Global Supply Chain Management – The Challenges of Global SCM

Globalization allows businesses to make their operations more cost efficient and productively efficient as well. However, in order for them to get these benefits, they need effective global supply chain management. Operations on a global scale vary in nature compared to SCM operations within a single country. Managers face more issues and challenges which are worth discussing and assessing.

Compliance with local regulations is one of the major challenges in front of global supply chain management. It is much more complex to devise a SCM system that is compliant with regulations in different countries. For instance, the regulations in one country may pose restrictions on the specific type of transportation of products. This can affect the supply of these product to a business in another country and consequently to the production and logistics of this specific business. Customs procedures, tariffs and excise duties can create further complications for global supply chain managers.

Foreign exchange rates also pose challenges in front of people working in global supply chain management. One of the main tasks of managers is to devise coordination systems and strategies that will produce greater cost efficiency. However, it is difficult for costs to be calculated and estimated given that exchange rates are fluctuating. This makes it essential for managers to be ably to analyze not only industry and business specific data, but national economy performance data as well. In turn, they can implement their forecasts into their SCM strategies.

Labor and production differences are other factors that create challenges for global supply management. The managers have to ensure that production and shipment schedules are coordinated internationally. Problems may come from the fact that labor is organized in different ways. The same applies to production as well. In addition, the managers have to ensure that there are no discrepancies in the supplied raw materials and products, as these discrepancies may affect the effectiveness of the production processes of different businesses in the chain adversely.

Time is considered to be a major challenge in front on global supply chain management. It is much easier for managers working locally to estimate the time necessary for transportation. In turn, they can manage inventory effectively and produce efficient distribution center schedules. It is much more challenging to estimate transportation times and to coordinate different operations along the supply chain. Difficulties come from time zone differences, but not only. They can be caused by natural disasters, labor strikes and conflicts.

Information flow management is another challenge faced by global SCM managers. It is more difficult for businesses to exchange accurate information timely on a global scale, despite the advancement in technology. This is because communication between people from different countries is often more difficult. In addition, information flow management systems from different countries are more challenging to synchronize.

Now you know what challenges global supply chain management is facing. There are indications that these challenges will remain in the near future, given the recent economic downturn, which has made businesses and national economies more conservative. Hopefully, more sophisticated SCM models will be developed so that these challenges are overcome.