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IDC: Globalization, Optimization, S&OP in Supply Chain’s Future

by on January 11, 2010

An article by Sean Murphy in the Supply Chain Management Review, about how globalization will take on a whole new meaning starting 2010, defined by demands and not costs.

Also includes IDC’s list of top 10 predictions for the supply chain in 2010.

Link here: http://www.scmr.com/article/442538-IDC_Globalization_Optimization_S_OP_in_Supply_Chain_s_Future.php

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From → Good to Know

3 Comments
  1. ahsan81 permalink

    I see some issues in the idea of “dynamic optimization” of the supply chain. With many production facilities across the ocean from the eventual market, there is a roughly one month lag for delivery of ocean freight. Before the recession, demand for cross-Pacific ocean freight was so great that suppliers had to make bookings well in advance to ensure space. I’m not sure of the current state, but Wal-Mart would book ocean freight at least several months in advance. That would seem to limit the potential of dynamically responding to shifts in demand.

    The article does make a very good point, of keeping production of items subject to high demand volatility closer to the marketplace.

    • Wei-Ching permalink

      I worked at an import and export company until half year ago. It gets order from US and UK and manufacture in China and Hongkong then distribute products to North America, Europe and Japan. I was a logistics specialist and arranging shipping was one of the duty of mine.

      Shipment from Asia to East coast of America takes 13 days to 1 month depends on what speed of vessel we book. We book vessel through differnt logistics services agents and have to make booking at least 1-2 month earlier than the delivery. Since the container and capacity of vessel are standard size and we also have packing list from factories, we usually are able to calculate how many vessel and what kind of vessel we need based on the dimension of container and vessel.

      Although companies definitely need to book ocean freight few months earlier, but I don’t think they can book earlier than 2-3 months before the delivery because shipping schedule is constantly changing as the factory usually cannot have products ready as the schedule they set half year or even one year ago. Also, companies usually have several reliable logistics agents that they worked before and they usually have several shipments simultaneously so it’s pretty easy to adjust what container you actually want to put on the vessel couple days before the vessel leave the port without worrying too much about the space availability.

      After I worked in that company, I was very surprised to see that one shipment from accepting the order to finally distribute to the market might take longer than 1 year. For example, what we were handling in 2008 summer might not be in the retailer until 2009 summer or winter. As you see such a long processing time and the response from the market is still good, do you still think the shifts in demand are that dynamic? Besides, I was surprised to find that actually it’s not customer’s demand that drives the trend of the market, it’s those manufacturers and companies that lead the market to where they want the market to be. Kind of sad that our behavior is all predictable to those businesses, but that’s the reality.

  2. Thomas Zhenhua Wang permalink

    Although the article itself doesn’t make much sense to me, it did remind me about the Bullwhip Effect and all the business prediction things on inventory, economy and etc. The fact is it is getting harder and harder to predict or to “dynamically optimize” anything due to the current situation either of the economy environment or that “the world is getting flat”.

    Here I use “getting flat” rather than “is flat” is because I think it is difficult to define flat. What’s the status of a flat world? By the term “getting flat”, I mean the transportation, communication is getting faster and more convenient, information flow is become more efficient with lower cost. This is definitely due to the advancement of the technology, especially of the information technology, which is indisputable!

    In this case, I think a flat world can be defined as a world without information asymmetry, which I think would never happen, although it is getting less severe than in the past.

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