What are top supply chain opportunities in 2007?

Filed in archive Point of view on December 28, 2006

Electronics Supply and Manufacturing has listed three areas where opportunities exist for companies to increase their market share and sharpen their competitiveness:

1. Proliferation of bilateral and regional free trade agreements: The Doha Development Round of World Trade Organization negotiations aims to lower trade barriers around the world, permitting free trade between countries of varying prosperity.

As a result of this breakdown in talks, free trade agreements will continue to multiply. Today, ten regional free trade agreements are in existence, while nine newly proposed regional agreements are in various stages of agreement.

2. On-shoring: Though the global sourcing boom has put Asia and Eastern Europe in the spotlight recently, manufacturers increasingly are looking at on-shoring opportunities closer to home in response to higher than anticipated total landed costs, quality issues, longer lead times, port congestion, and higher fuel costs.

There are also concerns over the potential impact if or when the Chinese Yuan floats on the open market. As a result, tried and true markets like Canada and Mexico are being revisited. Companies must evaluate sourcing alternatives based on the strategic and financial value they bring to the overall business strategy.

When making the decision to move or strengthen manufacturing operations, companies should consider conducting a strategic sourcing study.

Strategic sourcing studies look beyond typical unit cost or landed cost comparisons. Analyzing the impacts of potential sources to working capital, time to market (profit), and risk of disruption due to political and economic risk, physical supply chain risk (weather, natural disasters, security and health epidemics) is critical to good decision-making.

3. RFID: RFID is gaining ground in supply chain systems around the world, and adoption is just going to increase.

Retail is one of the primary sectors, with the oft-quoted Wal-Mart mandate to its suppliers to adopt this technology, but other retailers around the world are also finding benefits from implementing RFID.

Industries adopting RFID run the gamut, from labeling cheese in Italy to livestock in Australia and just about everything in between. However, it is the increased adoption of RFID by logistics and service providers that provides benefits to all other verticals.