Globalization not only shows at the expanding selling market oversea, but also at moving assembling operations to countries which offer lower work costs, cut down duties by free trade agreements, as well as lower expenses of transport for raw materials to lessen production cost of the supply chain. However, this process introduces a few SCM difficulties to ventures and organizations, such as:
Firstly, for some organizations, outsourcing manufacturing is conducted not only in one country, but also in other countries for various parts of their items. In any case, outsourcing expands not only the production process internationally, but also the firm’s purchasing network. Having providers in various geographic areas brings more difficulties to the supply chain. Organizations should manage, arrange, and work together with parties across borders in regards to manufacturing, warehousing, and shipping. Besides that, the cost to deliver products to customers on time across borders is also an issue to keen on.
Secondly, as organizations extend deals into worldwide markets, the foreign marketplace’s culture and preferences may require a significant change in the product to receive acceptance. This problem may increase the costs for the supply chain. There is also a natural risk of losing control over inventory, particularly if the organization does not have a proper and integrated management system. This requires an investment in a diverse structure of information across borders effectively.
Moreover, expanding manufacturing operation oversea contains other issues such as, difference in culture/language, political and legal risk in host country, also the higher risk of losing intellectual property. These issue always must to be studied carefully by any organization in supply chain before joining the globalization waves.