Podcast
Questions and Answers
Which of the following best defines a supply chain?
Which of the following best defines a supply chain?
What characterizes a global supply chain?
What characterizes a global supply chain?
What is one common objective of firms engaging in global sourcing?
What is one common objective of firms engaging in global sourcing?
Which of the following is NOT a reason for globalization?
Which of the following is NOT a reason for globalization?
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How does global logistics increase operational uncertainty?
How does global logistics increase operational uncertainty?
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What is an example of a major global supply chain issue?
What is an example of a major global supply chain issue?
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Which company is cited as an example of having a global supply chain?
Which company is cited as an example of having a global supply chain?
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What is a characteristic of a global supply chain network?
What is a characteristic of a global supply chain network?
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What is a characteristic of an increased variability in global logistics?
What is a characteristic of an increased variability in global logistics?
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Which of the following is NOT a consequence of decreased visibility in global logistics?
Which of the following is NOT a consequence of decreased visibility in global logistics?
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Which international strategy focuses primarily on global integration?
Which international strategy focuses primarily on global integration?
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What is one of the main drawbacks of implementing a No International Strategy?
What is one of the main drawbacks of implementing a No International Strategy?
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In the context of international strategies, what is a characteristic of the Transnational Strategy?
In the context of international strategies, what is a characteristic of the Transnational Strategy?
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Which of these factors contributes to decreased control in global logistics?
Which of these factors contributes to decreased control in global logistics?
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Which type of international strategy typically involves standardizing products for local markets?
Which type of international strategy typically involves standardizing products for local markets?
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What aspect is heavily affected by shifting political environments in the context of global logistics?
What aspect is heavily affected by shifting political environments in the context of global logistics?
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Which strategy emphasizes local responsiveness and customizes products for each market?
Which strategy emphasizes local responsiveness and customizes products for each market?
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What is the main focus of a global strategy?
What is the main focus of a global strategy?
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Which example illustrates a multi-domestic strategy?
Which example illustrates a multi-domestic strategy?
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What characterizes a transnational strategy?
What characterizes a transnational strategy?
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Which of the following exemplifies a company utilizing a global strategy?
Which of the following exemplifies a company utilizing a global strategy?
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In which scenario might a multi-domestic strategy be most suitable?
In which scenario might a multi-domestic strategy be most suitable?
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How does a transnational strategy differ from a global strategy?
How does a transnational strategy differ from a global strategy?
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Why do companies using a multi-domestic strategy typically sacrifice efficiency?
Why do companies using a multi-domestic strategy typically sacrifice efficiency?
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What major issue does the bullwhip effect cause within a supply chain?
What major issue does the bullwhip effect cause within a supply chain?
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Which of the following is NOT a consequence of the bullwhip effect?
Which of the following is NOT a consequence of the bullwhip effect?
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What is a recommended strategy to avoid the bullwhip effect?
What is a recommended strategy to avoid the bullwhip effect?
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What does the term '3PL' refer to in supply chain management?
What does the term '3PL' refer to in supply chain management?
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Which type of 3PL provider owns their own trucks and warehouses?
Which type of 3PL provider owns their own trucks and warehouses?
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What is a common benefit of using information-based 3PL providers?
What is a common benefit of using information-based 3PL providers?
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Which statement best describes the relationship with third-party logistics?
Which statement best describes the relationship with third-party logistics?
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What is one of the challenges mentioned in managing supply chain relationships?
What is one of the challenges mentioned in managing supply chain relationships?
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What is a primary reason for global sourcing in low-cost countries?
What is a primary reason for global sourcing in low-cost countries?
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Which of the following is NOT a challenge associated with sourcing decisions in a global context?
Which of the following is NOT a challenge associated with sourcing decisions in a global context?
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What describes the bullwhip effect in a global supply chain?
What describes the bullwhip effect in a global supply chain?
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What is a guideline for companies making global sourcing decisions?
What is a guideline for companies making global sourcing decisions?
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Which factor can enhance a firm's ability to compete when sourcing globally?
Which factor can enhance a firm's ability to compete when sourcing globally?
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What compliance issue must firms consider in global sourcing?
What compliance issue must firms consider in global sourcing?
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What is a common misconception when assessing the costs of global sourcing?
What is a common misconception when assessing the costs of global sourcing?
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Which location is often considered for global sourcing due to low manufacturing costs?
Which location is often considered for global sourcing due to low manufacturing costs?
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What is a primary function of a fourth-party logistics (4PL) provider?
What is a primary function of a fourth-party logistics (4PL) provider?
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Which of the following is NOT a user benefit associated with financial-based logistics?
Which of the following is NOT a user benefit associated with financial-based logistics?
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In which global strategy do operations have decentralized management with local profit responsibility?
In which global strategy do operations have decentralized management with local profit responsibility?
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What distinguishes a third-party logistics (3PL) provider from a fourth-party logistics (4PL) provider?
What distinguishes a third-party logistics (3PL) provider from a fourth-party logistics (4PL) provider?
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What is a characteristic of the global strategy in service management?
What is a characteristic of the global strategy in service management?
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Which type of logistics focuses on both global branding and integrated operations?
Which type of logistics focuses on both global branding and integrated operations?
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What benefit do users specifically gain from logistics solutions that provide tools for monitoring and tracking?
What benefit do users specifically gain from logistics solutions that provide tools for monitoring and tracking?
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Which characteristic applies to the management strategy of a no international strategy stage?
Which characteristic applies to the management strategy of a no international strategy stage?
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What is a common challenge faced in global sourcing decisions?
What is a common challenge faced in global sourcing decisions?
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Which logistics provider example is typically associated with 4PL?
Which logistics provider example is typically associated with 4PL?
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Study Notes
Global Supply Chain Management
- Lecture 8, MS3124
- Instructor: Dr. Fan Sai Kit
Agenda
- Global supply chain definition and examples
- Global economies & supply chain integration
- Global international strategies
- Global sourcing decisions
- Major global supply chain issues
- Third-party logistics
What is a Supply Chain?
- A network of facilities and activities that performs functions like product development, material procurement from suppliers, material movement between facilities, manufacturing of products, distribution of finished goods to customers, and after-market support.
- (Mabert and Venkataraman 1998)
What is a Global Supply Chain?
- A global supply chain is made up of interconnected organizations, resources, and processes located in different countries to create and deliver products and services to consumers.
Global Supply Chain Network
- A diagram showing the interconnectedness of suppliers, manufacturers, warehouses/distribution centers, and customers.
- Includes various costs associated with transportation, material, manufacturing, and inventory.
Example: Boeing 787
- Various components manufactured in the UK, France, Sweden, Japan, Canada, and elsewhere before assembly in the United States.
- The graphic shows the locations from different countries around the world.
Example: Ford
- A map showing different Ford component production locations worldwide.
- Components are manufactured in various locations from various countries, before being finally assembled.
More Examples
- A list of companies including National Grid, Grainger, Rockwell Automation, Bank of America, etc.
Global Economies
- Most firms today are impacted by global economies.
- Global sourcing of materials or products
- Global customers who want to purchase.
- Common objectives are to:
- Increase revenue through access to new markets
- Increase production capacity
- Reduce direct cost using cheaper resources and labor
Hong Kong Trading Partners (2023)
- Data provided in the form of tables detailing total trade and import values, and percentage shares for various countries and territories.
- Comprehensive rankings of trade partners for Hong Kong.
Major Reasons for Globalization
- Objective: Increase revenue.
- Rationale: Open up more markets, expand beyond competitors, obtain accessibility to markets for lower labor rates, and take advantage of available production capacity.
- Objective: Achieve economies of scale.
- Rationale: Reduce energy requirements, take advantage of lower transportation modes, and obtain access to advanced technology that might not be in current location.
- Objective: Reduce direct cost.
- Rationale: Take advantage of differences in production requirements, obtain access to specialized expertise, obtain local or regional tax benefits, and source products from locations that have fewer security constraints.
- Objective: Advance technology
- Rationale: Obtain accessibility to markets that limit access without local operations
- Objective: Reduce firm's global tax liability.
- Rationale: Obtain local or regional tax benefits.
- Objective: Reduce market access uncertainty
- Rationale: Source from a location that involves less transportation uncertainty and less security constraints
- Objective: Enhance sustainability
- Rationale: Source from a location that ongoing availability of necessary resources, such as, energy or trained workers.
Global Logistics - Complex Operating Characteristics
-
Increased uncertainty:
- Greater distances
- Longer lead times
- Decreased market knowledge
-
Increased variability:
- Unique customer requirements
- Unique documentation requirements
- Shifting political environments
-
Decreased control:
- Extensive use of international service firms
- Potential customs requirements and trade restrictions by governments
-
Decreased visibility -Longer transit times
- Longer holding times -Less ability to track shipment locations
Global Supply Chain Integration
- Setting the firm on a path through the stages of international development:
- Export/Import
- Local presence
- Globally integrated enterprise
Global International Strategies
- Four main international strategies:
- No International strategy
- Multi-domestic strategy
- Global strategy
- Transnational strategy
International Strategies
- A visual representation (Figure 11.1) of the different international strategies, positioned on a matrix based on global integration and local responsiveness.
No International Strategy
- Minimal pressure to adapt to local needs while keeping global integration in check
- Focus on standardization for each local market
- Limited growth in local markets, difficult adapting to changing global demands
- Import/export or license existing products (e.g., US steel, Harley Davidson)
Multi-Domestic Strategy
- High pressure to meet local demands, limited emphasis on global integration
- Develop customized products for differing local markets
- Sacrifices efficiency to respond to localized requirements
- Use franchise, joint ventures (e.g., Heinz, MTV).
Global Strategy
- Minimizes local adaptation in pursuit of global efficiency and standardization
- Focus on economies of scale and cost reductions
- Standardized products and services for local markets with minor adjustments.
- Examples include Microsoft and P&G
Transnational Strategy
- High global integration and local responsiveness.
- Low cost and differentiated product strategies with high local responsiveness.
- Balance efficiency with local preferences (e.g., Coca-Cola, Nestle)
More Examples
- A graphic illustrating the different strategies (Global/Multidomestic) and their associated supply chain characteristics (e.g., Heinz, Nestlé, Coca-Cola).
Global Sourcing Decisions
- Global sourcing options for durable goods industries:
- Asia
- Eastern Europe
- Latin America
- Africa
- Sourcing in low-cost countries:
- Rationale
- Challenges
- Guidelines
Rationale for Global Sourcing
- Low-wage rates reduce manufacturing costs.
- Increases choices of suppliers and keeps competitive pressure on domestic producers.
- Exposure to state-of-the-art technology in products and processes.
- Establishment of a local presence in international countries
Challenges in Global Sourcing
- Identifying varied production sources.
- Protecting intellectual property.
- Import/export compliance.
- Effective communication with suppliers
- Transportation issues (time zones, languages)
- Risk of obsolescence to inventory.
- Understanding the difference between unit and total cost.
Guidelines for Global Sourcing
- Realistic assessment of total and performance implications.
- Use the criteria in Table 12.5 to structure the decision analysis
Sourcing Guidelines (Table 12.5)
- A table providing criteria for decision analysis in domestic versus low-cost-country sourcing, considering factors like product life cycle, labor/intellectual property content, transportation, and security/constraints.
Major Issues on Global Supply Chain
- Lack of supply chain flexibility and internal competency to manage external partners.
Bullwhip Effect
- Small fluctuations in demand at the customer level get magnified as orders move upstream through the supply chain.
- Information distortion creates varying demand estimates in different stages of the supply chain.
- Causes higher costs and inefficiencies.
Impact of Bullwhip Effect
- Excess inventory.
- Increased inventory costs.
- High transport costs.
- Increased shipping/receiving labor costs.
- Reduced product availability
- Increased lead times delays
- Weakened relationships in the supply chain
- Decreased customer service
- Reduced profitability
How to Avoid the Bullwhip Effect
- Reduce supply chain uncertainty.
- Share information openly.
- Establish long-term contracts with suppliers.
- Improve operational efficiency.
- Strategic partnerships (VMI, CPFR)
Challenges in Managing Supply Chain Relationships
- Developing and implementing supply chain relationships
- Collaborating partners in achieving objectives
- Value creation by 3PL
Third-Party Logistics (3PL)
- External suppliers that perform all or part of a company's logistics functions.
- Synonyms: contract logistics and outsourcing
Types of 3PL Providers
- Transportation-based (asset-based or non-asset-based)
- Information-based (Internet-based, B2B, electronic markets)
- Warehouse/Distribution-based
- Financial-based
Fourth-Party Logistics (4PL)
- Integrators that accumulate resources and technology to handle complete supply chain solutions.
- Manages all facets of supply chains versus 3PL focused on individual functions.
- Examples: DHL, UPS, Accenture
Key Takeaway
- Global supply chain integration
- Characteristics of global logistics and services
- Global international strategies
- Global sourcing decisions
- Rationale
- Challenges
- Guidelines
- Major global supply chain issues
- 3PL vs 4PL
Appendix
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Description
This quiz covers key concepts from Lecture 8 of the Global Supply Chain Management course. Topics include definitions, integration, international strategies, sourcing decisions, and major issues in global supply chains. Test your understanding of these essential elements and their impact on global business practices.
