Wednesday, 25 July 2012

Expanding Business Beyond Borders

Supply Chain Management Services India

Thanks to technology, the world has indeed come closer. Geographical barriers have almost diminished from all walks of life. This fact is exemplified by global sourcing; to know more about this concept and its strategies, read on....

The concept of international sourcing is quite simple to understand. Through sourcing internationally, one looks for the most cost efficient location for business.  As the name suggests, global sourcing is a concept that involves sourcing goods and services to other countries instead of manufacturing or carrying them out in your own country. The most common products or services outsourced are call centres and labour-intensive goods. India is a favourite choice when it comes to global outsourcing; the reason being the low cost of labour and low cost of advance technologies. The countries that are ahead in international sourcing are the US, South East Asia, and several other European countries. Apart from improving trade relations between countries, global sourcing has many other advantages, which we will discuss further.

Main Advantages:

·        Expansion: Outsourcing has helped businesses expand, and not only private enterprises but whole of the global economy. The prices of commodities reduce as suppliers and contractors decrease the cost for gaining big contracts.

·        Quality: One of the advantages of sourcing your work to other countries is acquiring quality goods and services but at a very cost-effective rate. In countries like the US, the cost of labour is quite high, but in low cost countries (LCC) like India and Philippines, you can get the same level of quality but at almost 60% less cost.

·        Employment Opportunities: It provides ample of employment opportunities. It also offers a better standard of living with higher wages than what a local enterprise has to offer.

Though the opportunities are vast and there are many benefits, you need to tread carefully. While choosing a particular country for trade, one needs to identify the threats and opportunities in advance. You need to understand the culture and the work opportunities present in a particular country before outsourcing your work there. The work culture and ethics differ from country to country; these factors can affect your business.

So try and understand the work environment of a certain place before setting up your business there. If you are new to the concept of sourcing internationally, you could start with component sourcing from India, and then gradually move on to global. After all, the principle aim of any business is expansion. So why not turn to international sourcing for global exposure?

Sunday, 22 July 2012

Uncertainty in Supply Chain Management

A hard to manage factor in Supply Chain Management is uncertainty. As the world is getting smaller, with trade flourishing across borders, Supply Chain Management in India also faces the challenge of uncertainty in a big way.
We live in an uncertain world. Supply chains should be equipped to face these uncertainties. The world faces economic uncertainty and complex business systems. The challenge that the decision makers of supply chain strategies face is that their decisions could become uneconomic due to uncontrollable forces. They need to find a supply chain solution to face the uncertainties.
Management of uncertainty involves the overall effective management of the process from procurement of raw materials to delivery of finished goods to the end customer.
When a company manufactures a product, it needs to assess the demand in the market for that particular product, based on which the quantity of supply is decided. In addition, it needs to assess the uncertainty it faces while supplying the product. The manufacturer has to know the extent of unpredictability of demand and the probability of delay in the delivery of the product to the customer.
The manufacturer also has to understand the respective needs of customers that he intends to serve. If there are two companies, Company X and Company Y, customers prefer going to Company X because it is available in the nearby store. So one can presume convenience is important for the customer, not the price. However, customers may buy a product from Company Y because it is sold at a lower price. In this case, the customer is willing to wait if the product is not immediately available. The factors influencing the demand of customers vary for different segments and depend on the following factors:

Quantity of Production:
The order of raw materials to repair a production line is comparatively low. If you have to set up a new production line, the material order would have to be large.
Response Time:
The time difference between the customer’s order for a product and the delivery is known as the response time. In case of an emergency, response time has to be short. However, for a construction order, the response time is longer, because it is an accepted fact that procurement and delivery of raw material would take longer time.
Product price:
Usually, a customer whose demand is urgent is ready to pay a high price for a product. If a customer finds the price to be too high, he may either look for a cheaper alternative. Some customers also look at the quality of the product. If the quality is high, it means the product can be used for a long time period. Thus, the customer will be ready to pay a higher price for better quality.
A customer expects a high level of innovation from a high-end department store as compared to a general store. A customer will not expect innovation from a general store.
These factors are true for supply chain management in India or any other country, and are an iota of the vast subject of uncertainty.