Global supply chains most effective when managed correctly


As a way to cut spending, more organizations are beginning to shift their supply chains to a more global scale. While this trend helps reduce transportation costs and other expenditures, it also makes risk management a much more important aspect of the business.

This is because complying with international regulatory trade requirements is not always simple, according to an IndustryWeek report.

Neglecting laws can be extremely detrimental to a company's operations, as the fines could reverberate through all aspects of supply chain management.


And punishment can go beyond the financial realm, as jail time is also an option for managers claiming ignorance of the rules, the news source reported. This, of course, is leading more companies to have stricter operational and IT risk management policies.

According to IndustryWeek, major trade regulations are expected to be implemented early this year, requiring organizations to potentially reclassify nearly half of their components, resources and end-result products that are transported internationally. While many enterprise resource planning systems can help businesses maintain correspondence with their traveling goods, these solutions will also require an updated IT risk management policy, especially if these services are new to a company.

Meanwhile, global supply chain managers need to incorporate plans for natural disasters that occur around the world, as these too can be felt through an entire business, the news source noted. For example, the volcanic eruption in Iceland and last year's earthquake in Japan rocked a number of industries to their core.

In general, organizations with global supply chains should follow three best practices, including:

  1. Shift compliance activities as far along the process as possible.
  2. View compliance as a collaborative management service across multiple areas of the company and supply chain.
  3. Monitor non-compliance rates with the rest of the industry, allowing the company to make improvements to remain competitive.

Companies may also wish to follow new strategies for global supply chain management that were recently released by the Department of Homeland Security. These initiatives offer guidelines for fast recovery from supply chain disruptions, how to facilitate international trade and travel, as well as how to perform operations effectively in the time of a crisis, according to the DHS.

In the end, global supply chains can greatly benefit a company, but only if they are managed properly and remain compliant.