Global Trade Management Agenda 2016

Supply chain collaboration in practice and the key challenges in managing international supply chains

[Source: SCM Portal]

by: Prof. Dr. Dirk H. Hartel (*) and Dr. Ulrich Lison (**)

(*) Head of the Department of Business Administration Service Management at DHBW Stuttgart

(**) Member of the Executive Board at AEB and expert in the area of global trade, preferences and international customs processes

Collaboration in the supply chain: That is the focus as this year’s Global Trade Management Agenda examines a very intense form of partnership between companies – a partnership for which many examples already exist in business practice but for which there are no standard prescriptions (yet). The results of the survey, conducted in the summer of 2015 among 319 global trade and logistics experts, show that the topic has very positive associations and will become increasingly important over time. Businesses are also wary of the risks that this strategy presents, however. Like every year, the experts were also asked to share what they feel are the most urgent challenges in global trade management in the coming year. The study is a collaborative project of AEB Gesellschaft zur Entwicklung von Branchen-Software mbH and Baden-Württemberg Cooperative State University (Duale Hochschule Baden-Württemberg, DHBW) in Stuttgart.

Global trade management – key themes in 2016

Speed is number-one issue

Shorter lead times and time to delivery – this goal tops the agenda for businesses in 2016. Nearly 75 % of respondents cite this as an important or very important issue – displacing last year’s top agenda item of “complying with embargo requirements”, which ranks this year down in the middle of the field. Other challenges of heightened urgency are also vying for the top spots, including “minimizing risk in the supply chain” and “implementing changes to customs laws”.

Increased focus on personnel management

The study also looks at how companies are equipped to meet the various challenges. Nearly 42 % of respondents see room for improvement or major shortcomings in lead times, for example – putting this topic in the middle of the field. Action is more urgently needed in lowering overall GTM costs, penetrating new markets, and establishing a tax-optimized supply chain. Nearly 51 % perceive the most significant shortcomings in the area of personnel management. The challenge to businesses here is to keep up with the increasing professionalization in global trade despite a worsening shortage of skilled labor in the logistics industry.

Collaboration in the supply chain

Strong common ground on definition

“Collaboration is a targeted, solution oriented cooperation between companies. The aim is a coordinated, cross-enterprise optimization of processes and workflows in which each partner retains entrepreneurial freedom.” This working definition was presented to participants at the start of the survey and put up for debate. In the English-speaking world, there is already a consensus on how “collaboration” is defined and applied in practice. Most companies now have a clear understanding of the term as well, and one that is largely covered by the above working definition. Participants also feel it is important that the benefit be shared by all collaborative partners and that all parties accept the need for compromise.

Collaboration creates competitive advantages

Businesses that collaborate closely with other businesses in the supply chain and work with them to optimize workflows gain critical competitive advantages, say four out of five global trade and logistics experts. First and foremost, the experts expect collaboration to bring optimized processes – 87.3 % of respondents called such benefits very likely or rather likely. A large majority also expects collaboration to enhance their expertise and accelerate their supply chain processes.

In practice: still untapped potential

The study also highlights the time gains and financial benefits that businesses achieve through collaboration: The number-one benefit of supply chain collaboration cited by respondents is lower transport costs (31.7 %). Businesses also report shorter lead times and fewer delays in customer shipments. The results still show a marked gap between anticipated and actually realized benefits of collaboration when it comes to speed, for example. It’s clear that businesses recognize the benefits of collaboration in the supply chain, but many still do not exploit its full potential.