According to a recent study from the University of Tennessee’s Global Supply Chain Institute, the relocation of manufacturing and product sourcing to emerging economies is no longer the gold standard for global businesses. The Global Supply Chain Institute is part of UT’s Haslam College of Business.

False Promises

The rush to Asia in the last decade promised major cost reduction, but financial gains for many have been short-lived. The study delves into the downsides of outsourcing by putting the complexity and risk of the global environment into context. Evidence from the research, compiled in “Global Supply Chains,” the fourth installment in the “Game-Changing Trends in Supply Chain” series from UT’s supply chain faculty, suggests a more localized supply chain for many products may soon make a comeback.

Late last year, Gartner released its sixth annual Healthcare Supply Chain Top 25 ranking. The 2014 ranking identifies organizations across the value chain that are focused on reducing supply chain inefficiencies, while improving the quality of healthcare. Healthcare supply chain leaders continue to optimize their capabilities, while preparing for changes that population health models will drive through the supply chain. 

“The Healthcare Supply Chain Top 25 for 2014 reflects the metaphorical middle part of a marathon journey to build patient-driven supply networks,” said Eric O’Daffer, research vice president at Gartner. 

The difficult part is finding a reliable logistics and supply chain partner. Food and beverage companies need partners with industry-specific expertise that can devise customized solutions. Taking a look at what others have done can help food and beverage producers find the right partners for their needs. 

One such example comes from Avery Brewing. Founded in Boulder, Colo., in 1993, Avery Brewing is a relatively small craft beer company known as the brewers of Avery IPA, White Rascal Belgian-Style White Ale, The Maharaja Imperial IPA, Mephistopheles’ Stout and more than 20 other year-round and seasonal beers. Avery Brewing will move into a new $27 million, 96,000-square-foot brewery in early 2015. 

As a specialized, global expert services firm, Navigant focuses on assisting clients in creating and protecting value in the face of critical business risks and opportunities. Its services extend from expert and advisory work through implementation and outsourcing. 

The Navigant team’s research methodology combines supply-side industry analysis, end-user primary research and demand assessment, and deep examination of technology trends to provide a comprehensive view of these industry sectors. The report examines the significant forces shaping the global wind power industry’s supply chain, including analyses of more than 500 component and materials suppliers. Innovation and lean manufacturing are resulting in a highly competitive wind industry, the report concludes.

The CSCO’s responsibilities have evolved over many years, but the last decade especially has seen significant transformation. Traditionally focused on the tactical operations of moving products between two points, today’s CSCOs must contend with a huge level of complexity and risk in supply chain operations. This requires innovative thinking, and companies risk failure if they cannot adapt to this new mindset.

The concept of supply chain has changed so fundamentally that the term, in fact, may be outdated. Supply chain management commonly is visualized as a chain of goods running from point A to point B. This no longer captures the breadth and depth of today’s supply chains, which function more like an intricate web of integrated, global relationships. These relationships supersede political and geographic boundaries, and they also cross over the traditional barriers within companies.

Blame Amazon. Or Google. For that matter, blame all of Silicon Valley. They’ve trained us to become accustomed to having access to all of our data in an instant. We can order anything online, change the home thermostat with our cell phones and access the world’s information in seconds. So why are the connections between technology platforms in our supply chains so awful? 

It’s time for a change. We need better connections built on modern technology to manage the procurement of goods and their transport to customers across the globe. The challenge isn’t that the technology doesn’t exist; it’s used ubiquitously across other industries. Our dilemma is that we’ve built our IT infrastructure on outdated platforms and haven’t made the commitments to standardize the language to transmit data. There’s talk of big data and advanced analytics, but do we even have the back-end infrastructure to enable it?

Why Outsource?

In today’s discrete manufacturing ecosystem, humans and machines work in tandem to cut, drill, mold and assemble an unending variety of parts. Finished goods are pushed out to distribution through warehouses, stored and sent to customers as needed. In general, made-to-stock is far more prevalent than made-to-order.

Manufacturing locations are commonly determined by the lowest cost of raw materials, labor, facilities, freight, taxes and insurance. Factors such as quality, fulfillment reliability, production time, delivery time and public image are balanced against price incentives to narrow the field of potential manufacturing locations. 

Integrated Solutions

One newer solution to hit the market came from Citi. Through its Treasury and Trade Solutions unit, Citi recently announced the launch of Citi Integrated Payables Solutions. It is being billed as a suite of analytics, advisory and payment services that can assist organizations in optimizing their working capital and maximizing efficiency across their complete supply chain.

Among the system’s touted benefits are proprietary analytics, advisory services, client-to-bank connectivity channels and universal supplier on-boarding mechanisms. Citi says all of these features are intended to help address an organization’s continuum of suppliers, and that users will be able to influence working capital, reduce total costs, minimize supply chain risk and support their suppliers.


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