By Samuel R. Polakoff, President, TBB Global Logistics, Inc.
Is there a magic pill? Some pixie dust perhaps?
How are some of the world’s most prestigious companies managing to buy and sell across the globe at improved margins while you continue to struggle? You struggle with the rising costs of nearly everything. You can’t raise prices. Your ability to implement positive change is stuck like a prehistoric creature in the middle of an Arctic iceberg. What do the large companies understand that you do not? The answer is contained in the following four steps.
Don’t view supply chain as a cost center
Wal-Mart does not view supply chain as a cost center. Wal-Mart views supply chain as a competitive weapon. While other retailers like K-Mart struggle to survive, Wal-Mart grew at an exponential pace, not only here in America, but across the globe. This feat is even more astonishing when you consider that during this period they added difficult product lines such as groceries. While this growth was occurring, Wal-Mart continued as the low price leader while experiencing record profits. This trend has held strong – even during our prolonged recession. Why? Wal-Mart is the worldwide leader in supply chain strategy, technology and execution. They view supply chain as their ticket to success – and it works!
Cut your costs for raw materials and finished goods
If you are the traditional manufacturer that has purchased from the same suppliers for ions and suffer from the delusion that you are getting a great deal, you need to think twice. Your competitors sell for less and make more money than you do. How is this possible? Simple! Your competitors have adopted a strategic Asian sourcing program with trusted advisors in the U.S. and in the host country to insure high quality product without disappointment. Working in harmony with ocean and air transportation resources as well as those that provide Customs clearance and compliance with the new, mandatory U.S. Importer Security Filing can create a seamless, turnkey operation. Supply chain management will enable your company to reduce the cost of product, hold less inventory, and sell directly from the Asian factory to new customers in parts of the world outside the U.S. You have doubts? How did a company like Nike or Reebok experience a meteoric rise to profitability? Nike and Reebok are great marketing companies with outstanding supply chain management philosophy that has helped catapult them to amazing global success while maintaining a reputation for the highest quality. The examples are endless.
Be there – without being there!
To be successful, in the old way of thinking, a retailer might need to be in leased store space in every major mall in America. Suppose the product is seasonal. Does it make sense to be hanging an annual lease around the corporation’s P&L? What if the retailer just wanted to test a new market for a short period of time? The "kiosks" we see in malls today are commonplace. It has become an accepted method for retailers to experience the time or place utility of a specific market while avoiding expensive, long-term leases. Supply chain management affords companies the same luxury. Your Sales team wants to explore new customers in a region thousands of miles from your nearest distribution center. Do you commit to opening a new distribution center with an expensive long-term lease? Not to mention the cost of employing staff and running the facility. Yet effective supply chain management strategy enables you to engage a third party to manage small amounts of warehouse space in a technologically sound, full service facility with no long-term commitments. This is a stronger and more dependable response than trying to use expensive freight transportation to get the goods to market sooner. Just like the seasonal retailer, you can be there – without being there – by adopting supply chain management as an enabler to your business’ success.
Finish by going backwards
Walk into any busy distribution center and you are likely to see an ugly site – a big pile of customer returns that will be dealt with "when you have time." This means probably never. Adopt the philosophy that every unprocessed return is like leaving the lights burning all night while you sleep. Why waste the money? Proper and efficient supply chain management practice can ensure your returns are sent back immediately to suppliers for credit, are recycled, shipped to an outlet or simply placed back in inventory. Most importantly, companies looking to squeeze every last dime out of their supply chain strategy know that using a reverse logistics process will help honor the sanctity of the customer order and avoid painful waste.
So if you think supply chain management as a tactical business weapon isn’t for you, think again. Now you know what the big companies know. Supply chain management isn’t a cost center, it’s the guiding light to the pot of gold at the end of your rainbow!