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Integrating the Global Supply Chain

The speed at which a company anticipates and adapts to market forces is a critical source of competitive advantage for global manufacturers. Customers today are demanding more—more information, faster deliv­ery, and superior pre- and post-sales service. They expect their suppliers to be flexible enough to respond to their needs on multiple dimensions. A company's ability to seamlessly integrate all of its supply chain ele­ments—from departments and business units to suppliers and customers on a global scale—will determine success in the 21st century, as de­picted in figure 7.

Market leaders have already squeezed excess costs out of their sup­ply chains by replacing legacy systems with enterprise-wide planning (ERP) systems. Growth-minded executives are now shifting their fo­cus from cost cutting to tightening the links with suppliers and cus­tomers. They are partnering with their customers early in the product development process to ensure that product and service requirements are met. The leaders are also leveraging Internet technologies and add­ing functionality to ERP applications to capture and integrate key cus­tomer information into strategic planning. Internet-based technologies are providing a multitude of new, lower cost options for integrating with supply chain partners. These options range from loosely linked virtual networks to tightly coupled, highly interdependent channels.

Forging alliances with domestic and overseas partners, as well as outsourcing, are also strategies to improve supply chain integration. More and more, manufacturers are outsourcing logistics and support services, such as information services management and software de­velopment, in order to focus on their core competencies. Even manu­facturers in Europe, which have traditionally been reluctant to out­source, are increasing their activities in these areas. Market leaders are focusing on core strengths and arming themselves with the tools that facilitate a seamless flow of information throughout the extended en­terprise. Refer to figure 8 for an overview and ranking of the key strat­egies that will be used to improve supply chain performance in the next three years.

Aligning the Organization to Compete in the 21st Century

The imperatives for the 21st century—globalization, product innova­tion, and supply chain integration—all require a fundamental shift in executive mindsets. Operating successfully on a global scale requires companies to reevaluate their traditional strategies, from sourcing and production to distribution and marketing and customer service. It re­quires change—change that encompasses the entire organization, from business process capabilities to people.

 

More than two-thirds of all manufacturers in our study have under­taken major organizational initiatives in the past three years. Past ef­forts to restructure, streamline, and downsize are now giving way to a focus on changing corporate culture that impedes fast response, as de­picted in figure 9.

 

In short, the name of the game is speed and flexibility. Leading executives are preparing their organizations to rapidly respond to in­creasingly unpredictable changes in customer demands and market dynamics. Although the processes targeted for reengineering vary by region—North America (information systems), Europe (business plan­ning and logistics management), Asia-Pacific (finance and accounting and customer service) and Latin America (logistics)—the focus is clearly on improving flexibility and customer responsiveness.

 

The study confirms that significant competitive advantage can be gained by investing in people. It provides strong evidence that invest­ment in knowledge assets underlies the superior performance of the market leaders. Market leaders have reengineered their human resource functions and are now investing in work force management programs that promote high-performance work teams, improve cross-functional training and facilitate worker empowerment—ultimately creating a culture that thrives on learning and change, as depicted in figure 10.

SUMMARY

In conclusion, the Vision in Manufacturing study finds that market lead­ers are seeking competitive advantage on multiple levels. They are es­tablishing early mover advantage and putting their stake in the ground in target markets around the world. They are shoring up their arsenal of capabilities and investing in technology, best practices, and people. The leaders are recasting their enterprises to improve new product develop­ment, create a customer-centric orientation, tighten global supply chain links, and harness the knowledge assets of their organizations.

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 11


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