Global Supply Chain Management, Term Paper Example

Abstract

Each organization is constantly looking for way to augment its success in the business arena. As a result, most individual target to streamline their production cycle to achieve the benefits of efficiency. Entrance of globalization introduced novel ways of achieving this cost reduction targets. Companies that are able to utilize their supply chain to their own advantage had reaped significant results from such efforts.

Introduction

The supply chain is concerned with the activities that constitute flow of materials from their source of supply to the final destination, the consumers. It constitutes components of the organization and other enabling agents whose main aim is to add value to the product as it moves from the producer to the ultimate consumer. As suggested by Long (2003), the supply chain is composed of numerous entities involved in trading and who benefit through creation of value. The era of globalization has opened numerous doors that necessitate every organization to ‘shape up or ship out’. As a result, it is clear that globalization has opened up doors to new consumers who were beyond the reach of the domestic set-up. Similarly, globalization introduces new talent into the production cycle in addition to presenting opportunities for cost reduction and risk mitigation (Ross, 2009).

As suggested by Wang et al (2007), the new markets emanating from globalization have reduced the costs of holding inventory. Since the organization is able to perform Just in Time production, costs are hugely reduced. According to Ross (2009), the organization is able to “amortize product development, production, inventory and distribution costs…by expanding beyond the domestic market place (p 29).” An amplified customer base contributes to innovation since the customer needs vary greatly.

Foreign markets are mostly untapped since they provide a new facet of customer needs and wants. As a result, they are a source of new markets for the products in addition to introducing new efficiencies in the supply chain (Skjott-Larsen, 2007). For example, China has provided much of the outsourcing functions for American companies owing to the low cost of labor and government restriction. On the same note, globalization has introduced an advantage to business through which they can circumvent restrictions and tariffs by locating production units in foreign countries from which raw materials are sourced (Horch, 2009). Thus, an organization can relocate its production unit to a country with favorable characteristics and benefit form the favorable costs.

Augmented customer base is ground for achievement of economies of scale. As a result, the company is able to realize reduced costs and hence transfer the benefits to the consumers. Companies can as well have numerous production units near their consumers since demand for the products has gone global. Consumers are now able to source for goods from a producer on the global scale (Ross, 2008).

References

Horch, N. (2009). Management Control of Global Supply Chains. Brandsberg: BoD – Books on Demand

Long, D. C. (2003). International Logistics: Global Supply Chain Management. Springer, 2003

Ross, D. F. (2008). The Intimate Supply Chain: Leveraging the Supply Chain to Manage the Customer Experience. Florida: CRC Press

Skjott-Larsen, T. (2007). Managing The Global Supply Chain. Denmark: Copenhagen Business School Press DK

Wang, W.Y. C., , Michael S. H. &  Chau, P Y. K. (2007). Supply Chain Management: Issues In The New Era Of Collaboration And Competition. Idea Group Inc (IGI)