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World Trade Online

By Carl W. Asmus

Are intermediaries your solution to solving export headaches?

Don't let the currents of global e-logistics leave you in the backwater

It's no secret that today's high-tech marketplace requires fast, global reach, and it is no longer enough to just have ¤informationË about your business. You must be able to use that information to better operate and manage your business. Integration is critical.

By integrating technology and e-commerce into your business processes and re-inventing your strategy and operations, you can achieve greater efficiency throughout your supply chain.

Understanding the potential for e-business within your e-company is only the first step. The next step comes in truly transforming a traditional enterprise into one that is e-commerce ready.

Consider the following points, which directly or indirectly affect any global business:

  • Increasingly, people will have the ability to communicate and transact business anywhere and anytime as we move from mass production to mass customization. This means dramatically heightened competition for customers. High-value goods that constitute a vast majority of the global economy's value will require faster, more efficient distribution since, by their very nature, they are prone to obsolescence and depreciation.
  • As the movement within the supply chain is accelerated, a new level of visibility and control within the organization will be necessary to manage inventory in motion. A whirlwind of changes is challenging everyone's notions about what it takes to remain competitive. As Internet commerce booms, global boundaries fall and competition intensifies. Products are becoming commoditized. Low prices and high quality can't guarantee a sales base. On top of that, customer expectations for both quality and service are skyrocketing.
  • The most successful growth-oriented companies in the marketplace are adopting a new model that is driven by demand, not supply. Now, supply chain management focuses on learning from your customer how your product could be better configured or better delivered. In the new model, products are ¤pulledË by customer demand; not ¤pushedË based on supply. And since demand can shift 180 degrees without notice, the new model requires the cooperation of all members of the supply chain both internal and external.
  • Today, companies must share information and strategy not only within divisions, but also with outside suppliers and alliance partners. In this new marketplace, integration that is, shared information, ideas and even common infrastructure█makes the difference between industry leaders and followers.
  • You must understand the relationship between inventory and sales revenue. Over the past decade, inventory levels have reached as high as 60% above average monthly sales. Those levels have dropped by nearly 50% since 1991, largely from improvements in supply-chain-management processes. For many enterprises, this reduction is not just a trend, but a sustainable competitive advantage.
  • The ability to integrate with your customer's systems may very well require your reinventing your company. This may include positioning the relevance of a new value proposition both internally and externally, engaging in alliance relationships to speed up time to market, and migrating customers to new integrated systems. Put more simply, the challenge is to extend your brand attributes by helping your internal and external customers understand the new value of your enterprise. By integrating with your customers, you can enable them to gain efficiencies and business growth in the electronic marketplace.
  • For a company starting up today, building a nimble, Internet-ready organization is easy. But refocusing a mature enterprise presents some unique challenges. As you begin to move to this new business model, you will face some key issues.

Key Issues Must Be Addressed

Mature Culture: Employees were quite comfortable and committed to doing things the same old way. Moreover, many enterprises operate in an environment of silos. To gain greater efficiencies among work groups, departments are organized to maintain the base business by continually optimizing products and services. Rather than organizing to leapfrog the competition, the staff works very hard at perfecting their ¤cogË so that it fits into an old business model.

Lack of New Strategy: Your company must be execution oriented. Innovation and commitment to technology will well position you to embrace electronic commerce. You must actually create new value for customers, but it is difficult to see or to really understand this new value. Your staff may be barricaded in that silo work environment. Formal communication paths or common language may not exist to exchange information. Breaking through the silos to articulate a new strategy is a huge obstacle.

Further, metrics and goals must be developed against the base business and applied to this new value system. If not, people will continue to work really hard but toward goals that are no longer relevant. The old goals may be the very things that prevent the new strategy from being developed and supported. Metrics must apply to the new value system.

Workforce and Structure: Working in a mature culture with unclear business strategy, people will lack basic data to make sound judgments. They will lack the proper communication tools within the organization to affect strategy. Ultimately, they will lack trust in defending an unproven and undefended direction.

The industry we serve is extremely fast-paced. With mergers and strategic alliances announced every day it is virtually impossible for one person to understand all of the market implications of these announcements. Strong cross-functional teams are key in understanding how each product impacts our customers.

That said, becoming an e-commerce company doesn't happen overnight and isn't without challenges. So, where are we today?

Your Actions Will Determine Success

You must create ¤The Truth.Ë You have to instill a level of passion among your employees when articulating a new strategy, and they must see that level of passion in you. How do you set the stage for creating The Truth? Here is one approach:

First, create The Truth in two ways:

1) by clearly and consistently communicating your e-business strategy, and then illustrating how each project is an important piece of the overall strategy. It then becomes evident to every individual how they contribute to accomplishing this strategy, and

2) translating electronic commerce opportunities into metrics the staff is familiar with. For example, by showing real revenue opportunities in terms the staff is familiar with, they can begin to embrace the relevance of e-business and see why change is necessary to take advantage of a short window of opportunity.

Second, redefine the product values and performance goals that are relevant in the new order. For example, when tracking capabilities were first introduced, the value to the customer was convenience and peace of mind in knowing the whereabouts of a package.

Today, tracking functionality has evolved into a highly integrated and necessary level of visibility across a supply chain. It is critical to managing inventory in motion. So it is key that employees understand market trends and can add new value to their product portfolios.

Finally, drive collaboration across the organization. Creating a highly collaborative work environment is just the beginning in dissipating the ¤silo mentality.

Some companies are embracing this new Network Economy and others are being dragged into it. You must constantly ask, ¤How can we use technology to our advantage as well as our customers' advantage?

As you make your business more efficient, you must enable your customers to compete in the world of e-commerce, particularly by providing them with the ability to enhance their supply chain performance.

Asmus is vice president of global product marketing at Federal Express (www.fedex.com).

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