CHAP 2

• Global SCM


  Allows for seamless synchronization of the 3 flows (materials, information and capital) involving numerous global suppliers, assemblies in several global locations and sales in numerous global markets
• Globalization of markets


  The world is converging and can be viewed as a single marketplace
• Globalization of markets


  • Standard product can be sold all over the world where there is increasing homogenous demand for the product
  • Consumers from countries such as China and Japan demanding products that originally were only consumed in the western countries e.g. cheese and branded handbag
• Globalization of production


  Companies can locate its production facilities anywhere in the world, and they can also source or buy their raw materials (for its production) from anywhere in the world for better quality and price
• Globalization of production


  • Relocation of production facilities from western countries such as USA and Britain to emerging markets such as China, Indonesia and Vietnam
  • Emerging markets are popular as manufacturing sites because their factors of production such as labour and land are cheaper compared to those in western countries
• Global markets and strategy

  • Cohesive strategy on sourcing, procurement, warehouse locations, distribution centres, customer service, transportation and strategic channel of intermediaries
• Supply chain connections to emerging countries will continue to grow in bigger proportions
• Sourcing and procurement


  1. Strategically source and procure materials worldwide

  2. Strategically store materials globally (e.g. warehouse and distribution centres)
• Customer service


  • Provide customer service to worldwide customers
  • Evaluate and select the most appropriate transportation for cost-effective and efficient movement of materials
• Strategic channel of intermediaries

  • Choose the right strategic channel of intermediaries to take care of supply chain activities (e.g. consolidation, documentation)
• Warehousing


  • How to handle short term surges of supply while keeping the warehousing and freight cost low
  • Roses are perishable goods and therefore needs refrigerated or insulated storage
  • Warehouses need the capacity and capability to handle the surge of supply
• Globalization introduces supply chain volatility
• Storing roses before shipping

  1. Store in warehouse in New York

  2. Ship from Ecuador to New York

  3. Ship from New York to local florists in various USA states
• Supply chain faces challenges with foreign government regulations, weather, strikes, etc. due to global flow
• Inventory


  • Keeping stock-outs from occurring
  • Consequences of stock-out: frustrated customers, loss of business, loss of repeat custom
• Major supply chain issues and challenges in global business

  • Transportation
  • Warehousing and inventory
• The biggest issue in inventory is to keep stock-outs from occurring
• Stock-out happens when the company does not have any stock to satisfy the demand of the consumer
• Transportation challenges


  • Getting the most effective type of transportation for the goods
  • Availability of such transportation service in the country