Global procurement is on the rise, as companies are discovering the benefits of sourcing and outsourcing through international suppliers. There are potential risks, but in recent years the risks have been significantly reduced through introduction of better global supply chain management methods and standards.
Mastering global supply chain management is key to reaping the rewards that international vendors can offer; here are our top 5 tips for better global supply chain management.
Do Your Research
Just as you would with a local supplier, it’s important to look in-depth at an international supplier before considering entering into any contracts with them. In addition to the typical factors considered when vetting a local supplier, when assessing international vendors you should also consider their region’s local supply chain and how that will impact their supply to you (e.g. standards, regulations, etc.), as well as considering the cultural nuances and how these could impact negotiation and relationship building.
Have An Insider On Board
Knowledge of the local supply chain and the cultural significances within the region of your international vendor is key to minimising risks and building a good supplier relationship. Having a knowledgeable person with experience of working in the local area can also prove valuable when it comes to lowering taxes and negotiating with the supplier.
Consider The Impact On Lead Times
Lead time is one of the biggest factors affected by outsourcing production to a global supplier. Not only do you need to consider how long the international supplier will take to complete the order, but also the extended time period for delivery from the supplier based on their geographic location. This can be impacted by customs regulations and method of freight, and needs to be considered when forecasting your expected time to market.
Have A Reliable Back Up
Like with any supplier, international or otherwise, there is still a fair amount of risk in relying solely on them. Things can happen that are often out of the supplier’s control and can severely disrupt supply; that is where you back up comes in.
Having a back up supplier, often a local to your region vendor, who can process a last minute order efficiently in the event of issues will help you keep things on track.
Use The Technologies Available
In the digital world, supply chain management both on a national and international level has become much more of a streamlines process thanks to software. It is now possible to track the order process and inventory using a variety of tools and metrics, increasing the efficiency of global supply.
Technology can also bridge the communication gap between yourself and international supplier, with video and conference calling allowing meetings and negotiations to take place on a more regular basis at a fraction of the time and monetary cost. This can help to improve relationships with international suppliers and keep things running more smoothly.
Global supply chain management skills are important for procurement professionals looking to progress. CIPS course provide professionals with the in-depth knowledge and skills to succeed in procurement.
What would your top tip be for managing a global supply chain? Tweet us @Procure_Supply!