@Risk

Rising labor costs and quality concerns have many US companies reevaluating their overseas strategies.

In fact, new research conducted by Cook Associates Executive Search found that a full 85 percent of manufacturing executives see the possibility of  certain manufacturing operations returning to the US.

What are the reasons for this potential shift? Survey participants cited:

• overseas costs (37 percent)
• logistics (19 percent)
• other, including economic/political issues, quality and safety concerns, patriotism and overseas skills shortages for highly technical manufacturing processes (36 percent)

The study, which polled nearly 3,000 manufacturing executives primarily in small- to mid-sized US companies from October 13 through November 18, 2011, identified low-volume, high-precision, high-mix operations, automated manufacturing and engineered products requiring technology improvements or innovation as the primary forms of manufacturing returning to the US. (more…)

Results of the 2011 Change in the (Supply) Chain survey show that many Japanese high-tech companies are shifting supply sourcing locations from domestic to other Asian countries, such as South East Asia.

More specifically, the survey, which was conducted by IDC Manufacturing Insights and commissioned by UPS, revealed that:

• The Japanese companies interviewed expect to reduce their domestic supply sourcing by nearly half, from 96 percent to 53 percent in the next three to five years.
• These companies also expect to increase sourcing from Mature Asia Pacific Countries (Thailand, Malaysia, Hong Kong, and Singapore) almost threefold, from 9 percent to 24 percent.

The key concern appears to be cost management. More than two-thirds (68.9 percent) of the Japanese companies surveyed cited “reducing total supply chain costs” as the top supply chain priority in the past years. Not surprisingly, cost is also expected to remain one of the top drivers of change in the supply chain in the next three to five years. (more…)

Supplier collaboration is essential to supply chain risk management, and as PRTM has shown, companies that have implemented operational flexibility and collaborative initiatives are now realizing significant business benefits.

Unfortunately, though, building collaborative relationships with suppliers is often easier said than done.

Even though virtually every aspect of our work day has been transformed by Web 2.0 communication platforms, these technologies have been slow to infiltrate supply chain management. In fact, most companies today still rely on phone, fax, email and spreadsheets for collaboration with suppliers. These methods are frustrating, costly, inefficient –and perhaps worst of all, they’re risky, too.

Shouldn’t there be a better way?

At Aravo, we think there absolutely should be a better way. And that’s why this week we released Aravo Assure^TM, an innovative web-based B2B social network built to revolutionize the way businesses engage, share data and collaborate.

The concept is relatively simple . . . and long overdue. Using Aravo Assure’s^TM Enterprise 2.0 technology, trading partners are empowered with an industrial-strength collaboration platform and many-to-many communications framework designed to facilitate information exchange, while reducing the expense and administrative burden on both parties. That means Aravo Assure^TM makes it easier than ever before for suppliers and buyers to build robust, collaborative relationships –the kind of relationships that ultimately, mitigate supply chain risk. (more…)

3PLs and their customers appear to be misunderstanding each other’s priorities.

For example, the recently published Global 3PL & Logistics Outsourcing Strategy Report 2011-12, from eyefortransport, found that:

• 36 percent of 3PLs believe lowest price is the most important factor for shippers when choosing a new 3PL, as opposed to best quality service (30 percent).  Shippers, on the other hand, rate best quality service as the most important factor (64 percent) and lowest price as far less important than 3PLs expect (15 percent).
• When it comes to the non-renewal of existing 3PL contracts, 3PLs overestimated the importance of their competitors offering a cheaper price by a dramatic 49 percent.

This kind of fundamental disconnect needs to be addressed so the industry can successfully face the challenges that lie ahead.

“This year’s survey findings really reinforced some of the trends we’ve seen for the last 18 months,” said eyefortransport’s Executive Director, Katharine O’Reilly.  “The insights are not really unexpected, but when you see figures like this, especially in areas where 3PLs and their customers are fundamentally misunderstanding each other’s priorities, we really sit up and take note.  These are gaps in understanding that need to be filled if the industry is to move forward and grow as it should.”

In other findings: (more…)

How much are operational inefficiencies costing your business?

A new survey from Accenture and Clearstream found that the financial services sector could save more than €4 billion (about $5.5 billion) annually in collateral management costs by addressing operational inefficiencies.

Clearly, collateral management has become a critical industry issue because 1) regulators have set more rigorous capital and liquidity standards, and 2) banks are confronting new cost and growth challenges in the wake of the global financial crisis.  Done right, however, efficient collateral management can free up liquidity for banks, enabling them to meet new regulatory requirements while offering more products and services.

According to the Accenture survey, banks’ key collateral management challenges include:

• An incomplete view of all collateral and an inability to manage holdings centrally
• Suboptimal internal governance leading to a misalignment of objectives
• Inadequate internal transfer-pricing mechanisms
• A lack of optimization engines or the ability to deploy them effectively
• Inability to perform inventory projections
• Excessive staff costs as a result of process complexity

The highest potential cost savings, according to survey respondents, can be achieved by: (more…)