The end of the last millennium and the beginning of the new millennium has seen supply chain management emerge as a new management paradigm and a source of competitive advantage. This is especially true in a global marketplace where "getting the right goods at the right place at the right time and at the right cost" is imperative. It is essential for firms to develop an understanding of supply chain management issues, opportunities and problems in a global context. It is important to keep in mind the various cultural and distribution nuances existing around the world, together with the macro-economic and country specific factors while designing a global supply chain and when developing global solutions. This article begins by defining global supply chain management and the drivers of globalization. These two concepts form the basis of understanding the reason behind envisaging the need for an efficient global supply chain. With increased globalization and offshore sourcing, global supply chain management is becoming an important issue for many businesses. Like traditional, supply chain management, the underlying factors behind the trend are reducing the costs of procurement and decreasing the risks related to purchasing activities. The big difference is that global supply chain management involves a company's worldwide interests and suppliers rather than simply a local or national orientation. Traditionally, the global supply chain has not been considered the domain of the treasurer. But within the increasingly complex business environment that is the hallmark of globalization, the supply chain stands front and center among the treasurer's concerns.
[...] It is also important to have measures in place to facilitate the creation of a global supply chain and satisfy the three main criteria of managing flows of capital, information and material. Figure Information, Financial & Material Flows Material Flow Material flow is the main objective of the supply chain. The material flow in a global supply chain is from the suppliers, who provide materials and sub-assemblies, to the manufacturers, who build, assemble, convert, or furnish a product or service. [...]
[...] Drivers of Globalization To understand the importance of global supply chains, there is a need to understand some of the drivers of globalization and their effect on the enabling of efficient global supply chains. The drivers of globalization and their effects on global supply chains are described below. Market Drivers The recent years have seen the globalization of products and services. There has been a growth of global market segments which are receptive to and demand branded goods and services offered by global companies such as Nike and Sony. [...]
[...] MODEL OF GSCM A proposed model for global supply chain agility is shown in following figure: - The model posits that GSC agility consists of four component flexibilities Product development flexibility Sourcing flexibility, Manufacturing flexibility Logistics flexibility. Each components flexibility in turn consists of two dimensions - range and adaptability. GSC agility is impacted by the global competitive environment and information technology flexibility, and in turn is theorized to impact SC performance and finally global competitive performance. Based on the proposed model, we present the following propositions regarding the relationships between the dimensions of flexibility and GSC agility: - Proposition 1a: An organization's global supply chain agility is obtained through the co-alignment of the four component flexibilities called product development flexibility, sourcing flexibility, manufacturing flexibility and logistics flexibility. [...]
[...] The strategy for a global supply chain: Development of processes, structures, organizational networks and strategic alliances and partnerships. Designing a global supply chain: Global procurement, facility decisions, logistics planning, customer service levels and inventory management. Enabling a global supply chain: Management and integration of flows of material, finance and information across the chain. Maintaining and monitoring: Setting performance goals and parameters, financial controls. "Manufacturing offshore is bad business." - Harvard Business Review The world has come a long way from the times of Markides and Berg who wrote this article. [...]
[...] Category of Drivers of Risk Risk Disruptions Natural disaster Labor dispute Supplier bankruptcy War and terrorism Dependency on a single source of supply as well as the capacity and responsiveness of alternative suppliers Delays High capacity utilization at supply source Inflexibility of supply source Poor quality or yield at supply source Excessive handling due to border crossings or to change in transportation modes Risk Categories and Risk Drivers Systems Information infrastructure breakdown System integration or extensive systems networking E-commerce Forecast Inaccurate forecasts due to long lead times, seasonality, product variety, short life cycles, small customer base "Bullwhip effect" or information distortion due to sales promotions, incentives, lack of supply-chain visibility and exaggeration of demand in times of product shortage Intellectual Vertical integration of supply chain Property Global outsourcing and markets Procurement Exchange rate risk Percentage of a key component or raw material procured from a single source Industry wide capacity utilization Long-term versus short-term contracts Receivables Number of customers Financial strength of customers Inventory Rate of product obsolescence Inventory holding cost Product value Demand and supply uncertainty Capacity Cost of capacity Capacity flexibility Information Damage to telecommunications software Technology Errors or attacks on the reliability, integrity, or availability of the system that are carried out through the supply chain itself Politico-Legal Changes in govt., leading to changes in policies Changes in laws making them less beneficial Criminal Theft or Damage Risk Mitigation Before constructing a supply-chain risk management strategy, a multi organization level shared understanding of supply-chain risk needs to be created. [...]
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