What Is a Global Supply Chain? Definition, Benefits & Strategy

If you aim to sell your products in the global market then understanding the concept of global supply chain can be useful. Many companies around the world manufacture products in one country and sell them in another. Additionally, they may be sourcing raw materials from a completely different company. This accounts for a global supply chain. Research shows that the global supply chain management market is expected to grow at a CAGR of 10.9% between 2023 and 2032 to reach USD 72.1 billion by the end of this period. 

We have explained the concept of a global supply chain at length in this blog. It also talks about the benefits of a global supply chain, how to make the most from it, how it differs from a local supply chain, and more. Let’s get started!

Global Supply Chains: Definition and Real-World Examples

A global supply chain can be defined as a transnational network that many businesses leverage to manufacture and distribute their goods. It involves all the steps that form a part of the supply chain process with the only difference being that here the tasks are managed in more than one country. The key steps in the process include procuring raw materials, planning the production process, forecasting the demand, and supplying the end product.

Let us understand this with the help of a few examples. For instance, if a business sources raw materials from Taiwan, manufactures goods in Singapore, and sells them in India; its supply chain process will be termed as global. This is also referred to as a global production network or global value chain. 

Advantages of Global Supply Chains

Now, the question is why are companies using this business model? What are the advantages of having a global supply chain? Does it promise a good return? Let’s find out!

1. Broadens Business Perspective: Global supply chain widens your business perspective as you explore markets in different countries. It gives you a chance to learn new production techniques, management strategies, and marketing tactics. These learnings give way to better ideas and help improve business processes.
2. Chance to Collaborate with Experts: When you look for manufacturers, suppliers, distributors, and support staff in multiple countries, you stand a better chance to work with experts in the field. This can help improve your products, services, and overall customer experience, ultimately giving you an edge over your competitors.
3. Lowers Overall Expenditure: A global supply chain enables companies to look for raw materials globally and procure them from a country that offers them at the most competitive rates. They may import the raw materials to manufacture goods in their own country or outsource the production process to that country itself. This helps save the freight costs and the time involved in the process. They may even choose to outsource the task to a country where the labour and overall manufacturing cost are low.
4. Global Reach: It gives you a chance to enter new markets in different countries and build a stronger customer base. You get a chance to attract customers from different parts of the world.
5. Quick Deliveries: When you adopt global supply chains, you can ship your goods to different parts of the world in a quick and hassle-free manner. This is because you have manufacturing units and distributors at multiple places. It is also easier to keep track of the shipments this way. Quick deliveries and real-time updates about the shipment’s location enhance customer experience.

Contrasting Global and Local Supply Chains: Key Variances

Global and local supply chains represent two distinct approaches to sourcing, producing, and distributing goods and services. Both these supply chain models have their own set of benefits and challenges. It is important to understand the difference between the two to select the right one for your business.

One of the main differences between the two is in their geographical scope of operations. A global supply chain spans across multiple countries and continents. It often involves a wide network of suppliers, manufacturers, distributors, and retailers. Contrarily, a local supply chain operates within a defined geographic area, typically serving regional markets. A global supply chain caters to vast markets. It enables companies to tap into diverse resources and access specialised expertise. Such a wide reach offers opportunities for cost optimisation, innovation, and market expansion. In contrast, the local supply chain focuses on proximity. It facilitates quicker response times, reduces transportation costs, and enhances customer relationships.

Another key difference lies in risk management and resilience. A global supply chain is susceptible to various geopolitical, economic, and environmental factors. A problem at any of its places of operation can lead to disruption in supply, price rise, and other related issues. Contrarily, a local supply chain is more resilient to global shocks as it relies on local sources and can adapt swiftly to localised challenges. Global operations demand advanced management systems and cross-cultural competence to manage activities across diverse regions. Local supply chains benefit from shared knowledge and community support.

Strategies for Enhancing Global Supply Chain Performance

Here are a few effective strategies to improve your global supply chain performance:

1. Conduct Thorough Market Research
2. Use Advanced Tools
3. Maintain a Cordial Relationship with Your Partners
4. Build a Team in Your Target Country
5. Learn the International Rules and Regulations

ShiprocketX: Empowering Global Supply Chains

ShiprocketX is helping businesses streamline the complexities involved in global supply chain management. With its widespread network in approximately 220 countries and territories, the company empowers businesses to expand their reach in the international markets with ease and efficiency. By providing end-to-end logistics solutions, including freight forwarding, customs clearance, and last-mile delivery, ShiprocketX enables seamless cross-border trade. It provides real-time visibility and better control over international shipments. By partnering with ShiprocketX, you can reduce logistical hurdles and expenditures. You can operate in the global market with confidence and establish a strong presence when backed by this reputed company.

Conclusion

A global supply chain presents its set of opportunities and challenges for businesses. You can manage it efficiently with the use of advanced tools and technology. It is equally important to maintain a strong professional relationship with your overseas suppliers, distributors, and manufacturers to manage the supply chain processes efficiently. It is a good idea to appoint an agent who is an inhabitant of the country you plan to operate in. This will help you gain better insights into the market and maintain smooth communication. Partnering with a trusted shipping company such as Shiprocket can further help expand your reach and establish goodwill in the overseas market.