Joke: 3

That is Globalization.htm

Chapter 3
Global Dimensions of Supply Chain
http://video.mit.edu/watch/the-world-is-flat-9145/
Recommended read: The World Is Flat
By Thomas Friedman
ISBN: 0-374-29288-4

7-9 min- Bangalour

20-24 min- Netscape
29-30 min- Supply Chaining
1

Learning Objectives 1 Dell Inspiron 600m notebook Supply Chain.doc

Describe the scope of a global companys supply chain network and

understand what questions are appropriate for the network to
function on a competitive basis.

Understand the three major phases of globalization.

1.0 Countries
2.0 Companies
3.0 Individuals

Appreciate the complexity and magnitude of the operations of some

successful global companies and why global expansion is important
to their growth.

Explain how technology and service specialists can help companies,

especially small- to medium-size firms, penetrate the global
marketplace.

Learning Objectives (cont.)

Appreciate

the importance and magnitude of the trading

partner countries of the United States and Canada.

Understand

the nature of global markets and competitive

strategy.
Explain

the rationale for global security measures and the

balance necessary to ensure that such security measures do
not impede trade.

Discuss

global transportation options and strategic

3 Japan Earthquake impact on Supply Automotive.doc
intermediaries.

3 Japan Earthquake impact on Supply.doc

Wal-Mart, Supply Chain, Globalization*

As consumers, we love supply chains, because they deliver us

all sorts of goods at lower and lower prices.
Economists calculated a saving of $4,000/year to each family,
because of Wal-Mart. That is due directly, to lower prices at Wal-Mart
and indirectly, by the pressure on prices of other retailers.

As workers, we are sometimes hostile to these supply chains,

because they expose us to higher and higher pressures to
compete, cut costs, cut wages and benefits.
In 2004, Wal-Mart purchased from 5000 Chinese suppliers,
$18,000 million worth of goods.
HP sells 400,000 computers (products and components come
from all over the world) through Wal-Mart stores, each day,
during the Christmas season.
Technology and political events enabled globalization

Supply Chains in a Global Economy

Economies

and companies could improve their

wealth by allowing specialization of tasks.

The

advantage is true as long as you can sell

the increased volume that is produced. It is an
important role of logistics to help extend the
market area of countries or companies through
improved efficiency to lower the landed cost in
new market areas.

Major differences in Global Logistics (VS Domestic)*

Distance
Logistics

networks tend to become more expensive

and complex.
Thus, lead times and inventory may rise.

Language
Units of measure
Dates of public holidays
Time zones
Culture
Currency exchange

Major differences in Global Logistics (VS Domestic)*

Political stability
Infrastructure of several countries
Environmental regulations
Labeling laws
Custom and tax regulations
Transport regulations
Documentation and paperwork

Global Markets and Strategy

The global business environment has changed significantly and

become much more conducive to business activity between and
among different countries.

Success in the global market place requires developing a

cohesive strategy, including product development, technology,
marketing, manufacturing, and supply chains.

Global markets and strategy have four important characteristics:

standardization reduces complexity
global competition reduces the product life cycle
traditional organizational structures and business models
frequently change
globalization introduces more volatility

Supply Chain Security: A Balancing Act

Given

the importance of global trade to the United

States, a delicate balance exists between security
and the efficient flow of global commerce.

More

cargo inspections, much more paperwork, and a

longer time to clear U.S. borders are now a reality.

C-TPAT is

a cooperative effort to secure the global

supply chain and to facilitate legitimate cargo and
conveyance.

Ports
Ports

are a critical part of global supply chains and

also a major focus for global security.

Americas

ports are a vital part of its global

commerce. Over $2 trillion in trade value per year
passes through U.S. ports, and over $18 billion is
collected in industry fees and taxes.

A Typical Truck Shipment Crossing into Mexico

Global Transportation Options

Ocean

The most pervasive and important global shipment method,

accounting for two-thirds of all international movements.
Major advantages are low rates and the ability to transport a
wide variety of products and shipment size
Three major categories:
Liner service
Charter vessels
Private carriers

Air

Fast transit times

An advantage in packaging
Disadvantage of air carriage is high rates

Global Transportation Options (cont.)

Motor

Use motor transport when shipping goods to between the United

States and Mexico or Canada
It is very common in Europe
Motor also plays a large part in intermodal shipments

Rail

International railroad use is also highly similar to domestic rail

use
Intermodal container shipments by rail are increasing
Maritime bridge concepts
Land bridge

CIFFA- Canadian International Freight Forwarding Association*

Attwel Drive, Toronto, ON, M9W 5Z5 (Etobicoke)
Tel: 234-5100
http://www.ciffa.com/
Most international shipments involve more than one mode of
transport. It would be nearly impossible for an individual
exporter or importer to arrange with the various carriers,
especially overseas, to pick up, document, insure,
transport, store, report to customs and deliver the goods to
destination.
A freight forwarder is capable of covering all of the above
activities (using different 3rd party companies)

Strategic Channel Intermediaries-Freight Forwarders*

CIFFA: All about the smooth flow of international trade

Supplies expertise to international shippers
Consolidate small shipments into more economical sizes
Derives income from fees for service

There are 3 main areas of expertise:

1.
2.
3.

Understanding the terms of sale and terms of delivery between seller

and buyer. And ensuring that data and documents are compliant.
Selecting the right choice of mode and route of transport, and
completing the related documentation.
Import/Export documentation and custom clearance

Strategic Channel Intermediaries (cont.)Non-Vessel-Operating

Common Carriers

Consolidates and dispenses containers at inland points

Uses the shipping expertise that NVOCCs possess
Ocean carrier gains from the increased market area

Export Management Companies

EMCs act as agents for domestic firms in the international arena
Obtain orders, selecting appropriate markets, distribution channels, and
promotional campaigns

Export Trading Companies

ETC exports goods and services to overseas buyers and handles most of the
export arrangement
ETC allows small- to medium-size firms to engage in foreign trade

Strategic Channel Intermediaries (cont.)

Customs House Brokers

Oversee the movement of goods through customs and ensure

that the documentation accompanying a shipment is complete
and accurate for entry into the country

Operate under power of attorney from the shipper to pay all

import duties due on the shipment

The importer is ultimately liable for any unpaid duties

Keeps abreast of the latest import regulations and specific

requirements of individual products

Storage Facilities and Packaging

Transit sheds provide temporary storage while the goods await

the next portion of the journey

Carrier provided hold-on-dock storage free of charge until the

vessels next departure date

Public warehouses are available for extended storage periods.

Bonded warehouses operate under customs agencys

supervision and are used to store, repack, sort, or clean
imported merchandise entered for warehousing without paying
import duties while the goods are in storage.

Packaging
Export

shipments moving by ocean transportation

require more stringent packaging than domestic
shipments normally do

The

shipper may find settling liability claims for

damage to export goods very difficult. Usually, the
freight handling involves many firms, and these firms
are located in different countries.

Some Symbols Used for Packing Export Shipments

21

Foreign Trade Zones (FTZs)

22

Goods enter without customs formalities, duty or

bond.
Shippers can break bulk before entry.
Goods can be processed, repacked, or
remarked to avoid fines before entry.
Buyer can test or sample before entry.
Goods can be stored indefinitely and/or reexported without paying duty.

Student Feedback Questionnaire: Q16, Q17, Q18

16.
17.
18.

The guest speakers on Purchasing- Dorina and Ron,

were good (Feb/05)
The guest speaker on Supply Chain Management from
Sears Canada- Jery Marion, was good (Mar/05)
The field trip to the aviation manufacturing companyCFN, was good (Mar/12)

Comment on the back of the page:

16. The guest speaker on ERP- Jacob Chan, was good
(Mar/26)