What Is Global Supply Chain Management?

by Denise Sullivan; Updated September 26, 2017

Efficient global supply chain management allows a company to source materials and service customers in other countries. The supply chain affects a product's entire life cycle, from the planning stages to the sale. The company must be able to find the materials it needs to create its products, transport them to the production facilities and ship the finished goods to the retail outlets or end user of the product.

Material Handling, Storage and Transportation

The supply chain involves the handling and storage of a company's raw materials and finished products. Your logistics department must manage different shipping companies, track containers in transit and know when outsourcing to a freight broker would be in the company's best interest. If your company services a large area, it may be more cost-effective to rent multiple warehouses to cover different regions than to ship products over a longer distance from one single distribution center. In this case, you must consider storage costs and transportation between the warehouses and your retail outlets.

Integration With Other Departments

Supply chain management affects many areas of a company's operations. The procurement department must coordinate its schedules with the manufacturing department to ensure that the correct amount of raw materials will be available when they are needed for production. Both of these departments must be aware of any promotions the marketing department is planning so the company does not run out of product during a major event. Proper communication among departments can make the whole process more efficient and reduce the lead time needed to fulfill a customer's order.

Coordination With Global Affiliates

Coordinating a company's global affiliates becomes more difficult as a company adds business partners in other countries. You must stay aware of the import and export regulations in each country. Having multiple suppliers around the world also helps companies minimize the risk of manufacturing delays. A shortage of a particular raw material in one country will not cripple the company's production, because it can simply switch to a supplier in a different country.

Financial Impact of Global Supply Chain Management

Customs duties and import fees can also become a significant cost for multinational organizations. The company must also research all potential taxes when entering a new region. In some cases, a savvy financial department can use the differences in currency rates to reduce the cost of routine business transactions. Many banks allow companies to lock in large amounts of foreign currency at a specified rate. If the rate increases after that date, the company picks up a gain by purchasing foreign currency at the lower rate.

About the Author

Denise Sullivan has been writing professionally for more than five years after a long career in business. She has been published on Yahoo! Voices and other publications. Her areas of expertise are business, law, gaming, home renovations, gardening, sports and exercise.