An increasingly globalized, interconnected world means business professionals must understand how to navigate supply chains among different countries and cultures. In a post-pandemic era marked by disruptions, vulnerabilities in global production and supply chains have been exposed, according to Harvard Business Review (HBR). This emphasizes the need for universities to train professionals in resilient and adaptable supply chain strategies.
The Texas A&M University-Corpus Christi (TAMU-CC) online Master of Business Administration (MBA) with a Concentration in International Business program prepares graduates with the necessary skills to orchestrate successful global supply chains, leveraging goods and services from various countries to create cost-efficient products that transcend the capabilities of a single-country production model.
Logistics Best Practices
Competent supply chain managers strategically focus on critical elements such as transport visibility, enabling real-time tracking of goods from origin to the end consumer. The concept of chain of custody further enhances this by incorporating data on who did what with goods, proving invaluable for issue resolution.
Traceability to origin becomes a pivotal factor in the global sourcing landscape, addressing inventory and supply chain concerns and emphasizing safety and compliance, notably with tax credit regulations. The recent impact of the U.S. Inflation Reduction Act on electric vehicle tax credits underscores the significance of traceability to origin, influencing business relationships and regulatory compliance.
Finally, the unwavering goal of consignment integrity ensures that products reach their intended recipients in optimal condition. This objective extends beyond physical intactness to considerations of proper handling in transit, particularly for perishable items. Collectively, these nuanced yet fundamental elements form the backbone of effective international logistics.
Finding the Right Global Suppliers
Addressing heavy dependence on a single medium- or high-risk source — such as a factory, supplier or region — is crucial for building a resilient supply chain. Per HBR, the U.S.-China trade war has spurred a shift towards a “China plus one” strategy where firms diversify production between China and Southeast Asian countries.
However, to mitigate region-wide challenges, comprehensive geographic diversification is advisable. Managers should contemplate a regional strategy, producing a significant proportion of key goods within the region of consumption. For instance, labor-intensive work could be shifted from China to Mexico and Central America to serve North America and supply Western Europe. However, this might involve increased reliance on eastern EU countries.
The foundation of regional connections strengthens when businesses maintain a reliable and efficient operation, fostering trust among suppliers. Growing businesses become favored partners when they make timely payments and consistently deliver what customers need and when they need it. Loyalty is particularly solidified in challenging market landscapes where competitors may be grappling.
For some businesses, an international supply chain becomes a significant competitive advantage, especially in product categories with low differentiation. For example, office supply stores that have thrived amidst industry changes attribute their success to logistical expertise.
Protecting Against Risk
Risk mitigation involves supply chain mapping, extending beyond the primary and secondary tiers to encompass distribution facilities and transportation hubs. While this process can be time consuming and expensive, its importance is proven by the costliness of unexpected disruptions. The goal is to categorize suppliers as low, medium or high risk by employing metrics. These could include the impact on revenues in case of a source loss, the recovery time for a supplier’s factory after a disruption and the availability of alternate sources.
Assessing a company’s resilience against supply shocks and determining how quickly a disrupted node could recover or be replaced by alternate sites are critical considerations. Manufacturing capacity flexibility plays a pivotal role, influencing the ability to reconfigure operations in response to evolving needs. After identifying risks, strategic measures such as diversifying sources or stockpiling key materials can prevent disruptions.
Sustainability and Ethical Practices
Large firms, at times, leverage their control to raise prices and engage in anti-competitive practices, according to Brookings. This behavior highlights the necessity for robust anti-trust enforcement to curb market dysfunctions.
Striking a balance between market dominance and ethical and environmental considerations is vital for fostering sustainable practices within the supply chain, ensuring responsible sourcing and promoting fair competition to benefit both businesses and consumers.
Dealing With Labor Issues
The surge in the cost of living has led workers to advocate for wage increases, posing challenges for supply chains. Strikes by truckers in South Korea and railway workers in the UK have already disrupted global supply chains, impacting the timely delivery of crucial materials. The continuation of truck driver shortages from 2021 further intensifies labor-related disruptions, affecting not only trucking but also other sectors supporting supply chains, including ports and warehouses.
As the demand for e-commerce continues to surge post-pandemic, businesses grapple with heightened operational strains. Addressing these challenges requires strategic measures to navigate and proactively mitigate the impact of labor crises on international logistics.
Optimizing Inventory Management
As HBR notes, companies facing the absence of readily available alternate suppliers must strategically determine the amount and form of extra stock to hold temporarily, considering its placement along the value chain. Though counter to the prevailing practices of just-in-time replenishment and lean inventories, this approach is crucial for mitigating the costs of disruptions.
While safety stock introduces risks of obsolescence and ties up cash, the potential savings from lean practices need to be weighed against the potential for lost revenues and increased prices for suddenly scarce materials.
On-Shoring and Near-Shoring
Brookings notes that on-shoring involves bringing production processes closer to the home market, offering greater control and reducing dependence on distant suppliers. Near-shoring, on the other hand, entails locating production facilities in nearby countries, striking a balance between cost efficiency and proximity. These strategies aim to mitigate risks associated with global disruptions, providing companies with flexibility and agility. Balancing cost considerations with the need for a resilient and responsive supply chain is key in determining the optimal mix of on-shoring and near-shoring approaches.
TAMU-CC’s online MBA in International Business program ensures graduates can handle these and many more evolving challenges. With a forward-thinking approach, graduates are well prepared to seamlessly transition into their supply chain management careers, armed with the expertise needed to proactively address and overcome the intricacies of the global supply chain landscape.