Global supply chains

From CEOpedia | Management online

Global supply chain management is the process of managing and optimizing the flow of goods, services, information, and funds across an extended network of stakeholders, including suppliers, manufacturers, distributors, retailers, and customers. It involves the coordination and integration of these activities to deliver products and services to customers in an efficient and cost-effective manner. It requires strategic planning and monitoring of resources, materials, and information from suppliers to customers. It also involves forecasting customer demand, coordinating production and distribution, and managing the inventory.

Examples of global supply chains

1. *Apple Inc.: Apple Inc. is a renowned multinational technology company that relies heavily on global supply chains to manufacture and distribute their products. Their supply chain encompasses over 700 suppliers in 30 countries and involves the sourcing of components from different parts of the world and their assembly in China.

2. *Coca-Cola: Coca-Cola has a vast global supply chain that spans over 200 countries, with over 500 bottling plants worldwide. The company sources its materials from over 100 countries and has over 400,000 employees and contractors. This supply chain allows them to produce and distribute their products to consumers across the globe.

3. *Walmart: Walmart is a large retail multinational corporation that relies on an extensive global supply chain to deliver goods to its customers. Their supply chain involves the sourcing of materials from over 15,000 suppliers in 50 countries, and their products are distributed to more than 11,000 stores in 28 countries.

4. *Amazon: Amazon is an online retail giant that has an extensive global supply chain. Their supply chain involves the sourcing of products from more than 150 countries, the delivery of goods to customers in more than 100 countries, and the use of over 75 fulfillment centers worldwide.

When to use global supply chains

Global supply chains should be used when:

  • Companies need to source raw materials or components from multiple international suppliers and coordinate them into a single product.
  • Companies need to manage complex international logistics and optimize delivery times in order to meet customer demands.
  • Companies need to reduce costs related to production and distribution by identifying the most cost-effective vendors and supply routes.
  • Companies need to manage the risks associated with working with multiple suppliers across the globe.
  • Companies need to manage the different currencies, regulations, and customs associated with international trade.
  • Companies need to coordinate the activities of multiple stakeholders, including suppliers, manufacturers, distributors, retailers, and customers.

Types of global supply chains

An introduction to the types of global supply chains: Global supply chains involve the coordination and integration of resources, materials, and information from suppliers to customers to deliver products and services in an efficient and cost-effective manner. Here are some of the different types of global supply chains:

  • Vertical supply chain - This type of supply chain involves integrating a single product from the source of raw materials to the point of consumption. In a vertical supply chain, a company will usually control the entire process from start to finish.
  • Horizontal supply chain - This type of supply chain involves integrating multiple products from different sources. It involves working with multiple vendors to source the necessary materials and components for production.
  • Cross-functional supply chain - This type of supply chain involves integrating multiple departments within a company. It involves working with different departments to coordinate the production, distribution, and marketing of products and services.
  • Omni-channel supply chain - This type of supply chain involves integrating multiple channels of distribution. It involves working with multiple suppliers and distributors to ensure that customers get the products they need in a timely and cost-efficient manner.
  • Green supply chain - This type of supply chain involves integrating environmental considerations into the production and distribution process. It involves working with suppliers and distributors to ensure that products and services are produced in an environmentally-friendly way.

Advantages of global supply chains

The advantages of global supply chains include:

  • A global supply chain allows companies to access a wider range of suppliers and manufacturers on a global scale, leading to greater product variety, better pricing, and improved quality control.
  • They also provide access to a larger customer base, enabling companies to expand their markets and increase sales.
  • Global supply chains can reduce costs by streamlining processes, such as transportation and warehousing, and by allowing companies to take advantage of economies of scale.
  • They also enable companies to reduce their environmental footprint by reducing waste, emissions, and energy consumption.
  • Finally, global supply chains can provide companies with greater flexibility and agility, allowing them to quickly react to changes in demand and customer needs.

Limitations of global supply chains

Global supply chains have several limitations that must be taken into consideration when managing them. These include:

  • Complexity: Global supply chains are often complex, with multiple stakeholders, suppliers, and customers. This can lead to coordination issues and delays, as well as increased costs.
  • Visibility: It can be difficult to trace goods and services through a global supply chain, as there are often multiple layers of stakeholders. This can make it difficult to ensure the goods and services are of the expected quality and arrive on time.
  • Risk: Global supply chains are vulnerable to disruptions such as natural disasters, political unrest, and changes in currency exchange rates, which can lead to increased costs and delays.
  • Cost: Setting up and running a global supply chain can be expensive. This is due to the cost of transportation, insurance, and communication, as well as the need for skilled personnel and infrastructure.
  • Sustainability: The environmental impact of global supply chains must be taken into account. This includes the use of natural resources, emissions, and waste.

Other approaches related to global supply chains

In the global supply chain context, there are several other approaches that can be used to manage and optimize the flow of goods, services, information, and funds. These include:

  • Supply Chain Sourcing - Identifying and selecting the most cost-effective suppliers for materials and services needed by the organization.
  • Supply Chain Logistics - Managing the transportation of materials, goods, and services from suppliers to customers.
  • Supply Chain Planning and Forecasting - Developing strategies for anticipating customer demand and coordinating production and delivery.
  • Supply Chain Risk Management - Assessing and mitigating risks associated with suppliers, contracts, and other elements of the supply chain.
  • Supply Chain Collaboration and Integration - Establishing relationships with customers, suppliers, and other stakeholders to ensure collaboration and integration of the supply chain.


Global supply chains — recommended articles
Supply chain networks — Integrated supply chain — Role of transportation — Global value chains — Logistics chain — Contract logistics — Distribution logistics subsystem — Last mile — Supply chain integration

References

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