lie applies value chaio concepts to develop trade

• ITC has developed TradeWORKS, a • Exporting Automotive Components,

package of information and training a recent ITC publication, captures
It may look like just another, new and materials and technical assistance, trends in the sector's global supply
interesting supply chain diagram. In fact, to help developing country busi- chain. It provides an overview of how
this is a new business paradigm. Companies nesses benefit from the value chain issues such as e-commerce and intel-
no longer flourish solely on the size of the lectual property rights are shaping
revolution. Working together, firms,
inventory they can afford to carry. They changes in buyer-supplier relations,
business service providers and gov-
compete on price and inventory. But their as well as contacts and information
survival depends on how they can exploit ernment agencies develop and imple- leads.
the value chain. And part of that value ment trade strategies that respond to
ContactHema Menon, ITC Associate Adviser on Enterprise
chain is knowledge of the customer. market requirements. Competitiveness, at [email protected]
Contact Ian Sayers, ITC Senior Adviser for the Private
The bank can learn fronn the Sector, at [email protected] or go to http://
Related fbm/n articles
www.intracen.org/ipsms/tsd tor more information. • Value Chain Analysis: A Strategy to
pizza parlour
Increase Export Earnings
Professor Yossi Sheffi, Director of the • Putting It All Together: ITC's Template
Center for Transportation and Logistics of • ITC's Executive Forum has produced
for Strategy-makers
the Massachusetts Institute of Technology, a national export strategy template
• Putting "E" to Work
United States of America (USA), can call on CD-ROM, combined with national
• Negotiating Technology Licensing
his local store in Boston and immediately training, to improve national export
Agreements
be welcomed by name and asked whether competitiveness. It contains a value
he wants to order a pizza. The store clerk Find these articles and more on the Fonim web site
chain component. (http://www.tradefomm.org).
will even suggest the professor might want
to order the same as last time. Contact: [email protected] PdS
All this is a result of the store recogniz-
ing his telephone number and calling up the
details on its database. When Prof. Sheffi months." The important factor is that his large firms. Cregory J. Owens, Chairman
calls his bank to carry out a transaction, firm can beat the multinationals in reli- and Chief Executive Officer of Manugistics
though, he reports that: "I have to go ability of supplies and deliveries, and is Group, USA, notes that stock control —
through about 17 people who do not know thriving. It is able to satisfy local standards which is now common in computerized
me or what I want." better than outsiders. Boston expectations companies — would be impossible with
As it happens, his bank manager lives are not those his company has to meet, just only a traditional pencil and paper. Even ten
in the same building. Prof. Sheffi once the demands on home ground. years ago, it was rare for inventory to turn
tackled this senior financial officer to ask But one principle stretches across all over three times in a year. Today average
why banks make it so difficult for custom- forms of trade in an increasingly globalized sales are ten times inventory. For companies
ers to do business with them. The bank economy. Local firms have to do better in the 1990s, the level for survival was prob-
manager's response: "No other bank does than outsiders on price or flexibility. One ably to reduce inventory to one-fifth of the
it better." business leader describes it as a recipe for year's delivery. Unless they could institute
Sheffi's reaction as a business executive disaster if a firm fails to compete on either the controls to achieve such levels, they
was: "That is irrelevant. My expectations of these elements. went out of business, he observed.
have been formed by my grocery store." But how to achieve such flexibility or One of the benefits of computerized
The cross-sectoral impact of such demands price attractiveness? A. Michael Spence, stock control — and the Web has made
created by the level of service offered by the Philip H. Knight Professor Emeritus at such control instantaneous — is that as
most technologically savvy providers will Stanford Graduate School of Business, well as tracking customer orders, compa-
fundamentally change all consumer fields, USA, argues that companies that cannot nies can also use the increased power over
he expects. compete with big suppliers on economies deliveries to manage supplies for the best
of scale have to use the best technology if returns. They can plan deliveries in a way
they want to improve their flexibility and that will keep up prices or bring in revenues
Competing on home ground stay in business. as needed. Once again, it is not just a ques-
This is not just a story for the industrial tion of supply but of value.
world. As one Middle East producer pointed All along the supply chain, globalization
out, though his company is committed to
Faster turnover has put pressure on firms to be more effi-
"just-in-time" delivery: "Just in time in our Thanks to digital developments this cient. The trend is for longer delivery chains,
part of the world can be two and a half need not be simply an opportunity for more complex demands, more sophisticated

Tlie magazine ol the International Irade Centre Issue 1/2004 International Irade F o r u m