Launching an effective global strategy
Consider partnering with 3PLs to source and sell your products worldwide.
Not so long ago, a small business tempted by offshore manufacturing or by selling to growth markets overseas was very often thwarted by the complexities, costs, and basic where-to-begin fog surrounding global trade. But today, new third-party logistics providers manage these issues and many others for you, enabling businesses of every size to launch a global trade strategy quickly and cost-effectively.
No matter where you are—in size or location—your business can get a sample or product designed, prototyped, made, and sold globally with the heavy lifting done by experts—companies whose core business is managing ever-changing global networks for you.
Globalization Opens New Markets
Over the last decade or so, globalization has taken hold in ways we couldn’t have imagined beforehand, says Julie Fraser, president and principal industry analyst of Cambashi Inc. “Companies no longer expect the same market growth in established markets like the U.S. or Europe, while in emerging markets the growth rate is increasing rapidly.”
Trade More Focused in Regional Blocs
As a consequence, these high-demand areas are attracting more manufacturing and logistics-related service infrastructure. “We’re beginning to see the supply chain becoming more focused within trading blocs,” says Larry Lapide, an MIT research affiliate and retired director of MIT’s Demand Management Center for Transportation & Logistics. “Blocs might include the U.S. trading within the western hemisphere; Europe with Africa, Eastern Europe, and parts of Asia; China with its Asian trading partner companies, and possibly Japan.”
Fraser cites the work of Cambridge University’s Paul Christodoulou, who has identified a related emerging global business practice–Global Manufacturing Footprint Design. Professor Christodoulou describes it as a dynamic process that focuses on reconfiguring global manufacturing and support resources around specific projects to align business strategy and supply chain resources. These footprints will be reconfigured as demand requires on a continuous basis, requiring extremely agile logistics support.
Outsourcing vs. Near-shoring
“If you’re (a small business) with a product idea and want some traction in the market, first you have to make some tough decisions about how to allocate your money,” Ferrari says. “You may want to invest in the product design, or if sourcing is key to your strategic long-term plan, you may do the sourcing yourself and outsource the logistics piece.
You can also outsource the whole process, from product design to order fulfillment. But whether you decide to outsource piecemeal or the whole process to a one-stop shop, you don’t have to compromise on overall visibility. With the Internet and the adoption of more advanced inbound and outbound supply chain synchronization technologies, all sorts of visibility options are available.”
When the price of oil skyrocketed to $125 a barrel, companies began near-shoring as well as taking other resource-saving measures, Ferrari explains. “One strategy, driven by product and model proliferation, is to retain low-cost manufacturers–largely in China–and send the unfinished products to be finished in distribution centers close to where demand fulfillment occurs,” he says.
“Logistics suppliers provide these postponed manufacturing services and also direct shipment from manufacturers. After 2008, when demand dropped precipitously, postponement flexibility was very important to cash flow.”
Succeeding with Distributed Strategies
No matter how dynamic global networks become, however, Fraser notes that you still need a trusted relationship with suppliers. “Having reliable suppliers as you build out in each of the areas where you are working is key,” she says. “This is where a logistics provider’s role will be very important. We foresee that volatility is and will be the new normal. It’s not only that credit is tight, but markets will be far more unpredictable.”
The consensus among thought leaders is that those companies–big or small, size is not the determining factor–developing competitive and distributed global trade strategies are the ones most likely to succeed today and tomorrow.
“Today’s elongated supply chains are a lot more complicated for all companies,” says Kimberly Knickle, practice director, emerging agenda, for Manufacturing Insights. “Increased expectation for supplier partnerships are putting a lot more pressure on logistics. Every participant is trying to take on efficiencies and reduce costs, resulting in logistics having to step up.”
Prepare to Meet Increased Customer Demand
“Despite the on-going pressures to reduce costs, I’m not so sure we’ll see a reduction in product proliferation,” Ferrari adds. “Customer needs drive demand, and this fusing of sourcing/production/distribution strategy serves those needs. Logistics becomes the key enabler. We’re always going to need efficient sources of manufacturing, but logistics assures having product where you and your customers need it.”