discussion responses- 2 hours

5069 Discussion 8- What are some of the pros and cons associated with global or international scm?

Dan

Supply chain management and globalization are two commonly highlighted terms in this course.  In many ways, domestic supply chain management is not any different than global supply chain management, except for the larger area of operations.  The biggest pros of going global are access to new markets and the potential for greater growth and revenue.  Other pros of going global are access to technology, labor forces, better access to procurement sources, lower production costs, and the list goes on.  The cons with going global are larger travel distances, monitoring logistical processes, different business practices, cultural differences, language differences, higher transportation costs, and customs documentation requirements (Coyle, Langley, Novack, & Gibson, 2017, p. 9).  Globalization has also been a highly sensitive political debate among Americans.  Arguments range from jobs leaving the U.S. to greater global brand recognition.  Some would argue jobs are lost when firms offshore production, while others would argue that with offshoring comes lower prices and greater firm presence in new markets.  Globalization is a very debatable subject, but I tend to believe that in capitalistic markets its necessary and will continue well into the future. 

So why do firms decide to globalize their supply chains?  Simchi-Levi, Kaminsky, and Simchi-Levi (2008) identify four reasons for globalization that are known as global market forces, technological forces, global cost forces, and political and economic forces (p. 313).  Global market forces are the pressures firms face when foreign competitors sell in their domestic market, plus the opportunities they gain by selling in their competitor’s market.  Technological forces are the pressures firms face with going abroad to gain new access to technologies.  Global cost forces are the profit driven pressures firms face when deciding where to source supply and production.  Lastly, political and economic forces are the pressures firms face with the politics of moving abroad and the economic reasons for moving abroad.  I thought it would be important to list these four reasons for globalization as they establish a common groundwork for firms deciding to go global. 

Coyle, J. J., Langley, J. C., Novack, R. A., & Gibson, B. J. (2017). Supply Chain Management:  A Logistics Perspective (10th ed.). Boston, MA: Cengage Learning.

Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and managing the supply chain: concepts, strategies, and case studies (3rd ed). Boston: McGraw-Hill/Irwin.

Daniel

Globalization is a term used to describe the integration of the world’s markets and the international partnerships that is has created. According to the Merriam Webster definition of the word, Globalization can be defined as “the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets”.

Some of the pros of the international supply chain are the cheaper labor markets, acquisition of scarce raw materials, and the international partnerships that strengthen not only the market in America but globally. The cheaper labor markets that are frequently used in China and other countries tend to be a topic of discussion due to the humanitarian concerns of the working conditions. Although these cheap labor markets help significantly drop the price of certain products in America, we should not be doing that at the expense of other people’s lives. One of the biggest pros about these international partnerships is that it gives us access to a variety of natural resources that may be scarce in America.

Although international supply chain has quite a few pros, there are some downfalls to the situation. Lead times can be dramatically lowered due to the immense distance between countries and the reliability of the logistics chain is lowered due natural disasters and international terrorism. We see this kind of difficult situation all too often on the news whether it be Somali pirates taking over a cargo ship or hurricanes ripping through the Atlantic coast.

Altogether, I think that globalization is beneficial to the overall supply chain in America. The auto industry is indicative of this situation due to the success of many European car brands and the fact that they have moved some of their production facilities to America: “In contrast near about 70% of the top supply chains have reported that because of globalization the overall performance of the companies has been improved. In addition to it now they are trying to make important factors such as delivery reliability and quality issues under their control and they expect that they can completely get hold on these issues in years to come”.

References:

2017. Merriam Webster Dictionary. Retrieved from https://www.merriam-webster.com/dictionary/globalization

Chandak, Sumit. Chandak, Amit. Sharma, Advait. 2014. Globalization of a Supply Chain Management for an Automotive Industry-Future Perspective. Retrieved from http://ripublication.com/iraer-spl/iraerv4n2spl_11.pdf

 

Stephen

DQ# 1: There are two types of demand.  What are they, and how do they influence the supply chain?

     According to John Coyle there are two types of demand: independent demand and dependent demand (Coyle, 2014). Independent demand is the demand for a finished product. This type of demand is determined by the customer. For example, a skateboard manufacture would forecast the demand for their skateboards. They would not forecast the demand for the wheels to the skateboard, because the wheels already come with the skateboard. Dependent demand is the demand that is generated for the pieces and parts to make up the final product. This type of demand is generated by the original manufacturer of the final product. Using our skateboard analogy, the demand for the number of wheels is directly dependent on the number skateboards that are forecasted. 

     All types of demand are subject to various fluctuations. John Coyle discusses four types of demand fluctuation and they are: random variation, trend variation, seasonal patterns, and normal business cycles (Coyle, 2014). Random variation is a demand fluctuation that could not be forecasted and is caused by an unexpected an external event. A great example would be the surge in demand for food, water, and basic commodities just prior to a major hurricane. Trend variation is caused by products that have a useful and popular life, and then become obsolete as they are replaced by the next best thing. Eight track tapes, cassette tapes, records, and VHS tapes are excellent examples of this type of variation. Seasonal patterns cause repetitive demand variation the follows a set and predictable pattern. Halloween candy, Easter eggs, and Valentines Day cards are excellent examples of this type of variation. Finally, normal business cycles can cause demand variation because the nation's economy is always either: growing, stagnant, or declining. This business cycle influences how much money customers are willing to spend in the marketplace which in turn affects demand for products. 

DQ# 2: There are at least three forecasting methods. Name them and choose one to discuss in more detail, including advantages and disadvantages.

     The three forecasting methods are: using a simple moving average, using a weighted moving average, and exponential smoothing (Coyle, 2014). The forecast model I want to highlight is the simple moving average. The simple moving average simply predicts or forecasts the future by looking at historical trends. The most common method is to forecast one month of sales by using the previous three months of actual sales figures. For example, to forecast the sales for October 2017 you would add up the previous three months (July through September) and calculate the statistical average over those three months (Murphy, 2017). This statistical average is your expected forecast for the month of October 2017. A great way to check for accuracy in your forecast is to calculate the standard deviation in your forecasts (Murphy, 2017). A standard deviation is simply a way to express the variation between each month over or under the statistical average for the entire range of months calculated. The closer you get to zero, the more accurate your forecast. 

     Now that we understand how to calculate a simple moving average what are its advantages and disadvantages when calculating forecasts. The biggest advantage is its simplicity (Chambers, 1971). This method does not require in-depth analysis, a degree in mathematics, or specialized computer software to create the forecast. The disadvantage of using this method would be its inability to forecast trend variation, seasonal variation, business cycles, and especially random variation (Chambers, 1971). 

References 

Chambers, John (1971, July). How to choose the right forecasting technique. Harvard business review. Retrieved from https://hbr.org/1971/07/how-to-choose-the-right-forecasting-technique 

Coyle, J.J., Langley, C.J., Novack, R.A., & Gibson, B.J. (2017). Supply Chain Management: A Logistics Perspective. (10th ed.). Boston, MA: Cengage Learning. 

Murphy, Paul (2017). Contemporary Logistics (12th ed.). New York: Pearson