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 supply chain risk concern 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 the least cost regions, and commercializing products in high demand areas, all of which may be on completely different continents.
Comprehensive Management Strategies needed to Decrease the Kinks in the Supply Chain
When natural disasters such as hurricanes and earthquakes strike, 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.
Compliance with Local Laws in Geographic Areas of Uncertainty to Decrease Lead Times
Moreover, going global means having to deal with the 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. While advancing technology has minimized some aspects of long lead times, the physical transport of materials and finished goods remain at risk. Thus, international supply chains are highly complex, continually evolving, characterized by layers of uncertainty, and strategically critical to all levels of the company.
The Categorization of Supply Chain Risk Strategies: Atomistic/Holistic & Qualitative/Quantitative
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 supply chain 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.
Supply Chain Risk Mitigation Requires Talent, Expertise, Speed to Market & Attention to Detail
While all risks cannot be completely eliminated, selecting an expert service supply chain solutions provider, such as Flash Global, can be a critical component of a comprehensive risk management plan. Moreover, enlisting 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 supply chain 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:
- An integrated framework for addressing supply chain risks that provides an extensive knowledge of the components of risk, the ability to create risk profiles, and then use those profiles to produce a targeted strategy for an individual business.
- Technology with which to assess risk along both the quantitative and qualitative dimensions, and offer holistic methods to evaluate those risks.
- A framework that addresses the dynamic nature of international supply chain. Thus, as needs change, the framework can adapt to update profiles and re-evaluate risks, thereby fine-tuning the overall risk management plan.
Moreover, Flash Global offers comprehensive, end-to-end logistics services that can be customized into a service supply chain solution that is scalable to meet an organization’s needs. In the search for a supply chain services provider, a business should seek out providers that offer a complete suite of services including:
- Trade compliance
- Inventory management
- Asset recovery
- Order management
- Flexible, customizable solutions
- Robust reporting and data analytics
- Warehouse services
- IOR/EOR compliance and services
- Field service
- Network modeling
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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. Flash Global provides organizations with a competitive logistics advantage and the capabilities to maximize profits through combined resources and knowledge.
With a multitude of business models, a supply chain solutions 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.
If you are a fast-growing company looking to go global but want to mitigate supply chain risk, contact Flash Global today to learn more about our solutions engineering approach.
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