Globalization has impacted the supply chain more than any other area of the corporation. Most products now contain parts from multiple countries, and many include design ideas gathered from several nations. In a worldwide survey of 497 senior executives conducted by the Economist Intelligence Unit for AT&T, a majority of executives agree that their supply chain is becoming “much more dispersed”, particularly in the case of North American firms.

Received wisdom has it that cost-cutting is the dominant driver of supply chain expansion. The survey shows this to be mistaken: getting products quicker to market is the main motive in developing a more global supply chain, at least for firms in Europe and North America. A range of other objectives are also sought from increased trade with overseas suppliers that go beyond cost-saving: gaining specialist expertise from niche firms, taking operations closer to the target market and generally improving use of assets, to name but a few.

The flexibility offered by IP (Internet protocol) technology will do much to help firms get the most out of the supply chain. Nearly 60% of survey respondents see IP networks playing a central role in the effort to improve their global supply chain operations. For many this is the only way forward to achieve the goal of a seamless link down the chain starting with the end-user and ending with the most distant supplier. IP supports the ‘demand-driven’ supply chain, able to respond to immediate market needs.

Substantial challenges face companies, however, on the road to achieving full visibility across their supply chains. The biggest obstacle to achieving greater integration of IT systems with the company's suppliers is far from technical: “cultural differences” between the customer company’s senior management and that of its suppliers'—cited by 38% of executives in the survey. Other big hurdles include inadequate functionality and security of suppliers’ networks and systems.

For industries that have worked to overcome these barriers, however, the rewards for effective supply chain governance are substantial.

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