Supply Chain Management 101

A short, straightforward, and controllable supply chain is key to success. Whether sourcing a component or finished good, you should treat the chain as an asset, giving you an advantage over your competition.

A large number of big companies use expensive supply chain management programs which include item classes, order taking and export regulations. Export software allows companies to manage the supply chain with greater ease and efficiency. Based on the complexity and the costs associated with such software, most small businesses should rather work closely with logistics experts that when handling their goods. For small orders, UPS, FedEx, and DHL all suffice. For larger ones, more traditional ones such as Weiss-Rohligg will work well.

More importantly, some rules of thumb should be followed to minimize your exposure. Source from countries with minimal regulations; you want quick transport in and out of a country. Also, take advantage of competitive advantage to minimize costs but not by reducing quality. Remember if you pay peanuts, you get monkeys.

Ensure that suppliers are partially performance based so they feel like they have a stake in the product’s success. But remember, don’t put your eggs in one basket, so build up a secondary source to hedge against any supply issues which may arise: performance may decline, they may encounter financial difficulty, or delivery times may not be met. When choosing a supplier or suppliers, tailor the supplier locations to your clients’ needs.

The first consideration is the reliability, while the second one should be the vertical production process. While vertical production should be the end goal, start with trusted people, then build up from there. Over time, you will have enough contacts and know how to establish full control over all production

Most supply chains are established on value creation which makes the firm first look at the value of the item, then determine which production parts are most important.   A functioning supply chain should be responsive and flexible at both local and foreign levels. Remember.

About the author

David writes about economic activity throughout Southeast Asia and specializes on international trade relating to China. In addition, he holds a Masters Degree in Economics from Peking University.
Do NOT follow this link or you will be banned from the site!