Globalisation: Its Not-So-Small World Block 2 - Session 3 (Chapter 10) -…
Globalisation: Its Not-So-Small World
Block 2 - Session 3 (Chapter 10)
failure to cost up all the costs of offshoring (landed cost, inventory holding cost, cost of product obsolescence)
for success visit the country so you know the layout of the culture and opportunities
short term lower labor costs (not long term:!:)
nearshoring is becoming more of a trend now - the supply chain closer to home
how will the products be distributed
The need for supply chain visibility
regular or live visibility helps manage the supply and demand more effectively
Develop a global vision
they invest in enabling management structures and systems to deploy their global vision
they configure their supply base to optimize the mix of local suppliers and global suppliers.
create an effective corporate global vision “as a primary driver for investing resources and effort in seeking global suppliers and customers,”
They deploy resources to ensure that suppliers’ capabilities are aligned with their competitive and manufacturing strategies.
Closer to home
: nearshoring, rightshoring, inshoring, and reverse globalization
low-cost country within its hemisphere to save on logistics costs
balanced geographic portfolio to avoid some of the risks associated with low-cost country sourcing
Playing by somebody else's rules
Objectives & Qs when selecting a distribution site
how flexible is the business's market strategy?
how quickly can you enter & serve the market? can you afford this? buy property near key sites - airports, seaports, highways, railroads
is the business strategy to own overseas real estate?
are logistic services available & reliable in the area?
have you established a relationship with the local Customs departments & other officials? obtained the proper bonds & licenses?
have you established a local supply base? become familiar with local laws & cultures. Hire a manager with both logistics experience & knowledge of the key end markets.
Living in a somewhat flat world
Finding the next global hot spot
look at underdeveloped countries to see what opportunities might be there before others do
consider the risks (i.e. political structure and logistics infrastructure) Page 130
weighs logistic performance of 150 countries -
(World Bank & Finland-based Turku School of Economics - activity 3.4 OU see pg 123 for counties)
competence of local logistics providers
capability to track & trace international shipments
ease & affordability of arranging international shipments
cost of domestic logistics
quality of transportation & IT infrastructure for logistics
on-time delivery performance
the efficiency of the customs clearance process
Keeping an eye on China
companies - keep a close eye on China's logistics & infrastructure - very different way of doing things
don't show desperation as the - China will take advantage
China's business models are designed to change quickly
underdeveloped, and poorly serviced in respect of physical & communications infrastructure
the country’s railroads can only handle 30 percent of the current demand
keep a close eye on costs and analyse regularly to identify changes
"Low cost" sometimes "Poor service"
appeals & disadvantages
labour is cheaper
this is not a long-term solution (levels out with the offshore companies short falls)
tranporation costs increase
maritime vesels are the cheapest transportation option
some companies are at risk cause they do not have a defined strategy on how to manage their offshore resources
Take a look for yourself
go to the country and assess in person
too much police & military personnel
lack of traffic control
illegal behaviours without consequences
carry out a "regional logistics assessment" (evaluate the country's logistics assets & abilities etc.)
consider property purchase restrictions
consider legal requirments
consider financial demands