Mastering Global Operations to Enable High Performance

Companies compete in a multi-polar world—an environment characterized by a new and more complex phase of increased economic interdependence across multiple centers of economic power and activities. Accenture research into global operations reveals that succeeding in this environment demands a new way of thinking about global operations. In particular, it points to five guiding principles that can position companies for high performance on this new global stage.

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Today, we are witness to what is rapidly becoming a multi-polar world—an environment characterized by a new and more complex phase of increased economic interdependence across multiple centers of economic power and activities. Traditional centers of economic power are now complemented by new centers of power and competitors from emerging economies are increasingly investing in mature markets around the globe.

Companies from mature markets are under mounting pressure to globalize and so reduce cost and follow demand that is growing faster elsewhere than at home. Additionally, these companies need to plan to mitigate the risks of being displaced by emerging competitors entering their markets.

A shift is required from the traditional mindset of imports and exports to the effective global integration of design, sourcing, manufacturing, distribution, selling, marketing and support of products and services.

In 2006 and again in 2007, Accenture surveyed more than 250 executives to assess the state of companies with global operations and identify the characteristics of global operations mastery, a key prerequisite for high performance. Respondents were asked to assess their capabilities across dimensions that Accenture’s deep experience has shown to have a significant impact on the effectiveness of global operations.

• More than 85 percent of respondents viewed global operations as critical to their business strategies.
  
  
• The pace of globalization (based on the principles of supply and demand) is increasing rapidly.
  
  
• The percentage of supply bases located outside an organization’s home market is growing, as is the percentage of sales revenue generated outside an organization’s home market.
  
  
• Primary drivers for increasing the scale of global operations are balanced between the desire to penetrate other markets, pressures on revenue and cost in serving traditional markets, heightened competition from traditional industry competitors and new competition from emerging economies.

High performers translate their practices and approaches into greater ability to capitalize on their global footprints and to extract competitive advantage on the path to high performance. Accenture identified five key principles:

• Focusing on value, not assets. Shifting focus away from controlling assets to controlling the processes that ensure quality, service, market access and cost parameters are met.
  
  
• Designing the right support organization. Globalizing the entire value chain of a product/business unit rather than specific functions.
  
  
• Aligning and streamlining decision-making authorities. Achieving accountability and balance between local and global objectives.
  
  
• Optimizing talent deployment. Identifying experienced people to manage functions in each local area.
  
  
• Building adaptability and risk management capabilities. Globalizing supply networks introduces both political and other risks. (The Accenture model for assessing and mitigating risk has been developed to help companies assess and mitigate supply chain risk.)

Companies are looking beyond their traditional markets to achieve the growth their shareholders demand, and to counter the threats of new competitors entering their strongholds. However, for many of them, globalizing their operations is too often seen as a way to access low-cost supplies or to establish a base from which to address an emerging market.

Accenture recommends that such companies take a fresh look at their operations strategies by stepping back and considering the full scope of capability dimensions and guiding principles outlined in this article. If they can master those capabilities, then they can expect to make big strides toward positioning themselves for high performance in the multi-polar world.

Contact us to find out how Accenture Supply Chain Management can help your organization develop the strategies to master global operations on the path to high performance.

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