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Production shifting : Flexible factories, excess capacity and suppliers used to shift production from region to region to take advantage of current circumstances.
Information sharing : Information can be used to anticipate market changes and find new opportunities .
Global coordination : Having multiple facilities worldwide provides a firm with a certain amount of market leverage that it might otherwise lack.
Political leverage : The opportunity to move operations rapidly gives firms a measure of political leverage in overseas operations. For example, if governments are lax in enforcing contracts or international law, or present expensive tax alternatives, firms can move their operations.
Product development : It’s important to design products that can be modified easily for major markets, and which can be manufactured in various facilities.
Purchasing : A company will find it useful to have management teams responsible for the purchase of important materials from many vendors around the world. In this way, it is much easier to ensure that the quality and delivery options from various suppliers are compatible
Production : Excess capacity and plants in several regions are essential if firms are to take full advantage of the global supply chain by shifting production as conditions warrant.
Demand management : It involves setting marketing and sales plans based on projected demand and available product, is carried out on a regional basis.
Order fulfillment : To successfully implement a truly flexible SCM system, a centralized system must be in place so that regional customers can receive deliveries from the global supply chain with the same efficiency as they do from local or regionally based supply chain.
To access new market may require handing over critical manufacturing and engineering expertise
At any time the threat of protectionism might appear.
Regional Differences in Logistics First World Emerging Third World Infrastructure Highly developed Under development Insufficient to support advanced logistics Supplier operating standards High Variable Typically not considered Information system availability Generally available Support system not available Not available Human resources Available Available with some searching Often difficult to find
Elements of a Global SCM Customer Service Requirements Organizational Design and Training Requirements Performance Goals Global Supply Chain Management Business Processes Plant and Distribution Center Network Design Information Systems Key Customer and Supplier Relationships Performance Metrics Inventory Management Outsourcing and Third-Party Logistics Relationships
Improve Quality Supplier Networks Improve Delivery of Supplies Establish a Presence in a Foreign Market Reduce Costs Reasons for Global Sourcing Strategies React to Competitor’s Offshore Sourcing Practices Increase Exposure to Worldwide Technology Strengthen Reliability of Supply Gain Access to Materials Satisfy Offset Requirements
Evaluate operating and competitive environments Define scope of international purchasing effort Identify and evaluate potential suppliers worldwide Determine appropriate nature of buyer-supplier relationship Request/evaluate proposals from suppliers Continual reevaluation of implementation status, requirements, and capabilities Select “best” supplier, establish contract terms and conditions, and build desired relationship Steps in the Global Sourcing Process