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Managing the global supply chain: A risk measurement perspective

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  1. Introduction
  2. Importance of Global Supply Chain
    1. A framework
    2. Current practices
  3. Emerging technologies and Global Supply Chain Management (GSCM)
    1. RFID (Radio Frequency Identification Devices) and GSCM
    2. Drivers of globalization
    3. Strategic planning
  4. Potential risks from creating a inefficient GSCM
    1. Risk in Global Supply Chain
  5. Balanced scorecard in GSCM
  6. Conclusion

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. [...]

[...] Among the key global variables affecting a firm's supply chain are tariff and non-tariff barriers. Tariffs act as a direct tax on trade, while non- tariff barriers restrict trade and market access through other non-tax means such as quotas, quality and product standards, etc. Also, a number of countries have regulations regarding the environment. Local Governments & Political Situations The stability of local governments provides a stable environment for trade. Volatile political situations are great sources of risk in an international operation and firms tend to avoid these countries for trade. [...]

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