Discover the elements of supply chain management, role, and challenges facing global logistics. Every time walk into a shop, the first thing your eyes might bump into are huge shelves of different products. These items are either manufactured in the country or sourced overseas.
Have you ever taken a minute to ask yourself how the products reach the stores from various destinations? Products go through many processes before reaching the end consumer, which is where supply chain management and global logistics come in. For an organization to reach its goals, supply chain management should be effective. This means it should be quick to deliver goods to the final consumer at the lowest costs possible.
Understanding Supply Management and Global Logistics
To easily understand, let us first look at the supply chain and logistics, two important aspects that people take as one thing. The supply chain is a network of activities from procuring raw materials, converting them to finished goods, and delivering to the final consumer. A complete supply network should have manufacturers, suppliers, transporters, wholesalers, and retailers. On the other hand, Logistics is the movement of goods from production to various destinations.
It mainly involves transportation of goods within and outside the country, order fulfillment, warehousing, and storage. Therefore, supply chain management t is the management of the flow of raw materials, production of goods, and their delivery to the final consumer. Global logistics is the outbound transportation of goods and services using trains, ships, and airplanes. DHL is among the popular companies that offer supply chain solutions and logistics.
Elements of Supply Chain Management
Supply chain management is involved in a million products we consume. If the chain breaks, we may feel the impacts, whether direct or indirect. Here are the vital components that make up this system.
Planning is vital before beginning the supply chain. This may involve assessing the demand for goods or services, profit, costs involved, human resources, and viability. Divulging into the supply chain without a strategy may compromise the achievement of goals and profit. Organizations need to create a viable plan to forecast the demand and supply in the market to develop a productive supply chain management system.
Technological advancements have enhanced the easy flow of information from one point to another. Proper information flow helps the organization stay informed about its production activities and current supply and demand trends.
The supply chain management system cannot be complete without suppliers. These are producers of raw materials that create final goods sold to the final consumer. The supply chain management should ensure the organization gets quality raw materials on time and with desirable costs. Delay in the supply of raw materials or procuring at higher prices can result in losses in the organization.
Proper inventory management ensures the production of goods and services in the organization is not compromised. Also, it helps the business manage the ever-changing market demand. The supply chain management should always ensure the manufacturing sector gets raw materials at the right time and quantity. However, there should be a good link between the logistics and supply chain management departments to feed the manufacturing sector with all production necessities.
Production forms a critical part of the supply chain management system. Proper production is enhanced by the availability of necessary raw materials at all times. The organization needs planning, proper supply of goods, and inventory maintenance to meet its production goals. After production, goods need to be inspected, packaged, and transported to wholesalers or retailers for final consumption.
The supply chain management system of a business located closer to its raw materials is likely to flourish. Nearness to raw materials means reduced transportation costs and continuous production. A well-located organization can create a productive supply chain management to ensure goods reach the final consumers in time.
Typically, this is the movement of materials to the manufacturing unit and carrying finished goods to the market. A well-maintained transportation system increases production volume through timely delivery of raw materials and final products to the market. Organizations should work towards getting transport systems that reduce damage and loss of loss when moving goods from one point to another.
Roles of Global Logistics Companies
Global logistics companies ensure goods reach their designated location in another country. Safe delivery of goods in international trade relies on the corporation of the client and the global delivery system. The company should give the client a quote of all requirements to move the goods to another country and keep the items safe until receipt. A fully-pledged international logistics company should identify the ideal mode of transport depending on the nature of the cargo and arrange transportation on behalf of the client.
Challenges Facing Global Logistics
Lack of transparency in the supply chain is making it difficult to manage global logistics. While the world embraces the digital era, more companies get information about delivered goods days or weeks later. Other challenges that global logistics face include;
Counterfeiting involves using fake ingredients to make goods, labeling the goods with false stickers, and misappropriating one’s brand. Counterfeiting affects most companies that sell their goods in Asia. Nonetheless, online shopping has fueled this practice resulting in reduced customer confidence in certain manufacturers.
Theft of Goods
Some international transport systems deliver less quantity of goods they are assigned to transport. For instance, a transport company can be given 100 boxes of goods to transport and deliver 99 boxes. Manufacturers fail to realize the missing box on time as the shipment data arrives on their desks days or weeks after the delivery.
Failure to Update End Customers
We all know e-commerce has significantly grown because of massive internet use. People order products overseas and get deliveries within days or weeks. While many want to be updated about their goods in transit, some logistics companies fail to give this data, making it challenging to track the shipment of goods.
The Bottom Line
Supply chain management and global logistics are essential for a goal-oriented business. Supply chain management not only ensures there is timely production but also prioritizes the satisfaction of consumer demands. For global logistics, increased transparency, reduced theft, and counterfeiting can help build the lost customer confidence in certain brands.