I read an interesting report last week Global Supply Chain Trends 2008 – 2010 by PRTM Management Consultants. Their top two findings were that Globalization is accelerating within supply chains, and that this is driven mainly by pressures to reduce cost and penetrate local markets.
But the finding that caught my eye was number 3. “Despite average cost reductions of 17% per globalization initiative, many companies have difficulty realizing savings in management costs. In some cases management costs actually increase due to the more complex coordination of domestic and international activities.”
This is hardly surprising,, companies have invested tens (sometimes hundreds) of millions in supply chain integration software and systems implementations but have spent a small fraction of this on equipping the people who manage these systems to deal with greater complexity and cross-border cooperation.
Sharing information and workflow is a great start in creating an integrated global supply chain but it does not eliminate the problems caused by people working together across distance, cultures, timezones and through technology. We also need to develop global ways of working alongside the systems.
We also need to use these complex systems to insulate human beings from some of the complexity they don’t need to know. So long as we are working from a common flow of information that coordinates the activities of the supply chain we may not, for example, need to have a complex organization structure too. A matrix organization alongside an integrated supply chain system for example may be unnecessary.