The potential of global supply chain management is immense. It can be effectively managed to achieve organizational efficiency in the coming days. This article is about the global supply chain management and its analysis with special emphasis on the Australian SMEs. We have tried to study and analyze the issues that are most commonly faced by the supply chain managers at global level and suggest some innovative practices that can be adopted to improve the supply chain management . We have also studied the factors that act as the enablers to effective global supply chain management and the issues that pose as a barrier to the same. We have premeditated the most prominent and vital issues that the Australian SMEs face while managing the supply chains and how they can overcome the same with the application of the innovative strategies suggested by us. In the latter part of the article, we have tried to study how the technological changes and advancements have impacted the global supply chain management both positively and negatively and how the organizations can adapt to these changes to make their entire management process more simplified and operative.
The supply chain management also called value chain management or logistics management is the web of the interconnections between the suppliers, manufacturers, wholesalers, intermediaries, warehouses, retailers, distribution centers etc. The facilitating systems like transportation, communications, information technology etc. are also included in the global supply chain management system. Supply chain are the network or links of the discrete functions that are independent and interrelated to aid the entire process from procurement of raw materials to the processing and storing, warehousing and final delivery of finished products. All the functions that are carried out in a supply chain can be classified into two parts, inbound activities and outbound activities. The inbound activities include the in-house functions like purchasing the raw material, processing, etc. and the outbound activities include the logistics and the activities that are related to transferring the products and raw materials, like logistics, transportations etc. Both these activities together form the global supply chain(Zigiaris, 2000).
A global supply chain has to be integrated and developed to deliver the required results in a timely and efficient manner. The most effective global supply chains are the ones that are designed in a way that the global boundaries are taken care of and ignored at the same time. The rise of global supply chain and its popularization is linked directly to the phenomenon of globalization. It is impossible to jot down an exact date and time at which this concept was introduced, but this has changed the entire process and practice of business operations. As the organizations started obtaining raw materials, labor, etc. from the international markets, a huge difference was observed in the operational costs of the organizations. When an organization decides to go global and open the gates to global supply chain, the gates of immense potential and some huge potential buyers opens up to them. This is the biggest and most important factor that draws the organization towards global supply chain management. The businesses are not dependent this way on a single national market and the profits as well as risks get divided internationally. The globalization and penetration of the internet have only made it more convenient for the organizations to operate in international markets and operate globally(Satish, 2012).
As newer technologies emerge, the trend of global supply chain management is only going to gain more popularity and emerge and penetrate even further. In this article, we have aimed at studying the major challenges faced by the organizations in global supply chain management and how the technological evolution and advancements have impacted them. We have also analyzed the challenges in front of the global supply chain managers in terms of technological variation and the steps that the organizations and the managers can take to stay competitive in the market that responds to the ever-changing technologies.
Issues faced by global supply chains
The most commonly faced issues by global supply chains and their functioning are given in this section of the article. When an organization decides to enter an international market for any form of business or supply chain, it has to make a huge investment of time, money and resources. Additionally, they have to make visits or appoint people to supervise the operations. This also shoots up the operational costs of the organizations. The study of global markets and their trends is even more complicated and there is a higher amount of risk involved in this. Thus, the path to global supply chain management is not all easy and profiting and have a fair share of challenges of their own(Arntzen & Brown, 1995).
The primary driver of all businesses running in the world is the profits. It is the aim of every organization to maximize the profit being generated from their operations. The global supply chain faces the biggest hurdle in the form of variable costs. The cost of operations and labor varies from one country to the other. The firms operating in more than one country need to make sure that the product or service is provided at a normative price at all the locations. This is a challenge when the cost of production and delivery of the service is different at different locations. This leads to differential pricing in the global markets. Additionally, there are currency exchange rates and their ever-changing figures(Asokan, 2008). The international freight tariffs and rates also add to the costs of the international supply of the goods and services. The second biggest challenge faced by the organizations is the duty and taxes. The customs duty that has to be paid adds to the cost of the materials and is also changed frequently. Additionally, there are export and import barriers and regulations that the organizations need to abide by. The firms need to obtain license to do business and operate in some of the countries and this is both costly and time consuming. The custom clearance, license approval, transportation, production, all these processes takes time and therefore slow down the supply chain process(Croxton, et al., 2001).
In addition to the above challenges, there are the make or buy decisions, options for outsourcing, tax havens, markup rates for the different industries and countries that have to be kept in mind and the decisions have to be taken to operate in the most effective and efficient manner.
Barriers and enablers of supply chains
The global supply chain management as discussed above is not an easy task. There are factors that impact its functioning and have to be taken care of at all times in order to successfully manage the supply chain. To find out the enablers and barriers most common to global supply chain management, we need to first understand its working and the entire process. The global supply chain management constantly faces the known and unknown state of affairs and the controllable and uncontrollable situations that have to be dealt with(DeVry University, 2013).
The barriers that pose a threat to the global supply chain management include natural disasters like earthquakes, landslides, cyclones, blizzards, etc. that impact the functioning and operations of a business. Then there are health hazards and epidemics that may result in interruptions and losses. The additional risks like terrorist attacks, political risks, currency variations, forecasting inaccuracy, problems with communication and execution of instructions also are challenges to the global supply chain management. Then there are some internal barriers that the organizations might come across during supply chain management. These include, lack of support from management, cross-functional conflicts, resistance to change from the employees, lack of trust, non-alignment of procedures and policies, etc. These can however be easily overcome by discussion and open communication in the organization(Singh, 2014).
To counter the barriers there are the enablers that promote effective supply chain management that can be promoted in the system. These include accurate planning and processing, effective people management and internal communication, trust-based associations, cross-training of employees and managers, continuous evaluation of the current logistics plan and regular training of both the organizational leaders and the employees. External guidance and help must be taken and the management must not shy away from adapting to the latest technologies and changes. There are various other enablers that have been identified by the management professionals worldwide that empower the supply chain management process. The most important of these is the organizational structure. The structure of the organization directly influences the working of the organization. The functional units of the organizations must be aligned to make the supply chain management process better at all times. The technological upgradations also work towards the better management of the resources and getting the work done in an improved fashion.
Challenges faced by Australian SMEs in supply chain management
A number of global supply chain models have been built to optimize the entire set up of business operations. In Australia, there are various associations that provide support and guidance to the professionals and practitioners of global supply chain management in the small and medium enterprises. The Supply Chain and Logistics Association of Australia (SCLAA) is the largest of these associations. They organize events, provide guidance, help and expert opinion to the employees and managers who seek the same. Despite all the help available, there are certain challenges that the SMEs in Australia face in the practice of global supply chain management. Some of the most prominent ones are discussed below(Engineering, 2011).
The first challenge that the firms face is the uncertainly in the business environment. This is something that cannot be avoided and has to be managed by the organization and its leaders. The organizations most of the time focus on the short-term goals, operations and profits. This myopic vision can be dangerous for the organizations as it leads to losses in the long term. The firms have adopted globalization to its core and have begun outsourcing the work and business operations to countries that have skilled labor available at a lower cost. The immigrants in Australia have also started working at a cost of lower than the minimum wage decided by the Australian government, which had resulted in an increase in unemployment in the country. The integration of supply chain management activities by the organizations has broadened the scope and activities of global supply chain management. This has led to increased burden and added responsibilities for the global supply chain managers. The vendor management, inventory management, planning, forecasting, replenishment etc, which were earlier treated as independent functions are now all included in the supply chain management. Integration between facilities and operation is an excellent decision and a must have for global supply chain management, but it should not be done at the cost of the traditional supply chain management activities(Monday & Wood-Harper, 2010).
Technologically innovative practices in supply chain management
The marketplace today is extremely competitive and in order to stay ahead in this competition, the organizations need to make the most out of latest technologies to make their working more efficient and effective. The business needs to continuously innovate and evolve to have a better control over the logistics and supply chain. Technology had impacted all aspects of business starting from procurement of raw materials to processing, production, transportation et al. It has not only improved the system, but has also simplified it(CAPA, 2013).
Some of the areas where the transformation in technology has affected the supply chain and logistics are mentioned here. The biggest impact has been on the transportation of goods. Technology has made it quicker, simpler, cheaper and more efficient. The shipping costs have dropped to a fraction of what they used to earlier. The tracking of consignments has made the transportation of good more reliable. The customer satisfaction level is higher now and the errors and discrepancies have also reduced to a great extent. Technology has also made it easier to detect errors and faults in the produced goods and this has highly increased the trust and reliability on the brands and organizations(IIMB, 2008). The devices with radio and infra-red enabled detection technology has made this possible and their application in the logistics and supply chain has improved the effectiveness of the supply chain management system. The use of social media and instant messaging applications has also enabled the organizations to be more connected than they were ever before. The organizations are more accepting of the feedback and criticism and are willing to be exposed to direct communication and approach from the customers and employees. The productivity and efficiency of the firm can be greatly improved by integrating the latest technologies in their processes and supply chain management process(Monday & Wood-Harper, 2010).
Recommendations to adapt to the suggested innovative technologies
Regardless of the challenges and hurdles that the technological changes and advancements place in front of supply chain management, there are ways and practices that can help them adapt to these and emerge as a winner. The conditions of the market will always be volatile and there will always be newer and bigger challenges that will be there in front of the organizations when managing the global supply chains. We have therefore suggested a few ways and practices that can help them in adapting and benefiting nevertheless(Umney, 2014).
The first step that the organizations must take is to learn instead of opposing the technological advancements. They must take the first mover advantage and try to learn and excel at making use of the latest technologies and the ongoing changes. The next step that the organizations can take is positioning themselves in a way that creates a niche market for them. This way they will have a segment of customers that they are serving exclusively and their global operations are also driven accordingly. They need to integrate the entire process of supply chain and its management with a global perspective so that the management and the employees have a clear idea of where the organization is headed and about the vision and mission of the firm. This way they will have a scope to experiment and promote creativity among the employees. Once the entire organization is working towards a common goal, it becomes easier to align and perform. The next suggestion that we make for better functioning in the changing technological environment is agility. The organization must be agile enough to achieve and retain the global leadership and competitiveness. This will ensure globally satisfies customer base and will consequently reflect on the financial statements of the organizations as well(Li, et al., 2006).
Regular measurement and monitoring of the internal and external operation at both national and international levels is also important for an organization to stay competitive and emerge as a leader. The organization should set achievable yet ambitious goals and continuously motivate the employees towards their achievement. Continuous monitoring of performance is important to keep in check any lags and stay competitive in the global market.
The organizations can use innovative practices to monitor the progress and work at the facilities. As suggested in the article above, these can include radio technologies to monitor and track the shipments or to detect any anomalies in the in a process being carried, make use of social media to connect with billions of people with a single click or use the technologically advanced data analytics to stay one step ahead of their competitors.
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