Supply Management Best Practices for Global Companies by Jerry O Smith

Randall Mauldin
07-29-12 07:00 AM Comment(s)

Supply Management is a very vital component for a company's prosperity and even survival in today's globalization and high competitive nature in business. Ineffective and inefficient supply chain management can be the difference between making profit and bankruptcy. With companies across the world competing for offering the best prices to consumers, the amount spent on expenses is as vital as ever. Supply chain management is crucial for local, regional, and national companies and is especially so for global and international companies.

Some of the best practices in supply management for global companies address several different but very important issues. The distribution network and distribution strategy are major components of this. Information sharing, and inventory management must all be implemented appropriately to enable the best practices for supply chain management.

The distribution network deals with the configuration of suppliers, production locations, distribution facilities, warehouses for storage, and customer locales. This entire network should be configured to be inexpensive, quick, and dependable. Suppliers should be chosen not only by who provides the cheapest materials or products, but by how a particular supplier will affect the overall supply chain and bottom line. For example, a supplier may offer steel pipes at a lower price than it's competitor, but the competitor may be in a better location that drives down transportation costs. Production locations have the most flexibility for companies to decide where to put them. Production sites can be viewed as the middle point between acquisition of raw materials from suppliers and delivery of final product to consumers. The physical location of the production may also benefit by being at a middle point. This should be considered when establishing an initial facility, addition of a new one, or a relocation. Distribution facilities should be strategically placed to allow equal coverage of business areas.

The distribution strategy primarily deals with the transportation of materials and products throughout the distribution network. This should explore all options such as plane, train, motor carriers, and alternatives. It is important to think outside the box with this practice. This is particularly important for global companies as they ship and move items across the world and this can become quite expensive and time consuming if the best practices are not used.

Information should be shared with various departments to better communicate information that might only be knowledgeable to one department, but more significantly affects another. Inventory management and warehousing should have a goal to minimize losses. Supply chain management for global companies is one of the biggest extra concerns of going global from being just domestic. This does not have to be a liability with proper business and supply management practices.

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