global supply chain management

global supply chain management

The Evolution and Impact of Global Supply Chain Management

1. Introduction to Global Supply Chain Management

Modern business is stressful and demanding, and it has become even more so in the past few years. In the new economy, the mantra is familiar to everyone that if you remain the same, you fall behind. The relationships and partnerships among supply chain partners must also shift dynamically. Merely professing and professing a need for a flexible, agile, and integrated approach to business is not enough. Supply chain relationships must also change to meet the need for speed, security, and cost-effectiveness. Business can no longer use as a business model the previous manufacturing era, an era in which sales followed production. Our global customers are demanding smarter, more comprehensive solutions that quickly respond to their evolving business situations and translate shifting business needs into ongoing custody changes. These must be in new, inventive, and practical ways.

Supply chain management (SCM) is the concern of many academics and researchers today. Just as the industrial revolution redrew traditional production boundaries, the globalization of markets is rewriting the role of SCM. As a result, these areas receive increasing attention from business advanced technology managers. Modern manufacturers are closely tied to their suppliers, even extending this relationship to some of the customers. The results of the 1999 APICS strategy model are automating and integrating along multiple dimensions, building stronger partnerships throughout the chain, more effectively standardizing business processes, implementing solutions faster, gearing up for global e-business growth, remaining steadfastly committed to adults and process development, and using the industry.

2. Key Components of a Global Supply Chain

Gaining a true understanding of these differing supply chain components and key factors allows the organization, its supporting cast of traders and financial intermediaries plus logistics service providers to understand the total system needs and set the proper systems in place to effectively plan for and implement these requirements. Based upon the supply chain map and structure, these companies can thus better plan their internal systems.

To address the management issues of global supply chain management, it is necessary for us to understand the makeup of a global supply chain, its key components, and its primary differing factors. For while most people still consider the supply chain as a single entity with easy one-level connections and relationships, it is instead built from several, often quite diverse, complementary yet different parts. Each of these different parts can have unique risks, management tools, and techniques. Supply chain components consist of the core supply chain – the heart of a traditional company, a set of extended supply chain players, some non-supply chain players, and finally a set of logistics services that make the total system move.

3. Challenges and Risks in Global Supply Chain Management

Global sourcing, required in operating through a global supply chain, causes a number of challenges. Corridor capacity and modernization, quality of transportation services, political risks in foreign countries, and the growing areas of markets all have an economic risk that the business cannot ignore. By using effective capabilities to plan and manage the global network of different countries, a corporation is able to take advantage of some cost-efficient opportunities. When corporations select countries in the third world in order to reduce operational cost factors and increase profit potential, they face a level of risk determined by country stability. Governmental stability, economic stability, security threats, terrorism, internal conflict, and political stability are all components of country stability. By using the factors required in several countries, they can help the process of development and gain goodwill and global insights to offset the risk of international operations. Through a marketing channel that is established in a country with adequate purchasing power, multinational countries can gain goodwill. The region, the developmental level, and the percentage of population of more than 28 or 30% being in the middle class are all indications of the purchasing power that a country has.

Trade barriers and politically unpredictable environments pose one of the major challenges for global supply chain management. But the global sourcing business often has to participate in global procurement and global sales. Furthermore, it is important to be in both multinational and regional markets. This requires a multidisciplinary approach of various capabilities and different sales and marketing channels. Multinational corporations achieve greater economies of scale because of the increase in the volume of world trade. Changes in tariffs can result in increased opportunities for these corporations, enabling them to conduct operations in a variety of countries, but it can also pose political risks. The growth of NAFTA, the Uruguay GATT, and the Eastern European transformations all play a role in keeping corporations interested in maintaining globalization.

4. Technological Innovations in Global Supply Chain Management

According to domain experts, computing infrastructure availability is now virtually 100 percent over most of the world, for anything but disaster-ravaged regions. This perception is manifested not only in responses to our own surveys on supplier strategies, supported by sidelong glances at our own power-cord-stuffed and heat-abraded power-boards at symposia, but in the remarkable growth rates shown by providers over the last several years. Indeed, with the exception of the telecommunications sector (which includes the several hundred networked regional or TNC competitors vying for global dominance), neither we nor anyone else pay any attention to the specifics of the thousands of electronic material suppliers – that is, the thousands of corporations that comprise only a subset of available providers. For business planners, the point is increasingly simple – it really doesn’t matter who provides the compute infrastructure, provided that it can meet the corporation’s requirements and has a reasonable service level (availability, response time, and so on). The implications of this for the corporations’ strategies in electronic supply chain management and modeling are actually enormous. They mean, in essence, that the availability of technologies that support global data fusion, a key element in the development of successful supply chains – though complex – is straightforward and non-unique.

The rapid development of electronic commerce has fundamentally redefined the relationship between business and information technology in numerous industries. In practice, this development has generated four key advances in business practice. First, the proportion of commercial transactions that originate in web-based applications continues to grow at an exceptional rate and, as a result, web services are now often more important than data services (they certainly have greater growth potential, at least in the short term). Second, the integration of processes supported by Service-Oriented Architecture (SOA) within and among organizations has become a common strategy. Third, the consolidation of Information Technology (IT) infrastructures through data consolidation is another area of concern, helping to restructure troubled data centers in organizations seeking to influence widespread cost cuts on IT operations. Virtualization – the technical term describing the substantial growth in high-end computing supply delivered by fully networked servers – is a core component of most consolidation strategies. Finally, US corporations (and TNCs more generally) are increasingly committing to emerging global e-commerce standards.

5. The Future of Global Supply Chain Management

Because the field is still in its emerging stage, uncertainty prevails about the future evolution of the field and its relevance. Responses to these future challenges may require one or multiple paradigms in a multi-disciplinary manner. It is in this light that global supply chain management’s overall value to decision makers in international business and non-international businesses is assessed. These insights also find relevance for managers in a wide array of organizations, including manufacturing, marketing, operations, purchasing, human resource management, management information systems, law, logistics, and international business. Moreover, public policymakers face the challenge of removing barriers for global trade.

Global supply chain management is an ever-evolving field that emphasizes the continuing integration of capacities of multiple firms. International business, a forerunner of the field, focuses on the unique challenges that emerge as a production firm strategically expands across borders to establish manufacturing capacities in more than one country. While international business continues to scrutinize the dimensions of political risk, country risk, and currency risk, global supply chain management is increasingly involved in understanding the behaviors of numerous members that participate in activities within the supply chain. At the same time, global supply chain management also helps non-expanding firms adapt to challenges and opportunities generated by global supply chain management and activities associated with other global firms.