Offshore Manufacturing: A Supply Chain Overview
Over the last decade international trade has exploded with more efficient and effective means of supply chains, opening up almost any business to have global relationships, contracts and advantages. It is no longer only the largest companies that have the means to export their product. Adams Smith’s Theory of Absolute Advantage defined in 1776 explains “when a nation can produce a certain type of product more efficiently than other countries, it will trade with countries that produce other good more efficiently” (David, 2013 p. 19). While this holds true, it is no longer only a nation’s decision but the individual establishments within the nation that now have access to the international exchange.
The ability of a company to export their product to another nation requires no more than interested parties, the right product for the right price and the proper channels of supply chain management.
With TMD Holdings using offshore manufacturing there are many aspects and probabilities to ensure a successful relationship regardless of challenges and utilizing advantages. Infrastructure themselves present a challenge in dealing with the capabilities of the offshore cities. Other challenges include managing transaction risks and packaging for export. Advantages include availability of entry and the convenience of international contract templates by way of Incoterms. The Incoterms, contracts, logistics, and terms of payment are crucial to the supply chain assessment as well as the understanding of the elements and risks of international trade. Developing a clear transportation plan from the manufacturing plant in the US to the end user will produce a clear cost of export an well as answering; when, how, who, and what if? Plans for success include the precise import/export documentation, applicable insurance, and the means of transport plus a backup plan. Through investigating the challenges and advantages, assessing the supply chain requirement, detailing transportation possibilities and choosing the most effective and efficient movement of products TMD Holdings produces a successful supply chain from the offshore manufacturer to the end user.
International transactions and transportation create unique challenges and advantages by intensively assessing the supply chain, transportation needs and implementation plans the
process will be beneficial to the company. Being aware of the abilities of market entry, a country’s infrastructure, and the transaction risks a company can be prepared for the challenges it faces. Next, understanding Incoterms that best suit all parties, the availability of different modes of transportation and payment possibilities including the exchange rate will allow the company to make the best decisions. Additionally, researching the best plan and being prepared for exigent circumstances in multimodal transportation and packing by using the latest technology, innovations, and strategies will make the process more effective and efficient. TMD Holdings produces on going research and studies that include cost analysis and comparison, marketing and forecasting methods. Developing relationships with interested parties will lead to successful negotiation and finalized contracts.
David, P. (2013). International logistics: The management of international trade operations (4th ed.). Berea, OH: Cicero Books. Retrieved from: https://bookshelf.vitalsource.com
Figure 1 International Trade. Retrieved on March 30, 2017 from: http://www.europa-trade.com/ru