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Ammar Ahmed

IMPACT OF Registeration # 36312

With the advent of the internet and other technologies, the improvement of
transportation infrastructures, and significant developments in trade, the world
has gotten much, much smaller in recent decades. In fact, globalization has
affected most facets of our lives, including politics, economics, education,
health, employment, and culture. It is no surprise that globalization has also
greatly affected supply chain management (SCM).
Globalization has dramatically changed how manufacturers operate, offering an
opportunity to reach new customers in new markets while at the same time
exposing firms to greater competition. Meanwhile, raw materials and supplier
relationships must now be managed on a global scale. Just as there are benefits
and costs of globalization, there are similar pros and cons of a global supply
Factors that impacts to increase supply chain surplus due to

Globalization has unlocked a plethora of new opportunities for supply chain

management, from expanded sourcing opportunities to expanded markets.
These opportunities beget two larger opportunities: the chance to save money
and the chance to increase efficiency. Lets take a closer look:

1. Expanded sourcing opportunities:

A world market offers businesses opportunities to secure a diverse selection

of workers, materials, and products. This larger selection of goods and
services often means the opportunity to select higher-quality or lower-cost

2. The opportunity to reach new customers in new markets:

Just as globalization offers more materials and laborers, it also offers new
customers in new locations with new needs.

3. More room to grow:

New technologies and a shrinking globe mean that it is easier for companies
to grow generally: to produce more, offer more, and sell more. Expanding
borders also means expanding businesses and corporations.

4. More opportunities to save money:

Globalizations biggest benefit is that increases options: options for source

materials, options for workers, and options for transportation. More options
mean more chances to save on spending and increase profits.
Factor thats increase Supply Chain un-certainty:
There are three major factors that impact supply chain risk: Increasing supply
chain complexity, decreasing access to information and greater need for higher
quality faster, all for a lower cost. The ability to anticipate and address risk
effectively has been severely handicapped by complexity. Now that
manufacturers are outsourcing more work to suppliers across the globe and are
managing second and third tier suppliers, it has become difficult to track, trace
and monitor production.

Increasing complexity:

Supply chain complexity continues to increase in a number of ways. Companies

are outsourcing more aspects of their business to globally distributed supplier
networks. The manufacturing process has become infinitely more complex than
a simple assembly line. Manufactures today need to manage multiple product
lines, which are each assembled from parts coming from different suppliers.
And, those parts may require sub-assembly by other suppliers. Confusing
already, isnt it?

In addition to all of this, manufacturers need to manage logistics, knowing

where and when products need to be to meet demand across the globe. The large
numbers of geographic markets where products are now being sold continues
to increase. With this growth has come an increasing volume of regulations that
must now also be complied with, especially if you manufacture life science or
aerospace products.

Complex supply chain partnerships simply cant be avoided, offering

manufacturers an efficient, cost effective strategy to access new markets to
develop and deliver products in otherwise untapped regions.

Lack of data

As companies continue to expand globally, operational decisions will be made

regardless of whether all the right information is available. Unfortunately, if the
proper communication and collaboration systems arent implemented, a lack of
data correlates directly to an increase in risk. When organizations dont have
the right information to make an informed decision, a higher level of risk exists
that an undesirable outcome will occur.

So, what does this all mean when something goes wrong or there is a supply
chain disruption?

Because of globalization, it means that there is an increased likelihood that

companies will be exposed to and impacted by more adverse events, such as
natural disasters, political and economic instability, supply disruptions,
economic volatility and more. If you operate in more markets with more
partners, the odds are you will be more likely to face one of these disruptions.

Lets look at the Thailand floods as an example. Disk-drive companies were hit
hard after key suppliers were knocked out of commission. The companies
needed to reroute work to other suppliers not affected by the floods. Without
the correct, real-time data of when, where and how much supplies were affected,
it is difficult to quickly regain stability.

These events are hard to manage. Manufacturers need to find a way to succinctly
manage multiple suppliers across a number of regions.

As a result, the value of supply chain visibility has increased significantly. This
capability helps to significantly minimize risk of loss, order delays and reduced
quality. Manufacturers that take a wider, more holistic perspective across
operations can better manage complex supply chains. By implementing
technologies that can increase visibility into the supply chain, manufacturers
can more easily collaborate and communicate with suppliers. Not only will
processes instantly improve, but the ability to prevent (or at least minimize)
disruptions will help to increase the bottom line.

Need for greater quality, faster, cheaper:

With new markets for customers comes new competitors. When you are
competing on a global scale for supplier partners, the sky is literally the limit.
Anyone can now compete, so demands can become elevated, especially if a big
OEM order is at stake. Competitors may literally be betting the company to
get a specific order, so could be very aggressive when bidding. This situation
occurs regularly, such that it has now become a big challenge and new source of
risk to global manufacturers. How can you be sure that your low cost bidder
really has the capability to deliver your complex supplier sub-assemblies on
time and to specifications? Further, how well will they perform if you need
multiple design changes or other modifications across your global organization?
Will they still be able to provide you with the necessary traceability and
operational intelligence so you can stay lean and remain a low cost provider?

In the end, a global marketplace has been both a blessing and a curse, to an
extent. While new markets have opened up, greater risk now exists, which could
potentially impact the survivability of your company. And, as some of these risks
could even compound with each other, it is now critical for manufacturers to
increase their visibility into not only their own operations, but those of their
suppliers. With this much risk in play, any system that can help mitigate excess
risk is well worth the investment.