Global SCM is a worldwide network of suppliers, manufacturers, warehouses, distribution centers, and retailers through which raw materials are acquired, transformed and delivered to customers.
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- Internet and technological change.
- The proliferation of trade agreements.
- Falling Trade Barriers.
- Increase in international trade groups.
- New Markets.
Obstacles in Global SCM.
The points give below explains, the different potential obstacles in Global Supply Chain.
- Centralized control can be important, in taking advantage of some of the strategies.
- But in many cases, it makes sense to allow, local autonomy in the supply chain.
- Regional operation have proven to be successful.
- Regional business, depending on the characteristics of the region.
- Cultural differences can critically affect the way international subsidiaries interpret, the goals and pronouncements of management.
- Language : expression, gestures, context.
- Belief: differ widely from culture to culture.
- Customs: differ widely from culture to culture.
Cultural Variation in different groups.
- First World. relative economic conditions have affected, the mix of logistics and supply chain components.
- Emerging nations, the supply chain infrastructure is usually not fully in place. logistics as a necessary expense, and not a strategic advantage, so they limit investments in logistics infrastructure.
- Third World. The infrastructure is generally insufficient to support advanced logistics operations.
- First World, technically and managerially competent workers are available.
- Unskilled labor is relatively expensive.
- Emerging nations, skilled managerial and technical personnel are frequently not available.
- Third World, Although it may be possible to find employees, that are appropriate to the available technology level, Difficult to find Trained logistics professionals, and managers familiar with modern management techniques.
Information System Availability.
- First World, computer technology has increased at the same rate across different nations.
- Emerging nations, Support systems may not be in place to implement, efficient information systems.
- Communication network incomplete and not reliable.
- Third World, Advanced information technology is simply not available.
- Inefficient communication system.
- Some products have to be designed and manufactured, specifically for certain regions.
- For example, automobile designs are often Region-specific.
- Example: Honda Accord has 2 type of body.
True global products.
- These products are truly global, in the sense that no modification is necessary, for global sales
- Example: Coca-Cola, Levi’s jeans, and McDonald’s burgers.
Factors to be considered, while Moving from Domestic to Global Supply Chain
- Substantial geographical distances.
- Forecasting problems/difficulties in foreign markets.
- Fluctuations in exchange rates for different currencies.
- Demand for the great variety of products.
- Inadequate infrastructures such as:
labor skills, availability of supply, Supplier quality, Lack of local process equipment and technologies, Inadequate transportation facilities and Inadequate telecommunication facilities, etc. are some other factors we need to consider while moving from domestic to international.