Tips to Managing the Global Supply Chain
Global supply chain management refers to the distribution of commercial services and goods through a trans-national global network. The objective of global supply chains is to keep costs low, decrease wastefulness, and optimize business operations.
Supply chain management professionals must recognize the ways in which the global supply chain is unique in order to best oversee and optimize operations. 5 tips for improving global supply chain management include-
1. Diversify Suppliers
Reliance on one supplier can result in major consequences if the vendor experiences unforeseen operational issues. Instead, businesses should source raw material from a couple of suppliers to minimize their risk.
Contracting with more than one supplier will help avoid a disruption in business operations should one supplier have production or logistical issues. Additionally, multiple vendors encourage competitiveness and discourage unnecessary dependency.
However, it is not wise for companies to have too many different suppliers. An excessive number of vendors can unnecessarily complicate supply chain management responsibilities.
2. Strengthen Relationships
Maintaining a positive relationship with vendors is one of a supply chain management professional's main responsibilities. Best practices for developing a bond with vendors include engaging in open communication and consistently honoring commitments.
In-person meetings with potential suppliers can go a long way in establishing rapport. Remember, it is important to be mindful and respectful of diversity, especially for vendors in the global supply chain that have different cultural norms.
Supply chain management software is an excellent investment for both global supply chain vendors and businesses. Not only does supply chain management software provide a stable communication channel, but it also contains helpful tools for tracking and processing orders.
3. Source Locally
Although the global supply chain may present more affordable options, some businesses prefer to source raw material locally. Certain customers also prefer buying products made in the United States and may even pay more money for domestically produced goods.
When using a local vendor, raw material and products are likely to arrive much faster and if there is an issue with an order corrective measures can be undertaken more quickly. Local vendors are also incredibly valuable when there are unexpected changes in customer demand that a business has to swiftly respond to.
Operations management is simplified with local vendors, shortening the supply chain significantly. If a supply chain manager is having issues with decision making regarding whether to contract with a global supply chain vendor or a domestic supply chain vendor, they can ask local businesses where they source their raw material and learn about their overall experience doing so.
4. Ask Experts
Consulting with an expert can be immensely helpful for businesses that are newer to the global supply chain. Global supply chain management is complex and professionals ranging from certified customs brokers to global supply chain management consultants can be well worth the initial investment in the long term.
A global supply chain management consultant can reduce liabilities by considering various regulations, taxes, and logistics. If a business needs to request info about a shipment, they can talk to their in-country consultant instead of attempting to contact the vendor directly.
A licensed customs broker can assist businesses with-
- Navigating complex international or country-specific laws and regulations.
- Serving as a liaison between the United States government and importer.
- Preparing documents required for importing raw material or products.
5. Establish Schedules
Using data from their sales forecasting process, businesses can provide suppliers with estimates long before a product is needed. When vendors have a better understanding of buying patterns and schedules there is a smaller chance of raw material or products being unavailable.
Especially for vendors in the global supply chain, extensive shipment time can cause demand problems. To avoid this, businesses must make sure to ask suppliers for inventory data updates regularly.
- Global supply chain management includes the distribution of services and goods in a trans-national global network. Global supply chains aim to be affordable, decrease waste, and enhance business operations for businesses.
- Vendor-business relationships are crucial for global supply chains to properly function but can be challenging to establish and maintain.
- Experts including licensed customs brokers and global supply chain management consultants can simplify and streamline the entire supply chain process.