Expanding your business to keep up with supply and demand is a good thing. As your business grows and requires more resources, it’s silly to assume you won’t need to source global vendors. But as businesspeople all over the world know, managing supply channels in a global economy has its opportunities as well as its pitfalls and, from day one, operations management must be educated on mitigating risks.
Once your supply chain goes international, there are regulations, constraints and best practices that will help keep operations running smoothly everywhere.
1. Choose Wisely
The decision of which supplier to use should not be taken lightly, as manufacturing suppliers who are not true to quality or delivery promises can kill your productivity. Choosing the right supplier is a multi-goal, multi-criteria issue that is spread over many departments. Typically, the decision making construct doesn’t have specific outcomes; this is called a fuzzy environment. Knowing you need your widget to have specific costs, dimensions and delivery locations would be a crisp decision setting. Most companies have flexibility in some of its parameters so that the selection process becomes more difficult. There are newly established computer programs using hierarchical analytic processes that will help in identifying the best manufacturing suppliers, even in a fuzzy environment.
2. Best Working Conditions
Low wages, child labor and hazardous working conditions in a global market can can be more problematic than beneficial. Business consultants are recommending that manufacturing companies look at more than simple quality compliance when analyzing a supplier’s viability. Thoroughly review and analyze the work structure, average pay structure and employee satisfaction at the company before making a final decision.
3. Importance Of Product Safety
Although product safety and security measures are always a concern in manufacturing, our growing global economy has made these factors increasingly important on a worldwide scale. Though international suppliers may be able to promise a lower price point, they come at a risk of increased local and national restrictions. Product safety must be defined on a worldwide scale. As an example, the sealant supplier Apple Rubber has quality compliance from both U.S. governmental departments and European organizations, making them eligible to deliver globally without risk of regulatory issues.
4. Social Responsibility
Say one of your suppliers goes rogue, manufacturing ceases and the decision processes start new. Your company will be linked to your supplier’s production, which includes its socially responsible branding. When shopping for suppliers, a 2010 issue of the Journal of Supply Chain Management advises having a mind for long-term operation as well as identifying specific components of social responsibility and making sure the suppliers are contractually bound to follow them. Breach of these requirements needs to be just as important as a violation of performance, especially when it comes to social responsibility, as the ramifications of your supply chain organizations can reach into your company’s bottom line.
5. Third Party Labor
Hiring third-party labor contractors can be a cost-saving resource or it can also be a source of unscrupulous labor practices. It’s challenging to track third party labor contractors in a global economy, so like sustainability, the use of labor contractors needs to be contractually enforced. Make sure that there is specific language to vet recruitment organizations outside of the vendor company. Likewise, add criteria for third party employment. Since many countries, including some places in the United States, use informal hiring practices, legal recourse is a must.
Some of the points listed above might seem obvious, but you’d be surprised at how many businesses are hit with fines, fees and bad media because they failed to consider certain factors. Look at all of the information and decide what makes the most sense for the long-term future of your company.