Volume 53, February 2007

Message from the Editor Featured Industry: Manufacturing Global Supply Chain Management Conferences & Events Useful Links Featured Language: Korean Korean At-a-Glance Doing Business in South Korea Useful Links Latest News Tips & Tools Inside the Next Issue

Featured Industry: Manufacturing Global Supply Chain Management The world economy today is going through a revolution – one driven by technology. Anybody can reach anybody else, information can flow to and from almost anywhere or anyone. But the implications, in terms of competitiveness, are very important because it means that borders are getting thinner, and most industries are operating in the context of global supply chains. For example, businesses may have production in one country, maybe several countries; research in other countries; and customer service somewhere else. Therefore, in today’s economy, industry and commerce operate on a highly integrated, global supply chain basis. Understanding Supply Chain Management Supply chain management (SCM) is the process of improving the way your company finds the components it needs to make a product or service and deliver it to customers. According to the non-profit organization, the Supply-Chain Council, the following are five basic components of SCM. Plan (Strategic components) - You need a strategy for managing all the resources that go toward meeting customer demand for your product or service. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less, and delivers high quality and value to customers. Source – Choose the suppliers that will deliver the goods and services you need to create your product. Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And put together processes for managing the inventory of goods and services you receive from suppliers, including receiving shipments, verifying them, transferring them to your manufacturing facilities, and authorizing supplier payments. Make (Manufacturing components) – Schedule the activities necessary for production, testing, packaging, and preparation for delivery. As the most metric-intensive portion of the supply chain, measure quality levels, production output and worker productivity. Deliver (or logistics) – Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers, and set up an invoicing system to receive payments. Return – Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products. Positives and Negatives Components of a Global Supply Chain Supply chain management is often addressed in terms of cost reduction, lean manufacturing, and, of course, just in time production. (link to: http://www.strategosinc.com/just-in-time_production.htm) Bringing an offshore component into the mix makes its management that much more complex. Why go offshore? Manufacturing in developing countries is substantially cheaper than in the U.S. because of the low cost of labor. But offshore manufacturing brings with it another set of challenges. It isn't as easy to set up real-time data sharing with a factory in, say, South Korea as it is with a factory you own in the U.S. Plus the distance that overseas goods need to travel in order to reach the U.S. increases the chance that they will get delayed. The bottom line is that “going global” can bring back a lot of the uncertainty that supply chain systems were designed to eliminate. On a positive note, the technology capable of tracking shipments throughout the world is getting better. The bad news is that a lot of this technology is still pretty expensive and some of the places you would want to deploy it don't have the necessary infrastructure in place. Choosing suppliers By opening the door to using vendors and suppliers from around the world, globalization often increases the number of vendors and suppliers that companies can tap as alternate suppliers to fill gaps in their supply chain. The trick, according to research firm FM Global, is to make certain that the alternate suppliers your company chooses are truly separated from the risks born by their preferred counterparts. In its 2006 report “The New Supply Chain Challenge,” FM Global suggests taking into consideration a wide variety of factors, including: Do they get their electrical power from the same grid that serves your primary supplier? Do they rely on the same transportation systems? Do they buy their raw materials from the same place? The fewer questions like these that that can be answered in the affirmative, the more reliable the alternate supplier will be. It may be impossible to replicate the just in time model in a global supply chain, but by applying appropriate technology when and where you can, and by choosing the supply chain partners who have the capability to share data with you, you can get many of the benefits of just in time while paying lower offshore prices. For additional manufacturing industry white papers, articles, events, and organizations visit Global Language Solutions’ Resources section. References: Supply-Chain Council's FM Global Multichannel Merchant magazine

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