Essay about 06 GLOBAL SUPPLY CHAIN MANAGEMENT 1

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SCM 460 GLOBAL SUPPLY CHAIN STRATEGY
Dr. Alex Rodrigues
Global Supply Chain Management

Topics
Topic 1:
Why do firms go global?
Topic 2:
Understand global supply chain issues
Topic 3:
Understand effective and efficient global supply chains Topic 4:
Understand critical issues in global supply chains

What makes a
Supply Chain
“Global”?

Offshoring

Offshoring

Offshoring

Offshoring

Reasons for Global Supply Chains

• Lower costs: labor, material and other inputs, attractive currency exchange rates, low taxes
• Superior quality
• Tax Incentives
• Unique product or service
• Increased capacity and availability of supply
• Need to meet the local requirements or demands
• Economies of Scale
• Asset Utilization
• Technological and process specialization
• Political/Economic Issues (i.e. Trade Agreements)

Challenges of Global Supply Chains
•
•
•
•
•
•

Time differences
Cultural differences
Lead time
Hidden costs
Language differences
Returns and repairs of defective products
• Political and economical risks
• Differences in units of measurement race, cost,

Domestic vs. International Logistics
• International Logistics involves differences in comparison to national operations: – Distance of typical order-to-delivery
Text
operations is longer lead time is higher
– The longer the supply chain, the more cooperation and coordination is required
– The required documentation is more complex to accommodate the laws and regulations of all governing bodies
– Accommodation of cultural variation in how consumers demand products and services is essential

Domestic vs. International Logistics
Domestic
About 10% of U.S. GDP today
Cost
Transport mode Mainly truck and rail

Inventories

Lower levels, reflecting short-order, leadtime requirements and improved transport capabilities International
Estimated at 14% of world GDP today
Mainly ocean and air, with significant intermodal activity Higher levels, reflecting longer lead times and greater demand and transit uncertainty

Heavy reliance on forwarders, consolidators, and customs brokers
Financial risk
Low
High, owing to differences in currencies, inflation, levels and little recourse for default
Cargo risk
High, owing to longer and more difficult transit,
Low
frequent cargo handling, and varying levels of infrastructure development
Government
Primarily for hazardous materials, weight,
Many agencies involved (e.g., customs, safety laws, and some tariff requirements agencies commerce, agriculture, transportation
Significant paperwork; the U.S. Department of
Administration Minimal documentation involved (e.g.,
Commerce estimates that paperwork cost for an purchase order, bill of lading, invoice) average shipment is $250
Communication Voice, paper-based systems adequate, with Voice and paper costly and often ineffective; growing usage of electronic data movement toward electronic interchange but interchange and Internet variations in standards hinder widespread usage
Cultural
Relative homogeneity requires little product Cultural differences require significant market and differences modification product adaptation

Agents

Modest usage, mostly in rail

Global Logistics: Complexity Layers

Customer service Inventory
Logistics
executive
Warehousing

and storage

Packaging

Transportation

Competition

Other activities ENVIRONMENT

Global Strategy Framework
Economic Forces
Governmental Forces
Environmental
Technological Forces
Forces Forces
Sociocultural
Competitive Forces

Market Involvement
Product Standard
Strategy
Marketing Operations
Factors Moves
Competitive
Supply Chain Mgmt

PERFORMANCE

Supplier Power
Buyer Power
Industry
New Entrants
ForcesRival Firms
Substitute Products

STRATEGY

INDUSTRY

Customers Suppliers Employees

BalancedCustomer
Financial
Scorecard
Internal Processes
Performance
Innovation & Learning

ORGANIZATION

Regulators Community Shareholders

Structure
Processes
Organizational
Functions
Factors People
Culture

Reading 1: “SC manager as
Global Economist”
•
Show More

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