Question

D. Discuss the importance of why global supply chain management is so important to a company's success which does business internationally?

Answer 1

Global Supply Chain Management:

Supply Chain is the set of physical entities (persons and organizations included) involved in the flow of products, services and/or information from the source to the end consumer. It involves upstream which is supply and downstream which is distribution.

Supply Chain Management (SCM) is the art and science of how the supply chain is effectively and economically implemented. Purpose and utility of an efficient SCM is customer satisfaction, coupled with economy in delivery to the ultimate user, through the various nodes involved. An effective SCM entails wise planning of different tiers through which the product is to be passed through. Number of tiers shall be adequate enough to ensure efficiency in handling at each level. At the same time, more than essential tiers will lead to unnecessary and avoidable expenditure by way of third-party remuneration. This will lead to either a dent in the margin available to the producer/ supplier, or increase in cost to the end-consumer, or both. Another function of SCM is to ensure timely delivery, which also needs proper planning of the structure of network. SCM also requires strict controls over inventory, production, various stages of flow of the product and the inventory of the vendors.

Global Supply Chain Management (GSCM) is conceptually the same supply chain management but practically, of very large dimension. Because , GSCM involves flow of goods and services across counties. International business assumes greater degree of complexities due to the presence of various factors, major among them being-

• Multiple currencies and volatility of exchange rates
• Different time zones
• Different trade laws within each country
• Different sets of customer preferences and conventions

Owing to the above, GSCM which takes care of various additional features, apart from that of the SCM in general, is essential. This is to protect the interests of the company- by way of protecting the margins on the one hand and maintaining/ expanding markets through safe and prompt delivery at the least cost possible.