Supply Chain Problems
Companies are thinking and going global nowadays. As their operations increase, their supply chain also becomes global and more complex. Although a global supply chain can help a company source for materials cheaply and save costs of doing business, there inherent risks that a firm must content with in the global supply chain activities. Companies are well aware of the supply chain problems in the global marketing arena. However, managers often fail to take the necessary steps to mitigate the potential risks. This paper will discuss four supply chain problems that companies can encounter as they enter the international markets. In addition, a set of recommendations will be proposed to help the line managers to deal with these challenges.
Companies are always aware that if the supply chain is affected by some unfortunate situation it is not one facet of the company’s operations is affected, but the whole organization suffers. Indeed, the whole corporation can feel the cost implications of a failure in supply chain (Blanchard, 2010). For instance, a delay in the shipment of raw materials or parts can throw the production process into disarray. Accordingly, the company will lose millions in sales revenue since customers will not get the good or services that they need on time. Therefore, it is imperative that a company understands the possible sources of problem in the supply chain and takes the necessary steps to avoid any disruptions in the production process. Some of the common supply chain problems in the global operations include planning and risk management, relationship management, cost issues and talent development and management.
Planning and Risk Management,
While entering a new market, it is critical for a company to redesign its supply chain to reflect the needs in the new markets. International markets are different from home countries. Therefore, a company must plan well to respond to new market requirements. In addition, the company must carry out periodical assessment of its supply chain to respond to changes in global sourcing and ensure shipment security. Markets are dynamic and this can affect supply chain greatly because of adaptations to new environments (Sinha, 2009). For instance, customer preferences might dictate addition of certain components into the product. The company must ensure that such components arrive on time to meet the needs of the customers. Planning is critical, as it will identify the correct distribution framework to be adopted by the firm.
On the other hand, a company must take cognizance of the fact that risks are inevitable in the global supply chain operations. Such risks must be identified and should be quantified to make it easy to address them. To solve the problems of planning and risk management, companies entering the global market should have a strong business growth plan. In addition, it should hire the services of a professional consultant to help in creating sound business strategies. This approach will assist the companies in minimizing chances of slip up in the supply chain operations.
Relationship Management
A company entering the new market should develop and maintain new relationships with the suppliers and the customers. The strategies employed in the home market for relating with suppliers and other players in the supply chain might not replicable in other countries (Lambert, 2010). In addition, the company should devise a new approach of measuring and communicating expected performance as well as results in the new markets. The managers in the global markets must let go of any bias and choose to respect the new markets and adapt to mutual standards of communicating and solving problems within the new supply chain. To enhance communication and problem solving within the supply chain, managers must work within a defined framework that provides a common language for supply chain classification and analysis. This is imperative in measuring performance and communicating among the team members.
Cost Issues
Supply chain managers must understand that operating costs are continuously on an upward trend. Operating costs are escalated because of increased costs of raw materials and freight charges among other factors. Increased costs of materials affect the prices of the finished products and can be a source of competitive advantage if a company can keep these costs as low as possible. A company should develop metrics form measuring how effective it is meeting the set objectives. For instance, a well-designed metric can be used to compare different supply chains against a given set of strategies. By analyzing the results, a manager will be able to pick the right combination of strategies for optimum results.
Talent Development and Management
The talent gap is a big challenge for companies as they seek opportunities abroad. In essence, a company might struggle as it tries to build an effective international management team to oversee the supply chain, while at the same time, grappling with cultural issues across countries. To deal with the talent issue, a company going into global activities should develop a framework to organize its operations. Such a framework can be critical in solving human resource issues, such as new skills development and training of people within the supply chain. Leaders of the supply chain must have a thorough understanding of the key competencies required in a given locality.
Conclusion
Global operations are complex and therefore, a firm entering the international market must be prepared to apply new approaches in managing the company operations. This is also true in the management of the supply chain. The global supply chain is complicated although it can help a company get inputs cheaply. The problems of supply chain are many. However, this paper has only addressed four of them, including planning, relationship building, cost problems, and talent development. Against each problem has been identified a possible solution to overcome such challenges.
References
Blanchard, D. (2010). Supply Chain Management Best Practices. New York: John Wiley & Sons.
Lambert, M. D. (2010). Supply Chain Management: Processes, partnerships, Performance. New York: Supply Chain Management Institution.
Sinha, A. (2009 ). Supply Chain Management: Collaboration, Planning, Execution, and Co-ordination. New Delhi: Global India Publications.
