Managing the Global Pipeline
Course: Strategic Supply Chain and Logistics Management
The Globalization of Markets
Advances in Technology Driving the world to a converging
commonality.
Proletarianization of:
--Communication, transport, and travel.
Global corporations which operate with resolute consistency at low
relative cost using the entire world as a single market.
Trade-Offs in Global Logistics
Important to recognize trade-offs.
Key to recognizing the service needs of the market
Globalization in Supply Chains
• Liberalization effect of WTO, etc.
- No longer have to set up in target country, instead can concentrate on developing
economies of scale.
- Emergence of new manufacturing economies has resulted in increased competition and
oversupply.
- Companies will have to find new ways of remaining competitive by lowering costs in other
ways.
• Supply chain efficiency will become even more important.
The Myth of Globalization
CO N T RA E V I D E N C E O F T H E MY T H O F
H O MO G E N I ZAT I O N : E C O N O MI E S O F S C A L E :
Food firms adapt to national Technical developments
characteristics. lowering scale requirements.
Growth of intra-country segmentation. Cost of production is often only a
Growing demand for differentiated small part of total costs.
products.
Global Manufacture & Supply
• Focused factories:
Economies of scale, one factory for the world?
May overlook crucial logistics trade-offs: -
Transport costs & delivery times.
Requirement for local packaging.
• Centralized Inventories:
Centralizing Inventory = less total inventory.
May overlook the benefit of local to the customer.
Postponement & Localization
• Localization: Even in relatively homogeneous markets like Europe there can
be a considerable variety of local tastes. This may be better catered for in a
local assembly operation.
• Postponement: Design products using simple common platforms, using
common components. Assembly does not take place until required.
Customer Service Explosion
• Increasing perception that there is little technical difference between products.
• Service crucial source of differentiation and competitive advantage.
Requirements: Closely integrated marketing, manufacturing, and supply
strategies.
• Logistics of service delivery crucial!
Strategic Lead Time Management
• Product and technology life cycles getting shorter.
• Requirements for success:
- Ability to innovate.
- Ability to bring new products to market.
• Logistical Lead time becomes crucial.
- Time from sourcing and procurement through to recovery of investment by
selling
Organizational Integration
• Recognition of the importance of taking a systems view of business.
- Difficulty in achieving integration in functionally fixated organizations.
• Move towards a requirement for generalists
- Integration of all the different aspects of the organization.
- Philosophy of integration beyond the confines of the organization.
• Supply Chain Management.
- Requires that all the players in the value system work together.
Throughput Management
• The process of linking manufacturing and procurement to the needs of the
market.
• Requirement for reducing the length of the supply chain pipeline!
• Target: Lower cost, higher quality, greater variety, more flexibility, faster
response times.
Globalization
• Move to commodity markets and component specialization:
-Firms shop freely amongst the nations of the world.
Singer Sewing machines: Shells from the US, motors from Brazil, drive shafts from Italy,
machines assembled in Taiwan
-Increasing need for local customization
Washing machines: Germans want fast spin & Italians slow, British front loaders, French
top loaders, etc.
-Challenge how to achieve the benefit of standardization at the same time.
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Thank You!
Tuesday, February 2, 20XX Sample Footer Text 13
