Materials Management

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Establishing a plan of action to serve as a blue print from which to build is the first step in developing a company’s best practices in international supply chain management. The plan is developed by designated managers from impacted departments. All employees involved in the flow of material from ordering to payment are then made aware of the plan. Materials management on an international scale is not structured any different than domestic supply chain management but the chain is longer with additional and varying types of participants.

The plan of action is a live document that should be assigned to one employee who records all recommended and approved changes. Metrics to evaluate the effectiveness of the materials management are determined. A plan of action may be needed for different countries of origin/destination. Objectives are listed along with benchmarks or goals. Reducing costs should be at the top of the list.

Examples of the cost reduction sought are product, transit, personnel and other operating costs. Training all personnel (internal and external) to align with company goals would be another objective. Another goal would be reducing cycle time. Non-company participants, foreign and domestic should be included in training when necessary.

The plan should encompass any issues or opportunities that may surface as a result of dealing with a foreign company. Local laws, political nuances and cultural differences are considerations. Thought should be given to security of product and personnel. Any item that might affect cycle time and cost should be included.
Chemicals can be sourced in India, China, and Sweden. Determining the lowest cost entails looking beyond product cost but calculating the delivered cost. Lack of infrastructure can extend delivery times and increase costs. Time zone differences can make communication difficult. Tariffs, duties, and inspections can increase costs. An underdeveloped e-commerce system might create problems with synchronizing computer infrastructure.

International supply chain management requires rating of suppliers differently than domestic suppliers. In addition to the standards used for domestic suppliers, the qualification evaluations must include the ability to conduct international operations and to meet international requirements. The evaluation is a part of the plan.

Sourcing is the first step in implementation. Contacting a country’s trade ministers should help obtain information of potential suppliers. National trade fairs or sourcing shows sponsored by various countries is another avenue that can be used. Professional chemical sourcing companies, foreign and domestic, can be employed to find needed product.

Once a source has been identified, an action team consisting of a company’s key participants is assembled. The action team will implement the international supply chain management plan. A good plan of action permits best practices to be documented and duplicated.