Slide 1Slide 2The Extended Global Supply ChainWhy firms “go global”A Semi-Globalized WorldWhat is so Different about Global SCM?Twin Challenges for Global Supply ChainsGlobal BrandsCompetitive Advantage through Global StrategyOverview of current state of global businessOverview of Global Logistics and SCM IssuesOffshoringTotal Landed Cost and RiskVariability and UncertaintyGlobal InfrastructureNetwork StructureGlobal Supply Chain Network StrategiesStrategy—Focused FactoriesInventory CentralizationPostponement and LocalizationEnd-to-end Visibility/Event ManagementStrategy—International VisibilityGlobal Planning, Local ImplementationSlide 24Slide 25Business Administration 331Supply Chain ManagementChapter 9Dr. John E. BellAssociate Professor of Supply Chain Management 343 Stokely Management [email protected] are the negative supply chain implications of using less responsive, but lower cost, suppliers from low-labor cost areas?2Discussion QuestionMarkets are not homogenous and coordination requirements are high!Offshore contract manufacturing, outsourced customer service, long lead-times, supply chain disruptions – all symptoms of the extended global supply chain. All requirements of the new paradigm in global trade.The Extended Global Supply Chain3Why firms “go global”•Increase revenue–If a company can successfully expand into foreign markets it can increase its revenue.–When a foreign competitor moves into your market, competing with them in their home market may help level the playing field.•Decrease costs–Making and selling more units typically lowers your cost per unit (economy of scale)–Moving some business functions (e.g. manufacturing) to lower cost regions may lower overall cost4A Semi-Globalized WorldSeveral major trends have led to major changes in companies’ supply chains:–The decline of economic protectionism–An increase in economic integration and free trade (NAFTA, EU, ASEAN, MERCOSUR)–Global competition among global companies for global consumers–Technological advances that ease and lessen cost of communication5What is so Different about Global SCM?To put it simply: It’s difficult to plan and execute.•People are extremely different across nations/markets–CAGE (Cultural, Administrative, Geographical, Economic)•Companies sometimes abandon basic decision making processes and underestimate differences–E.g. Strategy, Cost/Benefit Analysis•Partnerships are necessary but difficult•Complexity is exponentially higher due to differences–Number of competitors, markets, and customers–Distances, languages, time zones, cultures, customs–Fundamental differences in approach to business and life6Twin Challenges for Global Supply ChainsWorld markets are not homogenous – variety is still very much required–How to offer local markets variety they want, while still gaining the advantage of standardized global production.Requirement for exceptional coordination to offset potentially higher costs in global supply chains–How to effectively manage the complex links in a global supply chain from source to end user.–How to compensate for the heightened risk of supply chain disruption inherent in global supply chains.7https://www.youtube.com/watch?v=ZuQ200JAViAConsumers expect a global brand to provide equitable levels of value in all of their marketsGlobal Brands8•Configuration–Where, and in how many nations, each value chain activity is performed•Coordination–How dispersed activities, or activities performed in several different nations, are coordinatedCompetitive Advantage through Global Strategy9Overview of current state of global business•New business paradigm forces globalization•Major reasons companies globalize–Increase revenues through expansion to new markets–Decrease costs through global SCM techniques•Twin challenges in global markets–Heterogeneous markets (consumer preference)–Exceptional coordination required to succeed•Global brands force supply chain to deliver on the promise•Competitive advantage in global SCM is gained through:–Configuration (what, where, when, why)–Coordination (staying on the same page, same goals)10Globalization makes companies focus on logistics and SCM!•Off-shoring•Total Landed Cost and Risk•Variability and Uncertainty•Global Infrastructure•Regional Economic Integration•Network Structure (Centralize/Decentralize)Overview of Global Logistics and SCM Issues11“Offshoring is relocating a function or a process to another country. Offshoring does not require that the control of the offshored functions be contracted to an external vendor.”(European Business Forum 2004)– Production– Call centers– Back office (accounting/legal work)– Engineering design– R&D– Production– Call centers– Back office (accounting/legal work)– Engineering design– R&DOffshoringExamples12Anjo City, Japan• Transmissions are loaded into containers• Container sealed• Transmissions convoy to the Port of NagoyaInland Dray Port of Nagoya• Container moves from Port of Nagoya to Port of SeattleOcean• Containers are unloaded at APL terminalPort of Seattle• Drayed (in - bond) via trucking company to Vancouver, Canada Truck• Containers are transferred to Canadian National Railroad (CN)Vancouver, Canada• Container storage at Port of NagoyaInland Dray • Containers are shuttled in a just-in- time and in-sequence process to the General MotorsplantGM Factory CA CNToronto, Canada• Containers are unloaded at a railhead at Toronto, Canada• Containers are drayed from railhead to GM inventory yardTruckCNRail• Containers are drayed via rail from Vancouver to Toronto, CanadaAnjo City, Japan• Transmissions Mfg • Drayed to Toyota CityToyota City Port of Nagoya• Container moves from Port of Nagoya to Port SeattleOcean• Containers are unloaded at APL terminalPort of SeattlePort of Seattle• Drayed (in - bond) via trucking company to Vancouver, Canada Truck• Containers are transferred to Canadian railroadVancouver, Canada• Containers are shuttled in a just-in- time and in-sequence process to the plantFactory CA Toronto, Canada• Containers are unloaded at a railhead at Toronto, Canada• Containers are drayed from railhead to inventory yardTruckRail• Containers are drayed via rail from Vancouver to Toronto, Canada• Containers loaded• Container storage at Port of Nagoya• Transmissions convoy to the Port of Nagoya• Container
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