What Recent Developments have Caused Supply Chain Management to become Increasingly Important to International Companies?

1. What recent developments have caused supply chain management to become increasingly important to international companies?

The supply chain management has been of great importance to the international companies in the recent times, as it has eased the supply chain process. In particular, the supply chain management has enabled the global business to undertake proper customer relationship management, demand management, and customer service management (Bidgoli 5-9). The systematic supply chain ensures that there is an efficient order fulfillment. Through the SCM, firms recognize the need for aligning the supply chain and the production systems in line with the global market requirements. The SCM enables companies to improve their supply chains, thus creating an effective and efficient system that can compete in the global markets. It also helps the company embrace the latest technologies to provide fast and low-cost supply flow. The international companies have embraced the principles of supply chain management and are therefore able to effectively supply the right products and quantity to the target location immediately. With SCM in place, firms are able to diagnose problems in the supply chain and devise strategies to address the issues. As a result, companies that embrace SCM are able to attain a competitive edge over their rivals, as they will be able to achieve and develop competencies, thus differentiating themselves from the competitors. The supply chain management helps the international suppliers to effectively source for raw materials and deliver the products to the final required destination in a timely manner.

6. What are some of the primary problems or concerns associated with sourcing from a foreign supplier?

Global sourcing, unlike the domestic or local sourcing, is a system that is characterized by a centralized procurement strategy where the buying companies seek economies of scale through standardization and benchmarking (Bidgoli 49). Sourcing from foreign suppliers is characterized by various factors, including increased risk of purchasing, increased purchasing scope, decreased purchase price, and stable purchasing channels among others. Despite this fact, the foreign sourcing has various challenges as described below.

One of the concerns associated with sourcing from a foreign supplier is the risk associated with currency fluctuations. Since the currency of the two countries vary and changes depending on the variation of the exchange rates, the currency fluctuation may affect the transactions, thus requiring the need for hedging. Quality is also a concern when it comes to international sourcing. If not well managed, it may lead to quality issues that would ultimately destroy the company’s brand image, thus resulting in financial implications. Hidden costs are another concern that should be looked at when dealing with foreign suppliers. The issues of foreign taxes, staffing and travel cost, freight, and inventory should be considered, as they affect the cost of the product or service. Warranties should also be considered since in case of defectiveness, remedy ought to have been agreed upon before the execution of the foreign contract. Finally, the product insurance and liability options should be considered and agreed upon prior to the making of the contract, as it specifies the extent of the obligation by the parties to the contract. Others include the jurisdiction and intellectual properties issues as they can affect the sale and agreement between the parties.

7. What is the benefit to a buyer company and to a vendor company of standards such as ISO 9000?

The ISO series represents standards for quality management and assurance that have been set by global bodies. Certifications like the ISO 9000 and others are awarded to companies that have met certain basic quality requirements that the certifying body expects from organizations. These standards prescribe specific steps that a company ought to follow for the attainment of quality management system within the organization. Since the ISO standards provide steps that companies ought to follow to achieve quality, the organizations that embrace the standards are effective in their operations. With the ISO standards, an organization is able to identify quality issues within the production lines, thereby making it easier to find solutions to the problem (Chary 11-2). At the same time, companies that embrace the ISO standards are able to create a supply chain that is characterized by integrity, thereby promoting the company. This would help the vendor or Buyer Company buy and supply products that are reliable, and those that embrace the international standards. ISO certification is also important, as it puts an organization or a vendor company on the global front as a supplier or developer of quality products. Unlike other companies that do not operate under the international set standards, a certified company is able to gain competitive advantage, thereby making its products be accepted easily by the end users. The certifications also ensure that a given company puts in measures for continued improvement of its products and services. This helps in ensuring that the latest technology is utilized while at the same time reducing the cost of production and delivery. Continued improvement would help businesspersons to be flexible and react quickly to the growing new opportunities.

Works Cited

Bidgoli, Hossein. Supply Chain Management, Marketing and Advertising, and Global Management. Hoboken, NJ: Wiley, 2010. Print.

Boyer, Kenneth K, and RohitVerma. Operations & Supply Chain Management for the 21st Century. Mason, Ohio: South-Western/Cengage Learning, 2010. Print.

Chary, S N. Production and Operations Management. New Delhi: Tata McGraw-Hill, 2004. Print.