Global Supply Chain Management Opportunities and Challenges

Published:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Introduction

If we call twenty first century as the era of Globalization, this statement will not be exaggeration. In this era everything is not only interlinked through modern ways of telecommunication, but improved traditional means of communication has also contributed to make this world truly global village. Although the container was an innovation initially applied for maritime transportation, the emergence of global supply chains has placed intense pressures to implement containerisation over inland freight distribution systems. Box - containerised - logistics is increasingly challenged to deal with the ever-increasing time, reliability and costs requirements of global supply chains. Imbalances in trade flows and accessibility and capacity constraints are among some of the developments that are making it increasingly difficult to reap the full benefits of containerisation.[1] It is nowadays very much possible through globally integrated supply chain management that electronic gadgets which we may be using in any African or sub-continent country, be a brand of United States', whose major components are made in China, assembled in Singapore or Malaysia and distributed through any of United Arab Emirates warehouse. Why all this happened? Why previous century's old mechanism has changed in which all things are manufactured, assembled, packed, stored and distributed from one location? Because globalization has put immense pressure on competing rivalries brand, now these organizations have not to compete only in cost but also in agile and more customized supply chain. Customization is great hindrance in mass production; therefore new trend of postponement has emerged. Therefore globally integrated supply chain management is the need of the hour which can offer cheaper, agile and customized supply chain management practices. This globally integrated supply chain management not only offers great opportunities but numerous challenges as well.

Managerial problem:

In the recent past, China has emerged as a big economic and technological giant, transition from World's sluggish economy to most rapidly developing economy has not only made possible due to cheaply available world largest human resource but also due to mass customized production. This phenomenon has affected regional supply chain as well as it has also challenged the global logistics. Most of the Chinese ships destinations are Middle East, Europe or America. These ships mostly follow longer route from China to Singapore, Srilanka and onwards. Globalization has put immense pressure on Supply Chain Management (SCM) techniques and practices. Agility, leanness, just-In-Time etc. are a few great challenges to Chine's SCM. China has recently developed its western and central region as duty free zone, which has converted central China into light engineering cluster. However, most of eastern coasts of China are more than 2,500 kilometers away from central China which is a great impediment in good SCM practices. A number of studies have been carried out to check the feasibility to connect directly central china with Europe through land route and then America through sea route to minimize distance, lead time and total logistics cost. The leading study to evaluate feasibility of land route options between China and Europe has been carried out by the Chamber of Commerce of the United States. With the title of Land Transport Options between. Europe and Asia: Commercial Feasibility Study. July 2006 [1]. Even possibility of using northern Artic ocean route has also been studied by Somanathan [2] but outcomes \ results of these studies are not cost effective.

Research question:

Consistently following long route is great hurdle for good SCM practices. This provides an urgent need to carry out in depth evaluation of the scenario in the purview of existing SCM techniques and practices and to find out most cost-effective methodology to reduce distances of supply, which should result in reduction of lead time, distances as well as total logistics cost.

Literature Review:

"The globalization, production and the geographic dispersion of trade have elevated the importance of the transportation and logistics sectors of the economy".[3]

"The logistics services industry will be affected by future developments throughout the world. Therefore, futuristic scenarios developments are important basis for long-term strategy development" [4]. Fischer, J. H. (2007) in Handbook of Industrial Engineering: Technology and Operations Management, Third Edition highlighted on these issues such as transportation management, shipment planning, Advanced manufacturing research (AMR), transportation management systems (TMS), vehicle routing problem (VRP).[5].

Rafay Ishfaq in his research addresses "strategic planning for an interregional, hub based, intermodal logistics network operated by a logistics service provider".[6].

Ryuichi Shibasaki and TomihiroForecasted the future trade amount and international cargo flow, they especially focused on China. For the trade forecasting sub-model, the Global Trade Analysis Project (GTAP) model, the most famous model to predict world's trade amount applying Spatial Computable General Equilibrium (SCGE) model, is applied after a few modifications. [7]. Zhao, X., Flynn, B. B. and Roth, A. V. has carried research in "Decision Sciences Research on China: Current Status, Opportunities, and Propositions for Research in Supply Chain Management, Logistics, and Quality Management" [8].

Klein, R., Rai, A. and Straub, D. W. Has worked on "Competitive and Cooperative Positioning in Supply Chain Logistics Relationships. Cooperative logistics relationships require the sharing of information, In this article, they theorize business-to-business logistics relationships should be managed using cooperative and competitive postures" [9]. Supply chain disruption has adverse effect on both revenue and costs. [10]

Largely undiscovered is the link between corporate and business unit strategies, with the help of supply chain strategies and capabilities.[11]. The four case studies of large corporations are evaluated from a Chinese setting in which imp reverse logistics is still in an early stage. The complex nature of China's economy and political considerations may influence the practices and perspectives of small manufacturers in the management of environmental issues which limits the generalizability of the findings. [12]. Valuable contribution has been made because of the fact that there is a lack of empirical studies focusing on in the Middle East region. [13].

In today's highly competitive global market, the pressure on rivalries to find new ways to create value proposition and deliver it to the customers grows ever stronger. In the last two and half decades, the logistics function has moved up to center stage. There has been an improving recognition that efficient logistics management throughout the organization and supply chain can largely assist in the mission of cost reduction and service enhancement. [14].

Thun, J.-H. and Müller in their paper empirically investigated the status quo of green supply chain management in the German region automotive industry from a practitioner's point of view. Several new aspects of green supply chain management, such as the "point of time of implementation, the driving forces, the relevance of intended goals and their particular realization and the adoption of eco-programs with suppliers and customers as well as internal and external barriers are analyzed".[15]

Much of China's economic growth has resulted because of the expansion of its exports and off-shore manufacturing. In the process, the United States had become one of China's most important trading partners. Historically, U.S.-Asian trade has moved by the most direct route, which passes across the Pacific Ocean to ports on the West Coast of the United States. Despite the historically predominance of the West Coast ports, the labor strike in 2002 began to challenge the assumption that it was the most logical route between Asia and the United States.

Shippers and their clients are now trying to lower their risk and dependence upon West Coast

ports, as well as to restructure the whole supply chain to reduce total transportation costs. Ports along the Eastern Coast of the United States have been the most immediate beneficiaries of this restructuring. [16]

A major phenomenon of open-door policy in China is the move of Hong Kong-based manufacturers' logistics lines to China, crossing the border to take full advantages of lower production costs, lowest wages and lowest rental costs. [17]

In the era of 1990s transport and communication appeared slowly to be on their way forward into the mainstream again, but now it has been transformed into the much broader concept of logistics, which has become an important element in the organisation as well as restructuring of the globalising economy. Transportation has become an integrated part and parcel of the production and distribution system. The fast track restructuring of the global transport system is taking place at present, therefore it is likely to have a impact on processes of globalisation. [18]

The relationship has been determined by ------ between freight and economic growth, in which the main influential factor is the freight transports demand. According to statistical data, it has been concluded that the freight present obvious linear relationship to the variables the population, GDP, total retail sales of consumer goods as well as the fixed assets invested on transportation and telecommunication. [19]

Product proliferation is a common challenge for firms providing customized products. To cope with this challenge, firms usually incorporate strategies such as component commonality, postponement, and/or delayed differentiation in their supply chains. [20]

This research concerns about the use of Eurasia as a landbridge for container traffic. We present case study findings concerning European-Asian transportation, and this reveals that the lead time advantage of landbridges (with respect of its costs) would be suitable for a manufacturer, but malfunctioning parts of harbours and railway transports hinder the potential of this alternative. Findings from demanding manufacturing logistics are further verified with a case study concerning a Finnish retailer having increasingly important presence in Russian markets. Retailer used to favour railways (∼early part of Eurasian corridor) but has nowadays configured distribution operations to favour road transports. [21]

The global city region can be expected to play a significant role in global logistics. [22]

Nowadays, the cooperative intelligent transport systems are part of a largest system. Transportations are modal operations integrated in logistics and, logistics is the main process of the supply chain management. [23]

There are many controversial issues concerning the relationships between container shipping lines, international port operators and the evolution of China's port system. We first present the factors linked with the transformation of the Pacific Rim transport environment resulting from increase container trade. This is followed by an analysis of China's port system. We argue that China is characterized by a 'divided' maritime transport system composed of three regions. The Chinese port system is marked by four interrelated transformations: port privatization, port expansion, modification of transactional networks and the emergence of a new business environment. The paper concludes on the need to upgrade China's port development policies. [24]

The globalization of production and the geographic dispersion of economic activity have elevated the importance of the transportation and logistics sectors of the economy. One sector in particular that has experienced significant expansion is maritime transport and container shipping. As the cargo has become increasingly "discretionary" such that it can conceivably be transported through any port that allows intermodal access to the hinterland, the industry has become much more foot-loose vis-à-vis a particular port of entry. The enhanced mobility of the cargo results in more intense port competition. One particular place to observe and study this dynamic is in the port and terminal selection of shippers and shipping lines and the role of port authorities in attempting to attract these carriers to their facilities [25]

As businesses continue to globalize, attention has increasingly turned to logistics. Examines global logistics in depth, beginning with a brief overview, to provide a working context. Discusses the development of global logistics strategy, taking a bottom-up approach. Assesses the effects of product-market characteristics on strategy formulation and evaluates logistics strategy at business unit or company level. Considers the implications of global logistics strategies, detailing the critical success factors which apply and highlighting the need for organizational change. [26]

Globalization of markets is a phenomenon that has received much attention and been extensively debated both at general societal/institutional/cultural levels and at market and business levels. In any globalization process, distribution of goods and services between and within local industrial and consumer markets is of great importance. Globalization of markets and reorganization of distribution are mutually dependent processes that involve changes in market structures. Contemporary examples of this are the emergence of global supply chains, internationalization of wholesale, retail and transportation firms and the development of sales via the Internet. The nature of the interdependence between globalization of markets and the reorganization of distribution is discussed, applying a network view of markets with reference to the cultural dimensions. Supply chain management issues are intimately related to these general development trends. The article concludes with some observations on the need, in practice and in research, to consider supply chain management in its dynamic context. [27]

Design/methodology/approach:

This study would focus to evaluate all possible routes options from central China to cities of the Middle East, Europe and America in terms of distances and lead time. Then conduct value propositions which will have direct positive implications on global business. But all these opportunities are linked with Challenges. As such, a viable logistics transit hub which can positively affect the GSCM is to be evaluated based on various frameworks before proposing to develop a mega strategy for structural development to cater for global SCM and gain economic, political and geographical advantages. This shall provide a strategic advantage not only to South East Asia, China, Pakistan and allied-countries but to the global-village too, to reap the manifestation of UN-Global drive for economic-soundness of means. However, many futuristic scenarios can develop which are difficult to predict with certainty and accuracy due to world fast track dynamics.

Table: Land, Air and Sea Routes from Central China to Famous Sea Ports of the World

Ponint A

Ponint B

Shortest Route from Point A to B

Distance in( Kms)

Shanghai

Central China Xining

2208 / 2500*

Shanghai

San Francisco

9901

Shanghai

San Dieago

10632

Shanghai

Karachi (Land Route)

5345 / 7314*

Shanghai

Karachi (Sea Route)

8926

Central China Xining

Karachi (Land Route)

3578 / 4814*

Karachi

Aden

2670

Aden

Cairo

2369

Cairo

Casablanca

3684

Casablanca

New York

5802

New York

San Francisco

4148 / 4680*

New York

Karachi

11702 / 14525*(by Sea)

New York

Panama

3564

Panama

San Francisco

4996

Shanghai

New York (Direct Via Air)

11881

Central China Xining

New York via

San Francisco (Land Route)

17081

Central China Xining

New York via San Francisco & Panama (Pacific Route)

20461

Central China Xining

New York via Karachi land + Sea (Atlantic Route)

19339

Shanghai

Singapore

3795

Singapore

Colombo

2721

Colombo

Karachi

2410

Colombo

Aden

3876

Casablanca

London

2979

Shanghai

London via Sea route

13371

Central China Xining

Karachi via (Sea route) Shanghai +Singapore +Colombo= Karachi

11426

Central China Xining

London via land route

7698/11204*

Central China Xining

London via (Sea route) Shanghai +Colombo+ Aden + Casablanca

21924

Central China Xining

London via (Land + Sea route)

+Karachi + Aden + Casablanca

16516

Findings:

Road route till Pakistan and then sea route as compared to only Sea route, has Following advantages:-

It is the most economical Route for Middle East, Africa and Europe as this route reduces lead time by almost 7 days.

It offer shortest path by reducing distances by 5124 Km.

It is even economical path to eastern coastal cities of Canada and America as it reduces time of 3-4 days and distance from central China to New York from Panama route by 1338 Km.

For international road and rail, it is not simply a question of transit time and reliability; it is also a question of cost.

Many future developments are difficult to predict with accuracy and certainty.

Within the next 15 years, there seems to be limited opportunity to dramatically increase the speed of ships or reduce the costs of air freight.

Increased concern about CO2 emissions could lead to changes in the view of the role of air freight within the supply chain.

Writing Services

Essay Writing
Service

Find out how the very best essay writing service can help you accomplish more and achieve higher marks today.

Assignment Writing Service

From complicated assignments to tricky tasks, our experts can tackle virtually any question thrown at them.

Dissertation Writing Service

A dissertation (also known as a thesis or research project) is probably the most important piece of work for any student! From full dissertations to individual chapters, we’re on hand to support you.

Coursework Writing Service

Our expert qualified writers can help you get your coursework right first time, every time.

Dissertation Proposal Service

The first step to completing a dissertation is to create a proposal that talks about what you wish to do. Our experts can design suitable methodologies - perfect to help you get started with a dissertation.

Report Writing
Service

Reports for any audience. Perfectly structured, professionally written, and tailored to suit your exact requirements.

Essay Skeleton Answer Service

If you’re just looking for some help to get started on an essay, our outline service provides you with a perfect essay plan.

Marking & Proofreading Service

Not sure if your work is hitting the mark? Struggling to get feedback from your lecturer? Our premium marking service was created just for you - get the feedback you deserve now.

Exam Revision
Service

Exams can be one of the most stressful experiences you’ll ever have! Revision is key, and we’re here to help. With custom created revision notes and exam answers, you’ll never feel underprepared again.