Complete Guide to Global Supplier Management
The world is growing and conducting international business is easier than ever. There are approximately 7.8 billion people in the world, which equates to a lot of opportunities for international supplier relationships. If you’re just going into business, be it brick-and-mortar or e-commerce, it’s important to understand how international supply management works. To gain a competitive advantage, here are a few things you should know:
What is Global Supply Chain Management?
Global supply chain management (GSCM) is a distribution of goods/services through a trans-national global network that will maximize profit while minimizing waste. Basically, it’s doing business with people “across the waters.” It’s the same concept as the regular ole’ supply-chain management, but places more focus on brands and companies willing to do international business.
Global supplier relationship management has six areas of concentration:
- Customer orientation
- Logistics management
- Supply-chain coordination
- Competitor orientation
- Supply management
These six areas of concentration can be divided into four main parts:
- Operations management
- Supply management
When a global supply chain is managed successfully, it complies with all international regulations that are set by non-governmental organizations (like the United Nations, for example). These organizations play a key role as they create and enforce laws which your company must abide by.
Best Practices for Managing Global Suppliers
When it comes to global supplier management, things can get complicated quickly. Every country has its own regulations and you need to know it all. Changes can happen by the day or even by the hour. The task of managing all supplier data can be quite cumbersome and oftentimes, even challenging. So what are the best ways to ensure these global suppliers are market-compliant and on track? Consider some of these best practices:
Set Minimum Standards
It’s about strategic sourcing. Your global suppliers should know your set minimum standards. Do not hand over quality responsibility to procurement. There should be an established and active global sourcing team in place. That means, when procurement finalizes a deal, your QA must attend to ensure standards are being met. There should be a strategic procurement process in place.
Mitigating supplier risk is just as important. Supplier performance is incumbent upon how they interpret your standards. Streamline the process by making this clear from the very beginning.
Know Your People
Get to know your suppliers before transferring large amounts of money or placing bulk orders. Practice smart inventory management. Even when doing business internationally, a visit is always in order. You need to see what’s going on and how things are done. You will never have a full view of a supplier until you set foot in their facility. Internal risk assessment might give you insight on which suppliers might need more frequent visits and why.
Takes these at face value. This is especially relevant to high-risk countries. You can certainly trust in suppliers but prior to placing orders, a business should always check on the certifications. If people are too quick to brandish an MRC or ISH certificate, it may be highly suspect. Especially if they cannot pass simple GMP audits.
A business should encourage their sourcing group to establish ongoing international business relationships. Especially the ones identified as being capable of manufacturing your items and understand your business processes. Changing suppliers too often can be more costly and lead to a lower sense of morale.
Global Food Safety Initiatives
Even if you think this regulation doesn’t apply to your product or service, it just may. Try to have contracts and import protocol agreements in place. If you sign on additional suppliers (aside from other contracts) they should also be signing an import agreement. This documents important information and informs the supplier of expected compliance.
Specific Global Products
Depending on what’s for sale, the rules and regulations can change. Any strategic supplier should know what is expected. Here are a few rules when it comes to specific global products:
Teams should employ comprehensive product specifications in all sales and marketing materials. Leveraging specifications helps a brand differentiate their product from the competition. It also keeps consumers happy, with fewer questions to your support team.
This one should be a given. In some cases, it is unacceptable to use U.S. labels in other countries. There are many times when a contract is created with different labeling companies that creates a conflict of interest. In these instances, it is critical to determine who will be examining your labels to ensure full compliance. If in doubt, have suppliers send you labels they have on file to establish better compliance.
Always examine product records and continue to conduct audits. It can be a good idea to leverage the services of a third-party auditor if you are unsure. These professionals can pop into the facility unannounced to give a real-time view of operations. Services can also be rendered for pre-shipment inspection with reporting done prior to shipment.
There should always be a member of the team looking out for quality assurance. There are many factors for QA to be on the lookout for. This includes things like:
- Ethical sourcing: Where does the product come from and is it obtained ethically?
- Underage labor: Is everyone involved of the legal age to work in their country?
- Environmental impacts: Is there pollution happening as a by-product?
- Sustainability: Is this a system that can occur over decades?
QA can be tough when it comes to global supplier management. A business owner cannot be there all the time to ensure compliance. Especially if they are just running a small shop on Etsy. The idea is to be informed and try to understand compliance as best as possible.
The more a brand comprehends the international supply chain, the more opportunities to make money. If it’s simply about education. The information is all there. You just have to take it to the next level and work from a global perspective.