A worldwide supply chain is made up of many business units, including manufacturers, suppliers, freight forwarders, warehousing, distributors, and merchants. These organizations help to move resources and information around the globe. Most global supply chains span numerous continents and countries, leveraging generally low commodity, labor, and production costs.
Businesses that want to take advantage of the benefits of global supply chains must overcome a number of hurdles, many of which are complicated, such as cash flow management, data management, and language barriers.
Management of the Global Supply Chain
A global supply chain is an extensive system used by businesses to manufacture and supply their products and services. This network begins with raw materials and concludes with the delivery of the completed product or service to clients.
Global supply-chain management (Global SCM) is the practice of managing and directing a network of entities that produces and distributes goods and services on a global scale. Global supply chain management’s primary goals are to maximize profit, decrease bottlenecks, and deliver a product or service on time.
Difficulties in the Global SCM
Longer Lead Time
Buyers are increasingly demanding faster deliveries. Their expectations have increased, as a result of technological developments in eCommerce. However, delivery durations in the worldwide supply chains are frequently measured in weeks and months. Long lead periods make it difficult to successfully balance supply and demand.
Unfortunately, excessive lead periods can cause your shipments to be delayed even more. With so many phases in the global supply chain and such long distances for goods to travel, there are several possibilities for mistakes to occur.
The solution is effective planning. For instance, air freight is more expensive than ocean freight, but it is much faster. An individual can profit from worldwide demand by using land or ocean freight for day-to-day business and having air freight agreements in place, he can meet the unanticipated rise in demand.
Management of funds
Cash flow management is a critical issue in every firm, but it is especially difficult in worldwide logistics and supply chain management. A complicated web of expenses must be tracked and planned for by businesses. However, with so many organizations working at the same time, it’s difficult to decide where or when to deploy your resources.
For example, if you invest Rs 10,000 on resources, you must know how much it would cost to turn those materials into products and deliver them to the end consumer. Shipping, storage, manufacturing, packing, freight forwarding, distribution, marketing, sales, and other activities are included in this process.
Accountability and compliance
When conducting business globally, companies must consider social compliance. As time passes, more and more methods for verifying supply chain partners to guarantee that ethical standards are met, emerge. However, there is no guaranteed way to be confident that everything is legal.
Companies must manage the risks involved with these issues, including potential brand damage, legal action, and, most crucially, irreversible harm done for profit.
Quality control and defects
Quality issues might sometimes be difficult to manage. Businesses, for example, must consider the variances in acceptable defect levels among countries. It is critical to establish the intended quality level and the proportion of acceptable errors ahead of time. It’s also a good idea to specify who is liable and what happens if there is a future disagreement.
Foreign transaction expenses and exchange rates
When conducting business overseas, even little changes in foreign exchange rates can drastically increase expenses. Developing countries may have the lowest labor costs in the world, but their currencies are frequently volatile and vulnerable to regional influences. Another factor to consider is the high cost of foreign transactions when dealing with a bank. These costs can easily build up and eat into your profit margins.
Companies of all sizes have had to rethink their operational strategies in order to revitalize their bottom line and retain as many customers as possible. Through SCM transformation, brands are creating resilience against future shocks and correcting their fault lines. Gartner predicts that by 2024, half of supply chain enterprises will have invested in technologies that support artificial intelligence and advanced analytics capabilities. In the next few years, it will be increasingly vital for supply chain professionals to take a holistic approach to AI and analytics. Your company can and should use technology to gain a better understanding of everything, from customer relationship management to increasing supply chain insight.
Disclaimer
Views expressed above are the author’s own.
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