Global Supply Chains & Manufacturing - Global Supply Chain Flashcards
what is the slowdown in manufacturing in China due to
acceleration of near shoring
companies are always reflecting on how effective their supply chain is and how it can be improved
example of typically technology chain
American designers
Indian Software Developers
East Asian manufacturers
European System integrators and support
what are the two core sets of knowledge assets on which global supply chains run
Technology
Management/Organisation
how is the firms supply chain a resource
shouldn’t be easily substituted
valuable
rare
difficult to imitate
all of these will allow for a competitive advantage
how to make a supply chain valuable (i.e. efficient)
increasingly involve whole system activities from sourcing to customer support
how to make a supply chain difficult to imitate
complex materials, information and people flows
how to make a supply chain rare (i.e. differentiated from competitors)
integration of global and local competitive advantages
i.e. firm specific and location specific advantage
how to make a supply chain difficult to substitute
delivery levels of responsiveness that are critical to customer needs
Example of changes in JCB global suuply chain
1979 - 96% of components from UK
2010 - 36% of components from UK (rest in India and rest of Europe)
what are the types of risks in supply chains
- macroenvironmental risks
- extended value chain risks
- operational risks
- 3rd party risks
- functional risks
What are macroenvironmental risks
Give some examples
have potential effects across the entire supply chain
economic
ESG
Geopolitical
Natural disasters
Regulatory
Security
what are extended value chain risks
(3rd parties)
originate in upstream and downstream supply chain partners
what are operational risks
interal process risks
eg risks in plans, in returns
what are functional risks
give examples
risks in enabling functions that support the supply chain
eg. HR (key individuals)
Finance (investments fall through)
IT (system collapse)
Legal issues
what risks are increasing
geopolitical risk
regulatory compliance
what risks are consistently high
supplier volatility
demand volatility
economic climate
why is lack of visibility no longer a big risk
transparency increased over last few years
how do overseas plants pose risk
physical, cultural and linguistic gaps
hard to physically check faults
excessive efforts and costs are needed to make up for any potential reputational damage
how do quality of parts from overseas pose risk
there is a financial incentive to cut quality
quality is difficult to achieve due to spatial distance
how can technology leaks at overseas factories cause risk
short term -> loss in business to competitors in respective countries
long term -> knowledge and IP spillover
further the distance, the higher the likelihood of this
how can dependence pose risk
Manufacturers who depend on one supplier have a weak negotiating power
eg Foxxconn was in a weaker position then it’s biggest customer - Apple
But have since diversified and used their knowledge to move into other markets
how can frictions with local governments pose risk
the public face criticism from consumers
if the company’s plans are negligent about environmental standards and labour conditions, they could clash with local government
consumer drive regulation change
how can companies prepare for risk
- QUALITY CONTROL
- SWIFTLY resolve the situation at an early stage when problems occur
- strike the right balance between global strategy and local strategy
