leaders…….. Lack of Global Technology Enablement …..………….. Summary………………………….................................... Sponsor Perspective …………………………………………. About Supply Chain Digest……………………………...... Global Logistics Capability Diagnostic………………… . End Notes ……………………………………………………….. 1 2 3 5 13 14 16 17 18 25
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The 10 Keys to Global Logistics Excellence
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Those two factors add cost, complexity, and frequently risk. Many companies early in their offshoring evolution find that managing this new set of skills and capability requirements is extremely challenging. Often, savings expected from the global sourcing initiatives fail to materialize, at least in part. SCDigest, for example, recently profiled a consumer hardware company that illustrates this reality1. Under pressure from major big box retailers for lower prices, the company is in the process of moving much of its manufacturing capacity to China and other low cost country sources. To this point, however, the expected savings from offshoring have not materialized. The company is just starting to analyze the factors, with no clear answers yet, other than a belief that there were many “hidden” costs that were not fully anticipated. This is a scenario that we hear on a consistent basis. In fact, a recent survey from McKinsey and the U.S. Chamber of Commerce of Western companies importing product from China found that the majority of respondents believed they were behind their competitors in such areas as total landed cost savings from offshoring, on-time delivery, and other key supply chain metrics (see illustration below)2. Considering that generally companies tend to over rate their performance versus others, this data is a powerful statement of the challenges of doing global supply chain
Ferreira, J., & Prokopets, L. (2009). Does offshoring still make sense? Supply Chain Management Review, 13(1), 20-n/a. Retrieved from http://search.proquest.com/docview/221135949?accountid=12085
In 2004, Global Information Systems, Inc. began to put into motion the consideration of offshoring 3,000 jobs from here in the U.S to company locations in China, India and Brazil. These were highly compensated job positions. About half of GIS is separated into a division known as Global Services Divisions. A considerable portion of GSD’s business came from customers outsourcing their business process needs. GSD began to seek ways to cut costs and improve performance by “offshoring” certain activities in order to present the most attractive value proposition to potential customers.
Global sourcing is an important aspect to a global business, as this can significantly decrease cost as well as have access to resources, technology and expertise overseas while increasing efficiency. However, the reliance on the supplier and the quality control of the outsourcing partner is potentially a threat to the businesses reputation and ability to succeed.
In light of recent growth of domestic and foreign countries outsourcing and off shoring over seas, companies been taken advantage of the cheap labor cost for outsourcing and off shoring manufacturing. Competitive business investing in domestic and foreign manufacturing have affects every part of the business industries from design, software development, finances and logistic management, i.e., customer and sales. Nevertheless, outsourcing been praised by businesses for outcomes of cost-effectiveness, efficient, productive and strategic, but damned as malicious, because of companies’ greediness, detrimental, and brutal in the public eyes.
This strategic report of ANZ’s offshoring strategy examines the effectiveness and drivers of ANZ’s decision to move towards outsourcing internationally, analyses the impact of ANZ’s offshore programs on stakeholders, explores key risks and opportunities and evaluates the success of ANZ’s offshore system.
A supply chain is a series of integrated processes within and across a company that produce a product or service to meet the demands of a consumer (Krajewski, et. al., 2013). Every company has a specific supply chain design and this design is implemented to meet the company’s competitive priorities. Supply chain management refers to the coordination of the company’s processes with those of customers and suppliers to match the flow of services, materials, and information with customer demand. In today’s global market companies are choosing to outsource many of their processes in order to save time and money. While outsourcing and decentralizing many supply processes may seem to be more cost effective,
In business, the outsourcing involves the contracting out of a business process to another party. In this case, USTech has outsourced its product to TaiSource. As a result, USTech enjoys TaiSource’s world-class research, design, and lower manufacturing costs. USTech gets the benefits of direct sourcing in China without the hassle of coordinating it. But this behavior has some inherent limitations. USTech is afraid that TaiSource could reap its confidential information and start its new brand in Mainland China. Therefore, a global enterprise should weigh the pros and cons of its outsourcing strategy.
The second source obtained for this research paper title is, Cross-Docking: A Strategy to Enhance Supply Chain Agility. This article was written by authors, Shweta Narang Arora, Dr. SM Anas Iqbal, and Dr.G.D.Gidwani, and all three of these authors have studied and work in the field of logistics, and have done credible research for the international journal of logistics and supply chain management perspectives.
For years the U.S. has seen explosive growth in the offshoring of services to many locations around the world. Many organizations are taking advantage of these opportunities because of the benefits to them and their customers. In order to compete with other companies many businesses are finding it necessary to outsource to other countries. Offshoring has produced some economic benefits but it has also created problems such as, work performed in remote areas that fail to meet quality standards, exploitation of workers, and lower environmental standards, especially in developing countries. These
The Reshoring Initiative is focused on helping companies shift collective thinking from “offshoring is cheaper” to “local reduces the total cost of ownership.”
Many business executives believe "offshoring" to be the destiny of any company that wants to remain competitive. Labor costs can be reduced by 25-30% or more, and companies across the country are doing it. How can responsible corporate officers not consider the offshoring option for their companies? But what are the real benefits and the pitfalls of offshoring? When does it make sense to pursue outsourcing, and how can you safely take advantage of lower cost resources in other countries without risk or loss of quality?
Many complex and more diverse decisions confront supply chain managers on a regular basis: what would be more efficient to manufacture in-house or to outsource; what new channels to implement that it would benefit their customers and suppliers, or how all new technologies, platforms, and practices have to be aligned to enable real-time supply chains. Current information technology reduced outsourcing transaction costs drastically, enabled companies to an increased supervision and control over offsite work, and outsourcing services can deliver faster and more convenient, but technology alone is not the solution. If a company decides to embrace changes in business processes and business culture, those changes can support a long way toward delivering a better product for less money. Complex sphere of activities in many countries is not relevant anymore because a massive number of activities outsourced became commonplace, a new normal.
Logistics is one of the main functions within a company, and the supply chain is a complex and sometime fragile global endeavor dependent on a network of independent, yet interconnected, moving parts. It requires professional management. Supply chain professionals order the product, build it, move it, ship it, distribute it, and drive the coordination processes with marketing, sales, engineering, manufacturing, finance, and information technology. In short, they make any business effort seem effortless.
The shifts in the jeans manufacturer Levi Strauss’s global strategy could vividly demonstrate how global sourcing strategy works and affect its supply chain. At first, the company was created in the USA. As it developed and became a global company, they began to employ workers all over the world. However, in face of fierce competition, Levi Strauss started to shift its operation to lower-cost countries in the late 1980s. By the year 2003, Levi Strauss closed the last four plants in North American and ‘has become an entirely offshore producer’ (Dicken 2011 p.318). The German fashion company Hugo Boss also provides similar example. In face of high production cost, namely high labor cost in domestic market, more and more fashion retailers choose to outsource their production. Moreover, some fast
Offshoring is the practice of relocating business processes to lower cost locations outside the country of origin. This is not a new practice for companies in the United States. Moving business processes to another country to take advantages of lower operating costs and cheap labor seems like a great idea. However, the dilemma for a company is whether the benefits of offshoring outweigh the risks. This dissertation will begin by briefly reviewing the history of offshoring. Next, it will examine the various advantages and disadvantages associated with offshoring. Thirdly, it will explore the growing trends of backshoring and nearshoring in situations where