Every business wants to succeed and accomplish its goals. For a business, organization, or company to produce and distribute goods and services to its consumers, the efficiency of its supply chain plays an important role. What’s more, customers want to get their goods and services delivered at the right time and quantity.
To cater to clients’ needs, companies and businesses either engage in a global supply chain or a domestic supply chain. What is the difference?
What is a Global Supply Chain?
A global supply chain is a system across numerous continents and countries to produce and distribute goods and services to the final consumer. With a global supply chain, there is communication and flow of resources. The employees involved need to communicate and pass information to get the global network working.
Additionally, the resources used in a global supply chain are those that meet the intended purpose of the supply chain and adhere to government regulations. Therefore, multi-national companies and organizations take part in this global system to produce goods and services. The cash flow in a global supply chain is one of the factors that lead to the success of this worldwide network.
The Benefits of Global Supply Chain
A company that is involved in a global supply chain will experience the following benefits;
- Better management of businesses and companies- the companies which engage in a global supply chain are organized by an international organization that ensures the companies are well managed. This is in a bid to ensure the final consumer gets the best services and products from the production to the delivery stage.
- Improves proactivity- the companies and organizations in global supply chains have the advantage of foreseeing certain conditions that may be experienced in the market. This may include the demand for the goods and services, whether it will decline or increase for some time. Therefore, they can establish and prepare well for the unforeseen conditions in the market.
- Improved transport strategies- every supply chain involves the production and distribution of goods and services from their initial and raw states to the final states that can be readily used by the final consumer. This involves using various modes to get the products delivered to the client. Therefore, businesses operating within continents globally will ensure the transport strategy is improved to get their various processes done.
- Enhances competition- since many businesses are involved in a global supply chain worldwide, there are quality goods and services supplied to the final consumer. Therefore, with such an established supply chain, a consumer can be sure of getting excellent products in the market.
- Exchange of ideas- when numerous businesses from various countries and continents engage in a global supply chain, they can learn different ways of doing business since different countries operate their businesses differently. Furthermore, businesses can learn new methods of production from others.
What is a Domestic Supply Chain?
A domestic supply chain is a network within a country that ensures products and services are produced and distributed to the final consumer within the same country. The transportation processes, the tracking of goods and services, and all the processes are carried out within the borders of a country. Some businesses opt to use the simple domestic supply chain for their processes because of various reasons.
The Benefits of Domestic Supply Chain
The following are some of the benefits of a domestic supply chain;
- Quick reaction to changes- whether there is a last-minute order from a customer, a change in service or product needed, or any other sudden alterations made, a domestic supply chain will make the needed changes quickly. This can be attributed to close geographical location and a simple supply chain.
- Saves time- a domestic supply chain has the suppliers closer to ensure the goods and services are delivered faster to the final consumer. In this way, there is a reduction in the number of intermediaries in the chain.
- Easy control of production- for a domestic supply chain, a business can easily monitor and visit the manufacturer when a product is made to ensure quality is at its best. Therefore, you can see the progress taking place in the product before the final result is presented to the consumer.
The Differences Between Global Supply Chain and Domestic Supply Chain
A global supply chain is a network that ensures that goods and services are produced and distributed to the consumer across different continents globally. On the other hand, a domestic supply chain is a system that connects a company with its retailers within a country’s borders to ensure the goods and services are produced and distributed to the consumer.
A global supply chain uses multiple transportation modes to get the products from the warehouses to the consumers or other stores. The domestic supply chain, however, uses a variety of transport modes to achieve this, with ground transportation preferred by many businesses.
In terms of cost, many factors are considered in a global supply chain. These involve the typical cost together with taxation and fees charged by various governments. Additionally, there is a fluctuation in currency exchange rates across country borders. A domestic supply chain, on the other hand, puts into consideration the normal costs such as technology, employees, and transportation and warehouse facilities.
A global supply chain undergoes coordinated efforts in management and decision-making. This may take a lot of time before a conclusion is arrived at. Additionally, there must be well-laid plans on how the information is to be shared and distributed.
On the other hand, a domestic supply chain normally has a single manager that oversees the operations of a business. Additionally, the single manager executes how information and goods, and services are distributed. In some cases, there may be managers dispersed in specific geographical areas.
Businesses, organizations, and companies need supply chains for them to produce and distribute goods and services to the consumers. A global supply chain facilitates operation worldwide while a domestic supply chain manages all its operations within the borders of a country. Therefore, a business can decide which supply chain it will use to get the goods and services to the final consumer.