Trend 2 – Globalization

The business landscape is rapidly becoming more global. Largely due to improvements in communications, globalization is dramatically impacting the way business
is managed and transacted, even on the most local levels. No area of a business is
affected more by the trend to a global business environment than the supply chain.
Manufacturing, distribution, sourcing of materials, invoicing and returns have all been
significantly impacted by the increased integration of a global customer and supplier
base, and many companies find that existing processes and technology are not
flexible enough for this new business environment.

For example, historically, many companies have brought in container shipments
from Asia Pacific through the ports in southern California. As the volume of container
shipments has increased, all of these ports have experienced capacity issues relating to
customs clearance and transshipping. As a result, some companies are contemplating
rerouting these inbound shipments to alternate ports. This change may seem subtle,
but a shift in logistics of this magnitude has far-reaching effects on the overall cost
and efficiency of the supply chain network. Dynamically repositioning the point
of entry for inbound container shipments can have a positive impact on customs clearance times and access to increased transportation capacity, however there can be a negative impact as well. Better understanding the total landed cost and service implications of alternate ports of entry can help improve supply chain costs and performance.

The right Supply Chain Design is critical to managing the changes brought about
by rapid globalization. A well thought-out Supply Chain Network Design can optimize
the network and the flow of materials through the network. In doing so, network
design captures the costs of the supply chain with a “total landed cost” perspective,
and applies advanced mathematical technology to determine optimal answers to
both strategic and tactical questions.

Strategic questions answered by a well thought-out network design:

• Where should facilities be located?
• How many facilities should I have and what capabilities should they have?
• What kind of capacity should they have?
• What products and services should they handle?
• Whose manufacturing and distribution orbit should they source?
• Which contract packers or contract manufacturers should I use?
• How can I achieve operations synergies through integrating acquisitions?

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