Abstract
In pursuit of new revenue opportunities and lower-cost operations, manufacturers around the world are creating ever-more complex global networks of sourcing, manufacturing, marketing, sales, and service, and research and development activities. Over the last two years, we have monitored the development of such networks through our global benchmark studies of the global operations of nearly 800 manufacturers based in North America, Western Europe, Central and Eastern Europe, South Africa, and Asia-Pacific. These companies represent a broad range of industries, including consumer business, automotive, hightech, diversified industrials, pharmaceuticals, and the chemical process sector, and together account for about $1 trillion in global sales.1
Our research finds that most companies have made little progress in optimizing their operations from a global perspective. Rather than take a holistic view in the expansion and optimization of their global networks - the complex web of suppliers, production and R&D facilities, distribution centers, sales subsidiaries, channel partners, and customers, and flows of goods, services, information, and finance that link them - most global manufacturers focus on fixing individual pieces of the network. In spite of launching many improvement initiatives across their global operations, most are overwhelmed by increasing strategic and operational complexity. And the complexity will only increase as companies their global expansion efforts - as research indicates they will. The problem is that those who let their global footprint grow without continuously determining how the various pieces of their operations should be redesigned, rationalized and optimized unwittingly build in huge redundant costs while losing opportunities for higher growth and profits.
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References
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Koudal, P., Engel, D.A. (2007). Globalization and Emerging Markets. In: Lee, H.L., Lee, CY. (eds) Building Supply Chain Excellence in Emerging Economies. International Series in Operations Research & Management Science, vol 98. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-38429-0_2
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