How To Use a Supply Chain and Source In The Far East
The concept of management usually has standard applications. Apart from a few modifications in the way their implementations vary based on location, the fundamentals remain the same. However, to better understand the concept of the supply chain in the Far East, it is essential to understand the following basics:
EOQ: Efficient order quantity, which is otherwise referred to as EOQ, is the amount of a commodity that must be ordered at one go. The reason this is to be given adequate importance is the implication it has on the cost. Ordering costs and holding costs differ based on the number of orders that are placed, which are in turn determined by the EOQ.
Lead time: Lead time is the amount of time that is taken by a vendor to supply an intermediate good so that it can be used in the production process. This has to be given quite a bit of importance because a minor delay may result in a stock out. If this happens, there is always a possibility that the production process may come to a halt. Therefore, lead time determines the way procurement decisions are made.
The supply chain in the Far East is going to be the same as the supply chain in any logistics process. Therefore, the following points need to be considered:
- Supply chain involves making transportation decisions in such a way that the overall cost is minimised, and efficiency is attained. Furthermore, the motive of every company is to decrease the delivery time.
- Warehousing plays a crucial role with regard to decisions in the supply chain in the Far East. There is a need to understand whether goods are going to be stored for a short or long period of time and whether that the movement will be on first-come first-served basis or first come last served basis. The nature and quality of goods will determine those decisions.
Furthermore, the supply chain is usually decided based on the nature of the goods that are going to be transported. The following may be some of the basic categorisations that are followed by management personnel to facilitate optimum supply chain decision:
- ABC: Always Better Control
- VED: Vital Essential Desirable
- FSN: Fast Slow Non Moving
- HML: High Medium Low
These categorisations are done on priority basis, and this is what facilitates the importance that is given to them in the supply chain. With regard to the Far East, the countries that make up these regions are usually the pioneers in consumer goods. Therefore, there are not many hassles that have to be given to it with regard to perishing or crossing the expiry date.
The availability of labour, and the nature of rules and state laws are also critical aspects, and have to be taken care of when making supply chain decisions. However, there may be some things that fall outside the management paradigm. For obvious reasons, supply will be given to a particular area where there is an increase in demand, drop in inventory or an emergency situation. All other places will be given importance after these concessions are made.
However, given the abundance of talent, the supply chain in the North East has been given sufficient weight-age with regard to how the corporate plan out the distribution of their commodities. At times, there are exceptions to the rules, but more often than not, there is a strict emphasis on the need to follow protocol. Any deviation from it will result in a loss of efficiency.
Strathclyde Design Services can be your Supply Chain Managers in The Far East. Our experienced team offer rich experience in sourcing, supply chain management, product cost management, project management, and operations excellence. The objective is to assist companies to operate in the far east, and maximise the potential to deliver products. Find out more.