Global supply chains enable businesses to obtain and circulate services and products between various countries and continents around the world via numerous networks. Businesses can better optimise their economic output by operating through global supply chains.
How do you manage a global supply chain?
In order to efficiently manage a global supply chain, there is a lot to consider and be aware of. Strategic planning and risk assessments are critical elements to mitigate for the possibility of occurrences which could disrupt the supply chain. Further to this, ensuring that your company complies with legislation, integrates relevant technology programmes and establishes positive relationships with members of the supply chain, will warrant successful management of your global supply chain.
What are the Pros and Cons of Global Supply Chains?
As is the case with many procurement and supply opportunities, there are both negative and positive elements. Looking at both sides will enable businesses to further understand what global supply chains are and if they are suitable for their organisation.
1. Broader variety of products and services
Opening up your organisation to global supply chains will increase your procurement options and can assist businesses to access unique products and services, allowing them to standout from their competitors.
2. Lower expenditures
Global supply chains can offer reduced prices of products and services, due to the fact other countries may have smaller labour and manufacturing costs.
3. New market
Increased procurement opportunities aren’t the only benefit of global supply chains. Depending on the location of where you’re buying products and services from, your business will in turn have access to new markets in a multitude of countries around the globe.
1. Communication challenges
Global supply chains transcend a multitude of international borders. Following this, it is highly likely that there will be language barriers for businesses to overcome when dealing with international entities.
2. Increased risk
When a business works with global supply chains, naturally there are some added risks involved. This includes the chance of events occurring beyond your control. For example, in March 2021 the Suez Canal (a waterway that connects the Mediterranean Sea to the Red Sea) was blocked by a large, stranded vessel for almost a week. An event such as this, can gravely disrupt the flow of global supply chains. Moreover, the geographical location of some points of your global supply chain might have an increased chance of natural disasters or political complications – it is important to acknowledge these potential disruptions and create contingency plans in case they occur.
3. Time constraints
Due to the sheer distance between various countries, the lead times on the movement of goods can be slower than those on a local supply chain.
4. International competition
Since your business will be competing against a larger number of brands and services through global supply chains in new markets, your company’s competition is likely to rise. Ensuring that the global supply chain is ran efficiently, will give the company a competitive advantage over its rivals.
5. Legal obstacles
As global supply chains involve crossing borders; it is more than likely that your company will have to consider a multitude of factors, in order to adhere to the varying regulations and laws from country to country.
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