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How to Handle Risk in Global Supply Chain Management

Michael Wilson | Jan 8, 2015

When your company has a global supply chain management plan, it can make things more complicated than a less extensive chain of supply would be for logistics departments and ...

global-supply-chain-managementWhen your company has a global supply chain management plan, it can make things more complicated than a less extensive chain of supply would be for logistics departments and supply management professionals. This is especially the case for supply professionals who do not have a tremendous amount of experience with international affairs. For those who are involved in their organization’s supply chain and want to be sure that they minimize the risks associated with having a chain of supply that stretches across multiple countries, there are a few important things to consider.

1. Understanding the Culture of Other Countries

No matter what element of your company's logistics is based in another country, at some point you will need to interact with someone who lives or primarily works in that country, even if it is only on the phone or through an email message. Because of this, you must take time to be sensitive to the culture and social norms of the people who live in this country. You can do this by reading up on the history of the culture, understanding popular religions, and immersing yourself in current media outlets that are based in the country where part of your supply chain process takes place. By incorporating culture sensitivity and local business practices into your supply chain management technique, you keep all areas of your company’s logistics running as smoothly as possible, even if a part of this operation occurs outside your home country’s borders.

2. Familiarize Your Business with Commerce Laws

Another important element of managing risk in an international chain of supply is making sure that you are aware of all the rules and regulations that apply to commerce laws in the relevant countries. For example, if a part of your supply chain exports goods from a specific country, you must have a strong understanding of what is necessary for legally exporting these goods from their country of origin. Also look into any pertinent fees, tariffs, or inspection requirements that could cause a slowdown in your chain of supply.

3. Obtain a Liaison in the Relevant Countries

Businesses who are going to have a global supply chain management strategy will want to have someone, either internally or externally, who can be responsible for the part of their chain of supply that goes through other countries. This might be an attorney who specializes in foreign affairs, or a logistics company who has a history of dealing with the particular countries that your business is going to be involving in its supply chain. This can streamline the way that you handle global supply issues and create a chain of command that is easy to understand for all those who may be affected by supply chain problems.

4. Stay Updated on Global Events

Although it will prove beneficial for you to stay up to date on events all throughout the world, it is especially important that you understand what is happening in the countries that are involved in your chain of supply. Make sure that you have a way of monitoring the news and geographic happenings in these countries so that you can take steps to prepare, in case an incident like inclement weather or a shift in the political climate of the country causes instability that might affect your business.

A global supply chain management strategy can bring many benefits with it, but it can also be a serious challenge for growing businesses that are unacquainted with the best practices for managing international logistics. If you can incorporate these and other positive policies into your approach to your global chain of supply, it will be much easier for you to successfully maintain operations that can be impacted by world events.

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