March 11, 2015
Due to increasing customer demand and competitive pressures, many startups, small businesses and larger enterprises face restructuring their organization to exploit the opportunities presented by going global. This presents several areas of concern of supply chain risk that today’s executives must address in order to manage and mitigate the risks involved, including logistical, economic, political, cultural, competitive and infrastructural concerns.
Generally, today’s global company operates within a complex supply chain that requires a coordinated flow of information, services, goods and payments within and across international boundaries. Optimizing profits in this environment includes sourcing from geographical regions with the lowest procurement costs, assembling and manufacturing in least cost regions, and commercializing products in high demand areas, all of which may be in completely different continents.
As recent events, such as hurricanes Katrina and Rita, have demonstrated, one disruption causes disruptions along the entire supply chain. Thus, a comprehensive risk management strategy must incorporate steps to identify, analyze and implement risk mitigation tactics that address potential disruptions across multiple countries.
In order to manage international supply chain risks, organizations need to first identify those risks. Two trends impacting the dynamics of international supply chains include consolidation and globalization of companies leading to increased uncertainty in logistics operations at the tactical, operational and strategic levels. These uncertainties become greater when factoring in such issues as rapidly fluctuating oil prices or unstable political movements.
Moreover, going global means uncertainty in local laws and cultural norms that may impact a business, and differences in more concrete concerns, such as uncertainty in supplier reliability and lead times also cause increased uncertainty. While advancing technology has minimized some aspects of lengthy lead times, the physical transport of materials and finished goods remains at risk. This can be seen today in the continuing port strikes along the western coast of the United States. Thus, international supply chains are highly complex, continually evolving, characterized by layers of uncertainty, and strategically critical to all levels of the company.
Supply chain risk can be categorized into types of risk and sources from atomistic to holistic. Generally, atomistic sources take only a limited link in the supply chain for assessment, and the approach is used for non-complex, low-value, and highly available materials and components. Holistic sources require a comprehensive analysis of the entire supply chain, and this approach is most appropriate for assessing risks to high-value, rare, unique, or complex materials or components, since disruption of these materials would have a wide effect on supply chain operations. Understanding these differences is necessary to delegate responsibilities in the management of risks.
Similarly, supply chain risks can be categorized as qualitative or quantitative. Qualitative risks include inadequacies in reliability, accuracy and precision of the materials or components, while quantitative risks include overstocks, out-of-stocks, customer discounts, obsolescence or lack of availability of materials and components. Both categories may create the need for holistic assessments along the supply chain, and may significantly impact the speed to market.
While all risks cannot be completely eliminated, selecting an expert logistics service provider, such as Flash Global, can be a critical component of a comprehensive risk management plan. Moreover, have an expert partner can enhance an organization’s ability to proactively focus on the probability of uncertain events, while using risk mitigation methods to minimize disruptions after they occur.
Thus, the crucial factor in risk mitigation and management is the ability to identify potential losses from unexpected events. For instance, if highly accurate deliveries are crucial to a business, Flash Global’s team of experts with deep knowledge and experience in IOR/EOR compliance regulations will help protect the company from expensive delays, thus keeping delivery schedules on track and costs to a minimum.
Employing the framework and infrastructure assets of a logistics service expert provides three main benefits:
Moreover, Flash Global offers comprehensive, end-to-end logistics services that can be customized based on an organization’s needs. In the search for a logistics services provider, a business should seek out providers that offer a complete suite of services including:
Companies operating in the global marketplace can reap a wide variety of benefits by outsourcing logistics and international supply chain management to a service provider. With a multitude of business models, a logistics provider can offer a tailored menu of services, such as distribution, or a comprehensive solution for enterprise logistics that includes international freight forwarding, domestic logistics, audit services, freight payment, business intelligence, transportation management system technology, and warehouse sourcing. Flash Global provides organizations with a competitive logistics advantage and the capabilities to maximize profits through combined resources and knowledge. If you are a fast growing company looking to go global but want to mitigate supply chain risk, contact Flash Global today for our solutions engineering approach.
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