Supply chain at the time of globalization
Globalization has produced a new level of interdependence among us. The economy and multinational supply chains do not abide by political boundaries. A computer ordered in Brazil is designed in California and assembled in several other countries. Economic integration was the first strong evidence of a new era.
Eduardo Paes (Rio de Janeiro former Major)
Rivers of ink have been written and billions of keyboards have been pressed around globalization since it started, as to say the beginning of the human history.
Yes, because even if globalization has been the talk of the town of the last two decades — with hundreds of thousands of economists, writers, politicians, opinionists, researchers, managers, experts, and middlemen debating on its implication on our lives and for our planet, one can easily assert that it’s a phenomenon as old as mankind. No matter how geographically limited it could have been during the primitive eras — when hunters and artisans started trading goods they were most efficient in providing between them and the near villages — it’s undeniable that market integration has grown at the same speed with the increasing will of men to get/collect what they are not able to create by themselves.
By the centuries, the complexitification of the dynamics and the accessibility to the global village by always cheapest means of transport and always more advanced technology, has called for a more elaborated system to manage the flow of goods, a system that oversees the whole process, from providing the row materials to delivering the final product to the consumer.
Just try to figure out how huge, labyrinthic and sophisticated supply chain industry is. Well, you are still far away from that. Today globalization has completely changed the way in which logistic networks face the market, imposing challenges, ranging from keeping up with a fast-changing consumer market to reaching new customers in new emerging economies, from handling with political and economic struggles to identifying and prioritizing risks and taking the right decisions. But among all those topics to analyse, there is one crucial challenge: “How to reduce costs for materials, workers and transportation?” Or rather, “How to keep costs as low as possible and be competitive in the supply chain market?”
In this, globalization’s process seems to give a large number of opportunities as workforce, raw materials, taxes, fuel, and transportation costs can be quickly calculated in order to find the cheapest option. “That’s easy” many can say “it’s China!” But the answer is not always so obvious. The Asian force is certainly the one offering more chances to save money, but many companies find it more advantageous to move their operation across different countries. This is because experts know that trends don’t last forever: the supply chain has to be flexible, fluctuating, ready for future changes; it has mainly to manage global operations and to collect an infinity of data, be ready to face geopolitical instability and ready to satisfy new fragments of the market.
Overcoming such challenge is not easy, neither for the most experienced experts in the field and the most renewed brands on the market. But keeping the control of costs, market fluctuation, transportation and materials prices and much more is crucial.