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Learning Objectives
After reading this chapter, you should be able to do the following:
Describe the scope of a global companys supply chain network and understand what questions are appropriate for the network to function on a competitive basis. Understand the three major phases of globalization. Appreciate the complexity and magnitude of the operations of some successful global companies and why global expansion is important to their growth. Explain how technology and service specialists can help companies, especially small- to medium-size firms, penetrate the global marketplace.
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 balance necessary to ensure that such security measures do not impede trade. Discuss global transportation options and strategic intermediaries.
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 in trade value per year passes through U.S. ports, and over $18 billion is collected in industry fees and taxes.
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 a wide variety of products and shipment size Three major categories: Liner service Charter vessels Private carriers Fast transit times An advantage in packaging Disadvantage of air carriage is high rates
Air
Rail
International railroad use is also highly similar to domestic rail use Intermodal container shipments by rail are increasing Maritime bridge concepts Land bridge
Supplies expertise to international shippers Consolidate small shipments into more economical sizes Derives income from fees for service
Consolidates and dispenses containers at inland points Uses the shipping expertise that NVOCCs possess Ocean carrier gains from the increased market area
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 goods very difficult. Usually, the freight handling involves many firms, and these firms are located in different countries.
Summary Companies competing in global supply chains need to address some important questions for their global networks to ensure their efficiency and effectiveness.
There have been three phases of globalization: the first was driven by countries, the second by large companies, and the third by individuals and small organizations. Successful global companies have transformed their supply chains on an ongoing basis to enable them to deliver low cost and high value to the ultimate customer. The scope and magnitude of trade flows between the United States and other countries have grown considerably in the last several decades. One interesting development has been the growth in importance of trade with China and several other Asian countries. Success in the global marketplace requires developing a cohesive set of strategies with respect to customer service, product development, business models, and overall supply chains.
Summary (cont.)
Supply chain security has taken on increased importance since September 11, 2001. Companies individually, jointly, and in cooperation with the various levels of government need to be actively involved. The federal government, in particular, has expanded the scope of its regulations and policies 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 for security. Canada and Mexico are ranked number 1 and 3, respectively, on the list of most important trading partners with the United States. That relationship is enhanced by the North American Free Trade Agreement ratified by Congress in 1994. While the treaty had lofty goals, it still is experiencing problems with full implementation of its objectives. Nevertheless, it has fostered trade in North America. Global supply chains have a number of transportation and related service options available to managers. Each of the options has advantages and disadvantages that need to be analyzed.