Have you ever considered expanding your supply chain to broaden your vendor horizons? A global supply chain allows manufacturers to expand into international markets, encouraging businesses to boost sales, lower overhead costs, improve threat and risk management, and more. Likewise, supply chain management software (SCM) ensures the timely delivery of services and goods to multiple distribution centers.

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Article Highlights:

• Understanding Global Supply Chains
• What Is Global Supply Chain Management?
• Benefits
• Challenges
• What’s Next?
• Conclusion

Understanding Global Supply Chains

The growing need for global supply chains is critical, thanks to constantly changing market situations. Despite the need for good supply chain management, many organizations don’t survive because they lack a global overview of their operations.

A global supply chain’s objective is similar to traditional supply chains but differs based on scope and geographic boundaries. However, there are certain expectations from global supply chains:

• Optimize supply chain operations based on the number of capabilities and costs.
• Analysis of investment across business units and geographic boundaries.
• Reduce operational and item costs.
• Address local and international business development goals.
• Strategize investment recovery processes.
• Lower inventory costs.
• Align incentives for integrating supplier, buyer and end-users activities that support strategies and end goals.
• Guarantee the right supply of goods and services for cross-border trades.

A general approach to a global supply chain requires almost the same information as a traditional supply chain. However, corporations must provide additional details like international logistics, politics, customs, currency, ethics, laws, language and culture.

The number of items and goods required from the supply chain and the delivery location should be well-defined. Suppliers must undergo evaluations involving the ability to conduct international operations before implementing global supply chains.

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What Is Global Supply Chain Management?

Global supply chain management is a process that helps plan and successfully execute goods and services distribution from manufacturers and consumers across developing countries worldwide. This system helps integrate multiple networks of manufacturers, suppliers, retailers and warehouses to source the right type of goods with the right quantity and quality.

Some major global supply chain management goals include reduced business costs, mitigating risks, improved efficiency and timely delivery. It ensures secure movement of raw materials and finished goods from the manufacturer and supplier to the retailer and other distribution points.

Top picks for the best supply chain management software include NetSuite, Blue Yonder, SAP Supply Chain, Oracle SCM and Infor SCM.

Primary Benefits

Global supply chains paired with software provide advantages for organizations across multiple industries like manufacturing, mining, food and beverage, textile, electronics, oil and gas, and more. Here are the top benefits of software-support global supply chain management.

Reduce Overhead Costs

Demand forecasting provides accurate overstocking forecasts. It allows organizations to cut expenses associated with overstocking. Using forecast insights, organizations can keep the specific product quantities to meet demand and generate more revenue.

To enhance this process, organizations must adopt automation solutions. For example, a warehouse management system (WMS) speeds up the shipping process while increasing overall efficiency.

Optimize Transportation Management

With transportation management software (TMS), supply chain professionals can reduce delivery spending, freight costs and invoice payments. This system has the most control over transportation and its cost. According to Markets and Markets research, the global TMS market size will grow at a CAGR of 19.1% between 2022 and 2027.

Improve Transparency

Leverage better demand forecasting via instant streaming of real-time data. With robust SCM solutions, businesses can manage demand fluctuations better. It allows supply chain professionals to overcome challenges and make necessary strategic decisions.

Minimize Delays

Addresses issues instantly and maintains a 12-hour communication cycle resulting in improved business performance. SCM helps avoid issues related to late shipments, logistical errors and production line holdups.

Boost Efficiency

Real-time tracking allows organizations to understand how to source raw material with better stock availability visibility. It reduces customer dissatisfaction and minimizes delays while improving overall efficiency.

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Challenges

There’s no denying the fact that supply chain disruptions affect the global economy at large. Building supply chain resilience to survive manufacturing delays, extreme weather conditions and changing customer expectations is key to remaining profitable. The following are some of the major disruptions affecting global supply chains.

Port Congestion

Since the pandemic, individual shippers, port owners and carriers struggle to run things smoothly. While weather disruptions and geopolitical constraints can definitely interfere with transportation networks, a pandemic-related problem, like a swift lockdown, can take down entire supply chain operations.

Port congestion is a top challenge for supply chains. It occurs when a ship arrives at port but can’t load and unload due to capacity, causing congestion. Once congestion occurs, it creates a backlog of orders that delays shipments and delivery.

Surging Freight Costs

Rising shipping and freight costs are major reasons why inflation increases. According to IMF research, when freight costs double, the inflation rate increases by 0.7%. And the effects were persistent in the last 18 months, meaning shipping costs will likely increase inflation by 1.5% by the end of 2022.

Scarce Material

Pandemic-related issues threw material scarcity into the mix as well. And due to consumer demands, suppliers and retailers struggle to keep up. A survey by the Institute for Supply Management (ISM) revealed a large-scale scarcity of basic materials, record-long lead times, inefficient transportation, increased pricing of commodities and more.

Production Delays

Manufacturers are still struggling to overcome production delays caused during the pandemic. They’re forced to compete for logistical capacity commodity supplies, leading to longer purchase lead times. Just like warehousing, production delays are inevitable at times.

Workforce and Labor Shortages

Labor demand is also at critical levels, and organizations can’t find laborers to match their needs. Even though wages are climbing, vital positions remain unfilled. While modern operations require a technology skillset, organizations may need to rethink their hiring practices.

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What’s Next?

It’s challenging for the global supply chain to cope with so many disruptions while remaining competitive. The sophisticated nature of interconnected global supply chains makes managing them vulnerable to multiple threats and risks. With emerging supply chain technologies, organizations can get better visibility, making their supply chains resilient and competitive.

According to Forbes, leveraging new technologies like blockchain, digital twins, real-time shipping status software, edge computing, 3D printing and predictive maintenance tech can provide businesses with greater visibility and control across multiple operations.

Other ways to improve global supply chains include:

• Managing labor and worker shortages.
• Easing port congestion.
• Mitigating geopolitical issues.
• Developing a new approach toward hiring.
• Preventing abusive market practices.

Progress isn’t going to be easy, but organizations must work on improving strategies to deal with interconnected cross-border challenges.

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Conclusion

Organizations facing bottlenecks within their global supply chain will benefit from utilizing SCM solutions to optimize operations worldwide. With robust software modules, businesses can effectively eliminate production delays and supply chain congestion while minimizing fundamental costs.

Do you use SCM software to expand your global supply chain in international markets? Leave us a comment below!