A New Year of Supply Chain Challenges and Opportunities

ThomasNet News (Butcher) - A volatile economy will make risk management more of a permanent factor for supply chain managers, and, moving forward, the usual approach to possible disruptions simply won't do.

In a recent survey of more than 500 CFOs conducted by Basware, the University of Navarra's IESE Business School in Spain and Indiana University's Kelley School of Business, 64 percent cited "reducing direct costs" as their top priority....Chief among purchasers' numerous supply- and cost-related concerns for 2010, according to the Institute for Supply Management's (ISM) December 2009 Semiannual Economic Forecast: a weak economy; health care and benefits costs; credit inaccessibility; business taxes; and high energy costs.

While these factors will continue to be a top priority in 2010, some other commonly neglected areas should not be overlooked, including supply interruption. The failure of a single supplier can have ripple effects all the way across the value network, ultimately resulting in shortages, stock-outs and lost sales.

"Security changes and requirements will continue to [affect] international trade for the foreseeable future with an emphasis on advance data and self-reporting," according to Hart. Among the new security programs, the Importer Security Filing (ISF), also known as the "10+2" rule, requires shipping data to be sent to customs at least 24 hours in advance of shipments arriving in the U.S. At the end of January, importers can face fines of up to $5,000 for each violation of an ISF that is incomplete, inaccurately filed or late.

Wal-Mart's recent launch of a Sustainable Product Index, and its refusal to partner with non-compliant manufacturers, is a prominent example on the retail side.

In response to a question posed by ISM regarding supply chain optimization, 71 percent of purchasing and supply executives said they plan to take new steps in 2010 to improve their supply chain management practices. The favored approaches: supplier consolidation; new or improved enterprise technology and system utilization; improved inventory/asset management; lean manufacturing; and cost reduction. 


"Develop integrated and collaborative relationships with first- and second-tier suppliers to better evaluate and control risk in the supply chain," Basware advised. "Fostering closer relationships with preferred suppliers will enable an organization to tap into supplier expertise to identify the source of potential threats."