What Is the Global Supply Chain?
Supply chains that span continents and countries are known as “global supply chains” and are used to procure and deliver goods and services. Information, procedures, and resources migrate across the globe as part of global supply chains.
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Global Supply Chain vs. Local Supply Chain: What is the Difference?
- The term “low-cost country sourcing” refers to the purchase of products and services from nations having lower labor costs and production expenses than the home country.
- When you are a customer in your own country, the global supply chain typically flows from your organization to your suppliers, who may be located all over the world.
- It’s common for companies in the same country to use “home-grown” supply routes, which means that all suppliers in the supply chain are located in that country.
- As a result, the total landed cost or total cost of ownership should always be reflected in the genuine expenses of a global supply chain.
Benefits of Global Buying
Cost savings
Due to lower labour and operating costs associated with the product’s manufacturer.
Development of suppliers
It is frequently possible to support specialised product offerings, resulting in the following:
- Possibility of increasing innovation
- Transferring expertise and enhancing the skills of a new market/workforce
Consolidating competition
By establishing new suppliers, you can increase your access to appropriately skilled supply routes.
Drawbacks of Global Buying
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Increased lead times
While production times can be quite short, lead times are frequently much longer because the goods require shipping, which adds to the lead time; this makes forward planning difficult.
Risks to one’s reputation
Modern slavery risk exposure, brand risk exposure, and financial risk exposure can all be increased.
Global markets are more vulnerable to regional influences, which can have an effect on trading markets.
Communication difficulties
To ensure that information is correctly interpreted, it is critical to carefully consider the terminology and communication methods used to interface with a global supplier.
Risk exposure increased as a result of STEEPLED factors
Due to the fact that the supply chain spans multiple countries, the risk of unrest in other countries having a direct impact on your supply chain activities increases.
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Control loss
Due to the distance between the working relationship and the technical aspects of the production process, it can be challenging to manage communications and oversee technical aspects of the production process. Additionally, quality issues can be challenging to manage.
Do We Need a Global Supply Chain?
Choosing between a global or local supply chain will necessitate a careful assessment of the benefits and drawbacks for each organisation.
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