The vulnerability of the world’s manufacturing and distribution capacity was brought under the microscope after the global pandemic, as the novel coronavirus began wreaking havoc on how people buy and sell goods and services in March of 2020.
Now, as companies are working to reestablish production lines and move items in massive amounts from manufacturers to warehouses and beyond, the world is watching and waiting for logistics to improve.
With that in mind, it’s useful to become more familiar with the nature of international and national supply chains, how they work, and what types of industries are dependent on these international supply chains. Doing so now can help you avoid future disruptions to your core operations.
The Difference Between International and National Supply Chains
In a nutshell, an international supply chain is based on utilizing a wage and product price variable between purchasing nations and manufacturing nations. When it’s less expensive for a country to produce items abroad than domestically, you build an international supply chain.
A national supply chain involves locally produced items and services and by definition, the inputs in the supply chain will be produced within the country. You have greater insight into the entire process, from raw materials to finished products of B2B or B2C sales.
While international supply chains will typically result in lower prices for the goods you’re ordering, there are some potential drawbacks. For example, there will be a much longer lead time as you await items coming by freighter ship or air, compared to receiving deliveries of items made closer to home.
A whole host of other issues can come to play when dealing on the international arena. Price fluctuations because of currency exchange rate changes and tariffs are always an issue to contend with.
Sometimes there are communications issues when the supply chain has international connections. Bad weather, ships stuck in the Suesse, etc. can lead to delays in production as well as delays in shipping parts for manufactured goods. Political developments can be as unpredictable as the weather, meaning you might experience gaps in shipping whenever there’s unrest in the manufacturing country.
How International Supply Chains Work
International supply chains are complicated mechanisms. They involve the careful coordination of many different partners: designers, engineers, manufacturers, quality control, labor, warehousing and transportation.
The timeline of international supply chains will vary, depending on such factors as how you are transporting goods (by ship, plane, truck or train), meaning that you may need to add several weeks to your production timeline.
If you are working with a novel product, there could be additional tooling and testing time at the foreign manufacturer’s location. You may be visiting some of the sites yourself or will rely on intermediaries to inspect and vet all of the partners you’ll be relying on in the supply chain.
Industries That Rely Heavily on International Supply Chains
A myriad of industries depend on the timely delivery of items from international manufacturers and markets, including:
- Construction industry
- Automotive industry
- Electronics industry
- Foods industry
- Pharmaceuticals industry
Preparing for the Worst With Supply Chains
There’s nothing like a pandemic to demonstrate how truly connected the world is today and the need for us to strengthen the supply chain network.
Maintaining the health and strength of supply chains at the national as well as international levels will be top of mind for anyone contemplating how their organization should respond to the next global crisis. Preparing for the worst now will do wonders for helping us avoid distribution crises.
To enter your next multifamily, residential or commercial project with confidence that your materials will arrive on-time and in good condition, partner with the team at Live Oak Contracting. Ask us how our knowledge and experience in international supply chain management can help your business grow.
