Friday 26th May 2017 - Logistics & Supply Chain

Divided nations

European unity is a tender flower. The impasse on the constitution, Italy’s apparent willingness to consider jettisoning the euro, even the bra-waring over China’s clothing exports all emphasise the differences between the 25 members of the European Union.

The understandable desire of consumers to get access to a five euro shirt is pitted against the interests of homegrown textile producers. The Italian citizen’s suspicion that he or she has been sold an expensive pup by the euro enthusiasts contrasts with the claims the single currency is good for trade.

Meanwhile, the question of a European constitution has interventionist French voters digging their heels in against a document that is perceived to favour laissez faire Anglo-Saxon business attitudes.

With opposing views monopolising the political sphere, it is not surprising that similar differences of approach among euro nations are to be found in the more pragmatic business world.

Across the continent there is a perception that supply chain automation has created an environment in which transactions move quickly and efficiently between organisations in industries such as the retail supply chain, the automotive and manufacturing supply chain and high-tech manufacturing.

Cultural barriers
Not so, says a recent study commissioned by services firm GSX from analyst company Quocirca and based on interviews with 400 management representatives of medium to large organisations in the UK, Germany, France and the US. The research reveals companies struggling with a shedload of technical and cultural barriers to trade.

According to Quocirca, the continual evolution of standards and the international trading environment, complicated by language barriers, Customs policies and currencies, are all contributing to the complexities facing the business-to-business value chain.

While more than 80 per cent of respondents have an electronic data interchange (EDI) or internetbased system at their disposal for conducting automated transactions, the combination of the identified complexities has limited their actual use.

As a result, approximately 95 per cent of organisations rely on manual communication via email, telephone, fax and post. This causes the value chain to be littered with cost inefficiencies and errors.

Most respondents were focussed on growth, market share and profitability gains, with 65 per cent aiming to make significant improvements in customer profitability and 59 per cent looking to reduce cost and overheads associated with the sales process to help realise such ambitions. However, with so many organisations using manual processes, the supply chain is limited by a lack of visibility and scalability.

However, the picture varies considerably between countries, reflecting dramatically different attitudes. France is the nation that finds the diversity of partner transaction mechanisms most difficult to deal with, says Quocirca.

French companies are the least likely to seek to reduce the complexity of supply chain management by cutting the number of their suppliers. French companies are also less likely to look to the automation of processes in the value chain.

The UK, on the other hand, has the lowestreliance on paper-based processes and the highest use of EDI. And the Brits seem much more customer focussed. On Quocirca’s evidence they are inclined to listen much more to customers who demand they adopt a particular supply chain management technology than suppliers’ automation requests.

Germany, however, is more interested in breaking across country borders to reach new customers than other countries and has the lowest interest in identifying ‘risky’ suppliers who might be likely to provide poor goods and services or be late in delivering them.

But what of the Americans? It may come as little surprise that the US is the region most actively pursuing automation or further automation of the value chain to improve procurement and that it has the highest level of EDI use in the procurement chain. However, more ominously Quocirca found that the US ‘finds it most difficult to keep internal systems in step with the business as it changes’.

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