Way before globalization came into picture supply chain management as a high-yielding business principle had long been in business practice of multinational companies. Its basic dynamics are decentralized procurement, production and administration which directly have a bearing on company’s cost-competitiveness and sales optimizing procedures, such as, local culture and trend centric innovation of goods and services, localized marketing as well as promotional techniques and buyer savvy distribution models for different areas which serves to maximize company’s top line sales growth. With the arrival of globalization in the nineties and with the expected course of its becoming predominant within a few years, these constituents of supply chain management as a whole befittingly became integrated and sharpened in the aggressive business model of large multinational companies throughout the world and thus supply chain management went global. In the following lines we will discuss in 3 distinct categories how global supply chain management plays a crucial role in present world economy.
Employment and Empowerment: Hopes accentuated by global supply chain management
In an environment where most of the large MNCs are keen on outsourcing their manufacturing or services from business houses of different nations, a large number of companies with a small market capitalization and limited customer reach entered into the global platform by simply catering their production facility and services to the worldwide business network. By virtue of their low production cost and plentitude of quality manpower they proved themselves to be indispensible in a tremendously cost-competitive global scenario. It explains the dynamics of global supply chain management behind the robust industrial growth experience of many nations of Asia and South America. Consequently, in these countries, over the past decade these fostered massive employment and a professionally focused environment of education. To supplement this astounding truth there can be numerous instances. Consider the boom of IT and ITES industry in India and China and the giant manufacturing plants located all over South-East Asia which supplies as big as 40% to 60% of the global demand of many multinational brands. Thanks to the global supply chain management and its sharpened business tools such as outsourcing, relocation and local joint ventures, this new growth aspect in developing nations rapidly gave birth to an aspiring middle class empowered with technical expertise, well-paid employment and a vigorous buying capacity for its new and variable consumer needs.
The Rise and fall of Buying Capacity: How one reciprocated the other
What global supply chain management as a business principle did to foster growth in one part of the world is in turn reciprocated into a massive sales growth of the global companies headquartered in U.S., Europe and Japan, which prior to the dominance of globalization were facing a saturation in the buying capacity of the consumers and consequent fall in revenue. This explains the new boost in both production and sales and services of various multinational giants like Sony, Volkswagen, Toyota, General Motors, IBM, Motorola and many more. In some industries the business process outsourcing proved to be more effective like in IT sector, when in some cases the relocation of manufacturing plants paved the way for new, promising market or in some cases joint venture with national or local companies proved to be fruitful. Thus, as a modern and superior business principle global supply chain management with its innovative management tools like outsourcing, local partnership, relocation or joint venture played a crucial role in uplifting the spirit of global economy.
New technology and research: Market-proactive boost of global supply chain management
With the onset of globalization and its encompassing business principle of global supply chain management, as the scope of various regional, local or national economy broadened to make the sharing among different cultures possible, this caused an upsurge in demand of various culture-specific local goods. Even some family run businesses, small-scale handicraft manufacturers, small technical and maintenance service providers, automobile parts vendors or local designer garment boutique became unexpectedly exposed to global market demand. Apart from boosting revenue growth in various ends it did a wonder in fostering new and need-based technologies and subsequent research to provide multiple manufacturing, logistics and information-sharing platforms. Secondarily, once perfectly stood on the global platform, these newly-emerged companies understood that in competition with other companies of the same or bigger stature they have to continuously evolve in multiple directions, such as, business ideas, technology and research and management skills. These two perspectives actually made way for creating various culture- specific, need-oriented business principles which added to the standard tools of global supply management chain. With the upsurge of new market, new consumer behavior and need and a wagon full of new business ventures, technology took the control of various layers of business processes in way which is never thought for, in a completely unprecedented way. This exemplifies the war of technologies to offer to customer goods with a better value-for-money. Now, after two decades of running into the era of globalization and the practices of its much-evolved principle of global supply chain management, we can see the enraged technological war between the warlords of old multinational giants versus the emerging, aspiring companies of developing nations.
To conclude, one must see that the very decentralizing principles of traditional supply chain management evolved stronger in the hands of multinational companies, became more variable and improvising in application and market control in the hands of companies in a globalised business atmosphere and finally with the emergence of a band of flourishing, new brand names in the developing world it evolved into a new culture specific, technology driven variant of its former self. So, not only as a business principle it evolved through all business and economic endeavour of twentieth century, but it actually, as a guiding principle shown the human side of economic enterprise. Some basic operative truths of global supply chain management which we can summarize here are, ‘to augment your production you need to get close to your buyer geographically’, ‘to enrich your distribution reach you need to make them your partner’, ‘to maximize your sales you need to become part of their cultures and sentiments’ and ‘to optimize your revenue from what you sell you need to add different value in different cultures’.