GLM Lecture 3

8/8/2019 GLM Lecture 3

1/19

Global Dimensions of Supply Chains

Chandana Hewege


2/19

Global Sourcing and Supply Chain

> http://www.youtube.com/watch?v=ykYgVz75JGc
http://www.youtube.com/watch?v=ykYgVz75JGchttp://www.youtube.com/watch?v=ykYgVz75JGc


3/19

Three eras of globalization

The first era was initially driven by countries (14001800) seekingmaterials and goods not available in their own land

The second era of globalization (18002000) was driven bycompanies seeking goods and materials, labor, economies ofscale, and markets.

In the third era of globalization, said to have begun around the

year 2000, the significant characteristic is that it is being poweredby individuals and smaller organizations

Globalisation and Supply Chain


4/19

Supply Chains in a Global Economy

Economies and companies could improve their wealth by allowing specialization oftasks.

The advantage is true as long as you can sell the increased volume that is produced. Itis an important role of logistics to help extend the market area of countries orcompanies through improved efficiency to lower the landed cost in new market areas.

Globalisation and Supply Chain


5/19

The Scope and Magnitude of Global Business

The ability to connect to individuals and companies across theglobe and to connect computer information systems on a 24/7basis has provided unparalleled opportunity for collaborationhorizontally and vertically in supply chains.

The trade volume with China was 18.2 percent of the total of thetop 10 for 2006, and it increased its trade volume by 20 percent

from 2005 to 2006. In 2000, China was number 4 followingCanada, Mexico, and Japan. Check the latest statistics below

https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
https://www.cia.gov/library/publications/the-world-factbook/geos/us.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/us.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/us.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/us.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/us.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/us.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/us.html


6/19

Global Markets and Strategy

The global business environment has changed significantly and become muchmore conducive to business activity between and among different countries.

Success in the global market place requires developing a cohesive strategy,

including product development, technology, marketing, manufacturing, andsupply chains.

Global markets and strategy have four important characteristics:

standardization reduces complexity

global competition reduces the product life cycle

traditional organizational structures and business models frequentlychange

globalization introduces more volatility


7/19

Supply Chain Security: A Balancing Act

Given the importance of global trade to the United States, a delicate balance existsbetween security and the efficient flow of global commerce.

More cargo inspections, much more paperwork, and a longer time to clear U.S. bordersare now a reality.

C-TPAT is a cooperative effort to secure the global supply chain and to facilitatelegitimate cargo and conveyance.


8/19

Ports

Ports are a critical part of global supply chains and also a majorfocus for global security.

Americas ports are a vital part of its global commerce. Over $2trillion in trade value per year passes through U.S. ports, and over$18 billion is collected in industry fees and taxes.


9/19

North American Free Trade Agreement & Supply ChainPotentials

NAFTA establishes free trade between these three countries and

provides the way the agreement is to be interpreted.

Even though the U.S./Canada Free Trade Agreement has been ineffect for some time, certain trade barriers still remain.

The supply chain constraints will eventually be eliminated asNAFTA experience grows. Refer to the diagram in the next slide.


10/19

A Typical Truck Shipment Crossing into Mexico


11/19

Global Transportation Options

Ocean

The most pervasive and important global shipment method, accounting fortwo-thirds of all international movements. Major advantages are low ratesand the ability to transport a wide variety of products and shipment size

Three major categories: Liner service (offer scheduled services)

Charter vessels

Private carriers

Air Fast transit times

An advantage in packaging

Disadvantage of air carriage is high rates


12/19

Global Transportation Options (cont.)

Motor

Use motor transport when shipping goods to between the United States andMexico or Canada

It is very common in Europe

Motor also plays a large part in intermodal shipments

Rail

International railroad use is also highly similar to domestic rail use Intermodal container shipments by rail are increasing

Maritime bridge concepts

Land bridge


13/19

Strategic Channel Intermediaries

Foreign Freight Forwarders

Supplies expertise to international shippers

Consolidate small shipments into more economical sizes

Derives income from fees for service

Non-Vessel-Operating Common Carriers

Consolidates and dispenses containers at inland points

Uses the shipping expertise that NVOCCs possess

Ocean carrier gains from the increased market area


14/19

Strategic Channel Intermediaries (cont.)

Export Management Companies

EMCs act as agents for domestic firms in the international arena

Obtain orders, selecting appropriate markets, distribution channels, and promotional

campaigns

Export Trading Companies

ETC exports goods and services to overseas buyers and handles most of the exportarrangement

ETC allows small- to medium-size firms to engage in foreign trade


15/19

Strategic Channel Intermediaries (cont.)Customs House Brokers

Oversee the movement of goods through customs and ensure that thedocumentation accompanying a shipment is complete and accurate for entry

into the country

Operate under power of attorney from the shipper to pay all import duties dueon the shipment

The importer is ultimately liable for any unpaid duties

Keeps abreast of the latest import regulations and specific requirements ofindividual products


16/19

Storage Facilities and Packaging

Transit sheds provide temporary storage while the goods await the next portion of thejourney

Carrier provided hold-on-dock storage free of charge until the vessels next departuredate

Public warehouses are available for extended storage periods.

Bonded warehouses operate under customs agencys supervision and are used tostore, repack, sort, or clean imported merchandise entered for warehousing withoutpaying import duties while the goods are in storage.


17/19

Packaging

Export shipments moving by ocean transportation require morestringent packaging than domestic shipments normally do

The shipper may find settling liability claims for damage to exportgoods very difficult. Usually, the freight handling involves manyfirms, and these firms are located in different countries.


18/19

Summary

> Companies competing in global supply chains need to address some importantquestions for their global networks to ensure their efficiency and effectiveness.

> There have been three phases of globalization: the first was driven by countries,the second by large companies, and the third by individuals and smallorganizations.

> Successful global companies have transformed their supply chains on an ongoingbasis to enable them to deliver low cost and high value to the ultimate customer.

> The scope and magnitude of trade flows between the United States and othercountries have grown considerably in the last several decades. One interesting

development has been the growth in importance of trade with China and severalother Asian countries.

> Success in the global marketplace requires developing a cohesive set of strategieswith respect to customer service, product development, business models, andoverall supply chains.


19/19

Summary (cont.)

> Supply chain security has taken on increased importance since September 11, 2001.Companies individually, jointly, and in cooperation with the various levels of governmentneed to be actively involved. The federal government, in particular, has expanded the scopeof its regulations and policies for global security.

> U.S. ports play a critical role in global supply chains since over 90 percent of global tradepasses through them. Ports are also an important focus for security.

> Canada and Mexico are ranked number 1 and 3, respectively, on the list of most importanttrading partners with the United States. That relationship is enhanced by the North AmericanFree Trade Agreement ratified by Congress in 1994. While the treaty had lofty goals, it still isexperiencing problems with full implementation of its objectives. Nevertheless, it has

fostered trade in North America.

> Global supply chains have a number of transportation and related service options availableto managers. Each of the options has advantages and disadvantages that need to beanalyzed.

GLM Lecture 3

Documents

Transcript of GLM Lecture 3