which expenses are climbing and which are remaining level. Using
that information, companies can calculate their end-to-end supply-chain costs.
Good capacity management offers additional opportunities.
Instead of buying goods in aggregate and putting all inbound mate-
rials into safety stock, companies should differentiate on the basis of
value. They can then “feed the lane” according to specific vessel
and flight departures. “You essentially speed up inventory turns
based on the value [of the product] rather than the whole project,”
he says. “If you have one month’s worth of front-end inventory, you
can cut that in half, knowing that you have something moving ... in
the pipeline.”
Security and compliance are difficult issues for every global sup-
ply chain today. For high-value products, Duhot recommends that
companies deploy global positioning system technology on trucks,
along with exception management systems to ensure that ship-
ments are where they’re supposed to be. They should also embrace
the voluntary Customs-Trade Partnership Against Terrorism (C-
TPAT) initiative, to improve oversight of suppliers and gain prefer-
ential treatment by Customs for imported goods.
Cost control is essential, but the ultimate goal should be customer satisfaction. Duhot acknowledges the difficulty of quantifying the price of failure from a customer-service perspective.
Nevertheless, companies should be acutely aware of the consequences. “If you lose a customer because of not fulfilling [an
order],” he says, “the impact is a lot greater than any cost in the
supply chain.”
Building Responsive Supply Chains
A recent survey finds businesses struggling with rising costs, the
slumping economy and the challenge of sustainability in global supply chains. Michelle Meyer, director of supply chain solutions with
Hitachi Consulting, talks about how executives are confronting
those issues.
The survey was conducted jointly by Hitachi and AMR Research.
It looked at 163 companies across multiple industries, soliciting
their views on major challenges related to supply-chain management today. A number of issues emerged, says Meyer, but one in
particular stood out clearly. The primary barrier to building more
responsive supply chains, according to the survey, was culture. In
other words, Meyer says, “our single biggest barrier was ourselves.”
By “culture,” the executives meant the manner by which they
communicate within their organizations, as well as with outside
partners. To overcome the obstacles that arise from siloed behavior,
many industry leaders are “designing supply chains from the customer backwards.” The result is networks that are built around customer channels and strict service expectations. In addition, Meyer
says, successful companies are working from a broad definition of
organizational structure, so as to minimize the boundaries between
