The 10 Keys to Global Logistics Excellence

The constant population grow, globalization and economic growth makes logistics a primary focus for business, especially big ones. Thomas Friedman said: “supply chaining” is fundamental as barriers to trade and interdependence are reduced across the globe.” That pretty much means that every day proper logistics are more fundamental to business to succeed and prosper. Fundamental changes across many areas of business, politics and the supply chain have “flattened” the world and led to an explosion of trade and global sourcing. The main issue about this new global challenges is that they add distance and time to the supply chain, those pretty much add cost, risk and complexity.

Many companies believe that they are not outsourcing properly compared to the competition, especially because of the lost savings. Many companies have troubles achieving their saving goals because of challenges divided in two areas mainly: * The potential savings were simply over-estimated: When calculating the expected cost of globally sourced products, companies frequently miscalculate or fail to consider a number of cost elements. * The company cannot yet execute a global supply chain well: In this situation, the company has in fact well-estimated a realistic total supply chain cost, but much of the savings slips away through problems in execution. Some of the specific areas where we frequently see challenges in global logistics execution include: Sub-optimal sourcing results, high inventories and lost sales, high costs for expedited freight, high levels of inbound lead-time 
variability between others.

Global logistics leaders are getting closer to the level of capabilities that lead to operational excellence, and which provide strong competitive advantage. The ten capabilities of global logistics leaders

1. Total Delivers Cost Management
Ability to analyse and predict the total supply chain costs from the source of supply to its final point of distribution. Which includes the ability to accurately calculate all the applicable duty, tariffs and other customs-related costs while factoring in any preferential trade agreements.

2. Global Logistics Process Automation
Logistics personnel commonly spend too much time on low value activities needed to get the freight to move, and not enough time on developing better plans and approaches to drive continuous improvement. The ultimate goal in global logistics execution: “one touch” information flow for all activities.

3. End-to-End Visibility
Event management/notification plays a key role, since the amount of data generated means that the only manageable approach is to have systems that proactively identify exceptions to the plan. Visibility systems should make it easy to find and drill down on information from many points of reference. Visibility systems should also facilitate the development of “role specific” system configurations to meet the information needs of managers in transportation, purchasing, inventory management, and other areas of the business. By deploying a robust, real-time visibility system, a company is able to operate a totally outsourced global supply chain with a relatively small corporate staff, and manage performance as if the functions were all handled internally. Global logistics execution is complex – it requires an advanced “traffic control” capability in the form of real- time visibility to avoid congestion and ensure the smooth flow of goods.

4. Supplier Portals and ASN Capabilities
Most companies today are not well integrated with overseas suppliers, and many still receive information about what is on incoming shipments via fax or other manual methods. Problems with the accuracy of that information means that not until the container is actually opened can what was shipped be completely determined. Global logistic leaders reduce the time and cost of inbound processing by enabling their suppliers to produce ASNs and properly label the goods. They also minimize inventory and stocks outs through better visibility to actual order status at offshore production sites.

5. Total product Identification and Regulatory Compliance Not managing these requirements well leads to a series of real and potential problems: Fines or other penalties for a failure to comply, delays in the movement of goods inbound and outbound and risk to the company’s brands should any problem with supply chain security emerge. Global logistics leaders are taking an increasingly aggressive approach to security, both to improve the flow of goods in the short term as well as protecting themselves from the impact of external threats and potential problems.

6. Dynamic Routing
Global logistics leaders are starting to develop more dynamic routing capabilities that will allow them to “rate shop” for the most effective combination of carriers, routes and third parties such as freight forwarders that will meet delivery constraints, in a fashion more consistent with how domestic transportation is managed.

7. Variability Management
Global logistics leaders use supply chain data and performance management systems to better understand both the level of supply variability and the root causes of that flux. They work hard to shrink total delivery lead times and the range of those lead time windows that are used by inventory planners to determine safety stock levels and purchase order timing. Variability is usually the week point of long supply chains.

8. Integrated International and Domestic Workflow
Until very recently, the availability of appropriate software has also been lacking. Transportation Management System (TMS) suppliers have had plenty to invest in just to improve their capabilities for domestic transportation management. Logistics leaders are deploying technology that enables them to have a single “work space” that contains both functionality and data across the full international planning and execution lifecycle. 9. Integrated Planning and Execution Platform

Information that decision-makers need tends to be in multiple places, and is hard to access. Integrated workspace is anchored by the operational skill to secure and maintain the information backbone with the diverse data structures that are needed by the various global logistics processes. Data becomes real-time for scheduling, in-transit visibility and performance measures of carriers. Transportation planners have a full picture of the total delivered costs of the integrated domestic and international legs.

10. Financial Supply Chain Management
In global logistics the “financial supply chain” can be much more directly linked with the physical and information flows. Letters of Credit, financial settlement processes, and other financial related capabilities must often be mastered to expand the network of potential trading partners on both the buy and sell sides, as well as to ensure the timely flow of goods is not interrupted by issues with financial flows and related documentation. A more advanced area of Financial Supply Chain Management relates to development of a “tax efficient supply chain.” Even sophisticated companies that have more global supply chain experience and were early adopters have only automated a small fraction of their global trade operations.

Mainly the article is taking us from point to point to the 10 point the author consider of special importance for every supply chain for big companies that are facing the new grows of globalization. Even though not all of them are appropriate for every company situation, you have to focus in this if you want to find opportunity areas in big companies. the seeming potential of substantial cost reductions from moving to low cost country sourcing alone seemed attractive enough that many companies simply assumed the benefits could be achieved through the decisions alone. But as we saw in the paper, there are many decisions and problems related to the new world logistics that simply taking the decision to outsource.

Bibliography

The 10 Keys to Global Logistics Excellence. Supply Chain Digest. Red Prairie. Consulted January 16, 2013. <http://www.scdigest.com/assets/Reps/SCDigest_Global_Logistics_Excellence.pdf>