426 W1: Case Discussion
CHAPTER 2
Global Dimensions of Supply Chains
Supply Chain Management: A Logistics Perspective (10e)
Coyle, Langley, Novack, and Gibson
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Discussion Outline
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Rationale for global trade and commerce
Contributing factors for global commerce and supply chain flows
Supply chains in global economy
Micro perspective of global supply chains
Supply chain security and role of ports
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Rationale for Global Trade
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Absolute advantage
Lower cost and/or access to items not available locally
Comparative advantage
Differences in the cost of producing products in different countries
Contributing Factors for Global Flows and Trade
Contributing Factors for Global Flows and Trade
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Population size and distribution
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Urbanization
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Land and resources
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Technology and information
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Globalized economy
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Population = Labor
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| Rank | Country | 2000 | 2010 | 2015 | 2050 |
| Population | Population | Population | Expected Pop. | ||
| 1 | China | 1,268,853,362 | 1,330,141,295 | 1,361,512,535 | 1,303,723,332 |
| 2 | India | 1,004,124,224 | 1,173,108,018 | 1,251,695,584 | 1,656,553,632 |
| 3 | United States | 282,338,631 | 310,232,863 | 321,362,789 | 439,010,253 |
| 4 | Indonesia | 213,829,469 | 242,968,342 | 255,993,674 | 313,020,847 |
| 5 | Brazil | 176,319,621 | 201,103,330 | 204,259,812 | 260,692,493 |
| 6 | Pakistan | 146,404,914 | 184,404,791 | 199,085,847 | 276,428,758 |
| 7 | Nigeria | 123,178,818 | 152,217,341 | 181,562,056 | 264,262,405 |
| 8 | Bangladesh | 130,406,594 | 156,118,464 | 168,957,745 | 233,587,279 |
| 9 | Russia | 146,709,971 | 139,390,205 | 142,423,773 | 109,187,353 |
| 10 | Japan | 126,729,223 | 126,804,433 | 126,919,659 | 93,673,826 |
| TOP TEN Countries | 3,618,894,827 | 4,016,489,082 | 4,213,773,474 | 4,950,140,178 | |
| Rest of the World | 2,466,012,769 | 2,829,120,878 | 3,050,850,319 | 4,306,202,522 | |
| TOTAL World Population | 6,084,907,596 | 6,845,609,960 | 7,264,623,793 | 9,256,342,700 |
Source: Table 2.1
Population = Labor (continued)
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Source: Figure 2.1
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Urbanization
The rise of “megacities” – By 2030, 60% of the world’s population will live in urban areas (vs. 47% in 2000)
Change most profound in the less and least developed countries of the world – Urban sustainability challenges
Image courtesy of Gijsbert Koren
Land and Resources
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Critical role of technology in mitigating resource scarcity
Image courtesy (left to right) of NRCS (USDA), U.S. Chamber, Agricultural Law blog, and Glacial Energy
Crop & forest Land
Water
Food
Energy
Technology and Information
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Technology as an “internal” change agent
Enhanced efficiency, effectiveness, and ability of an organization to compete in the global marketplace
Technology has two important dimensions.
Technology as an “external” change agent
New forms of competition or new business models (e.g. omnichannel distribution, global outsourcing)
Globalized Economy Export-Trade Flows of Merchandise (2014)
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Source: Figure 2.2
Globalized Economy Import-Trade Flows of Merchandise (2014)
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Source: Figure 2.3
Globalized Economy U.S. Total Exports and Top Export Partners (2014)
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Source: Table 2.4
| Rank | Export Partner | Total Merchandise (Thousands USD) |
| World | 1,620,531,899,958 | |
| 1 | Canada | 312,420,805,048 |
| 2 | Mexico | 240,248,662,812 |
| 3 | China | 123,675,667,401 |
| 4 | Japan | 66,827,397,507 |
| 5 | United Kingdom | 53,823,429,587 |
| 6 | Germany | 49,363,335,254 |
| 7 | South Korea | 44,471,327,831 |
| 8 | Netherlands | 43,075,167,531 |
| 9 | Brazil | 42,429,393,191 |
| 10 | Hong Kong | 40,857,860,576 |
| 11 | Belgium | 34,789,502,310 |
| 12 | France | 31,300,777,142 |
| Rank | Export Partner | Total Merchandise (Thousands USD) |
| 13 | Singapore | 30,237,316,176 |
| 14 | Taiwan | 26,670,195,718 |
| 15 | Australia | 26,581,669,437 |
| 16 | Switzerland | 22,175,920,059 |
| 17 | United Arab Emirates | 22,069,272,402 |
| 18 | India | 21,607,502,707 |
| 19 | Colombia | 20,106,608,178 |
| 20 | Saudi Arabia | 18,704,915,502 |
| 21 | Italy | 16,968,200,542 |
| 22 | Chile | 16,514,555,095 |
| 23 | Israel | 15,083,044,959 |
| 24 | Malaysia | 13,068,413,088 |
| 25 | Thailand | 11,809,766,363 |
Globalized Economy U.S. Total Imports and Top Import Partners (2014)
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Source: Table 2.5
| Rank | Import Partner | Total Merchandise (Thousands USD) |
| World | 2,347,685,228,534 | |
| 1 | China | 466,754,455,239 |
| 2 | Canada | 347,797,986,092 |
| 3 | Mexico | 294,074,053,415 |
| 4 | Japan | 134,003,716,530 |
| 5 | Germany | 123,259,613,666 |
| 6 | South Korea | 69,518,424,385 |
| 7 | United Kingdom | 54,392,304,698 |
| 8 | Saudi Arabia | 47,040,791,358 |
| 9 | France | 46,873,955,079 |
| 10 | India | 45,244,019,937 |
| 11 | Italy | 42,115,177,018 |
| 12 | Taiwan | 40,581,485,120 |
| Rank | Import Partner | Total Merchandise (Thousands USD) |
| 13 | Ireland | 33,955,621,192 |
| 14 | Switzerland | 31,190,602,048 |
| 15 | Viet Nam | 30,588,511,328 |
| 16 | Brazil | 30,536,551,551 |
| 17 | Malaysia | 30,420,378,588 |
| 18 | Venezuela | 30,219,171,644 |
| 19 | Thailand | 27,122,648,583 |
| 20 | Russian Federation | 23,658,083,164 |
| 21 | Israel | 22,962,203,403 |
| 22 | Belgium | 20,885,204,358 |
| 23 | Netherlands | 20,818,228,944 |
| 24 | Indonesia | 19,360,892,962 |
| 25 | Colombia | 18,299,722,680 |
Supply Chain in Global Economy
Supply Chain in Global Economy
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Global trade growth has been fueled by free trade agreements (FTAs) that lift most tariff, quota, and fee/tax limitations on trade.
The best supply chains compete very successfully on a national, regional, and global basis.
Bilateral
FTAs
Regional
Bi-lateral agreements are between two nations
US currently in 20 bi-lateral FTAs
Regional trade agreements involve 3 or more nations
US currently involved in:
Free Trade Area of Americas
Middle East Free Trade Initiatives
Enterprise for ASEAN Initiatives
North American Free Trade Agreement (NAFTA)
Supply Chain in Global Economy NAFTA
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NAFTA establishes free trade among Canada, the United States, and Mexico.
NAFTA’s goals involve making structural changes to operate a borderless logistics network in North America.
Image courtesy of PanCanadian Immigration Law Group
Micro Perspective Of Global Supply Chains
Global Markets and Strategy
Global Markets and Strategy
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Success in the global market-place requires development of a cohesive set of strategies including product development, technology, marketing, manufacturing, and supply chains.
Supply chain perspective
Customer service perspective
Global Markets and Strategy Supply Chain Perspective
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Strategically sourcing materials and components worldwide
Selecting global locations for key supply depots and DCs
Evaluating transportation alternatives and channel intermediaries
Understanding governmental influences on global SC flows
Examining opportunities for collaboration with 3PLs or 4PLs
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Global Markets and Strategy Customer Service Perspective
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Standardization to reduce complexity must maintain some customization.
Global competition often reduces the product life cycle.
Organizational structures and business models change with more outsourcing.
Globalization introduces more volatility and complexity.
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Supply Chain Security and Role of Ports
Supply Chain Security A Balancing Act
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Security
Efficient Flows
Security Measures
The Trade Act of 2002
The U.S. Maritime Transportation Security Act of 2002
The Customs Trade Partnership Against Terrorism (C-TPAT)
Global Trade Flows
Electronic filing of cargo information
Standards for container seals and locks, cargo tracking, identification, and screening systems for ocean containers
A “green lane”
Role of Ports Global Supply Chain and Security
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Over 90 percent of U.S. international trade passes through ports.
Ports are bases of operation to deploy troops and equipment.
Ports are a critical part of global supply chains and a major focus for global security.
Summary
Trade flows between the United States and other countries have grown considerably, resulting in global supply chains becoming increasingly important.
The increased complexity and competiveness of a global economy have resulted in shorter product life cycles, new forms of competition, and new business models.
Success in the global marketplace requires ongoing development of a cohesive set of strategies that has implications to both supply chains and customer services.
Companies individually, jointly, and in cooperation with the government are actively involved in supply chain security.
With increasing regional economic integration, NAFTA has helped to foster trade in North America.