Here’s What You Should Know About Global Supply Chains As A Small Business Owner
What is a global supply chain? It is a system through which businesses all over the world produce products or services. Though the definition might sound simple, a global supply chain might not be so. Several facets have to work well with each other. Global supply-chain management deals with six major areas such as logistics management, customer orientation, competitor orientation, supply management, operations management, and supply-chain coordination. Now, these six major areas can be divided into marketing, logistics, operations management, and supply management. If a global supply chain has to be successfully managed, a business has to comply with several international regulations that have been set by various non-governmental organizations, like The United Nations.
The Benefits of Global Supply Chain
As a small business owner, you probably didn’t even have any idea that extending a supply chain across the globe can actually lower the price of your final product. There are quite a few countries that have lower production costs. This helps them expand their supply chain to various parts of the planet. In situations when the dollar has a higher value than the currency of the country that you are trading with, buying goods and services from a supplier of that country can lower your expenses.
If outposts of your business are present throughout other continents, selling in those parts will be a lot easier for you. Suppose, you don’t have a supply chain and your business is confined to one specific region only. Now, if that region suffers a natural calamity or if disaster strikes, your entire business operation can get stalled for an indefinite period. You never know how bad a disaster can get. That’s not good for your company.
How Can a Global Supply Chain Succeed?
For a global supply chain to be successful, various factors come into play. Therefore, mentioning just one or two of them is practically impossible. The most crucial factor is cash flow and proper financial arrangements. Having a working capital for your business would mean that you can pay for its infrastructure and other essential things. If you don’t have that, you won’t be able to run your business for long. You must make sure that the supply chain is running well. Otherwise, there is a probability that you will lose money. As per the experts, a supply chain can take up more than 80 percent of the revenue that your company generates. So, focusing on that becomes mandatory.
Managing waste as well as not letting employee theft happen is also crucial to the success of a global supply chain. Certain policies won’t prevent any kind of such losses. Hiring the wrong people for your company can lead your business to lose a lot of money. Aside from that, you need to have a clear plan as far as your logistics are concerned. It’s pretty much essential for your business to reach as many customers as it can in the shortest span of time and offer as cheap rates as possible.
This industry is competitive and you shouldn’t leave any stone unturned. Many companies have placed their warehouses close to the urban centers to cut down the distance required to cover during delivery. When a customer gets free shipping, in reality, it’s not free. This is a business strategy that would give you an edge over your competitors. It all boils down to the costs. If your costs are in control, a global supply chain will be successful.
Types of Business that Benefit the Most from Global Supply Chains
Many manufacturing companies get success from a global supply chain. Any business that wants an international presence and has customers from all parts of the world will require a robust system to transport its products and services from one place to another. Businesses that generally thrive through global supply chains are electronics, oil and gas, textiles, mining, and food and beverage.
Global Value Chain and Global Supply Chain
A global value chain is a global supply chain of people and effort or activities that contribute towards creating as well as delivering goods and services when a supply chain exists in several countries and has to be managed. The subtle difference between a global value chain and a global supply chain is that the latter is all about the manufacturing and distribution process.
If you focus on every aspect of the system that you have in place to produce goods or services, you wouldn’t be facing any hurdles in your business. Efficiency is the key.
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