Supply Chain Management
- What role does globalization play for a company that is looking to operate internationally? (list, explain, give examples)
Globalization refers to the integration and interaction among people, communities, nations, and companies, a process that is driven by international trade and investments (O’Marah). For companies planning to operate internationally, globalization has the following roles:
- Expanding markets
- Providing access to cheap raw materials
- Facilitating the exchange of technology
Through globalization, companies find new markets to sell their products and increase their profits. Currently, most multinationals have embraced globalization and are present in emerging markets. For example, globalization has enabled most automobile companies to acquire a share of the large Chinese market; General Motors Company is one such business.
Globalization also facilitates worldwide access to cheap raw materials, which make firms to be competitive in domestic and international markets. Through global sourcing, businesses can find their inputs in various parts of the world at the lowest prices. Currently, most American brands get their products from China due to country’s huge clothing manufacturing capabilities (Bain). This tactic has enabled these companies to reduce their manufacturing cost, which has increased their profits.
Besides exchanging goods and services, firms share ideas with their foreign partners. According to Spulber, globalization has enabled businesses to sell trade trademarks, patents, brands, blueprints, and copyrights to foreign companies. The trade in ideas has led to organizations implementing sophisticated technologies that have accelerated their growth and increased their global presence (Eitzen and Zinn 83). For example, a small foreign company can buy a copyright to manufacture products of an established multinational. This policy can make the former to become wealthy and reduce the establishment costs needed by the latter when penetrating a new market.
- What factors must you consider for designing a supply chain domestically? (List, explain, and give examples).
The main concern for any supply manager is ensuring there is a punctual delivery of his/her orders. Consequently, I will consider the following issues when designing a domestic supply chain.
- Type of inventory
- Risks in the supply chain
- Relationship with the supplier
The type of products that I will be ordering will be the primary determinant of the design of the supply chain. When trading in perishable products, I will use a short supply chain so that my customers can receive my products when they are still fresh. For example, if I am dealing with horticulture, I will purchase these items directly from farmers. However, if the items are nonperishable, I will use a long supply chain because this method is usually cheap (Banker). In this case, I will purchase items from distributors and directly deliver them to my customers. This supply chain method will enable me to benefit from the just-in-time purchasing method.
Risks in the supply chain also determine the method to be used for procuring items. For example, if there is a high rate of crime, I will use the safest supply chain method even if it is long and expensive. However, if the business environment is safe, I will use the most convenient means. Further, I will consider my working relationship with suppliers. I will ensure that my supply chain has suppliers who are reliable and convenient. For this reason, my supply chain will comprise of people that are friendly to me, those who can give the company a long credit period, and those who are efficient in their work.
- What factors must you consider for designing a supply chain internationally? (List, explain, give examples)
When determining a supply chain internationally, I will have more concern on whether the suppliers can deliver my products. In this regard, I will consider the factors:
- Reputation of the supplier
- Distribution channel
- Location of the supplier
Due to the distance between where I operate and where my suppliers live, I will be unable to monitor the latter (Banker). Consequently, I will only use suppliers who have a positive reputation of delivering products within the agreed time. Therefore, I will only use reputable and established multinational companies such as DHL because of their punctual delivery of parcels (Bain). Also, I will use a distribution chain channel that will ensure my products reach their destinations when they are in the right condition. If I am dealing with perishable items, I will only use suppliers who have airplanes. If the items are nonperishable, I will use the most convenient means. Finally, I will only use a supplier that has officers in my foreign market. For example, if I am supplying my items to India, I will source suppliers who have distributors and warehouses in the country. When sourcing an international supplier, it is important to ascertain that the available supply chain system is effective enough to deliver orders to the intended customers.
- When optimizing a supply chain, which is better to focus on, cost or quality? (Explain, give examples)
The most important factor to consider when optimizing a supply chain is quality. The quality of the services determines how the product’s delivery. In most cases, a cheap service provider ignores many safety measures that guarantee proper delivery of the order (Eitzen and Zinn 92). For example, a low-cost supply chain may assume the need to use a professional courier service, which may result in the loss or damage of a parcel. Therefore, a company should focus on the quality of services than their costs.
5.) You are an international consultant working for a start-up company that is looking to expand into the US. They export sporting equipment and want to know what factors you look for to determine which countries to operate in. Choose two countries and explain your reasons for picking them.
The main factors that a company considers when determining where to expand to are the size of the market and the availability to access raw materials needed to manufacture the finished products (Spulber). My company will expand to India and China because these countries have a huge market for its sports equipment. The two countries have also been enjoying a high economic growth rate, which has increased the purchasing power of the local population. Moreover, the high number of manufacturing companies in India and China provide them with a lot of affordable raw materials which the company will use for making sports equipment. Therefore, the expansion to these countries will enable the business to make huge profits due to their huge market and the low costs of manufacturing sports equipment.
Bain, Marc. “US Fashion Companies are Starting to Look Beyond China for Sourcing Apparel.” Quartz, qz.com/431747/us-fashion-companies-are-starting-to-look-beyond-china-for-sourcing-apparel/. Accessed 15 Sept. 2017.
Banker, Steve. “The Supply Chain Implications of the Houston Flood.” Forbes, forbes.com/sites/stevebanker/2017/08/29/the-supply-chain-implications-of-the-houston-flood/#6128f6192c22. Accessed 15 Sept. 2017.
Eitzen, Stanley and Maxine, Zinn. Globalization: The Transformation of Social Worlds. 3rd ed., Wadsworth Publishing, 2011.
O’Marah, Kevin. “Ten Timeless Truths of Supply Chain.” Forbes, www.forbes.com/sites/kevinomarah/2017/08/10/ten-timeless-truths-of-supply-chain/#6285620e7bab. Accessed 15 Sept. 2017. https://insight.kellogg.northwestern.edu/article/the_global_idea_market
Spulber, Daniel. “The Global “Idea” Market.” KelloggInsight, insight.kellogg.northwestern.edu/article/the_global_idea_market. Accessed 15 Sept. 2017.