Would You Release Your Global Supply Chain’s Health Record on Dr. Oz?
The current presidential election has been notable for many firsts, including the two-week long melee between the candidates about who is in the best physical shape to lead our nation. Unfortunately, most people don’t like going to the doctor, and many postpone the appointment for regular checkups until something is bothering them enough to look into. But seeing the doctor for an annual checkup is a smart approach for assessing personal health and proactively avoiding any potential, catastrophic health issues.
Likewise, multinational manufacturers, distributors, and retailers should regularly assess the health of global supply chain and trade activities that rely on a complex network of trading partners and service providers to ensure products are cost-effectively sourced, produced, and delivered on time to meet customer expectations. On the surface, these critical business operations may appear to be operating just fine. However, health risks might be escalating in ways that can only be caught during a regular assessment or checkup. In the case of global supply chains, these health risks can manifest as supplier social compliance issues, customs shipment delays, inaccurate landed cost calculations, regulatory lapses and a myriad of other problems.
Like your family doctor, supply chain practitioners have to examine any changes that occur within their global operations with a holistic viewpoint. There are numerous examples where small changes in one area of the supply chain can have significant and unintended consequences in another. One memorable story is a global organization that changed its product packaging with the goal of maximizing transportation capacity and reducing costs. The company failed to account, however, for the fact that many of its shipments were delivered to small ports in Africa that were not equipped to offload the newly packaged products. This resulted in a tremendous expense to the company and caused it to scrap the innovative packaging.
A healthy awareness and understanding of current supply chain technology are imperative to assuring the ongoing fitness of your global supply chain. This can be tricky with a globally-distributed, complex web of supply chain networks. This scenario typically leads to suppliers, customers, carriers, and other trading partners utilizing varied and disparate communication standards, software products, data formats and integration methodologies.
To identify many of the challenges and assess the health of your supply chain, answer these eleven questions:
1. Are compliance checks for export activity performed at the transaction level?
2. Are sourcing analyses performed to determine the best compliant sources of supply, including what-if studies?
3. Does your organization leverage free/preferential trade agreements and have the ability to integrate new ones, like TTIP?
4. Does your supply chain have visibility across all import and export activities at the order level?
5. Is the production and verification of import/export documentation automated and efficient?
6. Do you include duty and tax implications when calculating landed cost scenarios to optimize decision-making?
7. Can you ensure import/export compliance across supply chain operations, including associated trading partners?
8. Can you effortlessly manage the flow of goods in and out of manufacturing hub countries, like China?
9. Do you comply with international trade regulations and do your processes quickly adapt to new government trade regulations?
10. Do critical customs delays rarely happen when working with cross-border suppliers?
11. Can you easily determine HS numbers, with corresponding ECN and import/export license requirements, where applicable?
If you answered zero to three questions with a no, count yourself lucky that your global supply chain and trade operations are comprehensive and that there is no need to schedule a doctor’s visit.
If you responded no to between four and six questions, then you should consider an assessment for progressing your global supply chain processes to maximize performance and avoid any regulatory fines.
However, if you responded no to seven to eleven questions, you should recognize your global supply chain and trade operation is at risk and now is the time to schedule a complete physical for the health of your company.
Optimal global supply chain health, similar to your own physical health, can best be assessed by your supply chain practitioners and specialized organizations with the expertise to ask the right questions, accurately interpret the results, and recommend the right corrective actions. Waiting too long between checkups can result in costly and complex complications that hinder an organization’s ability to meet customer expectations around the globe. Be sure and schedule checkups on a regular basis to maximize global supply chain performance, reduce trade compliance risks and improve speed to market.
Gary M. Barraco is director, global product marketing at Amber Road.