15 Global Supply Chain Gurus Show Actionable Strategies

The change in global supply chain environment makes it difficult to control operations. Here, leading experts will show how to streamline global supply chain.

In Search of Global Supply Chain Strategies
Whether you're a manufacturing company in China, a sourcing agent in London or a world's leading company in Silicon Valley, we're all in a global supply chain networks. We believe many practices in global supply chain management can be applied in every industry. However, you may wonder what kind of practices really work. That's why we ask our experts a very simple question,
"How to improve the operational efficiency in global supply chain?" 

We hope the comments from our experts will help you with what you're trying to do on regular basis. The list is presented in the order the responses were received in:

1. Manage Global Supply Chain End-to-End
Andreas Wieland, Assistant Professor at Copenhagen Business School

Successful supply chain management means that organizations are well-orchestrated in an end-to-end value network. To coordinate, contracts can be made with direct links in the supply chain, but how can organizations coordinate with the suppliers’ suppliers or the customers’ customers? 

Requiring suppliers to contract only sub-suppliers who follow certain standards could be a good start. However, commonly used KPIs used by supply chain executives are usually focused on logistics performance (e.g., “delivery reliability”), but is that really “supply chain thinking”? 

I suggest that KPIs should rather indicate how well-orchestrated the end-to-end network is (e.g., “percentage of second-tier suppliers who follow a certain risk management or IT standard”).

2. Put Lean to Work for Global Supply Chain
J. Paul Dittmann, Executive Director of the Global Supply Chain Institute at the University of Tennessee

Improving operational efficiency in the global supply chain is a complex undertaking, and requires a documented, multi-year strategy instead of knee jerk reactions, and programs of the month. Therefore, a firm would be well served to develop a supply chain strategy as described in my book: Supply Chain Transformation. That said, implementing Lean concepts would undoubtedly be part of that strategy, for example,

- Lean Warehousing: Many firms (both retailers and manufacturers) are now aggressively rolling out Lean in their warehouse operations. In the process, they reduce cycle times, and speed up customer responsiveness; and they reduce waste throughout their operations. It is safe to say that if a warehouse operation is not implementing Lean, it is falling behind its competition.

- Keep it Simple: It’s important to not over complicate things. The Lean journey should focus on straightforward activities that everyone can see and understand because the tools take on a life of their own, causing the operation to lose sight of the simple goal of waste elimination.

- Eliminate Before You Automate: Automation is critical to large, efficient warehouse operations. But, it can be overdone. One company had an empty automated storage and retrieval system (ASRS), calling it the “epitome of a monument to waste.” They had found a way to flow product through the warehouse without putting it in, and pulling it out of the ASRS. Another company eliminated the need for an AGV (automated guided vehicle) be simply moving the two material points next to each other. An “eliminate before you automate” mindset avoids hard-wiring waste in to an operation.

3. Align Global Supply Chain Strategy
Hugh Williams, Managing Director at Hughenden Consulting

In my travels I have talked to so many global companies that had contracted large consultancies to lead major process design overhauls or global technology roll-outs and didn’t get the supply chain efficiencies they were expecting. This is invariably down to not sufficiently involving and educating the right people. Global supply chains are massively complex systems, with lots of interdependent moving parts and decision points that rely on human judgement. To improve operational efficiency successfully and in a sustainable way, people across the entire business need to have a shared understanding of the supply chain goals and also what their individual roles are in achieving them. This applies to executive leaders, middle managers, right down to individual contributors like supply chain planners.

My advice to companies is simple: the most successful global supply chain change is led from the the top. Start by involving and educating the board and work your way down the rest of the company. Once this happens, then you’re ready to start tackling processes and technologies.

4. Work Hand-in-Hand with Your Suppliers
Andrea Stroud, Research Program Manager at APQC

Successful organizations implement formal supplier relationship management (SRM) programs to improve operational efficiency in their global supply chains. In an uncertain environment, affordability and predictability are at a premium, and a supply-chain organization can deliver these through effective management and oversight of its suppliers.

Research from APQC’s Open Standards Benchmarking in procurement shows that organizations without formal SRM programs report 121 percent longer supplier lead times. Reducing lead times from suppliers can help turn inventory faster, freeing up cash and ultimately satisfying customers. Ultimately, effective SRM can increase supply chain visibility, improve quality and supply consistency, drive down costs, improve customer service, create a higher mix of strategic versus active suppliers, and make an organization more competitive.

5. Mitigate Global Supply Chain Risks Properly
Roger Burritt, Professor at Macquarie University Faculty of Business and Economics

Outsourcing business processes to overseas countries enables companies to reduce operating costs, but the world is in desperate need of a new supply chain management framework to manage the process towards sustainability if such gains are to accrue.

Macquarie University has conducted research that reveals companies are grappling with the opportunities and risks presented by outsourcing processes overseas, there is a need for better information for decision making, and a stronger foundation is required to understand whether it really pays for companies to be green and socially responsible.

Key ways to mitigate risks associated with unstable supply chains are to conduct a company audit to uncover the issues, consider an assurance process, implement some training, consider how you can communicate more effectively with your suppliers, or perhaps by offering an incentive to your overseas supplier once improvements have been made.

In addition the growing importance of local information about environmental risk, such as water shortages faced by business or employment conditions, can be critical in supply chain decision making.

Hence, the fundamental need is to consider a new entity, the supply chain, and how to account for its activities. Quality information from accounting systems is of critical importance en route to a successful supply chain which helps movement towards sustainability.

However, where poor practices exist implementing a sustainable supply chain process is not easy because of complex international paths and geographical distances, often between several suppliers, and also differences between supplier countries. A need exists to consider unstable political and socio-economic conditions and to be aware of cultural differences in decision making.

Ensuring a sustainable supply chain is in place is particularly critical for companies outsourcing to developing economies, with the employment prospects of millions of workers hanging in the balance. Behind the prospects of decent work and a healthy environment for all should be an accounting system which addresses sustainability issues.

6. Learn How to Develop the Right Relationship
Kevin McCormack, Associate Professor at Northwood University and President of DRK Research

Global operational inefficiency is caused by poor (infrequent and/or poor quality) communications and a poor relationship fit between suppliers and customers. This causes a misalignment of actions, such as suppliers not making the right item at the right time due to forecast inaccuracy. Misalignment of actions due to a poor relationship fit means the supplier has other, more important customers and the supplier's actions will be influenced more by those customers than you.

For example, if the supplier has several big name cosmetic industry customers (90% of their business) and you are buying specialty automotive chemicals from them (less than 5% of their business), the supplier will be influenced in the direction of the cosmetic customers and they will get the attention, products and services before you. This will make the supplier sluggish to respond to changes and slow moving on innovation. What can you do? Identify the correct relationship fit, communicate that to suppliers and set up the right quality and frequency of information (two-way) flow. Expectation alignment and management will help both the suppliers and you. If you are not the big "influencer" to the supplier, recognize that and find other incentives for the supplier.

7. Optimize Your Global Supply Chain
David Simchi-Levi, Professor at Massachusetts Institute of Technology and Chairman at OPS Rules Management Consultants
Global financial turmoil, rising labor costs in developing countries, and huge volatility in the price of oil and other commodities can disrupt a company's entire supply chain and threaten its ability to compete. In Operations Rules , I identify the crucial element in a company's success: the link between the value it provides its customers and its operations strategies. There are some scientifically and empirically based rules that management can follow to achieve a quantum leap in operations performance. These are three examples:

Rule 3.1: Aggregate forecasts are more accurate than individual forecasts.
Risk pooling is considered the most important concept in supply chain management as it governs the tradeoffs in inventory management and leads to effective strategies such as push/pull and postponement.

Rule 5.2: Supply chain cost is always flat around the optimal strategy.
End to end optimization provides a way to take into account tradeoffs in the supply chain, typically between cost and service taking into account many factors that influence the design and flow of the supply chain.

Rule 7.1: A small investment in flexibility can significantly reduce total supply chain costs.
Flexibility, in particular in manufacturing, is an important skill that when implemented well can produce long term efficiencies and robustness to the supply chain.

8. Streamline Global Supply Chain Flows
Arnold Maltz, Associate Professor at the W. P. Carey School of Business at Arizona State University

As the holiday season approaches, manufacturers, carriers, and retailers have a joint responsibility to make sure consumers have what they want, no matter where in the world it is made. The challenges include:

- Worldwide capacity problems, especially at ports and transportation companies in North America and Western Europe

- Forecast errors that are made worse because goods had to be brought in earlier than planned

- The need to support not only brick-and-mortar stores, but also e-commerce sites, whether stand-alone or part of an omni-channel offering

Some ways to cope:

- Redirect your cargo, if you can, to less congested ports. That might mean diverting from Los Angeles/Long Beach to Canada or Mexico. However, make sure you have infrastructure at the reliever port, or things might just be worse.

- Work with your broker to see if you can get priority on unloading the ship and inland transport. It might cost a little more, but will help avoid empty shelves and lost sales.

- Hold your imports as long as possible before committing to final delivery. This increases flexibility and translates into less overall inventory since it is not in the wrong place.

9. Develop Solid Global Supply Chain Strategy
Carter McNabb, Partner at GRA Supply Chain Consultants

Global supply chain operational efficiency is derived from a combination of supply chain strategy, planning and execution.

- Supply Chain Strategy focuses on how supply chain network interrelationships, structures and flows are optimised to deliver the customer offer underpinning the business strategy. This is important as it determines the supply chain footprint; which costs are fixed and variable; and how responsive it is to customers.

- Supply Chain Planning (demand planning etc) is important as it determines how much cash is tied up in inventory, how much stock becomes obsolescent and how DIFOT is affected by stock availability. Accurate planning not only reduces stock and improves service levels; it also reduces costs by avoiding expediting and minimising write downs.

- Supply Chain Execution excellence (warehousing and transportation) improves asset utilisation, capacity and throughput whilst reducing the variable costs associated with warehousing and distribution.

The key is to ensure strategy, planning and execution are integrated and aligned across global supply chains. An organisation must understand its product and customer channels and match the supply chain response accordingly. For example, if we’re importing for domestic retail, we need to ask: what is the best flow path (offshore consolidation, cross dock or distribution centre) and inventory strategy (centralised or decentralised)? These questions are interrelated as the goal of supply chain is to optimise the relationship between costs, working capital and service levels.

The evidence? “Best in Class” organisations within an industry typically have supply chain costs that are 50% less than the “Average” performers.

10. Renovate Your Supply Chain
Dominique Bill├Ęs, Supply Chain Director at European Independent Purchasing Company Limited (EIPC)

There are several measures a company can take to improve operational efficiency in a supply chain. For instance, a company should explore if the supply chain can be re-engineered to provide further efficiency and reduce cost. EIPC is responsible for procuring materials and services for over 4,000 SUBWAY® stores across Europe. We re-engineer our supply chain as volumes increase, as well as continually exploring other ways in which we can further improve efficiencies, reduce risk and costs - for example by importing from Asia directly into Europe rather than via the U.S.

It is important for supply chains to be open to innovation at a distribution level and implement change. For example, introducing a more efficient picking system, such as voice picking, will deliver greater productivity and accuracy, enabling for a more efficient operation. Having the right warehouse management system in place will also achieve this.

Using a distribution service that is fit for purpose can have a huge effect on efficiencies. I’d recommend testing different distributors to determine which service best suits your company’s operational system and will maximise efficiency for all parties.

In-bound freight delivery efficiency can be optimised by consolidating in-distribution hubs and reducing stock levels at country level. Leveraging the volume of deliveries with other customers will also improve efficiency in a global supply chain.

11. Look Into Coordination Opportunities
Jeff Shockley, Assistant Professor at College of Charleston

For a global supply chain focused on efficiency, effective supply chain management would improve the flow of materials, information, and/or services throughout the entire system of buyers, distributors and suppliers using a number of established methods to increase the product or service delivery benefit or "surplus" to customers. Generally, companies first seek out aggregation opportunities (opportunities to consolidate orders, facilities, shipment/fulfillment, suppliers) to improve scale economies and reduce end-item forecast uncertainty and non-value-added costs.

Second, improving coordination and consensus (integration) among members of the chain reduces the negative cost and responsiveness impact of demand variability backwards in the supply chain. This is most commonly done in practice by expanding information-sharing among network partners through shared technology platforms or joint venture agreements, logistics/transportation coordination, strategic buffering to position inventory closer to the point of sale, vendor-managed inventory and/or revenue-sharing arrangements to facilitate this coordination.

12. Connect Your Global Supply Chain via Cloud System
Dave Bowen, Managing Director at Xchanging Procurement US

The key to improving global supply chain efficiency starts with making the transition from functional geographical silos to a truly integrated global supply chain. To facilitate a truly collaborative and interconnected supply chain, companies need to implement cloud computing systems. Cloud computing increases the visibility of the goods transferred in-transit, allows for real-time information sharing with global partners and ensures system automation which does away with reliance on paper documents for things like order confirmations, payment processing, product and delivery status updates, and also eliminates the margin of error. Cloud systems also facilitate best practice standardisation, improve supplier performance visibility, enhance cost reduction efforts, and drive consistency across all levels of a supply chain.

Companies also need to think about widening their supply base to improve operational efficiency across a global supply chain to diversify and increase insight into the capabilities of their respective supply bases. A diversified supply base allows companies to protect themselves against potential disruptions and mitigate risk. Global supply chain efficiency can be disrupted by anything from changes in internal strategy, staffing, currency fluctuations and commodity issues (e.g. the availability of oil, steel or paper in China, or EU/Russian sanctions), to natural disasters and war- all of which can have dire consequences that affect cost, availability and competitive positioning. By diversifying and improving knowledge of the supply chain, and by having multiple supplier options, businesses can be flexible and ensure such disruptions do not have a significant impact on efficiency. Category plans should therefore have contingency plans in place, utilising good supplier research and souring tools to ensure actions can be taken quickly.

13. Create Real-time Supply Chain
Fabrizio Brasca, Vice President of Global Logistics at JDA

In today’s omni-channel environment, demand is king, and meeting it quickly and cost-effectively is critical to supply chain efficiency. To be able to make realistic and profitable order promises to customers, businesses need to have real-time, holistic data with which to make accurate forecasts, and create plans.

Businesses which see variable levels of demand, profitable order promising is a dynamic, evolving process; it’s critical to use tools which create an optimal view of inventory, and the network, so that those decision makers at the top can better understand the reality of implementing their plans at each level of execution. In this way, businesses can close the gap between what they plan to do what they actually do, meeting their customer demand with ever greater efficiency and profitability.

14. Establish Global Supply Chain Control Tower
Antoinette Ienco, Digital Transformation Director at Capgemini Australia

Digital technologies continue to evolve and impact every touch point of the consumers shopping experience. The result is an increase in supply chain complexity with the requirement for a responsive and efficient supply chain becoming mandatory. Fortunately technological advancements in cloud and (predictive) analytics solutions are also available to Supply Chains professionals and these are being leveraged to set up Control Towers.

Control Towers are cross-divisional information hubs that are used to monitor, measure and manage transport and inventory visibility across the extended supply chain network and their sole purpose is to achieve business outcomes. They typically include people process and technology.

Leading organisations such as Unilever, P&G and Pfizer are examples of organisations that have achieved cost and process benefits from implementing Control Towers.

15. Develop Global Supply Chain Competecies
Daniel Bumblauskas, Assistant Professor at University of Northern Iowa

Organizations must be able to effectively identify value added activities across their global supply network to identify those tasks that are within core competencies and those which should be contracted to a specialized partner. Variation, uncertainty and risk reduction are critical to ensure on-time delivery of cost competing, high quality products. Assessing cultural, societal and spiritual differences in countries where business is conducted is also key.