3 Vital Mistakes That Impede Global Supply Chain Success

Posted by Martin Verwijmeren on Dec 4, 2018 3:42:39 PM

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Growth, global expansion, and building complex networks of partnerships are a boon to businesses, but they also come at a price. Greater complexity invites greater risk and room for error, and if companies aren’t careful, they may easily enter into unwieldy processes and systems that are ineffective and inefficient.

Information is at the heart of all this complexity; as a company grows and expands, so does the sheer volume of products, inventory, orders, SLAs, rules and regulations, and invoices – to name a few – they must contend with. And it’s not just static information; running an efficient operation demands more than an up-to-date repository. To compound the matter, the data involved is in constant flux. Rules change, invoices don’t always align, and the roster of carriers you should rely on will regularly alter if you want to optimize your operations.

As such, mistakes tend to arise in those cracks where companies don’t fully understand or leverage the vast information they have at their disposal or don’t continue building their network. We take a deeper dive into some of these common oversights below.

1. Expanding Without Centralizing Information Systems

When companies grow fast, for instance, via acquisitions, they will almost inevitably encounter various new technologies and products to integrate into their arsenal. Similarly, each new company will have its own ERP system. When these new conglomerates don’t connect the disparate elements of their mergers into one centralized platform, the splintered channels leave them vulnerable to great risk.

It also puts these organizations at a disadvantage by limiting their ability to support product flows in all their complexities, both inbound and outbound, as well as stock and reverse logistics, and also monetary flows – like maintaining the proper budget, invoicing, rate matching, and compensating service providers. Such lack of proper management carries serious consequences, as you lose your competitive grip in areas that derive the greatest value.

Lack of visibility also limits a company’s future growth and expansion and ability to compete on a global scale. Modern customer demand and e-commerce fulfillment takes innovative technology and keen insight to anticipate problems. It also requires a unified platform to collaborate with networks, and the flexibility to expand that network in opportune moments. As there is no single truth or perfect system for meeting these demands, the ideal approach is one that inherently embraces the dynamism, agility, and flexibility the task requires.

2. Remaining in the Dark About Hidden Costs in the Supply Chain

Though transportation spend can be a primary cost driver, many companies are in the dark about these expenditures. Inbound materials, transfers, returns, economic conditions, and many other variables tend to fall outside the scope of visibility, and cannot, therefore, be effectively managed.

Finance teams continue to depend on an ERP or general ledger system to compare contracts and invoices for accuracy. But for the modern needs of a global company, the approach leaves much to be desired and does little to check the actual execution against the agreed service level. Businesses with outdated practices are likelier to incur inflated service fees and carrier charges and be woefully unaware of inefficient shipping methods.

Mistakes-global-supply-chain-body-imageWithout proper visibility and automated rate- and invoice-matching processes in place, companies unnecessarily bleed revenue on higher freight spend, poor carrier selection, and unfavorable subcontractor negotiations. Each case may seem minor on its own, but they quickly add up. In the grand scheme of things, wasteful decisions on granular levels invariably affect performance and, as a result, reputation and customer satisfaction.

3. Delaying System Upgrades Due to Misguided Fears

As companies evolve, so too should the system they use to facilitate their expansion. Past implementations are often unfit for new demands and complexities. Many companies handle significant aspects of their operations, like the carrier selection process, spot quoting, rate management, and pre- and post-calculations manually. The outdated approach is not only time-consuming for shippers and LSPs, but also not sustainable. It unnecessarily complicates invoice matching and makes it heavily prone to human error.

While cobbling together disparate parts does not make a stronger whole, some enterprises are remiss to dispose of their legacy approach, especially regarding bespoke software. This is problematic for many reasons, not least of which is a lack of visibility and access to vital information. Organically grown IT architectures are rarely well-documented and therefore difficult to maintain, stifling a company’s ability to grow after acquisition. This reluctance to disrupt the status quo stems from a misguided fear that their system will be superseded and puts the business at a disadvantage.

It’s possible to implement innovative technology that isn’t invasive to preexisting IT systems. Platforms exist that allow you to simply improve upon your current landscape by integrating disparate components. They also offer automation, another key feature that is invaluable to companies that want to compete on a global scale. Moving toward these solutions saves revenue and frees businesses up to allocate precious time and efforts on more value-driven processes.

 

If failing to properly leverage vast amounts of information and growing networks are at the heart of these mistakes, then implementing a control tower with end-to-end visibility seems to be the natural solution. But what does that even mean? “Control tower” and “visibility” have become overused buzzwords with diluted meaning. For instance, many businesses believe they have visibility because they track certain data or that they have a control tower in place, even if it only extends to one area of their operations. Unfortunately, this antiquated and siloed approach can no longer apply if global supply chain success is what you’re after.

The tools organizations use to achieve domestic success are typically insufficient to support competitive, international growth. If any of the paint points, missteps, or hesitations listed above sound familiar, perform an operations audit. Does your team have granular visibility into every milestone within the supply chain? Can they take real-time action directly within the control tower? Does the control tower continuously and automatically optimize every order? This is just the starting point, but a necessary one. Those who enter the global playing field are savvy at building networks. However, businesses that implement the right tools to manage the data and collaboration which necessarily accompany those networks, conquer the market.

Topics: Multi-Enterprise Business Networks, Control Tower, Supply Chain Optimization, Supply Chain Collaboration

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