Previous

Page - 2

Introduction

Global supply chain management is the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers' requirements on a worldwide scale¹.
In other words, global supply chain management is the process of understanding and integrating the existing business activities along the value chain, with a view to improving them, while extracting efficiencies from different functional and geographic areas in order to create value for the end customer.

Drivers of Globalization

To understand the importance of global supply chains, there is a need to understand some of the drivers of globalization and their effect on the enabling of efficient global supply chains. The drivers of globalization and their effects on global supply chains are described below.

Market Drivers

The recent years have seen the globalization of products and services. There has been a growth of global market segments which are receptive to and demand branded goods and services offered by global companies such as Nike and Sony. Companies can also reduce the risk incurred by dependence on limited geographic markets and saturated markets in developed countries by catering to customers across the world.

Competitive Drivers

An efficient global supply chain can offer companies cost advantages through efficient operations, and can serve as a source of differentiation by assuring timely delivery and customer service. Typically, companies which are global competitors have substantial cost advantage over local competitors.

Also, if the customers have world wide operations and require services across different locations, a company with global operations is better suited to serve their needs. It is also being seen that globalization provides opportunities for companies to cross subsidize across markets in order to pursue growth strategies.

1 Council of Logistics Management, 2003

Next

* Contributed by -
Roshan Thomas & Ruth Balachandran,
Indian Institute of Management,
Lucknow.