Strategic approaches to global supply chain management

Table of contents

1. Introduction

2. The impact of globalization on business

3. Global supply chain management

4. Strategic choices
4.1 Strategic choices in global supply chain
4.2 Location choices
4.3 Production choices
4.4 Inventory choices
4.5 Distribution choices
4.6 Network design choices
4. Opportunities and risks
4.1 Opportunities and risks
4.1.1 High overall costs
4.1.2 Time delays
4.1.3 Unproductive overseas employees
4.1.4 Unfavorable weather conditions
4.1.5 Customer preference
4.1.6 Reduced costs of procurement
4.1.7 Reduced risks related to purchasing activities
4.1.8 Reduced labor costs
4.2 The example of japan

5. Conclusion

Bibliography

1. Introduction

The increased trend of globalization and offshore outsourcing in business environments has made global supply chain management an important issue to a good number of businesses today. Global supply chain management distinguishes itself from the traditional supply management given the fact that it involves an organization’s worldwide interests rather than a national or local perspective (Peng 2011, p. 465).

The fact that this approach to supply chain management involves a large number of countries, presents new difficulties that need to be dealt with in a totally different manner than the latter. These new difficulties require a strategic approach to global supply management, which is unique from the traditional methods used to combat such challenges. The strategic approach will put in mind certain issues affecting businesses today like; globalization, strategic choices, opportunities and risks, and natural occurrences like earthquakes and its aftermath and consequences to supply like in the case of Japan.

This paper provides a discussion of strategic approaches to global supply chain management and makes a mention of issues like globalization, strategic choices and opportunities and risks.

2. The impact of globalization on business

Globalization is the modern day trend of integrating political, economic, and cul- tural systems across the world through trade, transport, and communication. In other words, it refers to the process of integration and interaction among the worlds companies, governments, and people of different nations; driven by in- vestment and international trade fuelled by information technology (Das 2009, p. 42).

In simpler terms, globalization is a method of facilitating the interdependence and connectivity of the worlds businesses and markets. Though globalization seems to be more modern, it has its roots in the historical regional trades be- tween various communities who had to walk for long distances to get what they needed from far away lands. From these early periods, governments, people and businesses have invested a great deal in enterprises in other countries. This cross border enterprising habits has been fuelled to a greater extent by policy and technological developments in a number of nations across the world. Policy and technological developments has to a greater extent sparked off a se- ries of cross border investment, trade and migration until it appears that the world has entered into a new phase in its economic growth and development. These changes in policy have worked to open economies both in the domestic and internationally perspectives with many governments adopting the free mar- ket economic systems.

The free market system increases the productive level of nations that embrace it in addition to creating new opportunities for international trade and investment. Free market system involves free trade without the influence of barriers and tariffs between the countries carrying out the trade. It involves situation in which goods from one country are allowed into another without any excise being charged at all if not subsidized.

In an attempt to promote globalization and facilitate trade and investment across borders, many governments have involved themselves in negotiating for dramatic reductions in their barriers to commerce that once existed. In addition to reducing the barriers, they have also put in place international agreements that are aimed at advancing trade in services, goods, and investment among different countries. This reduction of barriers and removal of tariffs has enabled companies to take advantage of the new opportunities available in foreign markets and thus build foreign factories and establish production and marketing arrangements with foreign business partners.

Technological advancement has a hand in advancing globalization, given the fact that it has made it easier for people to communicate, travel and do business in the international perspective. Technological advances and especially devel- opments in the communications sector and the rise of the internet has facilitated globalization and made international trade more easy and flexible than before. These developments have given all the individual economic actors in trade, which is the investors, consumers, and businesses among others, a set of valu- able new tools for identifying and going after emerging economic opportunities (Das 2009, p. 42). This includes a faster, efficient and more informed way of analyzing the global economic trends, and efficient transferring assets in addi- tion to developing collaborations with same minded partners in the global mar- ket.

The major goal of globalization is to increase the material wealth, services, and goods of nations through an international sharing out of labor through interna- tional relations, competition and specialization. Apart from increasing the ma- terial wealth, globalization’s major aim is to integrate the different economies of the world into the international economy through foreign direct investment, trade, migration, capital flows, military presence, and the spread of technology. The interconnection of economies has worked to increase trade among different nations but has also created an unfair completion in the same industry as well. The opponents of globalization view it as a cheap means of the western world multinational corporations to benefit themselves at the expense of local enter- prises, cultures and the common people. This comes about, from the fact that not all nations are at the same economic and infrastructure level. This disadvan- taged group and people are thus deprived in terms of resources cannot function effectively in the increased competitive pressure brought about by the intercon- nection of their market with the rest of the world.

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