Supply chain management focuses on the flow of goods and services used in the production process. It’s also used to optimize the flow of data – for inventory tracking, for example. Supply chain management also includes finding optimal ways to manage financial transactions like international wire transfers.
Companies of all sizes across all industries engage in global supply chain management, and each face similar challenges. Government policies, changing regulations, and the status of treaties like NAFTA can tip the scales significantly either way for global businesses large and small. Small businesses, in particular, face a unique set of challenges when it comes to building wholesale global supply chains. But they also stand to make big gains if they can successfully optimize them. Understanding – and overcoming – wholesale global supply chain challenges is worth the effort.
Why Wholesale Global Supply Chain Management Matters
- Meeting customer expectations
An optimized global supply chain helps small businesses to offer the right product, at the right time, in the right place, at the best price. It’s a comprehensive function that includes a host of activities including procurement, warehousing, distribution, inventory control and financial management. Supply chain management brings all these functions together to help global wholesalers better serve their customers.
- Cost savings
An effective supply chain enables faster stock movement, which means lower holding costs and better cash flow.
- Enhanced service levels
With the right systems and technology in place, the wholesaler can support shorter lead times for the retailer. Relying on systems like just-in-time, or Kanban, wholesalers can add value by saving retail customers on inventory holding costs.
Given the rate of progress in technology, the ability to do business beyond domestic borders presents a great opportunity for the small wholesaler for a number of reasons:
- The internet, the low cost of software and data storage today has opened global markets for small wholesale firms. Finding foreign customers and foreign suppliers is easier and less costly than it’s ever been.
- Trading a foreign market is more complicated. However, a 1% investment in international supply chain efficiency yields a far greater return than a 1% investment in domestic supply chain efficiency.
Key Wholesale Global Supply Chain Challenges for Small Business
There are essentially four supply chain issues facing small wholesale firms:
- Lack of specialization. In larger firms, there are dedicated and specialized staff members who deal with all aspects of global supply chains. In smaller firms, supply chain management is typically owned by someone who plays many roles, or it’s outsourced to a third party. Outsourcing, unfortunately, comes with increased costs and decreased control.
- Inability to negotiate discounts. Because the smaller wholesaler cannot deal in the large volumes of bigger firms, the ability to negotiate costs becomes challenging, resulting in a higher cost of goods sold and lower gross margins.
- Lack of technology. Small businesses often rely on manually produced systems like spreadsheets for inventory control and supply chain management. They make data integration with suppliers labor intensive (so it often doesn’t get done), they are prone to error, and they’re a security risk.
- Archaic payment structures. International bank-to-bank transfers move through a complex network involving your bank, clearinghouses, SWIFT, CHIPS, currency exchange, and and your trading partner’s bank. The process can take up to five days (if nothing goes wrong). If there is a delay, it’s hard to track down where the system broke down – and which party was responsible.
Getting Global Wholesale Supply Chain Competitive Advantage
To compete effectively in the global market, here are five key challenges that need to be met to ensure a successful and affordable wholesale global supply chain.
- Your wholesale global supply chain management system must simplify rather than add complexity.
- Everyone involved in the system must understand it and support it.
- It should be supported by a global payment system that’s easy to use and saves you time and money.
- There should be coordination between all the supply chain partners – a weak link in the chain affects everyone.
- The importance of diverse cultures around the globe can’t be overstated. Conveying facts doesn’t always mean the message gets through. Invest in fluid communication between you and your global suppliers.
The most valuable currency wholesalers can trade in is the relationships they foster in both the supply chain and in the distribution chain. Today’s technology can go a long way in building and cementing those relationships. Check out 7 Essential Tools for International Trade for more resources on everything from building a global web presence to navigating global regulations.