Global Supply Chain is the network creation among companies worldwide, handling, distribution of particular goods and services and production (Skjott-Larsen, 2007). Global Supply Chain has some of its advantages and disadvantages as illustrated below.
Benefits and disadvantages of Global Supply Chain.
1. Global supply is extremely competitive, and there products of excellent quality with good prices will be available in the market without one searching worldwide. This because the product of required standard quality controls can be sourced quickly and efficiently. This advantage is never guaranteed because the easier access to a lot of the information for the product, Product review by customers’ means less control in product marketing for companies, some negative reviews may impact severely on sales.
2. Companies involved in the global supply chain ensure the economic viability of their business by being able to shave costs right down. The supply chain includes hiring of the dedicated and qualified managers to oversee the process and make vital decisions that will see the performance of the business improve. However, the supply chain is complex and costly because of the technologies and working parts involved. Companies face serious challenges for errors and oversights with the supply chain and therefore offset the value gained by its application. The costs of hiring are expensive and therefore the saved costs impact may not be invested back to be the business.
3. Companies that sufficient connections and supplies internationally, enjoy the reduced amount of inventory that they retain. Saving them the storage cost, thefts, transportation, etc. The amount protected from such losses can be used to sharpen the competitive edge that comes with the global supply chain. However, this cost saving feature can be a weakness in other situations; many customers value the services that they get when shopping at a store, to them the online stores lacks the personal touch and less appealing.
4. Time differences in different countries make the global supply chain operate 24/7 basis. Therefore, there is a sense that the supply chain never sleeps, and consistently people are working hard to meet the requirements of the supply chain. However, time of product delivery is an issue because many products will take longer to arrive via e-commerce when compared to shopping at a physical store. Easy access to online stores by many people does not always translate into a feasible way for delivering and shipping products. There are risks such as damage to products and perishability of products especially if the delivery period is long.
Political risks are likely to impact negatively on the global supply chain, starting with order results for instance when we look at the case of Russia-Ukraine crisis; political risks may involve physical disruption and destruction of facilities and cargo; Sanctions risks from liquidity and financial viability suppliers.
Currency stability, one of the many risks that come with global nature supply is the danger of the currency fluctuation. This variation will significantly impact on the prices regardless of your market power or clever contracts. Currency rates should be involved in risk management; a strong dollar is a sign of confidence by international investors in that currency. But it’s also a killer for the U.S. exports; Americans products are less competitive abroad when buyers have to pay in dollars. Suppliers should apply currency risk or find a way to adjust price over time to account for it. If the money moves in your favor, you will miss cost saving opportunities. It’s vital to agree on the baseline exchange rate of the initial quote, so there are no variations between suppliers and unexpected price changes over time.
Environmental effects and supply chains are closely linked (Zanjirani Farahani, Asgari & Davarzani, 2009). Manufacturers need to take into account the post-consumption phase of their products: the environmental burden incurred during different stages of the product transfer from producer to final user and then to the disposal site. An environmentally friendly supply chain connects with partners who should make material decisions about environmental consequences, enhancing competitiveness and create better customer service and increased profitability.
Labor laws, human rights impacts can occur at any level of the supply chain. Companies may be involved with adverse human rights impacts either through their activities or as a result of their business associations. In fulfilling corporate social responsibility to respect human right, organizations should avoid causing, directly or indirectly, negative effects on human rights. They should also address adverse effects on human rights impacts that their operations contribute to. However, such a practice is not simple to manage.
Matters security is equally vital in the supply chain; the vulnerability of the supply chain refers its sensitivity to disruption. Many causes are considered as undesirable impacts resulting from both internal and external forces. These forces cause turbulences that the supply chain is unable to withstand. The primary goal of the supply chain security is to protect the supply chain from threats that cause disturbances
End-to-end network visibility is key to establishing a responsive transport network. This enables a firm to shift its operations to areas where operating costs are low without interfering with the quality of customer service. An economic transportation system starts with shift in attitude to accept the understanding that it’s an inevitable cost and risk that must be dealt with efficiently
References
Skjott-Larsen, T. (2007). Managing the global supply chain. Copenhagen: Copenhagen Business School.
Zanjirani Farahani, R., Asgari, N., & Davarzani, H. (2009). Supply chain and logistics in
national, international and governmental environment. Heidelberg: Physica.
