On the priority list of critical management activities that are central to the success of your global business, supply chain management should be at the top. Regardless of your specialty, your organization needs the resources, raw materials, and equipment to bring the goods your customers want to the marketplace. Your ability to do that efficiently is heavily influenced by how effectively you manage your supply chain, especially when it spans the globe.
But since a global supply chain is massive and multifaceted, it can be difficult to coordinate all the activities, processes, and technologies that are involved, from ideation and production to distribution and more. For this reason, it is important to drill down into the fundamentals of what global supply chain management is all about, why the supply chain is inherently vulnerable, and how you can make it more resilient to disruption.
What is global supply chain management?
Supply chain management is the process of coordinating all of the production, procurement, and logistics-related activities that are necessary for a product or service to reach its end user. Global supply chain management is distinguished by where these activities take place, where the raw materials and other resources needed for production come from, and their destination for paying customers. The actual makeup of a global supply chain can depend on a multitude of factors, depending on the product in question. For example, the supply chain for a motor vehicle, which is made up of thousands of parts and components from all over the world, is much larger than for a head of lettuce, which is bound for a grocer’s produce section. The more resources that are needed for an in-demand product to arrive in stores or at customers’ front doors, the more intricate and complex the supply chain tends to be. Global supply chain management aims to streamline every single aspect of turning raw material into a finished product to meet your customer needs.
What are the core components of every supply chain?
While every supply chain is different, they share a few common elements: people, processes, and technology.
People
Whether they are the associates working in a distribution center or truck drivers charged with delivering semiconductors to an automotive factory, people are vital links in every supply chain. Artificial intelligence, machine learning, and automation are uniquely essential technologies that have made supply chain management more cost-effective and efficient. But they do not necessarily replace people; they just enable them to get their work done quicker and focus on the tasks that require a human touch.
Processes
Supply chain processes are the specific activities that turn raw material into a finished product. These include, but are not limited to, tasks like researching, sourcing, warehousing, transporting, purchasing, supplying, distributing, capacity planning, demand planning, and customer service.
Technology
In the global supply chain context, technologies are the tools, equipment, and other resources used to connect people with processes. When deployed successfully, technology can optimize a supply chain so supply and demand align with one another. Examples of supply chain technologies include artificial intelligence, automation, the Internet of Things, and enterprise resource planning system software. Some technologies are more specific to certain tasks, like picking and packing in a warehouse.
The challenges of a global economy
There are a lot of inherent advantages to a global supply chain. A global supply chain can keep your costs low by providing competitive prices for natural resources, ingredients, and components from all over the globe. In addition, it can give your business a leg up on the competition by increasing your inventory and access to distribution centers worldwide. A global supply chain can also greatly expand your customer base, providing more opportunities to grow and develop your brand.
But at the same time, the sheer size of a global supply chain carries inherent challenges. Many of these challenges presented themselves during the pandemic when lockdown measures interrupted work schedules and business activities up and down the supply chain.
But it does not take a once-in-a-lifetime virus to cause problems when supply chain processes are international. Other causes include:
Staffing, quality, and delivery hurdles: Recently employee shortages have played a role in global supply chain problems. If a business does not have enough workers in place to produce at a quick enough rate, this can also lead to supply chain bottlenecks. Quality can also suffer when labor shortages exist. You and your suppliers may define “top quality” very differently. If products do not reach your expectations, this can also present timing and delivery issues that can adversely affect customer satisfaction and sales performance. Finally, when manufacturing and fabrication essentials come from another part of the world, any number of complications can prevent goods from arriving on time, from inclement weather to miscommunications with logistics entities and other third-party partners.
Compliance and environmental sustainability: Virtually every industrialized nation has regulatory and oversight bodies that govern what certain products must include. Failing to adhere to these rules can frustrate supply chain processes, outcomes, and timelines. In a similar vein, many of these requirements that enterprises are encountering are about decarbonization. With an increasing number of countries spurning fossil fuels in favor of renewable energy sources like wind and solar, governments and federal regulators are requiring businesses to track their emissions. However, as Harvard Business Review recently pointed out, disparate data collection methods and limited visibility into supply chains are resulting in inaccurate reporting. This could lead to fines or penalties from oversight entities for non-compliance.
Returns and the reverse supply chain: Whether items arrive with defects, missing parts, or ill-fitting components, you may need to send them back, slowing every other aspect of your supply chain.
As a workaround, more organizations are adopting what is known as circular supply chains. An alternative to linear, circular supply chains make it easier for organizations to reduce their carbon footprint by reusing or refurbishing discarded products instead of throwing them away. As a result, organizations not only reduce their costs but also stand to be rewarded for their environmental stewardship, whether by governments or eco-minded customers who like to patronize organizations that share their Earth-first values. Moreover, servicing the products can be a great source of additional revenue and presents opportunities to cross/upsell your products and services to your customers making the reverse supply chain a critical element of your growth strategy.
For your supply chain to thrive and overcome the obstacles thrown in its way, you need a trusted team of supply chain professionals with the skills and technologies that can empower your people and processes. Inspirage is that team. As an Oracle Platinum partner, Inspirage has the expertise, capabilities, and solutions to steel your supply chain’s resolve and enhance overall visibility with Oracle Cloud ERP applications and our long track record of successful system integration experience. Regardless of your supply chain management needs, Inspirage has you covered. Contact us today to learn more.
