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Organizations that participate in the global arena understand the importance of having an efficient and effective supply chain management system. Hopes of an advantage over the competition are reliant on strategic plans for a profitable supply chain. Relationships with suppliers and customers are the bookends of making production work.
In many ways, the economic recession was a godsend for global organizations. They were forced to take a serious look at how problems within current supply chain mechanisms went straight to the bottom line. Take, for example, the ad hoc decision to use countries with low labor costs as the only solution to manufacturing low-price products. A vivid disruption from the recession, combined with an increase in transportation costs and inventory backlogs are factored into overall costs.
Generally, organizations that could control costs internally ran smooth operations and kept their customers happy. However, external factors weighed heavily on securing global supply chain walls and internal decisions were soon controlled by outside forces. Increased national and international competition with more players in the market has led to retooling supply chain operations.
Unless organizations acknowledge external forces that influence their business decisions, transportation problems, capacity issues and inventory surplus will remain. By comparison, extending the focus to all contributors throughout the supply chain will help them meet challenges successfully.
Challenges Facing International Supply Chains
Effective supply chain operations requires an ongoing analysis and restructure for many organizations. Grasping the challenges that organizations are facing is the first step in cultivating appropriate solutions. By examining key components of the supply chain structure, organizations can maximize customer value and come out stronger.
Failing to deliver enough of the right product at an affordable price is the heart of supply chain operations. On paper, the process looks simple. In reality, this requires connecting various moving parts and integrating them into a singular flow.
The solution to customer service challenges? In general, organizations must measure and understand the impact that current conditions are having on their supply chain system. By having a framework of performance, organizations can create a foundation for making improvements.
It will also help if supply chain managers evaluate the tradeoffs between costs and performance and develop strategies that meet the expectations of current and potential customers.
Rising costs in freight rates and labor rates, changing technologies, regulatory demands and more customers to please is putting a lot of pressure on cost controls. Zeroing in on a few that drive total costs of supply chain efforts is important to balance the equation.
Metrics are an essential tool for organizations to measure success. A comparison of systems and strategies, along with their direct link to costs can help to identify what is affecting operation costs.
Risk Management Preparation
The best plans require a contingency if something goes wrong. Supply chain operations are not excluded from the business norm. Periodic assessments are necessary to align with market changes such as acquisitions, intellectual property protection, global sourcing, new product launches, security concerns and available credit.
Additionally, identifying and quantifying risks to current supply chain operations is crucial to finding a solution. Across all sectors, organizations should have a foundation for dealing with risks. This involves swift implementation if a natural disaster disrupts part of the logistical flow, for example.
Risk management solutions will coordinate with suppliers, customers and other stakeholders to ensure minimum interruption occurs. The question of who is responsible for contingency strategies is answered before an issue arrives. Responses are coordinated better to keep the operation flowing.
Relationship Management with Crucial Partners
Crucial partners to international supply chain operations are not different from national relationships: suppliers, distributors, retailers and customers all have expectations and investments in the process. Managing these relationships requires the skill of a professional juggler and the art of diplomacy. The challenge for international organizations is to speak the language of each partner for better performance.
Employing a common language makes it easier for organizations to communicate internally and externally. Each aspect of the supply chain is linked, from creation to shipment to landing in the consumer's hand. Critical to coordinating these partnerships is clear communication lines to control the flow of goods and services.
Future Supply Chain Experts
It is easy for organizations to become distracted with the day-to-day activities involved in successful supply chain management. One overlooked challenge is what organizations must do when 20 or 30 years of experience retires. How will organizations continue to operate at optimal levels while simultaneously training new talent?
Acquiring and cultivating talent before planning the retirement party is important to make sure key competencies remain. Methods for developing future leaders to fill specific job qualifications should be part of strategic plans for supply chain management.
Financing Cash Flow to Progress International Supply Chain Operations
Equally important is the financial link that can make or break cost controls, customer service issues or hiring a skilled workforce. Without sufficient cash flow within international supply chain operations, entire organizations will suffer. Financing programs for unpaid invoices can strengthen the position of organizations that depend heavily on supply chain systems.
There are distinctive benefits for organizations that provide working capital to decrease operating costs. Generally, organizations can take advantage of the option to borrow on invoices while waiting for payment from distributors and retailers. This is a good way to leverage growth plans without increasing credit risks.
Basically, organizations with international supply chain operations can enter into a contract with a reputable international factoring company. They sell receivables to distributors and receive cash from the factoring company to continue business as usual. An increased cash flow helps to ensure that organizations can continue to operate successfully on the global stage.