IACCM NewsJuly 16, 2007 11:10 AM

Global supply chains face many predictable challenges - but experienced professionals report some unexpected and less publicized difficulties that add to cost and risk. For example, Europe emerges as the geographic region that is most complex to do business with - in many cases, even for Europeans. And North America is seen by professionals from all geographies as by far the easiest and lowest risk trading partner.

IACCM’s recent study on “Challenges in the Global Supply Chain” drew replies from Procurement and Supply Chain professionals worldwide. It shows quality control and managing across language and culture are the two most severe on-going issues. And while Asia-Pacific is the most challenging geographic region for supply chain professionals as a whole, Europe is not far behind. Quality, culture and logistics are all major concerns in dealing with Asia, but the challenges of Government regulation, long lead-times and cost are far more significant when managing trading relationships with European companies.

'Going global' involves significant difficulties, but experienced practitioners have mastered many of them, according to IACCM members.

Companies based in North America record a deeper set of problems in managing their global suppliers than those in other regions. In part, this is because of less familiarity and experience with the realities of international trade - and perhaps being 'spoilt' by the relative ease of trade within their domestic region. Interestingly, this group in general finds it harder to do business with Europe than it does with Asia-Pacific. On topics such as negotiation, labor issues and costs, Europe poses significantly greater difficulties.

By way of contrast, companies based in Europe find North America the easiest region with which to do business - easier even than other European countries! And to emphasize the continuing challenges of European integration, professionals based in Europe actually find it harder to negotiate with fellow-Europeans than they do with trading partners in Asia.

Internal issues – lack of resources, internal contention and insufficient planning – are significant factors that are constraining the results of global sourcing initiatives. Only 5% of respondents feel that they have a program that is ‘well planned and executed through a centrally defined strategy’. Insufficient resources 'on the ground' means that many organizations are struggling with supplier selection, and the absence of a local interface is contributing to the difficulty of managing quality and cultural barriers.

Ethical standards and labor-related issues have not proved to be significant concerns for almost three-quarters of those responding to the survey. Logistics, negotiation and on-time delivery are among the most problematic areas, but unlike culture and quality control, have been overcome by many.

Among the most worrying day-to-day issues, more than half the survey participants highlight shipping times, customs procedures and delays and managing exchange rates as medium to severe problems.

A full copy of this report is being sent to all survey participants. Simply visit https://www.etouches.com/supplychain to complete the questionnaire (which will take no more than 5 minutes) and the final report will be sent to you later this month.