Question

There is a trauma from moving operations to a global supply chain and you must not put your supply chain in the hands of amateurs. Why is this statement important to a Global Supply Chain?

Answer 1

Supply chain management is a relatively complex process that requires careful planning, execution and maintenance. However, in the local settings, supply chain management is simpler process than global supply chain. When an organization moves its operation to global supply chain, it faces new challenges and new settings. As a result, it is definitely better to avoid letting amateurs handle global supply chain management.

Few of the challenges that come with global supply chain system are:

• Product quality: When supply chain is made global, there may be instances where the manufacturing (or part of it) takes place at another country. This means there could be a possibility of low quality products/parts being manufactured.
• Time zones: The supply chain management involves moving of goods, products, and parts to and from different location. On the global scale, this means different time zones and working across the day. This may give rise to complications, especially with tight deadlines and delivery time calculations.
• Logistics: Think about procurement of goods. While the pricing can be fixed, there could be many reasons for a shipment to be delayed. This could in turn harm production schedule and eventually impact the outbound logistics of finished products.
• Compliances: On the global scale, procurement and sales often merge the line with import and export. This means there are increased complexities and regulations when it comes to the operation with global supply chain. There are various regulations that need to be followed in terms of taxation, duties, and law.
• Cultural difference: Working globally means you need to have a strong cross-cultural management system in place. This statement holds true for every global operation and not limited to supply chain. In order to maintain healthy business relationship and get the most out of the partners, cross-cultural issues must be addressed.

Now let’s consider an example of a company that is based out of Australia. It procures its raw materials from China and Malaysia. Manufactures the product in Australia and sells it in Europe and USA (primary market). The above challenges are very likely scenarios that one will need to tackle in order to operate the business smoothly.

Considering the points above, it is imperative that global supply chain is handled by a group of professionals that has the required experience and knowledge to deal with these challenges. That is why the statement read “you should not put your supply chain in the hands of amateurs”