Mercado | Insights | The 80's called. They want their supply chain back.

Insight: The 80’s called. They want their supply chain back

First Things First

Insight: The 80’s called. They want their supply chain back

January 27, 2023

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Every week, Mercado CEO Rob Garrison pens his latest learnings from the supply chain industry as part of an on-going series. Each article aims to share a little insight into what's going on that week, and to help foster discussion amongst industry professionals across levels, geographies, and companies.
Every year, Mercado surveys importers to measure the pulse of the average supply chain. The survey aims to examine each phase of the import process: Plan, Buy, Make, Move, and Sell.
Upon reviewing our 2022 import survey, you won't be surprised to learn that importers spend 6x more on purchasing than logistics, and that it takes 3x longer to complete.

Most importers had good solutions in place to manage the Plan and Move sides of their import supply chain. Yet when it comes to the Buy and Make side of the supply chain, a staggering 96% of importers admitted that they were still using Excel and email as their ‘system’.

As someone that has worked in the supply chain industry for over 25 years, I found that disturbing. Purchasing and manufacturing are arguably the most critical stages of the import supply chain. Most goods are 'made to order', meaning every issue during the Buy and Make phases potentially threatens all the sales that depend on those goods arriving on-time and in-full. It also makes it more difficult for other critical downstream functions, such as logistics and finance, to function properly.

If the purpose of the supply chain is to enable growth, then failure to adequately manage this most vital part of the supply chain is clearly a missed opportunity.

So, how does it get solved? It’s easier than you think.

Step 1. Digitize the purchasing process.

Purchase orders begin their life as digital (created in the ERP). Once exported as a PDF and transmitted via email, however, every subsequent step is effectively analog and manual. The solution is obvious. Transmit, execute, and manage import orders in a system that remains digital and provides end-to-end visibility.

Step 2. Connect the teams who make and move the products.

Importers should digitally connect to their suppliers, trading partners (i.e. forwarders), and teams onto a shared platform, for greater collaboration. When you purchase products online- customer support, ordering, shipping, and payment are all integrated. This is how purchasing imported products should function as well.

Step 3. Automate.

Many of the functions in purchasing are repetitive and redundant, and should be automated in order to improve efficiency and reduce errors.
A digital, networked, automated supply chain will reduce costs and improve sales forecasts. It also helps enable stronger resiliency, brand image, worker satisfaction, and corporate governance.

Don't get me wrong, I loved the 80's, but I also remember when the only thing I could do with my phone was call people!
Mercado | Insights - The $2.8T international supply chain visualized
"In an 'ideal' world, an importer would have at least one backup country, and one back up supplier for every critical product... All of this sounds good on paper, however it's actually incredibly difficult in practice."
One key reason is the dominance of China. Many importers are concerned about China as a sourcing point due to increasing tensions between the countries. However, the reality is that China dominates mfg in Asia, and they are very good at it.

As a result, quitting China is hard, as you will see in the excellent analysis below by Rita Rudnik.

A second reason is much more mundane. Most importers lack a robust database of their suppliers, and their supplier's suppliers. On the surface this sounds ridiculous, however we have gone through decades of 'predictable' supply chains where this wasn't a priority. Using the example above, most of the bike importers I spoke to were simply not aware of how reliant their suppliers were on Shimano.

My guidance to all importers is to address this database issue quickly. Beyond resiliency, knowing a lot about who makes your products, and who makes their parts, is also critical for understanding things like cost, ESG, and sales.
Want to take part in this year's survey?
We've launched out annual import supply chain benchmarking survey, helping importers to see where their supply chain stands against the competition and identify opportunities to build for a brighter future.

Enter today to receive a FREE copy of the 2022 results and be in with a chance to win $250 worth of Amazon vouchers!
Take Part

About the author

Rob Garrison, Mercado CEO

Rob Garrison

A highly accomplished Global Supply Chain executive with 25 years of experience, Rob Garrison has provided strategic vision and leadership to Fortune 500 companies. Rob has an impressive history of building agile, technology-enabled supply chains, and he has an established track record of forging high-growth partnerships, positioning organizations for success and launching innovative technology solutions that significantly improve end-to-end supply chain efficiencies.

Rob is currently CEO and founder of Mercado Labs.
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