Supply Chain Managing the Risks Term Paper

Global Supply Chain Issues

The increasing focus on core competencies and efficiency has led many companies to outsource non-core operations to distant specialists, saving production costs and cutting organizational waste. The integrity of a global supply chain is absolutely crucial to keep these relationships profitable. However, the benefits of global supply chain operations extend far beyond cost-savings. They also serve to: (1) Increase Revenue; (2) Achieve Economies of Scale; (3) Reduce Direct Cost; (4) Advance Technology; (5) Reduce firm's global tax liability; (6) Reduce market access uncertainty; (7) Enhance sustainability.

Challenges/Vulnerabilities

1. More demanding logistics operating environments

a. Language

b. Unique national standards

c. Sheer amount of documentation

d. High incidence of countertrade and duty drawback

2. Security considerations

3. More complex total cost analyses

4. Transportation considerations

5. Import constraints

Global logistics must support operations in a variety of different national, political, and economic settings while also dealing with increased uncertainty associated with the distance, demand, diversity, and documentation of international commerce. A manger must also consider the relative maturity or stage of global trade: (1) Import/Export; (2) International with Local Presence; (3) Globally Integrated Enterprise. Each stage possesses unique product, marketing, supply chain, management, information technology, and human resource strategies.

Analysis

Helferich's principles of supply chain Disaster Management Preparation are useful for non-disaster supply chain management as well. The unpredictability of far-flung GSC operations is not unlike the unpredictability of disasters. GSC managers should strive to be as thorough in their preparation and try to learn from the mistakes SC managers have made in preparing for disasters.

The DMP strategies are helpful because they focus not just on planning, but on a robust response to the disaster/setback and eventually a recovery. The principle of mitigation is especially useful, as setbacks are inevitable and a company's response is often more important to partners than its initial error. Mitigation principles include "capability to process at new locations and include alternative equipment and systems" and "robust systems, processes, and infrastructure that can a survive period of disruption."

GSC managers in a standard outsourcing operation, for example, can apply these principles by providing for alternate suppliers and carriers. They can also designing systems to handle the failure of individual nodes without collapsing, e.g. providing for deliveries direct from a (C if B. is inoperative for some reason.

It is important for the company to make sure the benefits of a particular operation are worth the costs of managing GSC challenges for that operation, which can be numerous and cumbersome. Not every company has the same purpose or incentive in maintaining a global supply chain. Some are pursuing huge benefits, while others are pursuing relatively small benefits.

Bibliography

Donald J. Bowersox. Supply Chain Logistics Management, 3rd Edition, Chapter 12: Global Supply Chains…