Global Logistics and Risk Management Essay Example

Global Logistics and Risk Management Essay Example Global Logistics and Risk Management Essay Global Logistics and Risk Management Essay EXECUTIVE SUMMARY GLOBAL LOGISTICS AND RISK MANAGEMENT Global supply chain enables companies to expand beyond their domestic markets and expand globally . International supply chain could be viewed as an extension of the domestic supply chain if managed well . There are several forces which determines the success of international supply chain. Global market forces involves pressures and opportunities created by the foreign companies and customers . Overseas business sometimes is a defensive mechanism to defend domestic markets . Another reason for expansion is because of the increased opportunities in emerging markets and the facilities provided by information technology and internet. Regional expertise in technology is another reason why firms look for overseas locations for production and research. This helps firms to improve the production facilities and use the best technology available across the world for better and effective production cycles. Cheap labor and lower costs could be a valid reason for global manufacturing locations . But the manufacturing supply chain in this case should be well integrated to avoid other operating costs which might increase due to remote locations . Political and economic factors like trade agreements, tariff rates, export restrictions and inflation,could positively or negatively affect the efficiency of global supply chain. Supply Chain Risk refers to an uncertainty or unpredictable event affecting one or more of the parties within the supply chain or its business setting, which can (negatively) influence the achievement of the business objectives. : Unpredictable and unquantifiable risks are known as unknown-unknown . where as quantifiable risks are known as known-unknown. To manage the unknown –unknown risks a required level of redundancy needs to built in the supply chain . This can be one through careful analysis of supply chain cost trade-offs. Sensing and responding quickly can also help the firm overcome unexpected supply chain problems . Adaptability is another key factor in managing this type of risks . Adaptive supply chain would require supply chain partners that morph and reorganize better react to sudden crisis situations. Global risks in supply chain could be managed through speculative strategies . This works when a company works on a speculative scenario and if that scenario is realized . Otherwise the results could be dismal. Another strategy which is known as hedge strategy. In this strategy a company designs the supply chain in such a way that any losses in part of the supply chain will be offset by gains in another part . Flexible strategies enable a company to take advantage of different scenarios . Flexible factories and suppliers which enables production shifting is very important . Market information sharing is another important aspect of flexible strategy. Global coordination and political leverage are other important factors which would contribute to the success of flexible strategies. A global strategy implementation would require five basic functional developments . Product development is the designing of products which can be modified for various markets . An international design team could be used for this . There should be a separate management team handling the purchase of important materials from vendors across the world . This way the quality and delivery options from various suppliers can be checked and ensured. Excess capacity and plants in several regions are essential to take full advantage of global supply chain by shifting production based on conditions . Centralized management and effective communication systems are essential for this system . This accounts to production development. Demand management should be based on regional basis in this system . A centralized system must be in place so that regional customers can receive deliveries from the global supply chain. There are several issues with international supply chain management . The main issue is with the international and regional products . Some products can be universally designed but some other products has to be designed based on the regional preferences . Another issue is the differences in terms of centralized control and local autonomy . Managers sometimes tend t overlook the learning from the global supply chain to use the local learning of supply chain . Other issues could be related to the socio economic reasons like inflation could be a major risk , if not managed well. Foreign government norms could be another potential threat to global supply chain. The main regional difference I global supply chain would be the cultural differences . Differences is languages ,beliefs and customs followed locally . Another aspect is the availability of infrastructure indifferent countries . The highway systems ,ports ,communication ,information and advanced manufacturing and ware housing technologies allow the development of advanced supply chain . Logistics infrastructure in many emerging markets are not fully in place due to the lack of adequate investments in this area . The logistics infrastructure and the other infrastructure in the third world nations is not always adequate enough to support the advanced global supply chain systems . Another area of difference is the difference in the operating levels and the performance evaluation and expectation . The operating standards of the developed world typically vary greatly . Some firms might have met high expectations and place great value on contracts and agreements Research and negotiations are essential to successful deal making in the emerging nations . And government also plays a large role in the business in these countries . In third world nations the traditional performance measures have no meaning . shortages are quite frequent and the service levels practiced in the west are not met in these places thus a firm has very little control over the timing and the availability of the inventory Another major concern is the availability of the information systems . Quick and prompt information sharing is very important for the success global supply chain . Support systems and the communication networks available in the emerging markets efficient information flow. Availability of technically and managerially competent workers is another problem faced by most of the global supply chain systems . The regional ,political and religious influences in man power selection mostly denies the opportunity to hire the best talent available for the success of global supply chain. In spite of all the regional, political and other differences, global supply chain is here to stay and grow. As the markets are getting saturated companies across the world has to grow beyond their domestic markets . So the relevance and importance of global supply chain is even more pronounced in today’s world IBS BANGALORE Muhammed Haneef 07BS0062