Global Supply Chain Managment & Importance
The world has become a global village due to technology. It is not an issue now to connect with the world. With technology, business and industries can reach worldwide customers. Now, the manufacturers can supply their products and services to the world. You might think that to supply the products to the world may increase the risks of high cost like manufacturing, production, and distribution, and management strategies.
To reduce costs, companies create global supply chains. Companies get benefits through the supply chain as the risk of high cost lessened. Companies can outsource their products and generate large-scale efficiencies. Through the global value chain, the cost of shipping and production has reduced over the years.
Global supply chain definition
The definition of global supply chain management is quite simple and straightforward. The value chain is a network around the world that businesses use to manufacture and supply goods or services. This network spans across different countries and continents. However, managing a global chain involves a complete process, including manufacturing, employees, resources, raw material, and professionals.
What is the difference between the global supply chain and the local supply chain?
A global supply chain is a network that helps organizations to use low-cost countries attached to the global supply chain. These countries manufacture goods with low labor rates and low production cost in that country. A global supply chain system can be operational from your home as a buyer with a team of supplier tiers. These supplier tiers are from different countries and locations.
Local supply chains involve suppliers from your organization’s region. The products from the local supply chain distribute within a specific region or country only.
What is an example of supply chain management?
Supply chain management is a production and logistics process that involves the procurement of raw material into a fine finished product. There are many examples of rich and prosperous companies developed through the supply management process. Here are the most known company that runs through.
Global supply chain examples (Amazon Case)
Amazon is a united state’s electronic and cloud computing company. Amazon is the largest online retailer in the United States. Amazon was among the first companies who started selling products online. Now, the product range includes shoes, clothing, luggage, music, books, videogames, makeup, and many other accessories. Amazon is now close to shipping 10 million different products. All this is the result of managing the global supply chain.
Different companies collaborate with amazon to start their business. Many entrepreneurs are making money by promoting products on amazon. They get a specific percentage of profit on every product they sell.
What are the three main factors that global chain supply management needs to consider?
Supply chain management focuses on the organization’s efforts. For a successful global supply chain management, collaboration requires suppliers and service providers. supply network involves people, processes, and technology to be successful. Here are three main factors that procurement processes management must consider.
People are the most important factor in supply management as they are the soul of an organization. The people involved in managing a global supply chain must have experience and skills to find sources, manufacturing, and shipping products. The people must know the company’s aim and vision and try their best to improve the overall functioning of the supply chain.
Supply chain management involves the processes to fulfill the demands of customers and providing the best products. It includes finding sources, raw material, production, distribution, warehousing, sales, and customer services.
Technology plays an important role in global supply chain management as it connects people and processes. People must know the use of technology to be successful in the global supply chain.
What are the benefits of global supply chains?
According to industry experts, there are many benefits to global supply chains. It provides a huge advantage to entrepreneurs. The benefits are:
1. Lowered Cost for Businesses
Many countries offer low production costs and attract industry leaders to be a part of the global supply chain. The cost price of the products is reduced due to lower labor and operating costs. If you are willing to buy a product from other countries in the United States, you will get a lower cost. If the dollar is strongest against those countries, you will even get more profit.
2. A large variety of products
Through the procurement processes chain, you can sell a large variety of products. Suppose a person has a home furnishing business, both online and retail shops. Apart from home furnishing, he may outsource many other products like curtains, napkins, tablecloths, even other products like coffee, tea, supplements.
3. Worldwide Customers
Through the global supply management, you can ship your products worldwide. It broadens the vision and idea of business. You get an approach to meet international customers and fulfill their demands. Doing a little research will make you able to expand your sales globally. Culture and language is not an issue because you can hire an employee to deal with you and your customers.
What is supply chain management, and why is it important?
Supply chain management is a process of monitoring the production of goods from raw material to fine finished goods. Supply management is useful in reducing the cost of products and get a considerable profit. It also includes logistics services for smooth manufacturing of goods. For this purpose, a company hires a supply chain manager to monitor the process. The supply chain manager will observe the following procedures.
Procurement of raw material
In this process, supply chain managers find raw materials for products and sign a contract with the supplier. The agreement also includes the shipping of raw material to manufacturing sites or warehouses for further process.
Finding manufacturing sites and warehouses
Finding a manufacturing site is a crucial step in supply chain management. Many factors need to be considered when finding a manufacturing site. These factors include the site’s size, the volume of goods, distance from the supplier, and logistics of moving goods to the next stage.
Ensure partnership agreements
Supply chain managers must ensure all the partnership agreements. According to the agreements, the suppliers and manufacturers will ensure the timely production of goods and their quality.
This step needs proper planning and strategy because this can minimize or maximize the costs. Effective supply chain management strategies operating expenses to get profit.
Tackle the changes to scheduled events
Running a huge business involves time management. To achieve the goals, supply chain managers must plan a schedule for smooth working. Any delay in delivering material from morning to evening may have a massive impact on the rest of the chain process.
Inventory is a list of products. This process includes collecting materials, storing, fetching, and dispatching products to different sites. Any delay in the process may affect the whole supply chain process. A chain manager must be meticulous in managing inventory as it brings a huge profit to the company.
Customers’ product demands
The customer is the beginner of a supply chain because supply network management depends on their orders. Therefore, it is necessary to meet all the requirements of customers to provide the best products. Customer satisfaction is the base of supply chain management.
This process includes packaging the products and then shipping to the customers. The chain manager ensures the safe packaging and shipping of the product not to be damaged. Then a customer gives good feedback by praising the company and products. This gains the customers’ trust, and they order more products. However, shipping time is also an important factor to consider.
Why is supply chain management (SCM) important?
Many elements contribute to managing the global supply chain system. All these elements depend on each other, and if any single thing goes wrong, it will affect supply chain management and business. It is important to monitor all the processes keenly to avoid any disruptions in cash flow.
It does not mean that it will damage your business because it has many positive aspects too. If the risk is high in supply chain management, the profit will also be high through the supply chain. The supply chain has the power to reduce cost prices and increase benefits and efficiency. Here are some points to consider regarding the importance of supply chain management.
Improve Customer Service
Effective management of the supply chain ensures customer satisfaction by shipping them quality products. A low supply chain leaves a wrong impression on customers by sending parts of products or even the wrong products. A supply chain manager ensures and monitors all the processes from raw material to shipping the right product.
Products in the right location
Through tracker, the supply chain ensures to deliver fast and accurate products to the right location. Suppose you order some books and it takes several weeks to reach it, you will be displeased due to late delivery. Or sometimes, it delivers to the wrong address to someone else; you will get irritated and never order again. SMC ensures shipping the right products at the right location.
Reduce Operating Costs
The supply chain reduces the operating costs at different points. The supply chain reduces the costs for the retailers because the supply chain quickly distributes the finished goods. In this way, retailers do not have to pay extra costs for expensive inventories. Same as a company has to pay tens of thousands of dollars if there is any delay in the production. To save the costs of a fine, the supply chain is more important because they deliver products on time.
Firms hire supply chain managers because they help control and reduce supply chain costs. This boosts the financial condition of the business. The supply chain reduces warehouses’ costs and directly transports the goods to the company when they need it. This also saves a lot of money and boosts the profit of companies.
Avoid Production Delays
Production delays result in a heavy fine and unhappy customers. Medical product and technology company CanvaTec had to bear a loss in revenue of 300 million pounds for late production. This enhances supply chain systems and managers’ importance to take care of customer value and deals with customer service.
What are the benefits of supply chain management (SCM)?
Today supply chain management (SMC) is of great importance for business because it monitors the flow of information, manufactures goods from raw material to finished products, and delivers to the consumer. Data monitoring is important in chain supply management, but many other factors make the management of supply chain successful. These factors include good vendor and supplier relationships, cost control, finding a reliable logistic partner, and adopting new technologies, including artificial intelligence. It is not easy to manage the supply chain, but an effective supply network brings competitive advantages to improve the bottom-line. Here are the benefits of supply chain management:
Higher Efficiency Rate
The chain managers monitor the production process and provide real-time data about demand and supply. This data allows companies to implement a backup plan to avoid delays. When you are in the supply chain business and hire efficient supply managers, they try to predict the unpredictable. It means they give you an estimate about demand.
A decrease in Cost Effects
With almost accurate demand production, supply chain management decreases the cost of inventory. Supply chain management improves inventory systems and relationships with both vendors and customers. Supply chain management quickly delivers the goods to the company when they need to avoid inventory expenditure. In this way, the business grows well from the bottom line.
According to Logistic Management’s “The State of Logistic report (u.s news world report)” freight transportation costs increased dramatically from 2016 to 2017. The full truckload cost increased by 6.4%, Less-than-truckload cost increased by 6.6%, private or dedicated 9.5%, and air freight 3.1%. Due to an increase in transportation cost, shipping optimization became necessary in supply chains. Supply chains identify the most suitable shipping method for every parcel like small parcels, large bulk orders, and other shipping methods to find the lowest price. It improves the company’s bottom line and customer satisfaction.
Improve quality control
Quality of products and customer satisfaction is the priority of the company and business. Supply chain activities ensure the quality of goods from raw materials to manufactured goods. It implements quality control rules and meets the demand of consumers.
Why is it important to study supply chain management?
By studying supply chain management, you will understand how a business operates. In supply chain management, you will study the processes and relationships of vendors and organizations. In this field, the key goal is to fulfill customer demands, plan effective strategies, bring value to the customer, and improves financial status. Here are some reasons why it is important to study the global supply chain management
As a supply chain manager, the company demands you to increase its financial profit. You will learn to maintain inventory levels, reduce costs, and labor expenses. To work in logistics management, you need to learn all the strategies to improve an organization’s profitability.
New challenges and trends
In the supply chain management course, you will learn to handle the industry’s new trends and challenges. To keep balance in the process is a major challenge. Effective collaboration and communication skills are necessary to provide customer service. In today’s era, technology brought a great revolution in sourcing chain management. You must know the use of the latest technology to meet market demands.
Logistics and Decision Making
There is constant change in the business world, and one has to make a quick and right decision to meet the company's and customers’ demands. China is the largest producer of the world’s goods; some companies are shifting their products home for protection against disasters. The importance of supply managers is increasing in the market who can make a decision to provide effective solutions. One must have all the information and training in logistics.
A person having a sourcing management degree has plenty of employment opportunities with higher salaries. The demand for supply chain managers is increasing with the increasing trend of supply chains. The most competitive advantage of studying supply chain management is its demand in the market.
What does a global supply chain managers should do?
The global supply chain manager deals with the logistics of the value-added chain. He is responsible for the creation of raw materials into fine goods. He ensures monitoring all the product development process. The global supply chain managers have to dive deeper to find the best supply networks. This includes five parts.
- Plan or strategy
- Find a source of raw material or services
- Ensure manufacturing production and efficiency
- Timely delivery and logistics
- Checking of returned, defective, or unwanted products
Plan or Strategy
For effective global supply chain management, a proper plan or strategy is necessary. The manager is responsible for developing an effective strategy to ensure the development of goods. Communication is a key factor in this process. A sourcing manager must have excellent communication skills with the master of science to deal with people through phone calls, emails, face-to-face, and video call interaction. He must have the ability to communicate with suppliers, vendors, and shipping contacts to plan an effective strategy.
Find a source of raw material or services.
The supply chain manager is responsible for finding raw materials for products and making the best product ready according to customer demands. He finds low-cost manufacturing plants for the production of goods. He is responsible for finalizing contracts and rates with shipping lines for transportation of goods and minimizing price.
Ensure manufacturing production and efficiency
Once everything is planned and strategized, supply managers oversee the manufacturing of goods to implement customer demands. With time, he may also offer innovation in the product for better applications. He controls production costs by offering alternative solutions. He is also responsible for monthly productions and sales. A graduate in sourcing management can handle these leadership roles well.
Timely delivery and logistics
When products become ready to deliver, the manager contacts to shipping companies and warehouses for further process. A great supply network manager has to work among different time zones as products are manufactured, shipped, and delivered in different countries and in different places. He has to ensure the timely delivery of the products.
Checking for returned, defective, and unwanted products
A manager has to manage the safe delivery of products to the customers. Sometimes, during shipping, a product gets damaged and returned back by the customer. Sometimes, there are defects in manufacturing that he has to control. He has to manage defected and returned products by replacing them.
Global supply chain manager salaries
In united states a manager can be between 120 000 USD to 170 000 USD per year with good background degree but the person with lower background can extract roughly 100 000 USD a year with can be increase over time with experience
Why is the global supply chain so difficult?
Managing a global supply chain is challenging in current times because every industry is thriving hard to reach worldwide customers. Companies try their best to reduce production costs, increase profit, and improve productivity in the global marketplace. A successful business must need a powerful global value-added chain management to stand in the global market.
Here are some challenges that a business may face in global supply chain management.
Conflict in business objective and requirements
A primary challenge that every business and company may face is conflict in business objectives and requirements. For example, a supplier will prefer a manufacturing company who buys a large amount of raw material regularly. The supplier will demand the best possible price for raw products. ‘ On the other hand, the manufacturing company wants to purchase raw material at the lowest price. Also, the manufacturer will want flexibility in purchasing raw materials like when and how to purchase.
The other challenge is to find the best currency exchange sources to get the best rates. A company has to deal with international suppliers and customers to buy and sell products. The company must plan for currency exchange charges and income.
Reliability of international business partners
Global logistics network management involves international distributors, suppliers, customers, and business partners. It is difficult to find reliable business partners to grow the business. It is difficult to monitor the business practices of different organizations in the global logistics chain.
Financial Transaction and Insurance
Managing the finances in the local logistics network is easy as compared to the global supply chain. International transactions are more complicated than the local transaction. A company has to establish a bank account with complete details of business and earnings. He also has to pay taxes and get insurance to secure the transactions.
Acceptance of International standards and regulations
The quality standards, packaging import, and export product regulations, and labeling regulations are different in different regions of the world. A company must ensure and meet all the rules and regulations regarding import and export for the successful global supply chain management. Business programs have to pay a fine sometimes if they do not meet the international regulations.
Suppose you want to start your career as a global logistics chain manager or you want to hire a supply chain manager. In that case, you must prefer a master of science in sourcing chain management to run your business successfully. The manager plays a key role in the supply chain.
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