SCM World Managing Global Trade September 2013

RESEARCH REPORT
MANAGING GLOBAL TRADE

RISING IMPORTANCE BUT
LAGGING EXECUTION
SEPTEMBER 2013
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CONTENTS
EXECUTIVE SUMMARY
INTRODUCTION
BUSINESS DRIVERS FOR GLOBAL TRADE
CHALLENGES OF GLOBAL TRADE
CONCLUSIONS & RECOMMENDATIONS
18
REFERENCES
18
ABOUT THE RESEARCH
19
MANAGING GLOBAL TRADE RISING IMPORTANCE BUT LAGGING EXECUTION
EXECUTIVE SUMMARY
Research conducted in April 2013 by SCM World on managing global manufacturing footprints highlighted the
growing complexity of cross-border trade. Where globalisation once meant low-cost country sourcing, today it is
clear that goods must move in all directions at once east to west, north to south, rich country to poor country and
back again. Movement of product, whether as raw material input, finished goods or capital equipment, requires
an approach to global trade management that is ever vigilant to regulations, taxes, transportation costs and more
and one that is equally capable of facilitating inbound supply and outbound delivery to end customer markets.
To understand the business drivers and execution challenges associated with this increasingly important and
complex area, we fielded a survey to the SCM World community. Having collected 114 complete responses and
then conducted a further 10 in-depth interviews, we arrived at some broad conclusions that suggest global trade
management has begun to outgrow most companies largely manual processes. The highlights of our findings
include:
Three-quarters of the companies surveyed conduct trade across more than 10 countries, with almost half
(48%) trading across more than 50 countries.
Over 41% of the companies surveyed import more than half of their products from international suppliers.
More than 97% of respondents say that product cost savings are either important or very important business
drivers of international sourcing.
More than a third (35%) of the companies realise more than half of their sales from customers located in foreign
markets. Further, over the next five years, two-thirds expect their total share of international sales to grow by
more than 10%, while more than a quarter (28%) expect growth of more than 25%.
Almost half (48%) of respondents say that an inability to control global transportation costs and the lack of
visibility of global shipments moving through the global supply chain are among their top 5 business challenges.
Over three-quarters (80%) agree that shipments delayed by customs or experiencing customs problems are
impacting customer service in a material way, and nearly 90% say the same about unpredictable lead times on
international shipments.
Over half (58%) agree that their inability to take advantage of preferential duty programmes or free trade
agreements is costing them a material amount today and unless corrected will only increase.
More than 57% of respondents agree that complying with global trade regulations is one of the top concerns
they face as a global business.
Only 12% of respondents indicate that their collaborative execution with extended global trading partners is
fully automated.
Less than 4% of respondents say their import compliance is fully automated.
Among the most important overarching conclusions of this research is that loosely connected, ad hoc and manual
processes and systems will almost certainly be inadequate as supply chains continue to expand their web of
global trade. Anecdotal evidence from our interviewees confirmed repeatedly that visibility to and preparedness
for changes in the rules and costs governing global trade will be vital as companies seek to expand sales in new
growth markets and source more widely.
RESEARCH REPORT
INTRODUCTION
Global trade is still growing and fast
In a recent SCM World research report, Manufacturing Footprints: Getting to Plant X1, one high-profile finding was
that many companies are reshoring manufacturing. A majority of the 300+ companies said they intended to bring
at least some of their production back from low-cost, offshore locations to home markets (Figure 1). The media
drumbeat around this topic, especially in the United States, has sometimes given the impression that global trade
is on the wane, with local manufacturing replacing the far-flung movement of product around the world.
Deeper analysis of this issue, however, reveals a more nuanced picture. The reality is that while low-cost country
sourcing, especially in China, has indeed given up some ground in cost competitiveness to higher-cost home
country manufacturing, most notably in the US, global manufacturing footprints now are being designed to serve
growth opportunities in what were once low-cost countries, but now are hot markets. The flow of product across
borders is increasing, not decreasing, and is now bi-directional or multi-directional rather than one way.
Figure 1
The reshoring drive
14
We are looking to reshore most or all of our manufacturing for some

combination of cost, risk and market responsiveness improvements
We are looking to reshore some of our production as part of a dual
or multi-sourcing strategy
43
37
6
We are probably going to reshore some manufacturing for symbolic

or experimental purposes
We are not expecting to reshore any of our manufacturing
% of respondents
n=324
Source: SCM World survey, April 2013
Import/export remain on a steep long-term growth trend

Our initial survey questions for this report were designed to get directly at this issue by asking specifically about
trends in import/export movements. To set a baseline, we wanted to understand how broadly supply chains reach
in terms of number of countries involved.
Three-quarters of the companies surveyed trade across more than 10 countries, and almost half trade across
more than 50 countries. Nearly a fifth operates in more than 150 countries (Figure 2). The typical trade compliance
department therefore needs to know everything about the rules governing sales into and sourcing from many
dozens of countries. Some of the larger, more mature markets like those in Europe or the US are reasonably
predictable and well organised, while many emerging markets including those in Africa and Latin America can
be fickle and confusing. Extreme examples, like Brazil for instance, may require knowledge of trade regulations at
the state as well as national government level. There is certainly a lot to keep track of in managing global trade.
JULY 2013
Figure 2
Global footprint
How many countries does your company currently do business in (sales and/or sourcing)?
Less than 10
19
11-50
25
51-100
13
101-150
150+
27
16
% of respondents
n=113
This global movement of product accounts for a substantial share of companies overall business. Over 40% of
those surveyed import more than half of their products from international suppliers, with 18% saying that they get
three-quarters or more of their product supply from international sources (Figure 3). Among those most reliant on
global sourcing are businesses in the apparel, toys and consumer electronics industries. As a matter of urgency
then, global trade is life or death for the majority of supply chains we looked at.
Figure 3
Global sourcing
What % of your companys sourced products/materials are purchased from international suppliers
and imported versus purchased from domestic suppliers?
18
Less than 10
12
11-25
25
23
26-50
51-75
76-100
22
% of respondents
n=112
Trendlines behind these figures show that supply chains in general are nowhere near the end of this movement
to a more global business footprint. Looking backwards, we see a huge increase over the past decade for both
inbound supply and outbound shipments. As well discuss later, it is not hard to see why so many supply chain
organisations have found themselves working with manual systems, despite the huge importance of global trade
in effectively executing broader business strategies. With a weighted average increase over the past 10 years of
about 44%, many have found the jobs mushrooming complexity hard to keep pace with.
Looking ahead, most respondents see continued growth, although generally at a slower pace. These findings
reflect some of what we saw in our manufacturing footprint research earlier in the year where many companies
were looking to slow the rush to low-country sourcing. It appears that while global trade continues to grow, it is
doing so more quickly on the sales side than on the sourcing side. Nonetheless, expectations for future imports
still lean towards an increase by a slim margin (Figure 5a).
RESEARCH REPORT
Figure 4a Growth of international sourcing
Figure 4b Growth of international sales
How has your companys share of imported

products/materials changed relative to domestic
purchases over the past 10 years?
How has your companys share of international

sales changed relative to domestic sales over
the past 10 years?
1
5
Substantial increase (50%+)
Significant increase (26-50%)
13
Moderate increase (10-25%)
17
40
0
9
17
Relatively stable (0% to +/-9%)

Moderate fall (-10% to -25%)
39
Significant fall (-26% to -50%)
30
Substantial fall (-50%+)
24
% of respondents
n=112
Growth is expected to be faster on the sales side (Figure 5b). New business opportunities, especially in markets
like Africa, which was cited by some interview respondents in the consumer products and pharmaceutical sectors,
or China, which continues to show growing demand across industries, indicate that global trade will be even
more important five years from now. Large countries that are still new to many businesses include India, where
significant investment in automotive production is underway, and Russia, which is seeing substantial growth in
some luxury consumer goods markets.
Figure 5a Future growth of international sourcing
Figure 5b Future growth of international sales
How do you expect your companys share of

imported products/materials to change over the
next 5 years?
How do you expect your companys share of

international sales to change over the next 5
years?
10
Substantial increase (50%+)
21
5
Significant increase (26-50%)
10
Moderate increase (10-25%)

Relatively stable (0% to +/-9%)
0
6
22
28
Moderate fall (-10% to -25%)
36
36
Significant fall (-26% to -50%)

Substantial fall (-50%+)
% of respondents
n=112
38
BUSINESS DRIVERS FOR GLOBAL TRADE

As a matter of basic supply chain practice, global sourcing has always started with the quest for lower costs.
Responses to this study confirm the obvious namely, that product cost savings are overwhelmingly the dominant
driver for global sourcing strategies. Also important is risk diversification as a rationale for global sourcing. Although
clearly second tier to cost savings, nearly 8 out of 10 respondents agree that risk mitigation is either important
or very important. This data corroborates what we found in our manufacturing study and suggests that concern
over international supply sources continues to increase.
JULY 2013
Among other possible business drivers for global sourcing, however, are two that are regarded as either important
or very important by a majority of respondents and are essentially interdependent with global trade management.
The first of these is tax or tariff savings, which 38% say is very important. Typical of this factor as a determinant
of where to source product is the pharmaceutical industry, where transport costs are very low and intellectual
property generally the most important value-added component in manufacturing.
Preferential tax treatment in such cases is often the key determinant of plant or supply locations. VAT rules and
apportionment of losses across borders may also be used to achieve substantial tax savings, something which
Vodafone has done, for instance, by locating a central purchasing organisation in Luxembourg, but writing off
losses in the UK.
Figure 6
Global sourcing business drivers
In terms of international sourcing (imports), how important are the following business drivers for your company?
38
Tax or tariff savings
Risk diversification/mitigation
Unique material, technology or

capacity access
Winning favour with/access to
international markets
Very important
Important
36
30
Neither important
nor unimportant
21
49
29
25
11
27
71
Product cost savings
17
36
33
Not very important
22
30
29
Not at all important
10
% of respondents
n=110
The second factor applies to those looking to win favour as an aid to accessing local markets. In many cases
this includes local content rules that apply in industries such as aerospace, solar power and telecoms, which are
often required to source a certain amount of their materials or components from local companies as a condition for
selling in that country. Many attractive high-growth emerging markets like Nigeria, India and Brazil impose such
rules. More than half (58%) of our respondents say such factors are at least important in global sourcing decisions.
Selling internationally is rising even faster than sourcing

In terms of international selling, most respondents see global trade as essential to future revenue growth. Given
that over 80% of our respondents are located in the US or Europe, this data reflects what we have seen elsewhere:
new revenue is increasingly difficult to wring from such saturated, slow growth consumer markets. The business
imperative driving global trade is therefore an urgent need to find new markets for existing products.
RESEARCH REPORT
Respondents very high regard for establishing a market position for future growth (62% consider this very
important) suggests that many are willing to invest in new markets now for a longer-term payback. Compared to
those who look to international sales for immediate revenue growth (only 36% consider this very important), future
market opportunity is clearly seen as strategic rather than tactical. This means its worth taking the time to set it
up right.
Figure 7
Global sales business drivers
In terms of international sales (exports), how important are the following business drivers for your company?
Establish market position for
revenue growth in future years
62
30
54
Open new markets
Meet customer demands for

global distribution
38
49
35
36
Grow revenue immediately
7 2
12
Exploit favourable trade terms
20
38
28
Reduce dependence on
existing markets
18
44
23
12
Very important
Important
Neither important
nor unimportant
Not very important
Not at all important
4 22
7
51
5
3
% of respondents
n=105
Notably lower on the radar, however, is the importance of favourable trade terms as a spur to increased international
sales. It seems that government policy, while potentially important to plant location decisions or global supply
network designs, is still relatively weak as an incentive for a company to enter a market.
CHALLENGES OF GLOBAL TRADE

With a steady upward trend for both inbound and outbound product movement over the past decade and continued
growth anticipated, global trade is clearly an essential ingredient to a successful supply chain and business
strategy. Global sourcing, although slowing of late, continues to grow both in volume and complexity, while global
sales appear ready to keep increasing, and at potentially even higher rates in the future.
The challenges associated with managing this still expanding area cut across many functions of the business but
fall broadly into two categories: visibility challenges and compliance challenges.
JULY 2013
10
Visibility problems cost money

In the visibility category, specific challenges seen to have material cost impacts that are likely to increase going
forward include:

Lack of visibility of global shipments moving through a supply chain three-quarters of those that list
this as a top 5 challenge agree it has material cost impacts and is likely to worsen if not corrected, with 12%
strongly agreeing.

Lack of consistent and timely collaboration with foreign suppliers 80% agree this has material cost
impacts, with 13% strongly agreeing.
Inability to grow international revenues fast enough owing to global supply chain constraints more than
two-thirds say this has material cost impacts and is likely to worsen.
Inability to control global transportation costs 79% agree that this has material cost impacts, 21% strongly.
Unpredictable lead times on international shipments three-quarters say this has material cost impacts, with
more than a quarter (26%) agreeing strongly.
Excess safety stock attributed to non-optimal supply chain performance 87% of respondents say this has
material cost impacts, with 36% agreeing strongly.
Each of these issues represents a problem attached to uncertainty of supply, whether inbound or intended for
customers. The very high agreement among respondents across industries that excess safety stock is a material
problem pulls into one bucket the overarching cost burden of buffering against such uncertainty. It is clear that
visibility problems in global trade are creating expensive waste and undoubtedly edging at least some potential
growth markets from marginally profitable to loss making.
Lean principles in supply chain have been deployed for decades to eliminate such safety stock, but much of the
progress here has been internal to a given geography where supplier plants are built next door to customer plants,
as in the case of Toyotas manufacturing complex in Japan, or pull-based replenishment systems serving retailers
as in the case of Walmart in the US. International sourcing demands a solution to this visibility problem. Across
long distances, and especially across borders, lean principles are much harder to implement because visibility
goes from the reliable line-of-sight kanban approach to one dependent on poorly connected information systems.
Figure 8
Lack of visibility of global shipments moving through a supply chain
Costing us a material amount today and

unless corrected it is likely to increase
Has a material adverse impact to our
production and/or distribution plans
12
18
Is impacting customer service in a

material way
Is one of the top concerns we face
as a global business
Is adversely impacting our ability
to compete and grow
63
21
51
22
29
43
12
Strongly agree
6 2
27
34
Agree
27
51
20
32
Neutral
Disagree
8 2
10
Strongly disagree
% of respondents
n=50
RESEARCH REPORT
0
0
11
Figure 9
Lack of consistent and timely collaboration with foreign suppliers

13

16
61
Is adversely impacting our ability to

compete and grow
31

material way
12
67
13
49
15
46
19
35
24
8
12
0
0
10
30
21
% of respondents
n=53
Figure 10 Excess safety stock attributed to non-optimal supply chain performance

36

26

to compete and grow
material way
51
15
39
44
13
53
20
30
30
33
39
0
0
4
15
18
7
2
4
% of respondents
n=55
Strongly agree
Agree
Neutral
Disagree
Strongly disagree
Visibility problems also impact revenue

Many of the challenges seen to have material cost impacts also have damaging effects on other elements of the
business strategy, including:

Almost two-thirds agree that poor collaboration with foreign suppliers is adversely impacting their businesss
ability to compete and grow; 31% strongly agree that this is a problem.
Four out of 5 agree that supply chain constraints are restricting their businesss international growth.
Nearly 90% agree that unpredictable lead times on international shipments are impacting customer service in
a material way.
JULY 2013
12
The implications of these findings are especially concerning where top-line growth depends on finding new market
opportunities for established products, as is common in consumer products industries. The most challenging
situations are those where growth markets are low-income countries that demand lower price points, but are also
encumbered with complex trade regulations and poor supply chain visibility, as is the case in India among other
places. This added cost and unpredictability can make competitive market entry impossible in such situations.
A typical case is the supply chain for a global consumer packaged goods company with a European headquarters,
but a large and growing African business. The primary concern is not importing product from Europe to Africa or
vice-versa, but intra-regional cross-border trade on the African continent. In-country sourcing is seen to be subscale in many countries, but shipping across borders is so complex and unreliable in terms both of regulation and
transportation that regional supply networks have yet to be built. The business opportunity is there, but hard to
reach because of global trade management complexity.
Figure 11
Inability to grow international revenues fast enough due to global supply chain constraints

compete and grow
30

53
26

19

18

material way
19
0
0
17
49
23
51
24
51
28
46
30
5
% of respondents
n=40
Figure 12 Inability to control global transportation costs

compete and grow
Is one of the top concerns we face as a
global business
material way
22
60
18
14
49
22
17
37
17
27
40
20
14
12
37
31
35
42
10
% of respondents
n=50
Strongly agree
Agree
Neutral
Disagree
Strongly disagree
RESEARCH REPORT
13
Figure 13 Unpredictable lead times on international shipments

34

material way
40

49
25

to compete and grow
57
24
41
20
28
39
4 7
49
24
0
0
2
5 2
32
7 2
% of respondents
n=55
Strongly agree
Agree
Neutral
Disagree
Strongly disagree
Compliance problems constrain strategy

Beyond visibility issues, global supply chains also face persistent and costly problems in terms of compliance to
the many and ever-changing rules that govern global trade. Challenges in this area, however, arise from political
or legal logic rather than economic logic and thus are generally less predictable than transportation, inventory
or other materials management matters. The key, as with any supply chain challenge, is finding a way to remove
unintended variability. Non-compliance is an important source of such unintended variability.
In the compliance category, specific challenges seen to have material cost impacts that are likely to increase
going forward include:

Shipments getting delayed in customs or experiencing customs problems 60% say this has material
cost impacts and is likely to worsen if not corrected; almost a fifth strongly agree this is the case.
Inability to take advantage of preferential duty programmes or free trade agreements 58% say this has
material cost impacts, of whom 23% strongly agree.
Complying with global trade regulations 61% say this has material cost impacts, with almost a quarter
strongly agreeing.
Managing trade finance vehicles on international shipments 71% say this has material cost impacts and
is likely to worsen if not corrected.
JULY 2013
14
Figure 14 Managing trade finance vehicles on international shipments

compete and grow

22
63

material way
70
25
57
9
30
41
43
0
0
41
5 4
35
% of respondents
n=24
Figure 15 Complying with global trade regulations

18

material way
20

to compete and grow
47
22
41
24
22
37
15
17
30
43
15
10 3
7 2
35
36
34
15
% of respondents
n=41
Figure 16 Inability to take advantage of preferential duty programmes or free trade agreements

compete and grow
25
14

11

global business
10

material way
39
28
45
4 4
27
33
37
28
38
30
41
7
8
21
25
7
11
3
4
% of respondents
n=29
Strongly agree
Agree
Neutral
Disagree
Strongly disagree
RESEARCH REPORT
Figure 17 Shipments getting delayed in customs or experiencing customs problems

18

material way
30

20

global business
18

to compete and grow
70
8 22
51
43
6 2
29
41
22
15
29
44
34
8 4
10 4
% of respondents
n=54
Strongly agree
Agree
Neutral
Disagree
Strongly disagree
Many of the more memorable stories attached to problems managing global trade come from situations where
seemingly capricious regulations slow down commerce. Among these are:

A new Argentinian requirement that every item imported must be accompanied by a photograph of the item
along with all customs documents.
An unannounced policy change governing the importation of mining equipment to Indonesia that incurred a
$2 million fine.
A food labeling rule change, without notification, that halted an inbound shipment of raw materials to India.
New supply was airfreighted in to maintain production, while the rejected ocean vessel fell into limbo because
the US Food and Drug Administration refused to allow back into the US product which had been rejected by
a foreign government. The stock was scrapped.
Compliance is not just a process problem its about knowing the rules
The critical thing to understand while attacking the global trade management problem is that, unlike many supply
chain strategy issues, it is more about content than process. Visibility issues, as discussed above, lend themselves
to systemic solutions in which trading partners follow protocols for issuing purchase orders or advance ship
notices. Technology solutions that provide control tower capabilities are scalable ways to get better at leaning an
extended global supply chain. Compliance challenges, on the other hand, depend primarily on knowing the rules,
and especially keeping up with changes in those rules. Someone has to research the rules on an ongoing basis
and maintain accurate central knowledge constantly.
JULY 2013
15
16
Figure 18 How global trade is managed

What % of your global trade functions are you performing with internal staff and
automation versus outsourcing to third-party logistics providers?
36
Internal
Outsourced
64
% of respondents
n=111
Many of the supply chain executives interviewed for this report relied on brokers, third-party logistics firms or other
agents familiar with local trade rules as a way to handle the problem. Where such agents are well-established and
reliable, so too will be trade through them. When entering new markets or engaging new sources, however, supply
chain executives must start afresh in looking for trustworthy partners. Such partners cost money and separate the
supply chain from its customer or supplier, reducing the ability to learn and improve. There is also the problem
of corruption, which adds cost, confusion and a serious threat of legal trouble where home rules, such as the US
Foreign Corrupt Practices Act, may impact companies that get caught in such situations.
Solutions are lagging behind the problem

Considering how important global trade is to business and supply chain strategy, it is surprising how little most
organisations have automated or even supported it with systems. Over a quarter of our survey respondents
describe their collaborative execution with global trading partners as dependent on faxes, phone calls and e-mail.
Most say they have at least some electronic connectivity in the form of EDI or other automated transaction systems,
but only about 1 in 10 claims to have near real-time visibility to global trade movements.
Figure 19 Limited collaboration

How would you describe your collaborative execution with extended global trading partners
(ie, foreign suppliers, global customers, forwarders, brokers, international carriers) today?
Extensive (fully automated near-real time

exchanges/status updates)
3 11
Moderate (some EDI or other automatic/

scheduled communications)
26
Limited (faxes, phone calls, e-mail)
None
60
% of respondents
n=112
RESEARCH REPORT
In terms of specific capabilities and the degree of system support available, it clear that many companies are
relying heavily on disconnected systems, which are absolutely prone to error and unlikely to provide a single
version of the truth. Consider the following findings:

43% say they handle free-trade agreement management (soliciting supplier qualifications, certification of
shipments against rules of origin) mostly manually or on spreadsheets.
41% handle import compliance (electronic communication with customs brokers, landed cost calculation
including duties, licence management, filing import documents with governments) with homegrown systems
providing some automation.
Only 8% say they have full automation with a global trade management system integrated to ERP for export
regulatory compliance (restricted party screening, licence management, generation of shipping documents,
filing of export documents with governments).
Figure 20 Degree of automation achieved with global trade operations
Automate free trade agreement management (soliciting

supplier qualifications, certification of shipments against
rules of origin)
24
Automate import compliance (electronic communication

with customs brokers, landed cost calculation including
duties, licence management, filing import documents with
governments)
27
34
Automate export regulatory compliance (restricted party

screening, licence management, generation of shipping
documents, filing of export documents with governments)
23
41
Perform freight audit
31
31
Manage transportation rates and contracts for ocean and

air shipments
36
Supply chain visibility to track inbound and outbound

shipment status and calculate ETAs
43
31
14
31
33
35
34
34
31
26
22
% of respondents
n=112
Mostly manual or using

spreadsheets
JULY 2013
Some automation with

homegrown systems
Some automation with one or

more point solutions provided
by vendors
Full automation with a global

trade management system
integrated with our ERP system
17
18
CONCLUSIONS & RECOMMENDATIONS

Global trade is clearly a critical part of most companies business and supply chain strategies. For the purposes
both of finding lower cost sources of product and new markets to increase revenue, global trade represents an
irresistible way to grow profits and ultimately business value. Evidence that this attitude is strong and growing
is irrefutable.
And yet, tactical challenges associated with managing such large and fickle trading networks are certainly having
material adverse impacts on costs and the ability to compete for new customers in new markets. Data from our
study shows that despite the rewards of getting global trade right and the costs of getting it wrong, most supply
chains have yet to crack the problem systematically.
The most common way of handling trade management processes and the information needed to support such
processes is some combination of manual work in spreadsheets, clunky homegrown systems and arms length
relationships with third-party partners. For a key business problem whose main feature is unpredictable and often
politically driven rule changes, such disconnected systems are sure to fail.
Supply chain strategists wrestling with global trade should start by breaking the problem down into issues that are
classic supply chain visibility problems, and other issues that are about compliance. For visibility issues, the holy
grail is some kind of control tower type system capable of tracking shipments, orders, change notices, forecasts
and any other supply/demand balancing information for all to see. The notion of collaborative execution2 offers big
gains in efficiency and faster cycles of improvement.
For compliance issues, the main problem is keeping abreast of rules. Given that many companies participating
in this research do business in dozens of countries, and that many of the most important for future growth are
immature politically, it is nigh on impossible to get everything right every time. Specialists whose business includes
constant updating of relevant rules may offer a subscription-based answer to this problem.
Truly successful global trade management depends on getting both the visibility problem and the compliance
problem right. A control tower system of some kind may be a prerequisite for success, but without accurate and
up-to-date content for compliance purposes, money will still be wasted.
REFERENCES
1 Kevin
2 See
OMarah and Dr Hau Lee, Manufacturing Footprints: Getting to Plant X, SCM World, April 2013.
the report Collaborative Execution: Speed, Innovation and Profitability, SCM World, March 2012.
RESEARCH REPORT
ABOUT THE RESEARCH

Invitations to complete an online survey were sent to
corporate members of SCM Worlds global community
and to other supply chain, procurement and operations
Location: Almost half of respondents (46%) are based in the

EMEA region, with 39% in the Americas and 15% in AsiaPacific and elsewhere.
practitioners in June 2013. In total, 114 completed

responses were received during the three-week survey
period. This data was supplemented by telephone

interviews with almost a dozen executives.
Our thanks to Amber Road for sponsoring the research
39
Europe, Middle
East & Africa
Asia & Australia
and providing insights.
North & South

America
The key demographics of this sample are as follows:
Rest of the World
Industry sector: Food & beverage (17%), CPG (14%),

industrial (13%) and healthcare & pharmaceuticals (9%) were
11
% of respondents
the sectors with the largest number of respondents.
Food & Beverage
17
CPG
14
Industrial
13
46
Company size: Half of respondents work for companies with

more than $1bn in annual sales, while 41% are below $1bn.
10% of the sample did not disclose revenue information.
Healthcare & Pharma
Logistics & Distribution
Professional Services
Utilities & Energy
Fabric & Apparel
Retail
Hi-Tech
$5bn-$10bn
Chemicals
$10bn-$25bn
Agriculture & Mining
Other
10
Under $1bn
14
$1bn-$5bn
41
$25bn+
16
Undisclosed
% of respondents
4
Job function: Four out of 10 respondents define their role
as supply chain, while 16% work in logistics and distribution,
11% in procurement and 9% each in operations and general
management.
Supply Chain
40
Logistics/Transportation
& Distribution
16
Purchasing/Procurement
11
Operations
General Management
Sales/Marketing/Business
Development
Other
12
15
% of respondents
Job level: 40% of respondents are at senior executive, vice

president or director level, with 49% at manager or head of
department level.
11
11
SVP/EVP/Board
VP/Director
Manager/Head
49
29
Other
% of respondents
% of respondents
JULY 2013
19

SCM World Managing Global Trade September 2013

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SCM World Managing Global Trade September 2013

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RESEARCH REPORT

MANAGING GLOBAL TRADE

ABOUT SCM WORLD

BUSINESS DRIVERS FOR GLOBAL TRADE

CHALLENGES OF GLOBAL TRADE

CONCLUSIONS & RECOMMENDATIONS

ABOUT THE RESEARCH

MANAGING GLOBAL TRADE RISING IMPORTANCE BUT LAGGING EXECUTION

MANAGING GLOBAL TRADE RISING IMPORTANCE BUT LAGGING EXECUTION

The reshoring drive

We are looking to reshore most or all of our manufacturing for some

We are probably going to reshore some manufacturing for symbolic

Source: SCM World survey, April 2013

Import/export remain on a steep long-term growth trend

MANAGING GLOBAL TRADE RISING IMPORTANCE BUT LAGGING EXECUTION

MANAGING GLOBAL TRADE RISING IMPORTANCE BUT LAGGING EXECUTION

Figure 4a Growth of international sourcing

Figure 4b Growth of international sales

How has your companys share of imported

How has your companys share of international

Substantial increase (50%+)

Significant increase (26-50%)

Moderate increase (10-25%)

Relatively stable (0% to +/-9%)

Significant fall (-26% to -50%)

Substantial fall (-50%+)

Figure 5b Future growth of international sales

How do you expect your companys share of

How do you expect your companys share of

Substantial increase (50%+)

Significant increase (26-50%)

Moderate increase (10-25%)

Moderate fall (-10% to -25%)

Significant fall (-26% to -50%)

BUSINESS DRIVERS FOR GLOBAL TRADE

MANAGING GLOBAL TRADE RISING IMPORTANCE BUT LAGGING EXECUTION

Global sourcing business drivers

Tax or tariff savings

Unique material, technology or

Product cost savings

Selling internationally is rising even faster than sourcing

MANAGING GLOBAL TRADE RISING IMPORTANCE BUT LAGGING EXECUTION

Global sales business drivers

Open new markets

Meet customer demands for

Grow revenue immediately

Exploit favourable trade terms

Not very important

Not at all important

CHALLENGES OF GLOBAL TRADE

MANAGING GLOBAL TRADE RISING IMPORTANCE BUT LAGGING EXECUTION

Visibility problems cost money

Lack of visibility of global shipments moving through a supply chain

Costing us a material amount today and

Is impacting customer service in a

MANAGING GLOBAL TRADE RISING IMPORTANCE BUT LAGGING EXECUTION

Lack of consistent and timely collaboration with foreign suppliers

Costing us a material amount today and

Has a material adverse impact to our

Is adversely impacting our ability to

Is impacting customer service in a

Figure 10 Excess safety stock attributed to non-optimal supply chain performance

Costing us a material amount today and

Has a material adverse impact to our