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ly rely on third-party logistics (3PL) providers to handle international transport of their products. This strategy enables companies
to both reduce distribution costs and mitigate risk of damage
to their products, and thereby contribute to their primary business objectives. Businesses can adopt visibility, collaboration, and
traceability systems and processes to meet both regulatory and
Quick Safety Checks
• Does your organization outsource any part of production internationally? If so, do you employ a 3PL provider to mitigate risk,
increase customer satisfaction, and reduce transportation costs?
• Does your organization have a supplier scorecarding system to
ensure your suppliers meet regulations and standards?
• Do you have an automated system in place to calculate the correct duty amounts in order to avoid fines and penalties?
• Do you have a system for tracking the variety of country regulations pertinent to your industry, and ensuring that your products
meet those standards?
4. Areas Outside Your Direct Control
In addition, unforeseen environmental, political, and economic
crises can stop a supply chain in its tracks. A recent incident that
halted production for a variety of industries across the globe was
the Japanese earthquake and tsunami in March2011. Order fulfill-
ment in a variety of industries was delayed for weeks or months,
and the worldwide economic impact was severe.
While these crises cannot be prevented, companies are nevertheless on the hook for mitigating their risk of exposure to a
variety of supplier performance issues. Two common strategies are
to diversify the supply chain (despite the trade-off of higher cost)
to ensure lower risk and to hold suppliers to specific standards.
Supply chain product compliance is increasingly complex, with
companies required to disclose detailed information about their
products, including composition, origin, and regulatory status.
Managing this data remains a critical supply chain challenge that
is necessary in order to comply with a wide array of regulations.
Other challenges that leave an organization open to risk
involve the variation in country regulations for global trade and
supplier performance in the areas of financial status, shipping
performance, and compliance with business processes. In a global
economy, risk is also heightened by natural disasters as well as political and economic breakdown. Successful supply chain strategy
is dependent upon implementing automated systems for tracking
supplier credentials, certifications, and financial and operational
performance that includes safety and risk mitigation.
For more information, visit www.takesupplychain.com.