Advertisement

Blog

Executives Ponder Shifting Supply Chain & Logistics Practices

Increased risks, rising transportation costs, and complex supply chain practices worry most supply chain professionals. To lessen the anxiety, many executives are reassessing their company's existing practices and looking for ways to get more value from them.

Browsing through eyefortransport's (EFT) “Top Ten Supply Chain Presentations” from its recent European and US Chief Supply Chain Officer Forums, some of these efforts seem to be concentrated on gleaning greater opportunities from sourcing, procurement, and reverse logistics operations.

At Motorola Mobility, for instance, part of the sourcing and procurement strategy focuses on three core tenets — deep supplier relationships, transportation mode/service level optimization, and fact-based cost negotiations, according to a presentation by Jeffrey Wood, global procurement director for the Transportation, Fulfillment, Repair, Packaging and Contact Centers.

In these areas, the driving principles hinge on things such as: Establishing supplier relevance by consolidating global spend, across modes; fostering executive-level engagement; increasing visibility to expedited shipments to reduce premium spend; reducing shipper and supplier risk through dual-sourced lanes; and negotiating costs via a cost per kilometer analysis, monitoring the fuel index and adjusting for seasonal market trends.

At Nokia, these concepts go a bit further and shift into risk management, according to Kari Kulojärvi, Nokia's senior vice president of the Smart Devices Supply Chain. Kulojärvi's talk highlighted the need for looking at the trade-offs between flexibility, cost, the lead-time required to react, and raw material buffering as well the risk associated with single sourcing and multi-supplier sourcing. For instance, problems with a single-sourced part could mean a late product ramp-up if there are hiccups in development and slow price erosion. On the flip side, parts sourced from many suppliers could stunt innovation, lower investment in customized development, or foster a lack of deep commitment. As Kulojärvi points out, it may always be obvious which option delivers the best results or is a risk worth having.

For semiconductor makers Intel and Infineon, tackling logistics and transportation issues offers a promise of supply chain improvement.

Paul Slaven, director of global reverse logistics at Intel, points out that a strong reverse logistics strategy could create competitive advantages. Because of changing service models, collaboration agreements, overall affordability, and the corporate strategy direction, bringing more attention to reverse logistics — those practices associated with product or parts repair, warranty work, recycling, reuse, and end-of-life disposal — is becoming more important in today's business world.

In addition to forging a competitive advantage, Slaven notes that the value of reverse logistics also comes in the form of information management, cost optimization, and brand protection. It also leads to greater organization standardization, improved customer service, and better business intelligence.

At Infineon, according to slides from Peter Dressler, senior director of supply chain logistics operations, a significant emphasis has been placed on its transit network 2018 project, which encompasses its distribution network, production partners, and finished goods stock locations at distribution and consignment centers. The main target is to identify the optimal transit network for next five years and focus on minimized costs at current service levels, existing and future business requirements, and enhanced network flexibility, says the presentation.

At many companies, practices like these are constantly evolving as the business climate changes. What logistics and sourcing practices are you reassessing? How can more value be derived from them?

1 comment on “Executives Ponder Shifting Supply Chain & Logistics Practices

  1. Daniel
    August 21, 2014

    “Increased risks, rising transportation costs, and complex supply chain practices worry most supply chain professionals. To lessen the anxiety, many executives are reassessing their company's existing practices and looking for ways to get more value from them.”

    Jennifer, these are the add on costs which can narrow the profit. But it can be reduced to an extent by pooling the delivery to batches and rearranging the warehouse to industrial areas.

Leave a Reply