Challenges in a Global Supply Chain

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Discuss the challenges that a company may experience with a global supply chain.

Introduction

Businesses and supply chains have become substantiality global over the last decade. Between 1995 and 2007, the number of transnational companies has more than doubled from 38,000 to 79,000 and foreign subsidiaries have nearly tripled, from 265,000 to 790,000. (Ref: IBM report “the smarter supply chain of the future”)

In addition to spreading geographically, supply chains now involve more companies. Nearly 80% of executives surveyed said they expect the number of collaborative relationships with third parties to increase. And ever broader range of activities is being outsourced: (Ref IBM report “the smarter supply chain of the future”)

There is no single definition of a “global” supply chain but as the traditional definition states it is a network of organisations involved through the upstream and downstream linkages, in the different processes and activities that produce value in the form of products or services in the hands of the ultimate consumer. Globalisation has fuelled the new global supply chain and defines the network as being global.

If we consider the well know Barbie doll, Barbie, originally made in Japan but today different parts are made in various countries, hair made in Japan, plastic body comes from Taiwan, cotton clothing from china and mounds and pigments from the USA. If we add the logistics and assembly as well as supporting activities it’s obvious that a global supply chain faces many challenges in fulfilling customer needs and demands.

Challenges of complexity

Christopher (2011) identifies 8 sources of complexity in the supply chain; we briefly mention key complexities that lead to challenges in the global supply chain.

In a global supply chain or network companies through their adopted strategies have indentified core and non core activities and in most cases they have outsourced noncore activities. This has



Bibliography: Bozarth, C.C, Handfield, R.B , ( 2nd edition 2008) Introduction to Operations and Supply Chain Management: London: Pearson Education Limited Lysons, K and Farrington, B Baily, P, Farmer, D , Crocker, B, Jessop, D, Jones, D ( 10th edition 2008) Procurement Principles and Management: England: Pearson Education Limited. Christopher, M (4th edition 2011) Logistics and supply chain Management : England: Pearson Education Limited. Whelan, P. (2011) Global supply chain managementl lecture notes, CW_BRSCM_HY5 Supply chain Management, Institute of Technology Carlow, department of Business, unpublished. Mentzer, T, J et al (2006) why global supply management? [the handbook of global supply chain management] The Arberdeen group (2006) global supply chain bench mark report available at www.aberdeen.com [accessed on 1st of February 2012] Diederics, R , Leopoldseder, M (2008) its still a big world available at www.mckinsey.com accessed on [2nd February 2012] Branch, A, (2008) Global Supply Chain Management and International logistics: England: Routledge.

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