How globalization has changed the supply chain?

How globalization has changed the supply chain?

In the past years, studies and research have proven that the biggest concerns with the global supply chain are: profitability, customer satisfaction, cost management, as well as flexibility.

This last concern is one of the most concerning because being able to offer personalized prices and packages, which reflects in multiple supply chains, is not as easy as it seems. Clients expect good delivery times, but they also expect the company to adapt to their different customers and suppliers. The market is so volatile that the economic contractions have a direct impact how a company distributes, manufactures, invoices, and material sourcing. By globalizing your supply chain, the company will need to put under consideration each market’s taxation, invoicing and localization issues. This will also affect pricing models and services, but at the end of the day, companies will need to find ways to optimize their supply chains by staying on top of all of these critical functions to continue being competitive. Since times are changing so fast, it is becoming evident that many company’s processes are out of date and cannot always keep up with the changing conditions in the supply chain market. Technology is another factor that for some companies becomes a challenge because any adjustment made in the supply chain due to lack of proper technology or outdated procedures when on a global scale can cost a lot of money.

Finding ways to differentiate your product on a global scale, no longer comes down to pricing, features or even brand recognition. Now, differentiation will come down on most occasions to the supply chain and the innovative factors they can include to offer a better service, arrival times, packaging, and basically anything else that adds value for the customer. So, most companies will need to focus on optimizing their supply chain, allowing them to reduce costs, increase transparency, lower risks, and support new and innovative processes. By optimizing processes, you’ll be able to access information easily, being able to make better decisions in a shorter time span. You can become a reliable supplier by keeping your global business accessible with just a single transparent point of access through an online global community. Like this, there are many other strategies that can be put into place to ensure optimization at a global scale.

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Challenges in the global supply chain are constantly putting at risk the quality and the level of customer satisfaction of your company. Although there are some companies that are recognized for having the best logistics practices in the world like IKEA, which you can read more about on the David Kiger Blog, it is important to know the challenges that your company could run across while exploring global supply chain. Some of the things to consider may be time zones, which could easily turn into a delicate issue, especially when a client has to wait a full day to get a response due to time zone differences. One thing is to handle logistics in your backyard, but handling long-range logistics can increase prices, delivery times, among other things which can all be quite complex and ignoring this will be a huge inconvenience for any company. Even though a company may manage organizations in different countries, this global sourcing will ultimately still lead back to the organization. They have to be accountable for everything their company does, including child labor practices, working conditions, and any other activity to ensure compliance. Delays seem to be inevitable at times, especially when globalization has lead to so much economic or political turmoil in some parts of the world. Your company has to be prepared for anything that may affect your delivery times, and shipping timeframes in general. A final consideration for the risks involved in dealing internationally is the language barriers. Ensuring clear and effective communication will be necessary when dealing internationally, to avoid translation issues.

Despite the many factors that may challenge or put at risk global, dealing internationally could be a great advantage for your company. The important thing will be to prepare to adjust to customers needs, ensure on time delivery, create an infrastructure that allows you to manufacture and store the merchandise, and any other factors that can directly affect the way your company is perceived. Lastly, security is a rising concern for global supply chain since products and merchandise may pass through so many different providers, that will make accountability quite difficult to track. Even if you are very organized, and update procedures regularly, it is pretty difficult to accomplish all of your expected deliveries on time if you don’t have fully trustworthy providers. Logistics in the global market is something that will continue to evolve and as international organizations, it will be essential to be aware of the challenges and risks you might face.

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