I think senior level executives are finally realizing the impact that internationalization has had on their businesses. It’s hard to imagine, but world merchandize trade has nearly tripled in the past decade. That fact astounds even me. This explosive growth is obviously good news for most companies. It’s an opportunity to grow top-line revenue by penetrating new markets, as well as reduce costs by buying from low-cost suppliers.
Of course, none of this is news to the typical executive. Large, and even midsize, companies, have been taking advantage of these opportunities for a while. What many executives are just now coming to grips with is the means by which they’ve capitalized on the internationalization opportunity. In a lot of cases, it’s been a land grab approach. “Let’s do whatever it takes to exploit revenue growth and cost-saving opportunities now; we’ll get efficient later.”
Well, later has finally arrived. Chief financial officers and chief supply chain officers are now wondering why their international supply chain cost structures are so much higher and operational performance levels are so much lower than those of their domestic supply chains. They’re trying to figure out how to bridge this international vs. domestic supply chain performance gap.
How will companies address these challenges?
Supply chain centers of excellence are becoming more commonplace today, with an emphasis on reducing costs and driving greater operational performance. By taking the time to assess the ins-and-outs of their international supply chains, many companies are finding some low hanging fruit, in the form of duty savings through preferential trade programs, reductions in inventories through better visibility and collaboration with extended trading partners, and reduction in international transportation costs through better management of carriers and 3PLs.
Jim Preuninger, CEO, Amber Road