Global Supply Chain Case Study

In today’s markets, the drive for a business to continue to lower costs, improve quality, provide world class customer service and to continue to grow, drives many companies to consider moving some production to low cost countries as well as develop sales channels in countries other than their home country. A manufacturer, based in the United States that has decided to move some production to another country to continue to grow and compete must consider a variety of risks and opportunities to ensure that the venture is a positive one for the company, its employees, customers and shareholders. According to Gilani (2010), “the process of “globalization”, refers to the big picture process that draws products, services, and markets around the world

Whether a new product or a component of a product that is currently being made in the plant, multiple areas must be mapped to understand how to move this production to another country. The plan must cover areas such as product development and design, purchasing, manufacturing, forecasting, customs and transportation. Simchi (2008) writes, “Any company, even a huge global company, is not immediately ready for integrated global supply chain management”. In considering the global supply chain, risks to the performance of the supply of parts into a manufacturing plant or finished product out to the customers must be considered. All the same risks that exist to a domestic supply chain, such as forecasting issues, new product development cycles, weather and labor disruptions exist in the global chain with additional risks to

A company may choose to purchase and place additional raw material for finished goods in the markets where they are used. This type of speculation can be a big winner if the additional demand is realized or create an impactful loss if the demand does not materialize. For global supply chains that may have a high opportunity for risk, hedging the supply chain can help reduce that risk. As noted above multiple sources for components, while more expensive can stop a complete stock out of inventory. Flexibility is a strategy that is designed into a supply chain where the component or finished goods is always sourced or made through a variety of vendors and company own facilities. This strategy while it provides material flow through many locations, therefore reducing risk of any one event interrupting the supply chain, requires complete coordination and communication between participants and can raise a company’s inventory holding costs.
The global supply chain has almost become a necessity for companies that want to continue to grow their business. The need to find lower cost, improve quality, and gain new customers has created the need to go global. With planning, communication and training a company can successfully navigate the global supply chain risks and opportunities. According to Manuj (2008), “by understanding the