Managing a supply chain can be a difficult and demanding task. Managing it on a global scale is even more so. The decisions you make can affect your sales across multiple countries, either positively or negatively, and ultimately have a major impact on your ROI. So how do you make the most efficient and effective decisions across multiple, international markets?
Here are 4 mistakes to avoid in your global supply chain management decision-making process:
1. Thinking in the Short-Term
How many links are there in your supply chain, from raw materials to the finished retail product? Now, what factors affect each of those links? When it comes global supply chain management, people tend to think in terms of immediate supply and demand, but this can have detrimental effects. It’s important to look up and down the entire supply chain and understand how the factors affecting each link today will impact your business next week, next month, and next year.
2. Focusing on Spend
When making decisions about our supply chain, we often prioritize the chain based on how much we’re spending for each product or material in it. The most important materials, and the ones that get the most attention are the ones we pay the most for. But outsourcing around the globe has made some of the most important products we use into the cheapest as well. Which is a great thing until something goes wrong, and your supply is cut off.
A political dispute makes it difficult to continue importing from a particular country. Floods in another area have wiped out a crop that’s essential to your product. You didn’t see it coming because you were focusing on the fairly small percentage of materials that make up most of your spend. Instead, prioritize your supply chain by impact: how important is this item to your overall product?
3. Not Being Connected
Globalization has changed the way we do business. In fact, it’s not even accurate to call it a “supply chain” anymore. It’s more of a supply web, with different connections all over the world. But in the decisions we make, we still think of it as a single chain. However, with so many different facets to keep track of, keeping everything together and organized is virtually impossible. The only way to do it effectively is to keep every link in the chain connected through a single platform.
4. Lack of Visibility
The core problem in global supply chain management is the tendency to pay little to no attention to where products and materials are coming from. This can be one of the root causes of all of the above issues discussed, and a hundred others. Managers know who their direct suppliers are, and they know who they’re selling to, but they don’t follow the chain all the way up, knowing what’s going on two links up the chain or three links down it. It’s not an easy thing to keep track of on a global scale, but it can be disastrous if you don’t.
Keeping track of a global supply chain requires knowledge, focus, and extensive external resources in order to be handled effectively. Every decision you make can impact your company on a global scale. You owe it to yourself, to your company, and to the rest of the supply chain, to do everything in your power to make sure those decisions are the right ones.