Industrial

World industrial manufacturers are in the midst of globalization and its effects are being felt by suppliers, manufacturers, customers, and all supply chain participants.

Industry majors are in various stages of transformation from a regional "buy/make/sell" model to a global "buy/move/make/move/sell anywhere" model. This shift is occurring in order to achieve greater scale and cost efficiencies while capitalizing on rapidly expanding markets such as China and India. While making this transition, companies must maintain or enhance supply chain flexibility and customer responsiveness.

As a result of globalization, more and more supply chains are starting to originate in low-cost countries (LCC), mainly in Asia and Eastern Europe, while largely continuing to terminate in North America and Western Europe. Traditional organizational structures and business practices are being challenged.

Key challenges faced by industrial companies include:

• Transforming from regional to global organizations and processes
• Most industrial companies are organized with little-to-no inter-dependency among regions. With globalization, these companies are transitioning to a primarily functional or process-oriented organization that spans regions, time-zones, languages, and cultures. As different markets (sales regions) begin to share platforms, parts, and capacity supply, companies will have to develop new processes to quickly right-size to the “right” demand. Sales and operations planning processes will need to be increased since individual events will now have a truly global impact
• Total landed cost sourcing
• When does it make business sense to source from a low-cost country? In a regional model, companies typically make parts sourcing decisions based primarily on part-piece-cost and traditional supplier score-carding. In moving to a global model, companies must move beyond traditional metrics. Companies will have to consider additional supply chain factors such as inbound lead times, logistics costs, and inventory costs.   
• Transportation focus
• In the current regional model, transportation is a low percentage of overall costs (compared to parts and labor). Most companies do not consider transportation a core competency and outsource to third- and fourth-party logistics companies (3PLs or 4PLs). These companies generally perform the design, planning, and execution of the logistics networks and provide turn-key service to their customers based on contracted service-level agreements. Globalization will increase transportation activity and cost. To compete, many companies will continue to outsource execution but bring design, planning, and control as an in-house functions. 
• Supplier collaboration, visibility, and event management
• In today’s regional model, industrial companies have developed primarily people-based processes to gain visibility to significant events and their management. While people will always be core to a business process,
  a systematized approach is necessary to effectively manage the diverse time-zones, languages, and cultural differences that occur with globalization.   

i2 solutions can help industrial companies make a transition to global supply chain processes. With more than 15 years of experience working with leading industrial companies, i2 has developed comprehensive solutions that cover the three major business process areas of global order-to-delivery (OTD); supply chain design and total landed cost; design-to-source solutions. These process areas and solutions also span the four key capability areas of visibility, planning, collaboration and execution (add links). i2 solutions for industrial companies are being used in the production environments of 7 of the top 11 global industrial OEMs in the world.

i2 solutions for industrial companies can enable best practices including:

• Closed-loop (“plan-do-check-act”-based) supply chain design, planning, and execution processes
• Total landed cost sourcing
• Global demand and supply capacity management
• International supply chain visibility and event management