CHAPTER 2 Global Dimensions of Supply Chains Supply Chain Management: A Logistics Perspective (10e) Coyle, Langley, Novack, and Gibson © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Discussion Outline © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Rationale for global trade and commerce Contributing factors for global commerce and supply chain flows Supply chains in global economy Micro perspective of global supply chains Supply chain security and role of ports 2 Rationale for Global Trade © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 Absolute advantage Lower cost and/or access to items not available locally Comparative advantage Differences in the cost of producing products in different countries Contributing Factors for Global Flows and Trade Contributing Factors for Global Flows and Trade © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 2 1 3 4 5 Population size and distribution 1 Urbanization 2 Land and resources 3 Technology and information 4 Globalized economy 5 Population = Labor © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6RankCountry2000201020152050PopulationPopulationPopulationExpected Pop.1China1,268,853,3621,330,141,2951,361,512,5351,303,723,3322India1,004,124,2241,173,108,0181,251,695,5841,656,553,6323United States282,338,631310,232,863321,362,789439,010,2534Indonesia213,829,469242,968,342255,993,674313,020,8475Brazil176,319,621201,103,330204,259,812260,692,4936Pakistan146,404,914184,404,791199,085,847276,428,7587Nigeria123,178,818152,217,341181,562,056264,262,4058Bangladesh130,406,594156,118,464168,957,745233,587,2799Russia146,709,971139,390,205142,423,773109,187,35310Japan126,729,223126,804,433126,919,65993,673,826TOP TEN Countries3,618,894,8274,016,489,0824,213,773,4744,950,140,178Rest of the World2,466,012,7692,829,120,8783,050,850,3194,306,202,522TOTAL World Population6,084,907,5966,845,609,9607,264,623,7939,256,342,700 Source: Table 2.1 Population = Labor (continued) © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 Source: Figure 2.1 © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8 Urbanization The rise of “megacities” – By 2030, 60% of the world’s population will live in urban areas (vs. 47% in 2000) .

1. CHAPTER 2
Global Dimensions of Supply Chains
Supply Chain Management: A Logistics Perspective (10e)
Coyle, Langley, Novack, and Gibson
© 2016 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
Discussion Outline
© 2016 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Rationale for global trade and commerce
Contributing factors for global commerce and supply chain
flows
Supply chains in global economy
Micro perspective of global supply chains
Supply chain security and role of ports
2
Rationale for Global Trade
© 2016 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.

2. 3
Absolute advantage
Lower cost and/or access to items not available locally
Comparative advantage
Differences in the cost of producing products in different
countries
Contributing Factors for Global Flows and Trade
Contributing Factors for Global Flows and Trade
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scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
5

3. 2
1
3
4
5
Population size and distribution
1
Urbanization
2
Land and resources
3
Technology and information
4
Globalized economy
5
Population = Labor
© 2016 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
6RankCountry2000201020152050PopulationPopulationPopulati
onExpected
Pop.1China1,268,853,3621,330,141,2951,361,512,5351,303,723
,3322India1,004,124,2241,173,108,0181,251,695,5841,656,553,
6323United
States282,338,631310,232,863321,362,789439,010,2534Indones

4. ia213,829,469242,968,342255,993,674313,020,8475Brazil176,3
19,621201,103,330204,259,812260,692,4936Pakistan146,404,91
4184,404,791199,085,847276,428,7587Nigeria123,178,818152,
217,341181,562,056264,262,4058Bangladesh130,406,594156,11
8,464168,957,745233,587,2799Russia146,709,971139,390,2051
42,423,773109,187,35310Japan126,729,223126,804,433126,919
,65993,673,826TOP TEN
Countries3,618,894,8274,016,489,0824,213,773,4744,950,140,1
78Rest of the
World2,466,012,7692,829,120,8783,050,850,3194,306,202,522T
OTAL World
Population6,084,907,5966,845,609,9607,264,623,7939,256,342,
700
Source: Table 2.1
Population = Labor (continued)
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accessible website, in whole or in part.
7
Source: Figure 2.1
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scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
8

5. Urbanization
The rise of “megacities” – By 2030, 60% of the world’s
population will live in urban areas (vs. 47% in 2000)
Change most profound in the less and least developed countries
of the world – Urban sustainability challenges
Image courtesy of Gijsbert Koren
Land and Resources
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accessible website, in whole or in part.
9
Critical role of technology in mitigating resource scarcity
Image courtesy (left to right) of NRCS (USDA), U.S. Chamber,
Agricultural Law blog, and Glacial Energy
Crop & forest Land
Water
Food
Energy

6. Technology and Information
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scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
10
Technology as an “internal” change agent
Enhanced efficiency, effectiveness, and ability of an
organization to compete in the global marketplace
Technology has two important dimensions.
Technology as an “external” change agent
New forms of competition or new business models (e.g.
omnichannel distribution, global outsourcing)
Globalized Economy
Export-Trade Flows of Merchandise (2014)
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accessible website, in whole or in part.
11

7. Source: Figure 2.2
Globalized Economy
Import-Trade Flows of Merchandise (2014)
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accessible website, in whole or in part.
12
Source: Figure 2.3
Globalized Economy
U.S. Total Exports and Top Export Partners (2014)
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accessible website, in whole or in part.
13
Source: Table 2.4 RankExport PartnerTotal Merchandise
(Thousands
USD)World1,620,531,899,9581Canada312,420,805,0482Mexico
240,248,662,8123China123,675,667,4014Japan66,827,397,5075
United Kingdom53,823,429,5876Germany49,363,335,2547South
Korea44,471,327,8318Netherlands43,075,167,5319Brazil42,429
,393,19110Hong
Kong40,857,860,57611Belgium34,789,502,31012France31,300,
777,142RankExport PartnerTotal Merchandise
(Thousands

8. USD)13Singapore30,237,316,17614Taiwan26,670,195,71815Au
stralia26,581,669,43716Switzerland22,175,920,05917United
Arab
Emirates22,069,272,40218India21,607,502,70719Colombia20,1
06,608,17820Saudi
Arabia18,704,915,50221Italy16,968,200,54222Chile16,514,555,
09523Israel15,083,044,95924Malaysia13,068,413,08825Thailan
d11,809,766,363
Globalized Economy
U.S. Total Imports and Top Import Partners (2014)
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accessible website, in whole or in part.
14
Source: Table 2.5 RankImport PartnerTotal Merchandise
(Thousands
USD)World2,347,685,228,5341China466,754,455,2392Canada3
47,797,986,0923Mexico294,074,053,4154Japan134,003,716,530
5Germany123,259,613,6666South Korea69,518,424,3857United
Kingdom54,392,304,6988Saudi
Arabia47,040,791,3589France46,873,955,07910India45,244,019
,93711Italy42,115,177,01812Taiwan40,581,485,120RankImport
PartnerTotal Merchandise (Thousands
USD)13Ireland33,955,621,19214Switzerland31,190,602,04815V
iet
Nam30,588,511,32816Brazil30,536,551,55117Malaysia30,420,3
78,58818Venezuela30,219,171,64419Thailand27,122,648,58320
Russian
Federation23,658,083,16421Israel22,962,203,40322Belgium20,
885,204,35823Netherlands20,818,228,94424Indonesia19,360,89
2,96225Colombia18,299,722,680

9. Supply Chain in Global Economy
Supply Chain in Global Economy
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16
Global trade growth has been fueled by free trade agreements
(FTAs) that lift most tariff, quota, and fee/tax limitations on
trade.
The best supply chains compete very successfully on a national,
regional, and global basis.
Bilateral
FTAs
Regional
Bi-lateral agreements are between two nations
US currently in 20 bi-lateral FTAs
Regional trade agreements involve 3 or more nations
US currently involved in:

10. Free Trade Area of Americas
Middle East Free Trade Initiatives
Enterprise for ASEAN Initiatives
North American Free Trade Agreement (NAFTA)
Supply Chain in Global Economy
NAFTA
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17
NAFTA establishes free trade among Canada, the United States,
and Mexico.
NAFTA’s goals involve making structural changes to operate a
borderless logistics network in North America.
Image courtesy of PanCanadian Immigration Law Group
Micro Perspective Of Global Supply Chains
Global Markets and Strategy
Global Markets and Strategy
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11. 19
Success in the global market-place requires development of a
cohesive set of strategies including product development,
technology, marketing, manufacturing, and supply chains.
Supply chain perspective
Customer service perspective
Global Markets and Strategy
Supply Chain Perspective
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accessible website, in whole or in part.
20
Strategically sourcing materials and components worldwide
Selecting global locations for key supply depots and DCs
Evaluating transportation alternatives and channel
intermediaries
Understanding governmental influences on global SC flows
Examining opportunities for collaboration with 3PLs or 4PLs
1

12. 2
3
4
5
Global Markets and Strategy
Customer Service Perspective
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21
Standardization to reduce complexity must maintain some
customization.
Global competition often reduces the product life cycle.
Organizational structures and business models change with
more outsourcing.
Globalization introduces more volatility and complexity.

13. 1
2
3
4
Supply Chain Security and Role of Ports
Supply Chain Security
A Balancing Act
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23
Security
Efficient Flows
Security Measures
The Trade Act of 2002
The U.S. Maritime Transportation Security Act of 2002
The Customs Trade Partnership Against Terrorism (C-TPAT)
Global Trade Flows

14. Electronic filing of cargo information
Standards for container seals and locks, cargo tracking,
identification, and screening systems for ocean containers
A “green lane”
Role of Ports
Global Supply Chain and Security
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accessible website, in whole or in part.
24
Over 90 percent of U.S. international trade passes through
ports.
Ports are bases of operation to deploy troops and equipment.
Ports are a critical part of global supply chains and a major
focus for global security.

15. Summary
Trade flows between the United States and other countries have
grown considerably, resulting in global supply chains becoming
increasingly important.
The increased complexity and competiveness of a global
economy have resulted in shorter product life cycles, new forms
of competition, and new business models.
Success in the global marketplace requires ongoing
development of a cohesive set of strategies that has implications
to both supply chains and customer services.
Companies individually, jointly, and in cooperation with the
government are actively involved in supply chain security.
With increasing regional economic integration, NAFTA has
helped to foster trade in North America.
CHAPTER 1
Supply Chain Management:
An Overview
Supply Chain Management: A Logistics Perspective (10e)
Coyle, Langley, Novack, and Gibson
© 2016 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.

16. Discussion Outline
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scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Five major external forces
Development of supply chain management concept
Integrated supply chain characteristics
Supply chain flows
Major supply chain issues
2
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accessible website, in whole or in part.
3
Leading Retailers (Sales Year)2000201020141. Wal-Mart 1.
Wal-Mart 1. Wal-Mart2. Kroger2. Kroger2. Kroger3. The
Home Depot3. Target3. Costco 4. Sears, Roebuck &
Company4. Walgreen4. The Home Depot 5. Kmart5. The
Home Depot5. Walgreen6. Albertson’s6. Costco6. Target7.
Target7. CVS Caremark7. CVS Caremark 8. JC Penny8.
Lowe’s8. Lowe’s9. Costco9. Best Buy9. Amazon.com 10.
Safeway10. Sears Holdings10. Safeway
Source: Table 1.1

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4
Five Major External Forces
1
2
3
4
5
Government
Policy &
regulation
Organizational
consolidation
Globalization
Technology
Empowered
consumer
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accessible website, in whole or in part.
5

18. Five Major External Forces - Globalization
Inventory management challenges
Faster duplicability of products & services
Faster reduction in demand
Requirement of new pricing policies
Higher risk of obsolescence
Longer and more complex supply chain challenges
Growth and increased scope of outsourcing
Images courtesy of Daily Lending News
Globalization creates more economic and political risk, shorter
product life cycle, and the blurring of traditional organizational
boundaries.
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accessible website, in whole or in part.
6
Five Major External Forces - Technology
The Internet. “Connected” 24/7
Images courtesy of National Conference of State Legislatures
Social networks. Impact on customer demand and the speed of
information transfers
The world’s “knowledge pool” connection. Opportunities for
collaboration in supply chains

19. Technology is a facilitator of internal process and supply chain
transformation. It is also a major force in changing the
dynamics of the marketplace.
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accessible website, in whole or in part.
7
Five Major External Forces – Organization Consolidation and
Power Shifts
During the 1980s and especially the 1990s, economic power and
the driving force in supply chains shift from product
manufacturers to the retail end of the supply chain.
More collaboration among organizations in supply chains
Win-win, improved services such as:
Scheduled deliveries
“Rainbow” pallets
Advance shipments notices (ASNs) shrink-wrapped pallets
Sharing of point-of-sale data to mitigate “bullwhip effect”
Images courtesy of Community Services and Health Industry
Skills Council (Australia)
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20. accessible website, in whole or in part.
8
Five Major External Forces –
Empowered Consumers
Consumers are empowered by exponentially expanded access to
product sources and related information and increased buying
power due to high income levels.
Increased pressures on supply chain due to increased demands
at the retail level in terms of:
Competitive prices
High quality in products and services
Tailored or customized products
Convenience and responsiveness – 24/7 availability with a
minimum of wait time
Flexibility – Omnichannel distribution strategies
Images courtesy of Forrester Research
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accessible website, in whole or in part.
9
Five Major External Forces –
Government Policy and Regulation
More competitive environment is a result of the deregulation of
several important sectors in the United States occurred in the
1980s and 1990s.

21. The transportation industry. Expanded services beyond
transportation, with service providers’ role evolving to
outsourcing partners
Images courtesy of Liberty Unyielding
The financial sector. More flexible and responsive to customer
needs, making businesses more cognizant of supply chain
management impact on efficiency and cash flow
The communications industry. A component of the information
revolution, leading to dramatic improvements and opportunities
in logistics and supply chains
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10
Evolution of Supply Chain Management Concept
Demand forecasting
Purchasing
Requirements planning
Production planning
Manufacturing inventory
Warehousing
Material handling
Packaging
Finished goods inventory
Distribution planning
Order processing
Transportation
Customer services

22. Strategic planning
Information services
Marketing/Sales
Finance
Activity fragmentation to 1960s
Activity integration 1980s
1990s +
Purchasing/
Materials Management
Physical Distribution
Integrated Logistics
Supply Chain Management
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11
Integrated Supply Chain – Basics
SCM is the art and science of integrating the flows of products,
information and financials through the entire supply pipeline
from the supplier’s supplier to the customer’s customer.
Suppliers
Contracted Manufacturers
Manufacturers
Wholesalers/ Distributors
Retailers/ Customers
Product/Services Flow
Information Flow
Finance /Cash Flow

23. Demand Flow
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12
Integrated Supply Chain – Network
Retail Store
Retailer Warehouse
Manufacturing Warehouse
Manufacturing Plant
Wholesaler Warehouse
Raw Material Supplier

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13
Supply Chain Flows
PRODUCT FLOW
Physical movement of goods and materials
INFORMATION FLOW
Enabling physical flow of products
Decision making
Supply chain collaborations
CASH FLOW
Management of working capital
DEMAND FLOW
Detect and understand demand signals
Synchronize demand vs. supply
Source: Figure 1.8
Major Supply Chain Issues

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accessible website, in whole or in part.
14
Cost and
value
Information
Organizational relationships
Inventory deployment
Complexity
Technology
Performance measurement
Supply chain security
Transportation management
Talent management
3
5
7
8
10
11
4
6
9
Supply chain network
1
2
Major Supply Chain Issues (continued)
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26. accessible website, in whole or in part.
15
Images courtesy of (left to right) Elemica, The Mudd
Partnership, Qstrock Inventory
The challenges
Network system (facilities and supporting transportation
services) must be capable and flexible to respond and change
with market dynamics.
Supply Chain Network
The challenges
Increased requirements in simplifying and continually
evaluating areas of complexity in the various aspects of supply
chains
Complexity
The challenges
Increased requirements for coordination or integration to reduce
inventory levels on horizontal (single-firm) and vertical
(multiple-firms) levels in the supply chain.
Inventory Deployment
Major Supply Chain Issues (continued)
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accessible website, in whole or in part.
16
Images courtesy of (left to right) TTGT Media, in-sourcing, The
Billing Project.

27. The challenges
The sharing of information along the supply chain
The discipline to ensure the integrity of the vast amount of data
collected and stored
Information
The challenges
The prevention of sub-optimization.
Cost and Value
The challenges
Internal collaboration (marketing, sales, operations, finance,
etc.)
External collaboration (vendors, customers, transportation
companies, 3PLs)
Organizational Relationships
Major Supply Chain Issues (continued)
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accessible website, in whole or in part.
17
Images courtesy of (left to right) FCW, Pixabay, The FSL
Group
The challenges
Connecting lower-level metrics in an organization directly to
the high-level performance measures of the organization and the
supply chain

28. Performance Measurement
The challenges
Evaluate, strategically plan, and successfully implement the
technology to make the improvements desired
Technology
The challenges
Transport “perfect storm.” Transport market changes; driver
shortages; fuel costs; infrastructure constraints; and regulatory
changes
Transportation Management
Major Supply Chain Issues (continued)
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accessible website, in whole or in part.
18
Images courtesy of (left to right) One Source Technology,
MediaTec Publishing
The challenges
Risk of disruptions, vulnerability, and exposure to terroristic
threats exacerbated by distance and complexity in global supply
chain
Supply chain security
The challenges
Attract, develop, and maintain the appropriate pool of talent
from entry level to executive level
Talent management

29. Summary
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accessible website, in whole or in part.
19
The rate of change has been driven by a set of external forces
including globalization, technology, organizational
consolidation and shifts in power in supply chains, empowered
consumers, and government policy and regulations.
Supply chains are extended enterprises which require managing
four flows—products, information, financials (cash), and
demand on a collaborative basis.
The global supply chains of the best companies must be
adaptive, resilient, and responsive to meet the challenges of the
global economy and develop mitigating strategies for disruptive
forces.