International Supply Chain Management: Challenges and Opportunities

International Supply Chain Management Challenges And Opportunities

International supply chain management (ISCM) includes planning, implementation, and control of the movement of products, services, documents, and other items across countries and continental boundaries to cater to the needs and expectations of customers and suppliers. An ISCM links the activities of suppliers, manufacturers, distributors, retailers, and consumers across different areas, such as economy, politics, society, culture, and environment. These areas affect the supply chain efficiency and performance.

To manage the supply chain effectively, businesses need both technical and strategic skills. This entails the use of analytical skills, creativity, and leadership. The changing demands of customers, suppliers, and partners require supply chain managers to be adaptive. Many supply chain managers implement lean, digital, and agile principles and methodologies to enhance supply chain performance and produce value for the stakeholders.

There are a lot of risks and difficulties that accompany any management process in business. Therefore, to overcome the challenges and leverage the opportunities of ISCM, managers need to use flexible and adaptive techniques and methods in the turbulent and complex global business environment. To attain knowledge of the current trends and technologies and conquer the complexities, they need to participate in certification or diploma courses and stay abreast with viable information.

In this blog, we will discuss some of the major challenges of supply chain management and opportunities and provide some strategies for ISCM managers to overcome the challenges and leverage the opportunities.

Table of Contents

Global Supply Chain Management

*smartsheet.com

Challenges of International Supply Chain Management

International supply chain management involves several challenges that may affect the efficiency, effectiveness, or profitability of the chains. Some of the common challenges of supply chain management are:

Supply chain disruptions

Supply chain disruptions comprise natural disasters, pandemics, malicious cyberattacks, strikes, wars, and political unrest. These disruptions may lead to delays, shortages, low product quality, and increases in costs of operations and eventually affect customer service and satisfaction levels in the supply chain.

Demand fluctuations

Demand fluctuation refers to seasonal changes, trends, fluctuations in tastes, income, changes in prices, and competition. Supply chain managers encounter numerous problems while planning demand fluctuation. It includes forecasting the supply and inventory levels and balancing demand and supply in a supply chain. It can also cause goods overstocking and understocking, which results in wasting, obsolescence, or stockout, which in turn affects the level of customer service and satisfaction.

Trade barriers

Some of the trade barriers are tariffs, quotas, subsidies, sanctions, embargoes, and non-tariff barriers, among others. These may also include obstacles such as trade impediments against Integrated Supply Chain Management.

Regulatory Compliance

Regulatory Compliance encompasses environmental, social, ethical, health and safety, quality, and security regulations. On the other hand, regulatory issues can make it difficult for the managers of integrated supply chain management to confirm that they are adhering to the regulatory requirements of different countries and regions and avoid any penalties, fines, lawsuits, or damage to reputation that may result from non-comply compliance with the regulations. This can additionally raise the cost and complexity of the supply chain and necessitate technology, training, and auditing.

Ethical issues

The ethical issues refer to the moral quandaries or confrontations associated with the decisions and behaviors of the organization and its partners in the supply chain, for instance, human rights, labor standards, fair dealings, corrupt practice, bribery, and sustainable environmental conservation. Ethics issues can create difficulties for supply chain managers in making sure that their supply will conform with the ethical values and organizational principles and those of stakeholders and minimize societal, environmental, and economic damages. Similarly, ethics also pose risks to the trust & loyalty of customers, employees, investors, regulators, reputation, and image of an organization.

Digital transformation

Digital transformation is the adoption and integration of digital technologies, such as cloud, IoT, blockchain, AI, and 5G, to transform and optimize the supply chain processes, capabilities, and performance. Digital transformation can create challenges for supply chain managers to select and implement the appropriate digital solutions for their supply chain needs and goals, and to manage the change and innovation in the supply chain. It can also require investment in infrastructure, security, skills, and culture, and collaboration and coordination with the supply chain partners and stakeholders.

Opportunities for International Supply Chain Management

Internal supply chain managers also have many opportunities to create value and a competitive advantage for their organization and its supply chain partners. Here supply chain management job opportunities are:

  • Digital transformation and innovation

Managers of ISCM can use these electronic solutions that come with the cloud, IoTs, blockchains, artificial intelligence, and finally, 5G to turn around their processes, capabilities, and, ultimately, supply chain performance. Using current digital technologies, ISCM managers may improve their awareness concerning the supply chain visibility, transparency, traceability, and security, and in turn, also increase supply chain operations efficiency, quality, agility, and resilience. The digital technologies allow ISCM managers to innovate by introducing new products, services, and modes of trading through generative artificial intelligence, 3d printing, and robotic technologies.

  • Collaboration and integration

Through social networks such as LinkedIn, ISCM managers can share data on supplies, customers, and other participants in the industry. By virtue of this, collaboration and integration can help ISCM managers decrease the risks, costs, and wastes while simultaneously increasing the values, quality, and service in the supply chain. Through collaboration and integration, ISCM managers can help to align their objectives and strategies and create a win-win situation within the supply.

  • Sustainability and social responsibility

The ISCM managers can assist in mitigating their carbon footprint, waste, and emissions or support the circular economy, fair trade, and ethical sourcing that are part of the objectives of the organization and societal goals. The sustainable and socially responsible approach to managing the ISCM could enhance the efficiency, productivity, profits, and compliance with the regulations and standards. Similarly, sustainability and social responsibility could enable ISCM managers to improve their reputation and trust and acquire customers, employees, investors, and regulators.

Strategies for Dealing with Supply Chain Management Issues

In this globally and intricately complicated environment, supply chain management faces various challenges ranging from supply chain disruptions to demand fluctuations, trade barriers, and regulatory compliance, ethics, and digital transformation. This can limit the supply chain’s operations, efficiencies, effectiveness, and even profitability. However, some of these challenges can be addressed to enhance the supply chain performance and outcomes. Here are some of the Strategies for Dealing with Supply Chain Management Issues:

  • Easing transportation jams

To address the issue of supply chain interruption caused by transport bottlenecks such as port jamming, insufficient containers, and no drivers, requires easing transportation issues through the modal mix adjustment, optimization of route and frequency as well as coordination with logistics partners. It enhances the visibility, reliability, and speed of the mode of transport and minimizes hold-ups, lack of orders, and cost within the supply chain. For instance, certain firms have opted for air freight, train freight, as well as inland waterway services to sidestep this problem of sea freight.

  • Prioritizing public health

Addressing the challenge associated with supply chain interruption because of public health crises such as COVID-19 involves prioritizing public health by availing of all safety measures, including distancing, sanitizing, testing, and vaccinating suppliers and customers’ employees. This move will also safeguard the health of people along the supply chains, reduce transmission rate, and avoid operational shutdowns. Some companies have provided personal protective equipment, temperature checks, and contact tracing for their employees and also their suppliers in the supply chain.

  • Adopting automation tools

Automation tools like artificial intelligence, machine learning, and even data analysis may be used to tackle this issue of demand fluctuations due to changes in customer taste, trends, seasons, or competition. This can improve the quality of forecasts and planning and, consequently, eliminate waste, obsolete stock, or shortages in the supply chain. For instance, companies have employed automation tools for analyzing customer behaviour, market conditions, and historical data to forecast demand and maximize inventory optimization. 

Conclusion

International Supply Chain Management is a critical aspect of global organizations that can assist them in having a competitive advantage, but it also comes with several risks and uncertainties. Therefore, ISCM managers should be agile and resilient enough to face the challenges that come with ISCM and take advantage of the available technologies, platforms, and networks to enhance and transform their supply chain. ISCM managers also must have the capability of developing the essential skills, knowledge as well and skills to manage the supply chain efficiently and ensure the continuous monitoring of supply chain performance and outcomes. 

If you want to become an excellent ISCM manager, you may opt to take the Executive Certificate Program in Supply Chain Analytics and Management offered by IIM Mumbai. The program will offer you industry-relevant knowledge, methods, and technologies concerning the modern global design, and operation of the supply chain. You will also interact with the best faculty, practitioners in the field as well as professionals or peers who share the same interests as you. This will give you a career edge, and prepare you for your future in supply chain management. To get more information about the program, contact Jaro Education.

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