Globalization and the Supply Chain

Globalization is changing the way we do business today. The world is turning into one big market and competitors are no just your neighbors. In such an environment, not only do the management policies and marketing strategies change but the company’s supply chain has to evolve as well. Logistics is a major part of the supply chain. In order to survive in a highly competitive environment, a strong logistics network is vital. This report focuses on how globalization affects the supply chain strategies of a company. Christopher (2005, pp. 1-50)

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The world is getting smaller and globalization is the main concern of companies today. Companies all over the world have started catering to a worldwide market. Empires like Pepsi, Coke, McDonald’s, and P&G operate in hundreds of countries. Companies that operated in their home country are now facing competition from international companies and imports from production giants like China and Japan. General Motors and Ford are facing immense competition from Toyota and Honda. In order to compete at a global level, companies need to revamp their supply chains. Rushton (2006, pp. 56-84)As an integral part of the supply chain, the logistics network has to be strong and geographically dispersed. In order to do this, companies need to focus on three things: building global organizations, penetrating global markets, and efficiently managing global supply.

Logistics Strategy

To keep up with globalization, companies need a suitable logistics strategy. What is a logistics strategy? It is the defining of stages at which a company’s logistics organization is most effective and efficient. Because there can be a number of these strategies based on the rate of evolution and expansion and the diversity of products. A logistics strategy consists of the following aspects: strategic, structural, functional, and implementation. The strategic aspect covers a business’s mission and vision. (Dasher, n.d) The structural part refers to how the business is structured internally and externally. The functional aspect is the functions and operations the business performs and implementation deals with how to implement that strategy; it can involve information systems as well. (Murray, n.d)

Globalization is forcing businesses to go global as well. Operations are going international for most large-scale companies and even smaller ones are crossing borders in some way or the other. Even for the fashion industry, timely operations are vital. A trend starting in one corner of the world catches up in the other corner by the end of the week. With mass media exposure, demand for products and designs spread like wildfire. For an effective logistics strategy, in this case, outsourcing is a new trend. Outsourcing logistics has a number of advantages:

Businesses can easily reach areas and markets that were previously inaccessible. By outsourcing logistics, businesses can make commitments overseas and internationally without having to worry about transport and delivery. Since fabrics, apparel, and other fashion merchandise firms now sell to a worldwide market; demand for products has gone global. You can see children playing in the streets of India wearing Nike t-shirts. Also, since all the production of garments is outsourced, outsourcing logistics would be profitable as well. International logistics services are dedicated to this function and can reach a wider area than an average company’s own logistics functions.

It also saves costs. Expanding a company’s own logistics department to go global can be extremely costly and complex. Extensive planning is needed and the process is very time-consuming. Outsourcing saves time, costs and ensures that the job is performed expertly by professionals who are dedicated to this business. (Murray, n.d)

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Coclusion

Like other business functions like IT operations, customer care, and even marketing, logistics can be outsourced as well. It is a smart new trend that is not only promoting globalization but also allowing companies to save costs and reach out to a more diverse market and range of customers. Logistic companies like UPS and Agile operate in many countries and can collaborate with any business, offering cost savings and leverage.

References

Christopher, M. (2005) Logistics and Supply Chain Management. 3rd. ed FT Prentice-Hall. ISBN 0273681761

Dasher, R. (n.d.) Introduction and Tutorial: Supply Chain Globalization. Stanford Asia [Internet]. 2009. Web.

Murray, M. (n.d.) Creating a Logistics Strategy. About.com [Internet]. 2009. Web.

Rushton , A. Croucher, P. Baker, P. (2006) The Handbook of Logistics and Distribution Management (pp. 56-84) Taschenbuch – Kogan Page. ISBN 0749446692

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