Today, there is so much talk about global supply chains and the need to source overseas to remain competitive in the marketplace. With the transition to manufacturing around the world, companies have had to become import and export experts, explore preferential trade agreements, calculate landed costs, rely upon instruments such as letters of credit and drawbacks, and comply with ever more complicated security regulations that guard against individuals and countries with links to terrorism gaining access to information and products that could jeopardize the security of the United States. Goods must be classified, screens against denied party lists must be performed, the need for an export license must be determined and so on. Supply chain technology has emerged as an automated means to comply with regulations, generate all the documentation they demand and give companies global product visibility so that they know exactly where their goods are at every point along their journey to the marketplace.
To many among us, the term supply chain technology is a foreign concept. How is it different from other applications on the market? What is it designed to do? Is it just another form of enterprise resource planning (ERP) software? What should I be looking for in the solutions I am considering as the executive who must purchase supply chain technology for my firm? The questions can be endless and overwhelming.
This article dissects supply chain technology into its primary elements and explicates their purposes. In this way, executives charged with exploring the wealth of supply chain technology available on the market today can institute an informed technology search, armed with the basic insights they require. The discussion presents the essential features that comprise the minimal acceptable functionality a firm needs and stratifies them by purpose. It also offers some additional considerations executives need to contemplate when seeking to enhance their firm's operations by automating import and export functions with global trade management technology.
Supply Chain Constituents
The global supply chain can be roughly divided into two constituent elements: compliance and execution. This division is intellectual at best, as interdependencies between the two are undeniable and far-ranging. Yet distinctions do exist, prompting technology developers to implement separate functionality for each element within their products. This principle of technology design acknowledges that firms operating in today's global marketplace must achieve "good" grades along both continua in order to be successful. Otherwise, excessive charges and delays, which add yet another layer of financial cost and erode the profit that overseas manufacturing sought to assure, will accrue to enterprises.
Interestingly, compliance is often viewed as the lesser portion of the supply chain. However, it can account for a disproportionate number of unexpected or unanticipated problems. These difficulties arise from ever-changing rules and regulations instituted by government and financial entities, not to mention the standards imposed by trade organizations and specific industries. Simply stated, the multi-national nature of global manufacturing and distribution exacerbates a company's efforts to be compliant.
Three problems dominate the issue of supply chain compliance (SCC): volume, complexity and instability. Given their overriding influence, it truly is impossible to manage SCC without a computerized solution. Some may argue that supply chain participants (SCPs) can be held responsible for proper implementation and execution of their portion of SCC. But, as is the case with too many independent generals, there must be a single point of command or confusion will predominate.