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Global Supply Chain Management: Best Practices and Trends

Global Supply Chain Management

As an increasing number of organizations engage with vendors on a global level to fulfill their supply chains, the need for supply chain robustness has never been so critical. It ensures businesses can maintain performance and avoid potential disruptions as and when they occur, resulting in securing their reputations and avoiding losses in revenue. This has been acutely highlighted since the turn of the decade due to global events. It leaves those organizations that are not focused on the efficiency and robustness of their supply chains susceptible to disruption and revenue erosion.

This has led to organizations investing capital in and spending time on optimizing supply chains to cut lead times, improve supplier performance and increase business profitability. Despite wider global markets beginning to settle and inflation falling, this trend will likely continue with organizations investing more in managing their supply chains. Not only will this be in terms of making them more robust, but also to protect their reputations, combined with increased focus on performance and analysis to gain an edge in an increasingly competitive landscape.

The Global Supply Chain Landscape: What is the current situation?

Greater focus on sustainability

There has been an increased awareness of ESG considerations amongst the general population, with more significant numbers of end consumers seeking out companies that align with their own ethos and shunning those that engage in unethical and exploitative practices.

Even if an organization is not engaging in these practices themselves, association with entities that are found doing so can harm the perception of the business within the market and how it is viewed by end customers. Not only can this lead to consumers opting for a competitor, but it can also lead to business partners deciding to pursue alternative business relationships. Therefore, awareness of changes in global regulatory legislation and a focus on sustainable procurement have never been so important for organizations of all sizes.

While there has already been widespread focus and scrutiny of those businesses involved in the fashion sector, this is likely to encompass a broader range of companies over the rest of the decade and is an area that organizations across various sectors must be prepared for.

Focus on decarbonization

The increased focus on sustainability is accompanied by organizations becoming increasingly aware of the need and expectation to decarbonize across their supply chains. Due to the global nature of supply chains and differing countries’ varying legislation and regulations, this can be incredibly challenging for organizations.

In the same way that a lack of sustainability could impact the perception of the organization within the market, a lack of focus on decarbonization could also pose the same risks and loss of reputation. Organizations must focus on tracking and managing carbon emissions across their supply chain and foster a collaborative and transparent relationship with their suppliers to understand where improvements could be made and take the appropriate action.

Shift to customer-centricity

Awareness of the end consumers’ ESG and environmental expectations signifies a shift towards supply chains becoming increasingly customer-centric throughout. This is not only in terms of their ethos and values but also in providing them with the best possible customer experience when purchasing from an organization.

Organizations will need to consider and invest in customer experience metrics and data analytics to understand better what their customers want and enhance the supply chain’s ability to understand this. Investing in customer experience and focusing on departments across the business will assist in overall growth and improve supply chain functions, including inventory optimization and forecasting.

Increased agility

In recent years, supply chain trends have focused on the supply chain’s agility and will continue to do so for the foreseeable future. To cut costs over the last decade, organizations opted for leaner supply chains, resulting in issues during the COVID-19 pandemic, with supply chains collapsing due to volatility and companies unable to remain operational and fulfill orders. 

Since then, there has been a renewed focus on digitalization of supply chain management that provides a holistic view of the supply chain with transparency. This focuses on end-to-end visibility where there is an emphasis on a more collaborative relationship between the organization and supplier geared up for mutually beneficial success, rather than the buying organization focused solely on its performance and success.

This approach to supplier relationship management incentivizes both parties to work together to achieve a more agile and considered approach to supply chain management. This enables the business and supplier to anticipate potential issues and have processes to avoid disruptions, resulting in a more agile supply chain that drives increased revenue for both entities. 

Embracement of AI and machine learning

AI and machine learning have gained significant attention in the public domain over the previous twelve months and are expected to gain widespread adoption across the supply chain management sector over the upcoming years. While increasingly companies are turning their attention towards and using AI, arguably it has yet to be used to its full potential. While it has been employed primarily for planning and forecasting, we can expect to see it play an essential role as stakeholders gain greater confidence and trust in its decision-making capabilities. Once this happens, it will inevitably play a greater and more crucial role in supply chain operations.

One of the more significant challenges for supply chain managers is disruptions at various points across the supply chain that can cause erosion of profits. While stakeholders can have an overview of the situation, awareness and foreseeing each of these is not possible – this is where AI can be most effective.

It can learn from previous decisions by analyzing and correlating data and making recommendations as and when similar situations occur. From this point, it can gain insights from data from these initial recommendations and make further recommendations to improve performance, react to unforeseen events, and mitigate risks in the supply chain.

Digital Transformation in Supply Chain Management

Organizations looking to build and maintain a robust global supply chain geared up to navigate the market demands must focus on effective supplier management through digital transformation.

From cloud-based platforms to advanced supplier data analytics, digital solutions are addressing the challenges of supply chain management. These tools can provide real-time insights across the supply chain while predicting future trends, ensuring organizations can remain proactive. We’ll now further explore some additional capabilities emerging in the software space.

Supply chain integration

Supply chain software provides businesses with full supply chain integration by ensuring that the various supply chain segments communicate seamlessly. This integrated approach to supply chain management ensures that errors are reduced, departments are more efficient and essential stakeholders and decision-makers have a holistic view of the supply chain to make strategic decisions that will drive growth and profitability.

Data-driven insights

Supply chain and supplier data software provides organizations with cleansed data from which insights from vast amounts of data can be gleaned. This empowers organizations to identify kinks in the supply chain, forecast and meet demand and predict potential disruptions before they occur.

Global collaboration

As supply chains become globalized, so do organizations. Supply chain management software and supplier data software empower organizations to collaborate and work together on a global level. This ensures that teams work as effectively as possible while being aligned on the overall strategy and its execution.

Organizations that embrace supplier management digital transformation are ensuring they are ready to meet the demands of global supply chain management and can achieve sustainable growth in competitive landscapes.

Supply chain compliance across the globe

Not only are organizations required to be aware of regulations in their own country, but they are also required to comply with regulations globally to ensure that their operations are seamless and lawful. Any non-adherence has the potential to result in significant financial penalties that could hinder growth and in the worst circumstances, threaten the economic viability of the organization as a going concern.

Not only is this an essential consideration for the business internally regarding their operations and processes, but they also need to be aware of their suppliers’ business practices and whether they are aware of regulations and complying with them. There are a variety of areas that this covers, including tax and business registration, fraud prevention, trade compliance and more. Maintaining awareness of these areas can prove challenging for organizations and suppliers of all sizes. From the perspective of both parties, there is a genuine need to foster a collaborative relationship focused on transparency and mutual trust.

Organizations that can ensure this is a possibility will not only be able to focus on refining and optimizing the supply chain for improved performance but will also be the customer of choice for suppliers who will also be able to concentrate on improving their offerings to the organization to enhance the supplier experience, rather than being consumed with focusing on adherence to regulations.

Supply chain and supplier data software also ensures that organizations can manage supplier compliance, providing peace of mind for both parties. It should provide an automated approach that is specially tailored to each supplier. Organizations must remember that supplier compliance management is not a one-off task; any solution must offer the functionality to deliver consistent monitoring and ensure that relevant certificates are up to date, and any new requirements are extended to existing vendors.

Preparing for supplier risk management

Operating supply chains across continents increases their complexity and associated risks significantly. Organizations must understand their suppliers’ previous performance and the risks they pose to the supply chain. Failure to gain these insights leaves the organization’s supply chain open to disruptions that impact its market reputation and revenue.

However, these risks are not only related to suppliers; global events combined with increasingly complex supply chains ensure that risk mitigation is a crucial focus of the corporate agenda. Companies often take a siloed approach to supplier risk management – this can be avoided by integrating internal risk management processes with supplier data capture and management. To manually prepare for these supplier risks, organizations must undertake meticulous planning and evaluation to ensure that their supply chains remain disruption-free and are primed to provide end consumers with the best possible experience.

Supplier management software undertakes this task and ensures that organizations assess and mitigate against supplier risks.  Supplier risk management software should provide the functionality to build vendor risk and performance assessments for individual suppliers or defined supplier segments at scale. This should also be integrated with internal and external data from sources that can be combined with scorecard-based feedback to deliver an end-to-end view of overall supplier risk.

When utilized effectively, supplier risk management should be integrated into the overall supplier lifecycle, not as a disconnected silo working independently from elsewhere.

Software-driven supply chain performance

Branching out into new territories poses risks for organizations, but it also offers a variety of opportunities to take advantage of and maximize revenue. The company’s supply chain performance can be vastly enhanced when using supply chain software to drive efficiency and profitability. There are a range of benefits available, but some of the top-level advantages are detailed below.

Performance metrics tracking

Supply chain software provides an overview of KPIs that can be continuously monitored to ascertain how the supply chain is performing and if any areas are underperforming and require attention. These should be customizable depending on the organization’s requirements, but these should include areas such as order accuracy, lead times and inventory turnover to provide the business with a clear overview of the supply chain’s performance and robustness.

Process optimization

Supply chain software can provide businesses with core areas that need to be focused on and improved by utilizing insights gained from supplier performance data. These can be as wide-ranging as required, including dwell times in warehouses or where transportation routes could be refined. These data-driven insights can be used to tweak and refine processes on a granular level to enhance performance across all areas of the supply chain.

Automated reporting

Having buy-in from leadership and key organizational stakeholders is essential to ensure supplier management software is utilized as effectively as possible. It ensures that insights are being fully implemented across the business and investment is earmarked for areas of the organization that require it to make up for issues with underperformance.

Supply chain analysis that can be relied upon

The data that can be derived via supply chain management software can reveal granular-level data insights that can be used to fuel growth. This can encompass a range of areas of the supply chain, including supplier reliability, warehouse space and information related to inventory. Ideally, there should be the functionality for complete customization to ensure the organization is provided with the data and insights so as to have a rich foundation to improve. It needs to be in sync with high quality supplier data in order to ensure accurate reporting.

Visual data representation

While many individuals are comfortable with analyzing data in a numerical format, this is not always the case for leadership focused on other areas and demands of the business. Supply chain software provides the functionality to have data visualization tools embedded in the software to transform complex datasets into easily digestible graphs. This assists in a quicker understanding of the situation and facilitates streamlined discussions and decision-making by the key stakeholders to drive the organization and its supply chain forward.

For organizations looking to open into new global markets, regain competitiveness, or even increase profitability further by strengthening a porous supply chain, now is the time to invest in supply chain and supplier data software and fully embrace digitalization. The evolution of technology has rapidly gathered pace over the last twelve months, and it is likely that those organizations still relying on manual processes will be left even further behind and see market share and profitability continue to decline.

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