|Without firm management of the individual process steps, supply chain delivery costs often exceed expectations, potentially outweighing the savings from lowest cost outsourcing.
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The rush to outsource manufacturing to lower-cost countries around the globe has not paid the dividends most people expected. What many companies failed to sufficiently take into account was the increased cost and complexity of transport across global supply lines and international borders.
Part of the reason for this is that traditional systems do not have the ability to plan and execute all phases of international moves, including compliance with international trade regulations and calculation of the fully landed costs. When you consider ARC Advisory Group estimates a typical international transaction might require 35 documents across 25 parties complying with over 600 regulations and more than 500 trade agreements, you begin to understand the magnitude of the problem.
Thus, international logistics processes introduce significant complexity, cost and risk to outsourcing decisions. Without firm management of the individual process steps, supply chain delivery costs often exceed expectations, potentially outweighing the savings from lowest cost outsourcing. Companies wishing to establish global supply chain processes need to build their own internal competencies and infrastructure to achieve well-managed and cost effective global distribution. This requires two sets of disciplines and technology – one to plan and execute the physical move of goods and one to manage the flow of information required for international trade logistics and compliance.
A new generation of Transportation Management and International Trade Logistics solutions support these two disciplines. They enable companies to create a controlled and well managed process infrastructure that can deliver cost reductions and efficiencies in global supply chain delivery, while also complying with trade regulations. By managing every step of international movements, they provide visibility to the physical whereabouts of goods at any point in time, as well as the fully landed cost. They can also estimate these costs for extended supply chain network design alternatives to give management a better picture of the ramifications of outsourcing decisions.
Best of Breed supply chain technology companies specialize in managing the details of Global Trade Management and International Trade Logistics. They provide the tools to plan and execute global trade, cutting through the complexities, ensuring compliance, and delivering on the promise of lowest cost outsourcing. You can’t succeed in global trade without them.
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