Executive Briefings

Barriers to Implementing Supply Chain Innovation

The biggest barrier to innovation in global supply chains is the inability of companies to identify and then quickly react to opportunities, says Corey Rhodes, vice president-Americas at Amber Road. He discusses the reasons behind these shortcomings and steps to remedy them.

“Companies miss a lot of opportunities to innovate because they lack the agility to respond and execute when an opportunity presents itself,” says Rhodes. “Sometimes they don’t see an opportunity that is right there in front of them.”

One of the primary causes for this shortcoming is a lack of good data, he says. Half of the problem is effectively exchanging data among all the parties in a supply chain – a task complicated by different zones and languages. The other half is around keeping up with ever changing government requirements and regulations, says Rhodes.

“Companies can’t solve this problem by just adding a bolt-on to their ERP system and acquiring raw data on regulations from a data provider. You have to be able to interpret the regulations and then codify that into logic that your software can use,” he says.

With the right data, companies are better table to take advantage of opportunities like free-trade agreements, says Rhodes.  “Hundreds of FTAs are already in existence and new ones are being implemented at a staggering rate,” he says. “Most companies are not taking full advantage of the savings available to them.” As an example, Rhodes described a customer that was sourcing products from Korea. “Once the U.S./Korea trade agreement went into effect, we were able to qualify their bill of materials so they could take advantage of the FTA,” he says. “It is not just about what you are sourcing, but do those products qualify? You have to run the BOMs and qualify them against the rules of origin to take the duty savings.”

Another opportunity often being missed by companies is implementation of a China-plus-one strategy, where China remains a primary supplier but is supplemented by another supplier in a different region, says Rhodes. “We look at the products they have and all applicable trade agreements and then find the best secondary location,” he says. “This involves more than just identifying a country and researching its labor and manufacturing costs,” he says. “You also have to look into what are the actual trade implications of creating and exporting from this location.”

To view the video in its entirety, click here

“Companies miss a lot of opportunities to innovate because they lack the agility to respond and execute when an opportunity presents itself,” says Rhodes. “Sometimes they don’t see an opportunity that is right there in front of them.”

One of the primary causes for this shortcoming is a lack of good data, he says. Half of the problem is effectively exchanging data among all the parties in a supply chain – a task complicated by different zones and languages. The other half is around keeping up with ever changing government requirements and regulations, says Rhodes.

“Companies can’t solve this problem by just adding a bolt-on to their ERP system and acquiring raw data on regulations from a data provider. You have to be able to interpret the regulations and then codify that into logic that your software can use,” he says.

With the right data, companies are better table to take advantage of opportunities like free-trade agreements, says Rhodes.  “Hundreds of FTAs are already in existence and new ones are being implemented at a staggering rate,” he says. “Most companies are not taking full advantage of the savings available to them.” As an example, Rhodes described a customer that was sourcing products from Korea. “Once the U.S./Korea trade agreement went into effect, we were able to qualify their bill of materials so they could take advantage of the FTA,” he says. “It is not just about what you are sourcing, but do those products qualify? You have to run the BOMs and qualify them against the rules of origin to take the duty savings.”

Another opportunity often being missed by companies is implementation of a China-plus-one strategy, where China remains a primary supplier but is supplemented by another supplier in a different region, says Rhodes. “We look at the products they have and all applicable trade agreements and then find the best secondary location,” he says. “This involves more than just identifying a country and researching its labor and manufacturing costs,” he says. “You also have to look into what are the actual trade implications of creating and exporting from this location.”

To view the video in its entirety, click here