International Supply Chain Management
Supply chain management can be defined as the management of a series of interrelated businesses engaged in the ultimate delivery of service and product to final consumers (Mentzer et al., 5). It encompasses a network of activities linked to the flow and transformation of goods from the raw materials stage to delivering services to end consumer in a manner that integrate information flow. In essence, it entails the entire process of establishing every element of the product to the final consumer of that particular product. The contemporary world has come with various advances in the way people handle things and how business is carried out. New technology that can aid the way business is done has helped to relieve people on numerous repetitive tasks. Advances in communication technologies have created numerous platforms that people can use to interconnect and discuss many issues of interest (Mentzer et al., 20). Globalization has played a greater role in shaping how individuals communicate and carry out activities. The same kinds of technology that make the same worlds smaller have also shaped the business world. Progressively, businesses are going global and have been mostly attributed to the positive impacts of globalization. In simple ways, globalization refers as the process of technologies or business spreading across the globe (Mentzer et al., 25). This has largely made many organisations to carry out many offshore activities in numerous other countries where personnel costs, as well as production are cheaper compared to the host nation. Occasionally, these operations can be outsourced to some foreign nation for similar reason (Lambert et al., 65). The definitive objective of any business for adopting supply chain management entails reducing the inventory in a situation where the raw materials required are available. As many companies get interested in enhancing their supply chain management, so do the number of web-based services increases. The Internet based service providers are often ready to offer part or all of the supply chain management services for businesses who opt to rent their service (Lambert et al., 68). All these have been attributed to globalization. Therefore, this paper seeks to conduct comprehensive research on international supply chain management where it aims to expose key issues that relate to the subject under study.
Globalization is a key factor that navigates the entire process of global supply chain management, and it would be inappropriate to exclude this notion while discussing this topic under research. Studies have revealed the essential contribution of globalization to the business and the advantages it adds to the international supply chain management. Key among the benefits is the reduced number of personnel needed, low costs of operations, as well as its capacity to have many operations in diverse locations. This can happen around the clock and helps to improve the competitive edge within the market (Chen et al., 289). Nonetheless, globalization has not been perfect and had some challenges to the business arena. In this scenario, businesses need to comprehend the laws, culture, as well as the regulations of the foreign state that they operate so that the business can operate effectively. However, when the finished items or even component requires being delivered globally, transportation issue becomes more burdensome (Chen et al., 290). Another issue is on the employment laws that often vary from one nation to another, regulations for global shipping also differ from the national shipping laws, and this may pose challenges to international supply chain management. Also, a rush order, especially from another side of the world, would be tough to accomplish and even very expensive than an order from a city to a city in the same county (Croom et al., 67).
1.2 Supply Chain Management
A supply chain entails a series of businesses involved in the delivery, production, sale of various products. Every organization involved in a supply chain gives a value added activity to the service or product. Therefore, supply chain entails the flow of materials and goods, funds, as well as information between organizations in a given network. The parties in the supply chain often link together in a common system (Frohlich et al., 186). Supply chain management broadly aims to connect effectively all the parties encompassed in the supply chain so that they can reduce the cost involved, improve the customer service, increase the company’s knowledge base, increase efficiency, as well as enhance barriers to their competitors (Chen et al., 300). The process often becomes a challenge at the national level and a regional level and encompasses manufacturing, warehousing, delivery of goods, and other suppliers essential to bring to the marketplace (Prater et al., 830). Another objective of a supply chain management entails developing a combined supply chain where individual involved companies are integrated and coordinated into an effective system with many goals of meeting the demands of the customers to the entire chain competitive (Frohlich et al., 189). This makes international business very critical, and the process becomes global so that it supports the process of operations.
2.0 International Supply Chain Management
Due to the growing aspects of globalization in several industries and business, global supply chain management has increasingly become critical (Choon, 39). Even many businesses that do not run in an international front also have customers, suppliers, as well as competitors. Therefore, this infers that the global elements of the supply chain management should always be considered even if a business is not operating in a global market.
This means that the international aspects of supply chain management must often be considered even when one is not in the global marketplace oneself (Choon, 40). In this regard, global chain management refers to the establishment and distribution of services and goods through precise, coherent linkages between structures, processes, and aims in the supply chain. Even though in many ways global supply chain management may share similar aspects to a national level supply chain management, differences also occur in many essential ways. First, the global supply chain management can be seen to be competing in a bigger arena compared to domestic supply chain management (Prater et al., 830). This is factual not only regarding geographical location spreading across the globe or nations but also the competition that is widely huge. Also, global supply chain management compared to the domestic supply chain is more complex especially when handling the global commerce which often needs many regulatory authorities, tax structures, cultures, and legal systems (Prater et al., 823).
2.1 Components of an International Supply Chain Management
Several pieces of literature indicate that there exist three components to global supply chain management and these are design, strategy, and operations. The operational components encompass the working structure of the business and any other arranged activities of the company’s functioning (Gunasekaran et al., 75). In essence, the operational components just include the day-to-day operations of the company on issues like inventory management, scheduling, planning, as well as manufacturing methods (Prater et al., 823). The design components encompass the establishment of a supply chain that needs to optimize and balance the company’s goals with the realities of the operations. The design in this regards includes the deliberation process of the business in enhancing its objectives. Finally, the strategic component of the global supply chain encompasses the planning, which is done by the company to enhance its goals as well placing limits on various processes. Jointly, all these three components provide a contextual framework for comprehending the global supply chain management (Gunasekaran et al., 71).
2.2 Drivers of International Supply Chain
The global supply chain management is often compelled by the promise of low labor and manufacturing costs, materials, as well as desire to penetrate new and emerging marketplace and many organizations have ventured in the business of supply chain since 1980’s (Croom et al., 67). Enhanced by the aspects of globalization, which occurs in the form various dimensions such as the geographic and qualitative parameters, the global supply chain has proved to be essential in the business world (Prater et al., 823). In fact, supply chain systems are growing more than ever to become a global affair. Even though both dimensions form key part to logistics, the qualitative parameter has become the driving force of international global chain management. Majorly, four clusters of global supply chain drivers are the market, government, cost, and competition (Choon, 43).
2.2.1 Market Drivers
When discussing the drivers of global supply chain process, the homogenization of the customer requirements can be regarded to be on the side of market drivers (Jüttner et al., 197). This typically infers that long productions run, centralized manufacturing, and the distribution centers are essential to enhance and benefit from the economies of scale (Chen et al., 119). Alternatively, putting in place scattered production facilities with excess capacity taking into consideration of domestic securities are no more needed and its place substituted by fewer, bigger, as well as central production facilities. Hence, the international service providers often prefer worldwide functioning organizations (Gunasekaran et al., 79).
2.2.2 Cost Drivers
Apart from the market drivers, there exit other variables on the cost side. The international scale economies are more apparent when it comes to these drivers. The production processes often focus on international delivery services and this encompasses refined logistics operations. Hence, favorable logistics, sourcing efficiencies, global sourcing, the dissimilarities in the country costs (comprising the exchange rates), product development costs, as well as technology has proved to essential for the global supply chain management (Seuring et al., 1699). The aspect of global sourcing is essential since it encompasses evaluating, identifying, negotiating as well as configuration of the supply across many boundaries and must consider cost, maximize the performance, and reduce the costs (Jüttner et al., 197). The global sourcing also concentrates on the upper side of the supply chain and must denote the internationally dispersed supplier’s localities of the company. In fact, in the contemporary global supply chain, companies have become suppliers that are no more limited to just local but also free to choose the suppliers on the worldwide scale. Organizations are often challenged to expand their extent of global sourcing to tap many opportunities as well as fend off various competitions. In addition, favorable logistics represents procurement, transportation, maintenance, distribution, warehousing, etc. The expanding productivity because of technological development within the logistics sector has a substantial effect on the ability to globalize the operations (Seuring et al., 1699).
2.2.3 Government Drivers
Another significant factor for global supply chains management is the government regulations. Hence, positive trade laws, companionable technical standards, as well as common market rules often concerns the global supply chains (Keah et al., 614). Advantageous trade policy is essential and has unquestionably, an enhanced international aspect of the trade. In addition, the compatibility of the technical ideals is of great significance since this relates to the compatibility and transparency of the information system, which is a vital component of all flow of items (Keah et al., 614)
2.2.4 Competitive Drivers
Competitive drivers to the global supply chain are also essential, and this may encompass high imports and exports, competitors from diverse continents, and the interdependency of the nations. The high imports and export factor denotes the flow of goods across geographical boundaries and hence forms essential aspect of international supply chain management (Keah et al., 615). In addition, the interdependencies of the nation activities reveal the growing functional incorporation of various economic activities across national boundaries. In an internationally designed supply chains, the product components must cross many national borders before reaching a final customer (Jüttner et al., 198).
3.0 Elements for Managing International Supply Chains
Certain elements are needed in the management of global supply chain. As earlier revealed in the paper, global supply chains are multifaceted with a network of interconnected companies. Hence, some elements are vital to ensure the business stay running efficiently, maximizing the profits, as well as reducing the costs of operations (Christopher et al., 14). In this regard, the aspects of visibility, as well as flexibility, form the fundamental factors that need to be integrated so that global supply chains can run effectively irrespective of the dimension of the chain. Visibility forms the key aspects of the global supply chains and requires that individuals are capable of seeing timely and accurate data at various phases with the global supply chain. This has been essential to the involved organizations since they can strategically manage their supply chains and this helps to reduce the delay risks (Christopher et al., 14). Primarily, an enhanced visibility ensures that operations of global supply chains remain valid resulting in lower costs.
Flexibility is another principal element, a vital factor in the prosperity of the global supply chains. Supply chains flexibility becomes significant when there is a need to understand whether global supply chain operations are vague or sound, as well as understanding the dynamics of the customers (Christopher et al., 14). Since there are competitions in this sector, it is growingly essential to appreciate the flexibility of the global supply chains. Hence, global supply chain should possess adequate flexibility so that it can effectively compete in the marketplace. The international supply chains appear to be less flexible and agile compared to the domestic ones. To some extent, the very globalization process has retarded its agility. For example`, many organizations in the quest to reduce the cost of production have done the outsourcing of their roles offshore. The key drivers for those kinds of moves are reduced related costs. Many companies have opted to operate on the international stage where they can ship products to different destinations across the globe (Angappa et al., 333). Also, it is popular to find a company sourcing various raw materials from various nations which ares situated thousands of kilometers from it. Hence, the lead-time in both the outbound and inbound logistics has significantly expanded which would otherwise lead to some level of uncertainty through the aspect of logistics. In this regard, companies that want to prosper in an international scene should embrace flexibility in their supply chain management (Angappa et al., 333).
The two elements (flexibility and visibility) are tied, and thus an information management shall be an essential value in the global supply chain managements (Croxton et al, 13). In fact, some scholars have stated that managing a global supply chain entails managing the information than just delivering goods to various destinations in the world. Organisations operating today have embarked on collecting massive amounts of data such that the trend to shift towards the sale information is leading to volumes of information being entered into the organization’s systems (Croxton et al, 13).
The information visibility is critical to the businesses that aim to improve the management of the international supply chain. The metrics that relates to the shipments or order and even the payment status shall highlight the inadequacies within the global supply chain then enable the firms to compel these through the cost elimination strategy (Minner et al., 265). More importantly, companies are focusing on how to attain effectiveness in the wider range of their global supply chain processes like product design, customer service, inventory management, and demand forecasting (Li et al., 107). The core to accomplishing all these must entail the act of information sharing between the involved companies in the global supply chain. Many scholars argue that exchange of information is the basis and then cross-organization coordination shall help deliver the wished efficiencies (Burt, 18). Even though these elements are essential to both domestic and global supply chain prosperity, the operational differences have often come into play particularly when the supply chain go beyond boundaries to other countries (Kannan et al., 153). This is because goods need to travel a far larger geographical distance and it frequently needs various modes of transport to attain it. Visibility is often hard to attain in a global supply chain. Hence, the companies need to do more regarding information sharing to accomplish this critical element in their operations. The skills, as well as expertise required to manage an international global supply chain effectively, may differ from those needed in the national platform (Minner et al., 265).
Increasing the supply chain beyond national borders broadly expand the chain thereby making the business exposed to many other variables. The variables may encompass boundary crossings, many modes of transportations or many hand-offs, various government systems, security concerns, and technology issues (Burt, 18). Hence, all these variables discussed above poses a place for errors that can derail the whole supply chain system (Croom et al., 68). The company need to ensure these problems do not upset the operations and the business should meet its objectives must address the variables. Risks tend to be very numerous when carrying out an international supply and thus companies involved in the firm must be aware of this fact and plan effectively. The parties to help mitigate the risks that may arise from global supply chain operations must put various measures in place (Kannan et al., 153). The domestic supply chain does not face huge risks and even if they occur they can be less, severe compared to the global supply chain management. Organizations that operate on the global front are often under some pressure relative to the domestic ones and thus need to manage the supply chain soundly. Thus, it is often decent for the companies that engage in the global supply chain to monitor regularly as well perform a cost-benefit assessment (Gunasekaran et al., 159). Sourcing goods and other services overseas might be less exorbitant; nonetheless, the risks may overshadow the profits in the end (Croom et al., 67).
In conclusion, the paper has unfolded critical insights regarding the global supply chain management. Globalization has been revealed as a key factor that has promoted this concept of global supply chains. Various businesses that take part in the global front can communicate, transport goods, and share relevant ideas thanks to globalization. Through globalization, companies have been able to reduce the number of personnel required in the business; they have also been able to lower the costs of operations, as well as having ability to conduct many operations in different locations in the world. In this regard, the global supply chain management has become essential in handling the international supplier through the dissemination of services and goods in a definite, coherent links between structures, processes, as well as the aims of individual members involved in the supply chain. In addition, the paper has unfolded the various components, elements, as well as key drivers of global supply chain management.
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