Supply Chain Relationships in a Global Firm

Globalization is associated with various opportunities and barriers regarding companies’ competitive advantages. Global firms have gained access to resources, but they now have to adjust their supply chains to the new challenges related to managing global operations (Monczka et al. 367). Some of these obstacles include cost pressure, networked economy, external forces, and talent shortage (Durach et al. 36). Leading multinationals have developed various strategies addressing the challenges mentioned above. These methods can be modified and used (or utilized unchanged) by firms of different sizes.

One of the most serious obstacles to effective supply chains in the global context is cost pressure. Companies are facing considerable financial issues related to economic constraints in different countries. Moreover, customers have rising expectations due to the growing competition and companies’ use of innovative strategies (Durach et al. 36). Buyers try to get the best bargain while receiving high-quality services including but not confined to quick delivery, added value, proper and service. Organizations have to reduce costs, but it is often difficult to do so, especially when operating in countries with underdeveloped infrastructure. Global firms can address this issue by optimizing their logistic networks (Durach et al. 36). Technology enables companies to manage various processes successfully and reduce costs. For example, transportation management systems ensure the use of the most effective routes and modes of transportation. The collaboration with local governments and authorities can also be beneficial as companies can initiate the necessary changes such as the development of infrastructure.

At this point, it is possible to note that the development of technology has become the area of the greatest progress. New advances associated with modes of transportation ensure the reduction of costs and savings for multinational that have funds to innovate (Durach et al. 42). High-speed trains, automatized warehouses, and effective information systems and technologies make supply chain management efficient. Tracking systems and tags ensure shipments’ safety and enable suppliers to add more transparency to their operations. At present, customers can often track the goods they have purchased from the moment of placing an order up to the moment when they receive their parcel.

The adverse effects of external forces can also be (at least, partially) solved by close cooperation with governmental entities and communities, as well as international organizations. The lack of global standards is a significant barrier to a more effective optimization of supply chain processes (Durach et al. 37). The development of international standards and their adoption in many regions take place at an insufficient pace. Emerging markets tend to adopt such standards slowly or reject many of them completely.

Managing networks is a considerable challenge due to cultural and socioeconomic aspects. Companies have different cultures and strategic goals, which can hinder their successful cooperation (Busse et al. 442). It is noteworthy that approximately 80% of supply change managers stress that trust-related issues are the most serious challenges they face when searching and collaborating with partners (Durach et al. 35). An example of an effective strategy related to networking is the approach used by FedEx (Monczka et al. 685). The company initiated the collection of billing data from all facilities and managed to develop procedures to eliminate overbilling errors, which resulted in up to 5% savings. Transparency and proper information sharing can be instrumental in addressing this barrier. Such issues as confidentiality and data safety arise, but the most recent technological advances solve these problems effectively.

The talent shortage is another significant barrier to effective supply chain management. Logistics is not seen as an interesting or financially attractive sphere, which is one of the factors contributing to the problem (Durach et al. 37). In developing countries, the situation is even worse as there is no logistics in their educational establishments’ curriculum. Global firms develop various strategies to handle this issue and concentrate on financial aspects and perks. Technology is another factor that can help companies find, develop, and retain talent.

In conclusion, it is important to emphasize that global logistics may face certain challenges, but global firms have many tools and opportunities to address the existing barriers effectively. Technological advances present a wide array of instruments to gain a competitive advantage. Effective collaboration with partners, as well as authorities and communities, has proved to be one of the central components of the successful management of supply chains.

Works Cited

Busse, Christian, et al. “Supplier Development for Sustainability: Contextual Barriers in Global Supply Chains.” International Journal of Physical Distribution & Logistics Management, vol. 46, no. 5, 2016, pp. 442-468.

Durach, Christian F., et al. “Trends and Strategies in Global Logistics and Supply Chain Management.” Global Logistics: New Directions in Supply Chain Management, edited by Donald Waters and Stephen Rinsler, Kogan Page Publishers, 2014, pp. 29-48.

Monczka, Robert M., et al. Purchasing and Supply Chain Management. Cengage Learning, 2015.