Coyle Chapter 3 PowerPoint Slides

8/12/2019 Coyle Chapter 3 PowerPoint Slides

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Chapter 3 Global Dimensions of Supply Chains

Learning Objectives

After reading this chapter, you should be able to do the following:

Describe the scope of a global companys supply chain network andunderstand what questions are appropriate for the network to function on acompetitive basis.

Understand the three major phases of globalization.

Appreciate the complexity and magnitude of the operations of somesuccessful global companies and why global expansion is important to theirgrowth.

Explain how technology and service specialists can help companies,especially small- to medium-size firms, penetrate the global marketplace.


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Learning Objectives (cont.)

After reading this chapter, you should be able to do the following:

Appreciate the importance and magnitude of the trading partner countries of

the United States.

Understand the nature of global markets and competitive strategy.

Explain the rationale for global security measures and the balancenecessary to ensure that such security measures do not impede trade.

Discuss global transportation options and strategic intermediaries.


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Three eras of globalization The first era was initially driven by countries (1400

1800) seeking materials and goods not available intheir own land

The second era of globalization (18002000) wasdriven by companies seeking goods and materials,labor, economies of scale, and markets.

In the third era of globalization, said to have begun

around the year 2000, the significant characteristic isthat it is being powered by individuals and smallerorganizations


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Supply Chains in a Global Economy Economies and companies could improve their wealth by allowing

specialization of tasks.

The advantage is true as long as you can sell the increased volume that

is produced. It is an important role of logistics to help extend the marketarea of countries or companies through improved efficiency to lower thelanded cost in new market areas.


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The Scope and Magnitude of Global Business The ability to connect to individuals and companies

across the globe and to connect computer informationsystems on a 24/7 basis has provided unparalleled

opportunity for collaboration horizontally and verticallyin supply chains.

The trade volume with China was 18.2 percent of thetotal of the top 10 for 2006, and it increased its tradevolume by 20 percent from 2005 to 2006. In 2000,China was number 4 following Canada, Mexico, andJapan.


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Global Markets and Strategy

The global business environment has changed significantly andbecome much more conducive to business activity between andamong different countries.

Success in the global market place requires developing acohesive strategy, including product development, technology,marketing, manufacturing, and supply chains.

Global markets and strategy have four important characteristics: standardization reduces complexity

global competition reduces the product life cycle traditional organizational structures and business models

frequently change globalization introduces more volatility


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Supply Chain Security: A Balancing Act

Given the importance of global trade to the United States, a delicatebalance exists between security and the efficient flow of globalcommerce.

More cargo inspections, much more paperwork, and a longer time toclear U.S. borders are now a reality.

C-TPAT is a cooperative effort to secure the global supply chain and tofacilitate legitimate cargo and conveyance.


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Ports

Ports are a critical part of global supply chains and also a major focus

for global security.

Americas ports are a vital part of its global commerce. Over $2 trillion intrade value per year passes through U.S. ports, and over $18 billion iscollected in industry fees and taxes.


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North American Free Trade Agreement

NAFTA establishes free trade between these three countries and

provides the way the agreement is to be interpreted.

Even though the U.S./Canada Free Trade Agreement has been in effectfor some time, certain trade barriers still remain.

The supply chain constraints will eventually be eliminated as NAFTA

experience grows.


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A Typical Truck Shipment Crossing into Mexico


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Global Transportation OptionsOcean The most pervasive and important global shipment method,

accounting for two-thirds of all international movements.Major advantages are low rates and the ability to transport awide variety of products and shipment size

Three major categories: Liner service Charter vessels Private carriers

Air

Fast transit times An advantage in packaging Disadvantage of air carriage is high rates


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Global Transportation Options (cont.)Motor

Use motor transport when shipping goods to between the UnitedStates and Mexico or Canada

It is very common in Europe

Motor also plays a large part in intermodal shipments

Rail International railroad use is also highly similar to domestic rail

use

Intermodal container shipments by rail are increasing Maritime bridge concepts

Land bridge


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Strategic Channel Intermediaries

Foreign Freight Forwarders Supplies expertise to international shippers

Consolidate small shipments into more economical sizes

Derives income from fees for service

Non-Vessel-Operating Common Carriers Consolidates and dispenses containers at inland points

Uses the shipping expertise that NVOCCs possess

Ocean carrier gains from the increased market area


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Strategic Channel Intermediaries (cont.)

Export Management Companies EMCs act as agents for domestic firms in the international arena

Obtain orders, selecting appropriate markets, distribution channels, andpromotional campaigns

Export Trading Companies ETC exports goods and services to overseas buyers and handles most

of the export arrangement

ETC allows small- to medium-size firms to engage in foreign trade


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Strategic Channel Intermediaries (cont.)Customs House Brokers

Oversee the movement of goods through customs and ensurethat the documentation accompanying a shipment is completeand accurate for entry into the country

Operate under power of attorney from the shipper to pay allimport duties due on the shipment

The importer is ultimately liable for any unpaid duties

Keeps abreast of the latest import regulations and specificrequirements of individual products


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Storage Facilities and Packaging

Transit sheds provide temporary storage while the goods await the nextportion of the journey

Carrier provided hold-on-dock storage free of charge until the vessels

next departure date

Public warehouses are available for extended storage periods.

Bonded warehouses operate under customs agencys supervision and

are used to store, repack, sort, or clean imported merchandise enteredfor warehousing without paying import duties while the goods are instorage.


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Packaging

Export shipments moving by ocean transportation require more

stringent packaging than domestic shipments normally do

The shipper may find settling liability claims for damage to export goodsvery difficult. Usually, the freight handling involves many firms, andthese firms are located in different countries.


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Summary Companies competing in global supply chains need to address

some important questions for their global networks to ensure theirefficiency and effectiveness.

There have been three phases of globalization: the first was drivenby countries, the second by large companies, and the third byindividuals and small organizations.

Successful global companies have transformed their supply chainson an ongoing basis to enable them to deliver low cost and highvalue to the ultimate customer.

The scope and magnitude of trade flows between the United States

and other countries have grown considerably in the last severaldecades. One interesting development has been the growth inimportance of trade with China and several other Asian countries.

Success in the global marketplace requires developing a cohesiveset of strategies with respect to customer service, productdevelopment, business models, and overall supply chains.


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Summary (cont.)

Supply chain security has taken on increased importance since September11, 2001. Companies individually, jointly, and in cooperation with thevarious levels of government need to be actively involved. The federalgovernment, in particular, has expanded the scope of its regulations andpolicies for global security.

U.S. ports play a critical role in global supply chains since over 90 percent

of global trade passes through them. Ports are also an important focus forsecurity.

Canada and Mexico are ranked number 1 and 3, respectively, on the list ofmost important trading partners with the United States. That relationship isenhanced by the North American Free Trade Agreement ratified byCongress in 1994. While the treaty had lofty goals, it still is experiencing

problems with full implementation of its objectives. Nevertheless, it hasfostered trade in North America.

Global supply chains have a number of transportation and related serviceoptions available to managers. Each of the options has advantages anddisadvantages that need to be analyzed.

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