Coyle chapter 3 powerpoint slides

Chapter 3 Global Dimensions of Supply ChainsLearning Objectives  After reading this chapter, you should be able to do the following:  Describe the scope of a global company’s supply ch

Chapter 3 Global Dimensions of Supply Chains

Learning Objectives

 After reading this chapter, you should be able to do the following:

 Describe the scope of a global company’s supply chain network and understand what questions are appropriate for the network to function on a competitive basis.

 Understand the three major phases of globalization.

 Appreciate the complexity and magnitude of the operations of some successful global companies and why global expansion is important to their growth.

 Explain how technology and service specialists can help companies, especially small- to medium-size firms, penetrate the global marketplace.

Learning Objectives (cont.)

 After reading this chapter, you should be able to do the following:

 Appreciate the importance and magnitude of the trading partner countries of the United States.

 Understand the nature of global markets and competitive strategy.

 Explain the rationale for global security measures and the balance necessary to ensure that such security measures do not impede trade.

 Discuss global transportation options and strategic intermediaries.

Three eras of globalization

 The first era was initially driven by countries (1400– 1800) seeking materials and goods not available in their own land

 The second era of globalization (1800–2000) was

driven by companies seeking goods and materials, labor, economies of scale, and markets

 In the third era of globalization, said to have begun around the year 2000, the significant characteristic is that it is being powered by individuals and smaller organizations

Supply Chains in a Global Economy

 Economies and companies could improve their “wealth” by allowing

specialization of tasks

 The advantage is true as long as you can sell the increased volume that

is produced It is an important role of logistics to help extend the market area of countries or companies through improved efficiency to lower the

“landed cost” in new market areas

The Scope and Magnitude of Global Business

 The ability to connect to individuals and companies

across the globe and to connect computer information systems on a 24/7 basis has provided unparalleled

opportunity for collaboration horizontally and vertically in supply chains

 The trade volume with China was 18.2 percent of the

total of the top 10 for 2006, and it increased its trade

volume by 20 percent from 2005 to 2006 In 2000, China was number 4 following Canada, Mexico, and Japan

Global Markets and Strategy

 The global business environment has changed significantly and become much more conducive to business activity between and among different countries

 Success in the global market place requires developing a cohesive strategy, including product development, technology, marketing, manufacturing, and supply chains

 Global markets and strategy have four important characteristics:

 standardization reduces complexity

 global competition reduces the product life cycle

 traditional organizational structures and business models frequently change

 globalization introduces more volatility

Supply Chain Security: A Balancing Act

 Given the importance of global trade to the United States, a delicate balance exists between security and the efficient flow of global

North American Free Trade Agreement

 NAFTA establishes free trade between these three countries and

provides the way the agreement is to be interpreted

 Even though the U.S./Canada Free Trade Agreement has been in effect for some time, certain trade barriers still remain

 The supply chain constraints will eventually be eliminated as NAFTA experience grows

A Typical Truck Shipment Crossing into Mexico

Global Transportation Options

Global Transportation Options (cont.)

Motor

 Use motor transport when shipping goods to between the United States and Mexico or Canada

 It is very common in Europe

 Motor also plays a large part in intermodal shipments

Strategic Channel Intermediaries

Foreign Freight Forwarders

 Supplies expertise to international shippers

 Consolidate small shipments into more economical sizes

 Derives income from fees for service

Non-Vessel-Operating Common Carriers

 Consolidates and dispenses containers at inland points

 Uses the shipping expertise that NVOCCs possess

 Ocean carrier gains from the increased market area

Strategic Channel Intermediaries (cont.)

Export Management Companies

 EMCs act as agents for domestic firms in the international arena

 Obtain orders, selecting appropriate markets, distribution channels, and promotional campaigns

Export Trading Companies

 ETC exports goods and services to overseas buyers and handles most

of the export arrangement

 ETC allows small- to medium-size firms to engage in foreign trade

Strategic Channel Intermediaries (cont.)

Customs House Brokers

 Oversee the movement of goods through customs and ensure that the documentation accompanying a shipment is complete and accurate for entry into the country

 Operate under power of attorney from the shipper to pay all import duties due on the shipment

 The importer is ultimately liable for any unpaid duties

Storage Facilities and Packaging

 Transit sheds provide temporary storage while the goods await the next portion of the journey

 Carrier provided hold-on-dock storage free of charge until the vessel’s next departure date

 Public warehouses are available for extended storage periods

 Bonded warehouses operate under customs agency’s supervision and are used to store, repack, sort, or clean imported merchandise entered for warehousing without paying import duties while the goods are in storage

 Companies competing in global supply chains need to address

some important questions for their global networks to ensure their efficiency and effectiveness.

 There have been three phases of globalization: the first was driven

by countries, the second by large companies, and the third by

individuals and small organizations.

 Successful global companies have transformed their supply chains

on an ongoing basis to enable them to deliver low cost and high value to the ultimate customer.

 The scope and magnitude of trade flows between the United States and other countries have grown considerably in the last several

decades One interesting development has been the growth in

importance of trade with China and several other Asian countries.

Summary (cont.)

 Supply chain security has taken on increased importance since September 11,

2001 Companies individually, jointly, and in cooperation with the various levels

of government need to be actively involved The federal government, in

particular, has expanded the scope of its regulations and policies for global

by the North American Free Trade Agreement ratified by Congress in 1994

While the treaty had lofty goals, it still is experiencing problems with full

implementation of its objectives Nevertheless, it has fostered trade in North

America.

 Global supply chains have a number of transportation and related service