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HOW TO NAVIGATE INTERNATIONAL EXPANSION DESPITE HEADWINDS

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Archives, Global Site Selection, Global Trade Daily, Site Selection

HOW TO NAVIGATE INTERNATIONAL EXPANSION DESPITE HEADWINDS

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The global pandemic has reminded us all of how inter-connected the world is. As countries emerge from the global health crisis, and economies show steady signs of recovery, companies with global exposure are increasingly optimistic about opportunities outside their home markets, despite a number of headwinds. 

Expanding a business beyond one’s domestic market requires long-term planning, utilization of complex global supply chains, managing risk exposures and being nimble enough to flexibly respond to changing market conditions.

The results of J.P. Morgan’s 2021 Business Leaders Outlook (BLO) survey highlight how leaders are adjusting to this new environment—and finding opportunities to grow globally despite the current challenges. 

In the survey, most midsize U.S. businesses are optimistic, even as they plan for continued unpredictability. Having learned in 2020 how to manage well remotely and deal with disrupted supply chains, U.S. business leaders are staying the course; global expansion plans remain at the same levels from pre-pandemic years. Most forecasts continued steady sales growth outside their home market. This indicates the confidence they have gained from pivoting throughout the year, including accelerating technology adoption, increased digitization of core processes and managing global ventures with much less in-person travel.

Ultimately, the rollouts of COVID-19 vaccines continue to be a core component impacting the global growth outlook for businesses. In addition, geopolitical events, new trade and investment policies and continuously changing business regulations will continue to challenge business leaders seeking sustained profitable international growth. 

Why Expand Globally in This Climate?

With issues such as labor shortages, severe bottlenecks in global supply chains and evolving customer expectations, it can be discouraging to consider international expansion at this time. However, according to the survey, executives remain optimistic. Those surveyed cited access to new customers/markets (72%), better opportunities to serve domestic customers with global operations (37%) and access to suppliers/materials (34%) as key reasons for expansion.

The pandemic will not deglobalize the business landscape. Business leaders have tried-and-tested remote workforces, seen governments become more flexible with business applications, and they have been leveraging new approaches and technologies to keep their business moving forward. In short, they have experience under their belt, have a long-term vision and see opportunity in international expansion—and are not letting the pandemic stand in the way. After all, adapting is what business is all about—and recognizing that extraordinary environments demand tailored strategies based on an accurate reading of market opportunities.

The World Has Changed: 3 Key Strategies for Navigating International Expansion

Developing Strategic Partnerships & Understanding Trade Policy

Trade barriers and tariffs were cited as the top international business concern for globally-active middle market companies in the 2021 Business Leaders Outlook survey. Complying with local regulations and the intricate differences in policy between nations can be overwhelming and time intensive. Any little error may lead to wasted time or resources, complications and added expenses. Developing strategic partnerships with businesses, banks and vendors—those who already have the local intel—goes a long way in effective global expansion.

The many cultural nuances and varying consumer preferences by country also benefit from local expertise. Furthermore, the insight around local competition and market opportunities is more easily obtained through these kinds of partnerships, especially when acting quickly is critical to success.

Increasing global political changes in recent years that are challenging the status quo require extra diligence in this environment. Additionally, the economic reforms under way in many developing countries are impacting both the volume and direction of foreign investment. We especially see this in China, India, Southeast Asia, Latin America and parts of Europe. For businesses navigating expansion in countries experiencing political and economic reform, it’s important to consider the impact these governments will have on fiscal, monetary, regulatory and foreign policy—and how significantly or quickly this may affect foreign investment opportunities.

As a positive example for businesses in North America, the United States-Mexico-Canada Agreement (USMCA) brought timely improvements to trade relationships in today’s volatile landscape. The USMCA has the potential to offer more certainty and a stronger safety net for trade and investment by promoting fairer trade and robust economic growth.

Investing in Technology & Digitization

Trade finance is the nucleus of the day-to-day global economy. It supports every stage of the global supply chain and ensures that buyers receive their goods and that sellers receive their payments. Yet the world faces a massive and persistent trade finance gap. The World Trade Organization estimated between 80% to 90% of global trade relies on trade finance, yet there was a $1.5 trillion gap between the market demand and supply before the pandemic. That gap has only increased since 2020.

COVID-19 accelerated a transformative period for trade finance, primarily through digitization. The global challenge with trade finance centers around inflexible business models, paper-based and tedious processes, regulatory constraints and outdated legacy systems. 

Technology can help bring down operational costs while also increasing efficiencies, encouraging new revenue opportunities, optimizing resources, enhancing the recruiting process … the list goes on. Businesses are investing heavily in digital transformation, with cloud-enabled technology becoming the new standard of operation. This brings immense advantages, including the immediate ability to access data and machine learning (ML) with virtually unlimited computing power, in a split second. The value of AI and ML can clearly be seen across business functions including trading, risk management, marketing and operations. It enhances outcomes by streamlining processes and increasing overall efficiency. 

Additionally, blockchain—a highly secure, decentralized digital record of transactions—offers a multitude of international trade-related applications, bringing high security, automation and traceability to important finance functions. 

Streamlining Supply Chains 

More than ever, managing global supply chains has become a critical skill for companies expanding internationally. Surging demand with various bottlenecks has disrupted global goods transportation and logistics. Gaining visibility over cross-border supply chains, while meeting profitability goals and evolving needs of customers, is an ongoing obstacle for most business leaders. Streamlining the global supply chain and focusing on visibility can lead to increased efficiencies throughout the entire production/solution life cycle. It entails optimizing processes by improving the accuracy of demand forecasts and schedules, and improving production lines to reduce costs. This can help make businesses more agile and profitable. Secure data integration is also critical, so information can be shared across channels swiftly and seamlessly.

While concerns around tariffs and trade barriers again led the list of business leaders’ global concerns in the 2021 survey, managing global supply chains overtook currency risk for the second spot. Instead of focusing on the next crisis-scenario—whether it be a pandemic, natural disaster or cyberattack—business leaders must continue their focus on making global supply chains more resilient for future disruptions.

The Road Ahead: Global Outlook Optimistic for Well-Prepared Business Leaders 

The overall global business outlook is optimistic, with 66% of leaders in the 2021 survey expecting their international sales to increase in the next five years. U.S. midsized, multinational businesses know that sustained growth requires access to new customers in new markets. That won’t change. However, today’s increasingly complex landscape will require greater investments in digitized products and processes, more customized local solutions in widely different international markets, and leveraging the expertise of reliable partners to understand the nuances of operating in challenging foreign markets. At the top of the list is having effective market entry and supply chain strategies, supported by a strong understanding of trade and investment policy to help shape your global market expansion.

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Morgan McGrath is head of International Banking at J.P. Morgan Commercial Banking, where he is responsible for the global relationship management of clients headquartered in the U.S. and overseas. Throughout his career, Mr. McGrath has worked with a wide range of companies, financial institutions and governments in Europe, the Americas and Asia Pacific.

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Archives, Global Trade Daily, News, Special Reports

How to Attract Millennial and Generation Z Employees with Eco-Friendly Initiatives

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By 2030, millennials and Generation Z (Gen Z) will be the central working force in society.

According to the 2018 Deloitte Millennials study, three-quarters of millennials and Gen Z respondents indicated they consider a company’s social and environmental commitments in deciding where to work. Two-thirds even said they would not accept a job that didn’t have a strong sustainability program. To make your business more appealing to younger generations of workers, you’ll want to think about going green.

Sustainability doesn’t always mean reusable water bottles and recycling, though that’s definitely part of building a sustainable business. Sustainability can also mean eliminating paper processes, streamlining workflows, and updating your business operations to create less waste. In these days of rapidly-changing work environments and shifting priorities, sustainability is something to keep at the forefront of your business plans.

Find your sources of waste

What’s the first thing you think of when it comes to eliminating eco-unfriendliness in business? My mind went right to the fact that companies have largely moved to paper-free internal communications. There are more opportunities to go green than just shifting to instant messaging and email communications, though! Even allowing for employees to work remotely is a sustainable practice that your company might already be participating in.

In order to identify more ways to be more eco-friendly, think about where waste comes from in your business. Is there any low-hanging-fruit like removing paper plates from the lunch room or offering composting bins around the office? Acting on the more apparently unsustainable elements of your business gives you a tangible place to start, and might just inspire more sustainability across the board.

Once you’ve tackled those more apparent waste generators, consider which departments might use the most paper or the most manual processes. Is there a way to streamline those departments and create less waste? Now is the time to get creative and re-think antiquated processes!

Re-imagine workflows and processes

This is where sustainability meets creativity. Changing up processes might seem counterintuitive. Doesn’t re-training require paperwork? Actually, it doesn’t take much to make it eco-friendly when you have the right partners and systems in place. Updating antiquated systems is an underutilized opportunity for increased sustainability!

For example, many unsustainable workflows exist in accounts payable (AP) departments. From sending physical checks to keeping paper records, there are a lot of manual processes (not to mention a lot of paper) going on in the back office.

If you’re hoping to attract millennial or Gen Z employees to your AP team, you might want to look into AP automation. You can automate the entire payment workflow, address the growing fraud and security risks associated with ACH payments, and ensure the resiliency of payment workflows all without using a shred of paper.

If it’s possible to make your AP department sustainable, it’s possible to find eco-friendly opportunities in pretty much any department! Once you’ve refined your processes and streamlined previously wasteful departments, it’s time to share.

Be public about your sustainability efforts

There’s nothing wrong with a bit of bragging about sustainability efforts. It might inspire more eco-friendly ideas from current employees, consumers respond well to companies that are environmentally friendly, and sustainability messaging can be a valuable recruitment tool.

In 2021 the Journal of Cleaner Production found that younger people are willing to accept a lower salary to work for sustainable companies. This isn’t to say that implementing sustainable processes and initiatives is the key to lowering overall company spend, but it is incontrovertible proof that sustainability really matters.

Going green isn’t only important to potential recruits. According to a 2020 study by IBM, “Nearly eight in 10 respondents indicate sustainability is important for them. And for those who say it is very/extremely important, over 70 percent would pay a premium of 35 percent, on average, for brands that are sustainable and environmentally responsible.”

Obviously, you don’t want to print a load of paper flyers or hire a plane to skywrite about your sustainable initiatives, but email blasts and website posts are paper-free and effective ways to share what you’ve done to become more eco-friendly. You might even consider forming a “green committee” to keep the sustainable ideas flowing.

Sustainability efforts can help you recruit employees, save money, and even increase your bottom line. Whether that means composting leftovers or automating entire departments, sustainability is worth keeping at the forefront of your mind and your business plan.

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Sarah Thibeau is the Digital Media Specialist at Nvoicepay, a FLEETCOR company.

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Archives, Global Logistics, Global Trade Daily, Warehousing

Supply Chain Executives Implementing Warehouse Visibility Solutions

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The last 18 months have truly tested the supply chain. Between a global pandemic, shipping bottlenecks, and surprising inclement weather, the impacts were felt across various industries. There’s still a shortage of microchips and other consumer goods due to the events of 2020, even as we move on from many pandemic-era consumer needs with items like sporting goods and furniture. Weather, gas line disruptions, and cyber-attacks are now affecting the production of new items, from plastics to chicken wings and meat supplies, and even cheese. Whether it’s the result of a singular event or that of multiple mini disruptors, the supply chain has been struggling to keep up with demand, which makes disruption the new normal. 

Even as experts attempt to navigate ongoing disruption, many supply chains today still have some components or areas that remain disconnected, which ultimately hinders the ability of all businesses involved (from the DC to the 3PL) to understand operations completely. To stay competitive, modern supply chain managing experts are focusing on better visibility and their use of data inside the warehouse, looking to provide better continuous improvement options to their teams as products go in and out of the warehouse – managing disruption before it becomes a transportation issue. Companies that have remained competitive during the last 18 months are turning to warehouse visibility to provide warehouse operators with valuable insights needed to turn analytics data into real-time, actionable process improvements. 

Many leading supply chain experts have found that continuous improvement processes need just that – their own continuous improvement. To that point, a recent industry survey revealed where inefficiencies are taking place within the warehouse, and where a lack of real-time, easy-to-use analytics data is still preventing operators from making integral, real-time decisions.  

Survey Results for Improved Insights 

In March 2021, Merit Mile commissioned an online survey that was presented to approximately 2,500 supply chain and warehouse executives. The survey revealed that over 75% of executives are seeing an increase in efficiency from implementing warehouse visibility technologies, with a quarter seeing between a 10% – 15% increase, and more than half seeing between a 5% – 10% increase.  

In addition, a third said they’re seeing a 10% – 15% increase in operational savings and another half said they’re experiencing a 5% – 10% operational cost savings as a result of warehouse visibility technologies that were implemented.  

Finally, nearly 70% of organizations said they need better visibility into the procurement functions of their warehouse, followed by production and labor (65%), and fulfillment (37%).   

Supply chain systems globally are feeling pressure of various types, with everything from constrained transportation systems, labor workforce challenges and supplier material shortages. What this survey shows is that thousands of supply chain executives realize that the warehouse is central to the entire supply chain operation. Incorporating better visibility regarding what data means to their operation will enable quicker decisions in real-time.  

Transitioning to New Supply Chain Strategies  

Using the data gathered, warehouse executives can now view what they need to implement and improve in order to create the best visibility for warehouse operators. With it now being made clear that almost all supply chain systems need a makeover, most companies have already begun transitioning to new and improved strategies.   

Over the next 12 – 24 months, 72% of businesses said they will be focused on aligning traditional supply chain strategies with both digital and analytics solutions. Sixty-four percent said they’ll be focused on defining an advanced supply chain systems strategy. Another 34% said their focus will be on executions and refinement of newly installed systems and solutions.  

Half of all companies polled said they plan to implement warehouse visibility technologies over the next 12 months. A third of those companies polled said they will be considering the implementation of such systems. These steps are just the first of many to come in order to perfect the supply chain systems and reduce the visibility issues of the supply chain.  

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Sarah Caro has nearly 15 years of experience in the public relations industry working preliminarily in the agency setting. Her expertise lies in the B2B realm, garnering client media placements in top-tier outlets including Forbes, The New York Times and Bloomberg, in addition to top industry-specific outlets. To date, she has worked within the mining and manufacturing, supply chain, automotive, healthcare, technology and non-profit sectors. As Senior Account Executive for Merit Mile, Sarah regularly gets client stories into the hands of the media, making them the go-to source for news stories.   

Archives, Global Logistics, Global Trade Daily, News, Ocean Ports

Secrecy of ILWU, PMA Contract Talks Blasted

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Los Angeles, CA – The Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU) should “part the curtain of secrecy surrounding their contract negotiations,” according to Los Angeles Chamber of Commerce President and CEO Gary Toebben.

The deadline for reaching agreement on a new labor contract governing America’s 29 West Coast ports passed at 5 p.m. PST this afternoon “and the scant amount of insight or information on the future status of a new contract worries many,” he said.

Toebben made his comments in an editorial for the Los Angeles Daily News published on the paper’s website  just a few hours before the contract deadline expired.

The last public statement on the progress of the talks was made on June 4 when the negotiations were described as “positive” by the leadership of both the PMA and the ILWU.

“About 12.5 percent of the US GDP currently flows through the ports, and 9.2 million jobs across America — including 3.7 million in California alone — depend on the efficient flow of goods on and off the docks,” he wrote.

“Industries spanning agriculture to manufacturing, from autos to electronics, and across all sectors of retail are currently scampering to implement contingency plans given that neither a new contract nor a contract extension has been announced, he said.”

Both the PMA, which represents the terminal operators and shipping companies, and the ILWU, which represents the 20,000 dock workers at the ports in California, Oregon and Washington, he said “are staying tight-lipped about the talks that have been ongoing for two months.”

It has been widely reported, Toebben added, “that rising health care costs are a major sticking point, given that the longshoremen, retirees and their families enjoy one of the most envied health care plans available in America today, with unlimited coverage at little or no cost.”

Also, he said, “it’s also understood that West Coast ports have been leaking market share for the past decade or more, as competing ports on America’s East and Gulf coasts have been lowering costs, improving performance and building infrastructure to attract greater shipping volumes. Global manufacturing patterns too are shifting, putting more origination points closer to East and Gulf coast destinations.”

Decrying the loss of cargo marketshare, Toebben said, “Suddenly, the West Coast is not the monopoly it used to be — and current lack of an agreement or extension only hastens shippers’ efforts to further diversify their transportation networks. In Southern California, the information ‘blackout’ by PMA and ILWU only fuels the worries of employees, families, politicians, communities and businesses small and large, who together wonder if we’ll see a repeat of 2002’s billion-dollar-per-day coast-wide shut down.”

Information, he charges, “is limited, but the questions aren’t – how close are the parties to reaching a new contract?; what issues have already been fully resolved, and which still remain?; will an extension be formalized to assuage concerns while talks continue?; will the union engage in work slowdowns if an extension can’t be signed?; and, can the ports continue to operate efficiently, with everyday issues and grievances resolved amicably, without an extension?

“Given the critical importance of the ports in today’s local and regional economies, and for the sake of the millions of people who depend on the uninterrupted flow of goods in and out of America,” Toebben concluded. “Such transparency is essential, especially given what is at stake now — and for years to come.”

07/01/2014