SC in a global context Flashcards
- How “global” is traditionally treated in the SCM domain?
• What is traditionally implied by the term “global” in SCM?
• What are the different functional orientations towards global supply chain management?
To answer this question I will like to refer to the text we had in class by Schonherr, 2009:
The aim of the paper:
• Was to provide a comprehensive and structured review of research within logitstics and SCM by identifying overriding themes.
• There is different ways to interpret “global” SCM and SCM is wide theme including end-to-end activities from raw material supplier to end customer.
• Often it is referred to as movements/flows of goods and services, information and capital.
• The important aspect of global SCM is that activities across the SC is happening cross borders
o The international/global aspect is widely discussed in the SCM literature, which is evident from review made of existing literature with global logistics and SCM
• While some slight differences in emphases existed over the years, no overall predominant topic or pattern were detected
• Either because no new topics (mature field) or due to the risk associated with exploring new topics or methodologies
• But there were some consistent themes investigated over the years (2000-2008)
• Opportunities and challenges in global L&SCM
• The description of L&SCM practices in certain countries or regions of the world
o Consistent frequent coverage over the years was observed especially in China, India, Taiwan, UK, US, Australia and Europe
• Third-party logistics (3PL’s)
• The potential of information technology (IT) for advancing global L&SCM
o Schonherr studied > 700 papers, identified 11 themes, which were grounded if 5 broader topics:
• Enablers:
• IT
• Supplier-buyer relationships and its impact and advantages
• Internal capabilities
• HR
Skills/competencies/practices
• External pressure
• Green and reverse SC
• Competitiveness
• Logistics
• Design and infrastructure
• 3PLs
• Environment
• Reforms and political developments
• Risk and uncertainty
• SCs within different industries
- Is the SCM discipline’s understanding of the concept correct/complete?
• Is the Global/Local distinction needed as an “add-on” to SCM?
• What is the perspective employed in this course?
• Whybark, 1997:
o Yes, it is need this is course is important, and thus this is the aim of Whybark’s paper.
• Of high interest specially within US
o He ask the question why US managers meet more challenges when managing plants abroad
• Compared to Europe their firms can grow rapidly to a good size by staying domestically, not the same in Europe where the countries are smaller. Hence, US managers do not get exposed to business travels outside the country
• Thus, proximity of European countries
o Real international differences in management activities that must be taken into account when operating globally
• E.g. some centrally planned economies tend to create an environment in which companies are separated from the customers
• Thus, there are some barriers to international operation management i.e. lack of international awareness and cultural concern
o He argued that a few new variables were introduced when going abroad but the weight of different variables changed significantly:
• Coordination: more complexity due to multiple sites, not necessarily country specific
• Legal requirements (including unions, regulations, and governance issues): also different from state to state
• Culture: also from state to state
• Labour climate and wages
o Some Variables That Might Need to be Added
• National sovereignty issues: potential for nationalization and/or issues of profit repatriation.
• Foreign exchange: where to source materials and in evaluating facilities.
• Language differences, but this is also an issue in some domestic plants
o Focus of the variables that change when going abroad can reduce the managerial cost
• Even though the majority a present both domestically and internationally
o By treating international operation management as a different field than operation management one may expect the managers to focus their attention when it gets easier to solve one may expect that international concerns diminish
What is global supply chain management?
• How can you define Global Supply Chain Management?
• What basic types of SCM problems can be solved under the global supply chain management umbrella? E.g. logistics and SCM applications in a global context
To answer this question I will like to refer to the text we had in class by Schonherr, 2009:
The aim of the paper:
• Was to provide a comprehensive and structured review of research within logitstics and SCM by identifying overriding themes.
• There is different ways to interpret “global” SCM and SCM is wide theme including end-to-end activities from raw material supplier to end customer.
• Often it is referred to as movements/flows of goods and services, information and capital.
• The important aspect of global SCM is that activities across the SC is happening cross borders
o The international/global aspect is widely discussed in the SCM literature, which is evident from review made of existing literature with global logistics and SCM
• While some slight differences in emphases existed over the years, no overall predominant topic or pattern were detected
• Either because no new topics (mature field) or due to the risk associated with exploring new topics or methodologies
• But there were some consistent themes investigated over the years (2000-2008)
• Opportunities and challenges in global L&SCM
• The description of L&SCM practices in certain countries or regions of the world
o Consistent frequent coverage over the years was observed especially in China, India, Taiwan, UK, US, Australia and Europe
• Third-party logistics (3PL’s)
• The potential of information technology (IT) for advancing global L&SCM
o Schonherr studied > 700 papers, identified 11 themes, which were grounded if 5 broader topics:
• Enablers:
• IT
• Supplier-buyer relationships and its impact and advantages
• Internal capabilities
• HR
Skills/competencies/practices
• External pressure
• Green and reverse SC
• Competitiveness
• Logistics
• Design and infrastructure
• 3PLs
• Environment
• Reforms and political developments
• Risk and uncertainty
• SCs within different industries
Why have firms traditionally gone abroad from an OM/SCM viewpoint?
To answer this question I will like to refer to the text we had in class by Ferdows, 1997:
• Three inaccurate premises:
o 1. Manufacturing investment is declining in developed countries and moving to developing countries
• Ferdows argue that even if there is an increase of flow into developing markets, it happens in smaller base
• FDI has grown both in developing and highly industrialised countries in tact in 1994 10 of these developed countries received half of the world’s FDI made that year
o 2. Why companies invest abroad: Most people believe that it is due to that fact that firms one to take advantage of low labour cost in foreign countries. Hence, they see international investments as substitutes rather than complements → something you cannot find at home
• However, Ferdows argue that this is wrong and that firms due this do based on other reasons such as access to other markets
o 3. Manufacturing does not have a bright future in industrial countries
• Ferdows argue that firms of industrialised or socalled developed coutnries may thrive if the figure out how to add more value to the customers or by producing more technology advanced products and processes
• The industrialised world will not follow the fate of agriculture
If the firms can improve productivity and add more value then this will not happen e.g. by customization, increased services or deploy new technologies)
• Well we will see a decline in low skilled jobs within manufacturing but these be substituted with more qualified works who will have to design new processes and products, dealing with suppliers and customers and distribution channels. So we see a shift from the typically assemble line work to more white collar work
• Between 25 to 40% of all world trade is estimated to be intra-firm
o Clearly these companies are organizing or reorganizing their cross-border production activities in an efficiency-oriented, integrated fashion, capitalizing on their assets around the globe. They are locating the various parts of the value-added chain where they contribute most to the company’s overall success.
o Global spread of production:
• Knowledge and skills
• Market access
• Government policies
• Risk (diversification)
• Competition
• Production and logistics costs
• → He concludes that leveraging on the global network is a powerful source of creating a competitive advantage
What is the current “level” of globalisation?
To answer this question I will like to refer to the text we had in class by Ferdows, 1997:
• Three inaccurate premises:
o 1. Manufacturing investment is declining in developed countries and moving to developing countries
• Ferdows argue that even if there is an increase of flow into developing markets, it happens in smaller base
• FDI has grown both in developing and highly industrialised countries in tact in 1994 10 of these developed countries received half of the world’s FDI made that year
o 2. Why companies invest abroad: Most people believe that it is due to that fact that firms one to take advantage of low labour cost in foreign countries. Hence, they see international investments as substitutes rather than complements → something you cannot find at home
• However, Ferdows argue that this is wrong and that firms due this do based on other reasons such as access to other markets
o 3. Manufacturing does not have a bright future in industrial countries
• Ferdows argue that firms of industrialised or socalled developed coutnries may thrive if the figure out how to add more value to the customers or by producing more technology advanced products and processes
• The industrialised world will not follow the fate of agriculture
If the firms can improve productivity and add more value then this will not happen e.g. by customization, increased services or deploy new technologies)
• Well we will see a decline in low skilled jobs within manufacturing but these be substituted with more qualified works who will have to design new processes and products, dealing with suppliers and customers and distribution channels. So we see a shift from the typically assemble line work to more white collar work
• Between 25 to 40% of all world trade is estimated to be intra-firm
o Clearly these companies are organizing or reorganizing their cross-border production activities in an efficiency-oriented, integrated fashion, capitalizing on their assets around the globe. They are locating the various parts of the value-added chain where they contribute most to the company’s overall success.
o Global spread of production:
• Knowledge and skills
• Market access
• Government policies
• Risk (diversification)
• Competition
• Production and logistics costs
• → He concludes that leveraging on the global network is a powerful source of creating a competitive advantage
