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!

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