The document discusses the evolution of globalization and its impact on supply chains. It argues that globalization has progressed from a core-periphery model based on comparative advantages to one characterized by integrated and networked supply chains. Going forward, countries and companies will need to focus on developing competencies in innovation and value creation, rather than costs, to differentiate themselves and remain competitive in an increasingly global business environment. Ireland in particular is encouraged to develop skills in process integration and innovation like Singapore has, in order to help Irish companies and the economy remain internationally engaged.
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Logistics Ireland 2006 Keynote: Globalisation Threat or Opportunity
1. LOGISTICS IRELAND 2006 KEYNOTE PRESENTATION SUPPLY CHAIN GLOBALISATION: THREAT OR OPPORTUNITY? Dr Daniel Park MASS Consulting Group Manchester, UK 5 October 2006
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4. GLOBALISATION RECONSIDERED (1) First Thoughts “ By almost any economically relevant metric, distances have shrunk considerably in recent decades.” Dr Ben Bernanke, Chairman, US Federal Reserve, 2006 “ It’s no longer a competition between products or services, it’s a competition between business models.” Professor Gary Hamel. London Business School
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6. GLOBALISATION DRIVERS Policy Drivers Competitive Drivers Cost Drivers Market Drivers GLOBAL INDUSTRY POTENTIAL * Integrative trade policies * Compatible technical standards * Common marketing regulations * Simultaneous collaboration and rivalry * Cross-border M&A * Flexible (incl. time-based) structures * Scale economics * Low transportation costs * High product development costs * Jointly managed facilities * Converging customer need * Increasing search for variety * High imports and exports * Transferable marketing
7. IMPACT ON PRODUCT LIFE-CYCLE Yesterday’s profit-makers Today’s profit-makers Tomorrow’s profit-makers Critical Phasing Critical Phasing Time Compression TIME REVENUE - PROFIT
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9. HOW DID GLOBALISATION EVOLVE? Core - periphery Comparative advantage Intra-industry trade Networked supply chains Resource endowment Value creation Economies of scale/scope Reduced logistic costs
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11. CORE AND PERIPHERY (Comparative Advantage) Natural Resources Agricultural Products Goods Capital Labour
14. FRAGMENTATION OF ACTIVITY (Intra-industry trade) Product Package Tiered Supply Simplified Distribution incl. 3PL and 4PL Final Demand
15. INTEGRATION OF PROCESSES Source: Edward Sweeney “Managing Information Flows” Logistics Solutions, Autumn 2006, page 19. Source Processors Retailers Suppliers Distributors Consumers PRODUCTS/SERVICES INFORMATION FUNDS
16. FORCES FOR CHANGE Asian Operations Multi-Process Alignment Value Migration
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18. TOWARDS A NEW VIEW OF GLOBALISATION A market is not so much about geographical demand as about the value of the decision-making authority located there. Central objective is to identify where value is created and to align resources and supply chain structures to gain share of this value. Globalisation is about the capability of contesting any market irrespective of geography.
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22. SINGAPORE INC Singapore Economic Development Board International financial institutions Investment in education Singapore as R&D centre Creation of globally-minded indigenous enterprise Attraction of internationally mobile operations.
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24. WHERE NEXT FOR IRISH COMPANIES ? (2) From “Gattorna-type” alignment of physical supply chains (service companies, 4 th -party logistics, etc) to alignment of multiple supply chains - physical, information, financial necessitating alliances, JVs, shared assets, time-based structures.