About International Supply Chain Management
Supply chain management for international companies enables them to manage how products get from the providers of raw materials to the end user. The international company uses supply chain management software to manage all of the company's processes in a cost effective manner. Globalized companies make the most profit when they can maximize sales of products to customers through effective supply chain management.
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Definition
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Supply chain management (SCM) for international companies became necessary with the increase in globalization---or expansion of operations into multiple countries. According to the Supply Chain Resource Cooperative at North Carolina State University, SCM begins with product development. The end product reaches the user through the cooperation of multiple organizations. These organizations are connected by physical flows and information flows.
The Cooperative states: "Physical flows involve the transformation, movement, and storage of goods and materials. . . . Information flows allow the various supply chain partners to coordinate their long-term plans, and to control the day-to-day flow of goods and material up and down the supply chain."
Point of Origin
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In some international companies, the supply chain begins when the customer places an order and continues to the first step of obtaining raw materials. The company ensures raw materials move from suppliers to the production center (that is, the factory). Automated sourcing of materials enables home office-based managers to analyze the cost-effectiveness of materials obtained from suppliers anywhere in the world. An ideal scenario occurs when raw materials are obtained cheaply from a local supplier near the point of production.
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International Logistics
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In "Principles of Supply Chain Management," Joel D. Wisner, Keah-Choon Tan and G. Keong Leong note an international business faces extra challenges in logistics--sufficient transport and storage, moving goods through customs, timely deliveries to foreign consumers and logistics pricing.
Supply Chain Reengineering
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The Supply Chain Council created the Supply Chain Operations Reference (SCOR) model to assist organizations manage global supply chains. This model uses the concepts of process management to help organizations increase the efficiency of supply chain networks. The model includes business process reengineering, benchmarking, best practice analysis and a process reference model. The organization uses new management practices and software to move the organization's performance from "as is" to "best in class" based on the best practices in the field.
Supply and Demand
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The supply chain helps the company to maximize its ability to respond to consumer demands for its products. In some international businesses, a product is not made until the buyer places the order, and in other businesses the company forecasts the quantity needed for each type of product on a periodic basis and adjusts the production schedule accordingly.
Globalized companies use strategies such as Collaborative Planning, Forecasting and Replenishment (CPFR) to help their organization respond to new product offerings and expansion into new markets (that is, untapped geographic locations and untapped types of consumers).
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References
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