The topic of globalization can evoke many viewpoints, both positive and not so positive.

Writing on this topic over three years ago, I often advised manufacturers to differentiate their supply chain strategy efforts on the appropriate response to two different business objectives.  The first and most visible today is the need for reducing direct manufacturing costs, most often manifested by a sourcing strategy to lower-cost regions such as China, Southeast Asia, or Eastern Europe. The second, objective is building and supporting revenue growth in new markets, a focus on emerging growth economies.  At certain times, both business objectives can complement one another, Asia and China being the best examples.  But in many firms today, they often provide a conflict.  Both may have to be managed with different deployment strategies.

One of the companies that practices the benefits of how to best balance these two strategies is Toyota.  For many years now, Toyota has sourced its final manufacturing sites not just to serve its customers located in a geographic region such as North America or Europe, but also to have the built-in flexibility to serve another geographic market when economic factors warrant. Supplier sourcing, on the other hand, is motivated by product quality and cost considerations, regardless of geographic location.

The latest success of the payoff of these strategies is Toyota’s recent 2008 third quarter results, posting a 7.5 percent growth in profits, coupled with a 9.2 percent increase in revenues.  While the majority of North America based auto companies continue to struggle, Toyota was able to reap the benefits of its geographic diversification.  Units sold in Russia recorded a 52 percent increase, along with a 62 percent increase in unit sales within China. Toyota continues to benefit from record sales in North America.

Properly balancing a low-cost sourcing strategy and a new markets growth strategy requires the ability to quantify the needs, requirements, and bottom line benefits for both. No doubt, the Toyota culture of lean, superior quality, and fact-based decision making helps them to complement sourcing and growth strategies.

Let’s hear your view…

Hi, I’m Bob Ferrari, the managing director of the supply chain consulting arm of The Ferrari Research and Consulting Group.  My background related to the practice of supply and value chain management includes former supply chain industry analyst roles at both AMR Research and IDC, consulting and implementation roles for software integrators, technology marketing leadership roles at two technology companies, including SAP, and many years of practioner experience in supply chain planning and execution.  You can view my full biography here.

 In this blog, I will provide my unbiased views, insights, and reader education into today’s burning topics surrounding the managing and deployment of global supply chains.  While there are many topics as well as bloggers in this area, I will provide focus on a critical few. Having viewed this area from many spectrums and constituencies, my goal is to present a balanced and insightful view of key strategic topics. The goal here is to advance our collective learning, and I welcome your comments and posts. Bob Ferrari

Welcome to my blog which I have titled- Supply Chain Matters. I selected this title to reflect my belief that supply chains can make or break a firm’s business strategy, or perception within the market.This blog will feature my views on the key global supply chain business process and technology topics of the day.  As a supply chain industry analyst, technology executive, and practioner, I will attempt to provide a balanced view of each topic, both pro and con. There are many quality blogs writing on the topic of supply chain, and I will not consciously duplicate content.  My focus will be on a select group of key trends that I believe will mold and influence the competencies and individual careers of many companies and supply chain professionals. These key trends will be:

 Our goal will be to provide you, our virtual readers, balanced, as well as leading-edge perspectives on these key topics.  I also plan to host guest bloggers, as well as to reference and comment on other interesting posts across cyberspace. Your comments are encouraged. So let’s get on to supply chain matters.