Global Supply Chain Decisions Made At Local Level

June 1, 2007
Just 35% of respondents reported their companies' supply chains are managed globally.

A majority of supply chain executives (60%) report that decisions are made on a regional or local basis. "These results suggest that some multinational companies operate a series of what might best be described as multi-domestic rather than global supply chains," said Yone Dewberry, managing director at Centrx. Centrex, BDP International's consulting unit, and St. Joseph University of Philadelphia conducted the study.

"The reasons for this vary, but the unrelenting pressure to achieve per-unit cost reductions, in tandem with the emergence of true global data visibility, must hasten supply chain integration to accommodate the exigencies of international trade," said Dewberry. Just 35% of respondents reported their companies' supply chains are managed globally.

On-time delivery is the single most pressing issue facing supply chains as cited by 64% of all respondents (87% European; 55% North American). However 43% of all respondents reported shorter lead times -- which they have achieved through warehouse management, ERP and TMS systems. Companies are putting metrics in place to improve this area, with 80% indicating they can measure on-time delivery to customers and 69% measuring on-time delivery from vendors. In addition, they collaborate on shipment visibility with carriers (82%), suppliers (42%) and customers (20%).

Other frequently cited supply chain issues were total landed costs and logistic costs, each noted by 39% of respondents.

To counter issues of global supply chains, 46% of the companies report increasing inventory levels as well as sourcing from multiple countries (43%).

Furthermore, companies are finding they need to increase investment in trade compliance and security. "This intensified focus on complex regulatory issues reflects the diverse cultures and business climates of countries in which trade has expanded remarkably in recent years," said Michael Ford, BDP's vice president of regulatory compliance and quality. "It also reflects the need for more and better information about international shipments in today's hyper-security-conscious environment." Most respondents said regulatory compliance is even more costly than supply chain visibility or RFID technology.

The study was conducted using an online survey distributed to 220 executives with global supply chain responsibilities. Approximately two-thirds of the participants' companies are headquartered in North America, 20% in Europe, and 14% in Asia and the Middle East/Gulf Region. Nearly half of the companies represented have annual revenues in excess of $10 billion, and another 20% have revenues of more than $2.5 billion.

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