Aly Song (Reuters)
It is the irony of our new economic age. Globalization brought with it elongated supply chains, as manufacturing and production were moved across oceans and continents. And now, a retreat from unrestrained offshoring (a trend some refer to as deglobalization or regionalization) appears to be making supply chains even longer.
Economists at the Bank of International Settlements (BIS), a Swiss-based consortium of central banks from around the world, recently mapped the realignment of global supply chains following the great supply chain shocks of the covid pandemic and Russia’s invasion of Ukraine….Story continues…
By: Mary Hui
Source: On-shoring is making global supply chains longer and twistier
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Critics:
In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management (ensuring the production of high-quality products at high speed with good flexibility and low production cost), logistics and marketing channels, through which raw materials can be developed into finished products and delivered to their end customers.
A more narrow definition of supply chain management is the “design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronising supply with demand and measuring performance globally”.
This can include the movement and storage of raw materials, work-in-process inventory, finished goods, and end to end order fulfilment from the point of origin to the point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.
Supply chain management strives for an integrated, multidisciplinary, multimethod approach. Marketing channels play an important role in supply chain management. Current research in supply chain management is concerned with topics related to sustainability, volatility, and risk management, among others. An important concept discussed in SCM is supply chain resilience.
Some suggest that the “people dimension” of SCM, ethical issues, internal integration, transparency/visibility, and human capital/talent management are topics that have, so far, been underrepresented on the research agenda. SCM is the broad range of activities required to plan, control and execute a product’s flow from materials to production to distribution in the most economical way possible.
SCM encompasses the integrated planning and execution of processes required to optimize the flow of materials, information and capital in functions that broadly include demand planning, sourcing, production, inventory management and logistics—or storage and transportation.
Supply chain management is a cross-functional approach that includes managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end consumer. As organizations strive to focus on core competencies and become more flexible, they reduce ownership of raw materials sources and distribution channels.
These functions are increasingly being outsourced to other firms that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing managerial control of daily logistics operations. Less control and more supply chain partners lead to the creation of the concept of supply chain management.
Supply chain management is concerned with improving trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement. Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy. In Peter Drucker‘s (1998) new management paradigms, this concept of business relationships extends beyond traditional enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies.
In recent decades, globalization, outsourcing, and information technology have enabled many organizations, such as Dell and Hewlett-Packard, to successfully operate collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities. This inter-organizational supply network can be acknowledged as a new form of organization. However, with the complicated interactions among the players, the network structure fits neither “market” nor “hierarchy” categories.
It is not clear what kind of performance impacts different supply-network structures could have on firms, and little is known about the coordination conditions and trade-offs that may exist among the players. From a systems perspective, a complex network structure can be decomposed into individual component firms. Traditionally, companies in a supply network concentrate on the inputs and outputs of the processes, with little concern for the internal management working of other individual players.
Therefore, the choice of an internal management control structure is known to impact local firm performance. In the 21st century, changes in the business environment have contributed to the development of supply chain networks. First, as an outcome of globalization and the proliferation of multinational companies, joint ventures, strategic alliances, and business partnerships, significant success factors were identified, complementing the earlier “just-in-time“, lean manufacturing, and agile manufacturing practices.
Second, technological changes, particularly the dramatic fall in communication costs (a significant component of transaction costs), have led to changes in coordination among the members of the supply chain network. Many researchers have recognized supply network structures as a new organizational form, using terms such as “Keiretsu“, “Extended Enterprise”, “Virtual Corporation”, “Global Production Network“, and “Next Generation Manufacturing System”.
In general, such a structure can be defined as “a group of semi-independent organizations, each with their capabilities, which collaborate in ever-changing constellations to serve one or more markets in order to achieve some business goal specific to that collaboration”. The importance of supply chain management proved crucial in the 2019-2020 fight against the coronavirus (COVID-19) pandemic that swept across the world.
During the pandemic period, governments in countries which had in place effective domestic supply chain management had enough medical supplies to support their needs and enough to donate their surplus to front-line health workers in other jurisdictions. The devastating COVID-19 crisis in US has turned many sectors of the local economy upside down, including the country’s storied logistics industry. Some organizations were able to quickly develop foreign supply chains in order to import much needed medical supplies.
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