Globalization is the key word that describes the progress of supply chains in recent years. Nevertheless, says Thompson, "global processes are inefficient." Companies that rushed to take advantage of low-cost labor and materials failed to adapt practices at the outset that would deal with the additional complications. Many continued to rely on legacy systems, and are only just beginning to take advantage of the growing number of applications available in a software-as-a-service (SaaS) mode. The technology offers advantages in the areas of cost, implementation time and risk, resulting in a rate of adoption that is four times greater than that for systems residing behind the firewall, he says.
The benefits of migrating to new systems can be substantial. Thompson cites a recent study by TradeBeam and Stanford University, which found the adoption of new global trade management (GTM) technology to result in top-line revenue savings of between 1 and 4 percent.
Further complicating the picture for global supply chains is the immense growth of free-trade agreements. In the mid-1990s, Thompson says, there were 50 or fewer bilateral FTAs in effect. That number has since swelled to more than 250, with several hundred more in various stages of approval. "Companies can no longer handle this with spreadsheets," he says. "They need to go to automated solutions."
Global businesses continue to be concerned with supply-chain visibility, or the lack of it. Other major issues on the table include a marked increase in security legislation and enforcement in the post-9/11 era, and the inevitable slowing down of product as it moves through longer supply lines.
Thompson sees a number of major issues materializing in 2010. One is full enforcement of the "10+2" importer filing requirement, as U.S. Customs and Border Protection begins assessing heavy penalties for non-compliance. Another is the further development of standards for exchanging data throughout the chain, among all partners. GTM technology can help in this effort, he says, but "it's very important to have an end-to-end vision of what you want your solution to do - not just work in one functional area or department, but to span across [all processes]."
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