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Posts Tagged ‘SLA’

Logistics supply chain software is gaining in popularity as more and more companies grasp the importance of having a global presence to survive in a dynamic business environment.  Having a supply chain management solution in place is not enough to keep pace with the competition today, so more companies are paying attention to the latest technology trends to gain additional advantage.

One of the latest trends in the industry is implementing a solution to manage the inherent risk in global outsourcing.  In the last several years, outsourcing has become a common strategy for many businesses, in addition to using logistics supply chain software.  Companies that outsource can save costs for labor and raw materials, but there are risks that go along with these benefits.  Some companies are so eager to take advantage of low labor costs in other parts of the world that they don’t stop to consider the hidden costs and risks that go along with that strategy.  One of the greatest risks is one a surprising number of companies don’t consider:   higher transportation and inventory costs.

An example of these risks are the delays in delivery time due to terrorism, quality control, and damage issues caused by a long supply line.  Also, swings in the value of currency create risk when the supply chain is extended.  Backlash against your business can also occur in some foreign countries when prevailing working conditions are abusive and wages are ridiculously low.

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To manage this risk, companies have adapted a number of strategies that vary depending on the probability of each inherent risk.  Some companies have pulled back operations in countries that have political instability.  Others have lobbied foreign countries to improve conditions and wages for their workers.  Companies that are proactive in managing the risks that are inherent to outsourcing are much more likely to reap benefits from the strategy.

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