I have been eyeball deep in course work leading to certification within the world of Global Supply Chain Management as well as marketing. This was part of my final exam and I refuse to let it sit in on a computer hard drive, collecting binary dust…It was submitted and it has been graded, so there are no ethical quandaries. It’s done, it’s over and I haven’t been this happy or this relieved in a long time.
Global Sourcing and Global Supply Management; A Reality
“It’s a small world, after all” and nowhere is this more in evidence than in the exhilarating world of modern global sourcing and supply management.
Technology has thrown open the doors of potential success to previously national and cultural centric marketplaces around the world, China as an example. Once considered a secretive sleeping giant, China has awoken and changed the face of global supply and demand, offering manufacturing, packaging and distribution on a massive scale.
(For Economist Print Edition, 2013)
Advances in computer hardware, software and modes of communication allows a buyer in Nigeria to be in contact with a supplier in Shanghai within minutes, their needs discussed, prices negotiated and sale completed, in just a few hours whereas 25 years ago, the two would have never had the opportunity to meet, much less do business.
The internet has created a global marketplace where regardless of a buyer’s requirements; there is someone available, within a few clicks of a mouse or taps on a keyboard, able to fill that need thereby, saving time, frustration as well as lowering the cost of doing business, increasing productivity and of course, profit. All of this is possible by virtue of the speed of access to information. Thanks to technology.
A simple and easy example of global sourcing is the E-Bay market model. It is microcosm of the reality of our international bazaar combined with the efficiency of centralized and familiar monetary systems, such as VISA, Mastercard and the newer option, Paypal. In addition, a variety of methods for shipping of goods are available, from common parcel post to U.P.S and Fed Ex as well as any other option preferred by buyer or seller. A buyer simply enters his/her need into the E-Bay system, a list of potential sellers is generated, the buyer selects a seller and an offer is made. Upon acceptance of the offer, shipping and handling is discussed, and an agreement is contracted; the goods are shipped via the agreed upon method and within days, the buyer has, in her/his possession, the items desired. E-Bay reflects the principles of global sourcing and supply chain management.
E-bay addressed the end user directly, operating as a facilitator of trade and is not so different from the modern commercial and industrial methods of securing raw, partial and completely finished goods. Buyers are no longer bound by borders or inadequate and time consuming methods of communication; tentative and expensive long distance calls overseas, or perhaps the almost antiquated mailing of requests method. Nations have recognized the changes in the global sourcing and many have responded to the need for more efficient import and export regulations. The most obvious for North Americans is NAFTA – the North American Free Trade Agreement. This monumental step forward opens up the previous trade barriers between the countries of Canada, the United States and Mexico, allowing all three nations to be more competitive and better able to serve not only each other but the world at large, through the sharing of common trade. NAFTA is by no means the biggest of free trade agreements; many continents, many countries have initiated free trade in order to take advantage of the world of global sourcing:
- ASEAN Free Trade Area (AFTA)
- Asia-Pacific Trade Agreement (APTA)
- Central American Integration System (SICA)
- Central European Free Trade Agreement (CEFTA)
- Common Market for Eastern and Southern Africa (COMESA)
- Greater Arab Free Trade Area (GAFTA)
- Gulf Cooperation Council (GCC)
- South Asia Free Trade Agreement (SAFTA]
- Southern African Development Community (SADC)
- Southern Common Market (MERCOSUR)
This is truly a breathtaking time for everyone within the freight forwarding and global supply management networks. For a peek at what lies ahead for the world of supply and trade:
So much in the works under the auspices of the World Trade Organization (WTO); an organization that has seen itself grow and become an absolute in the world of fair and global trade. The WTO oversees trade regulations, it provides the criterion of negotiation between participating countries, as well as providing a process designed to resolve disputes and ensure that participants conform to WTO agreements, signed by the representatives of the respective governments involved in the agreement process.
The WTO more than any other governing or regulatory body personifies the explosive growth of global trade. A mere half a century ago, this type of governing entity would well have been the stuff of science fiction; a dream of a world where trade could be as unfettered as possible, where the sharing of goods and even culture would become common place. The future is now and it is a time where everyone can take an active role in the developing of faraway nations and economies. The simple act of a product purchase from a store, a product manufactured internationally or the more complex purchase of raw goods abroad brings with it a positive upswing to an economy and helps to improve the lives of people living in countries thousands of kilometres away.
Global sourcing, along with its tremendous possibilities, has an almost equal number of tremendous hurdles. An industry or commercial concern, in 2013 must not only work toward research and development of its core business; it must always try to keep one step ahead of rivals but at the same time, remaining competitive in an ever changing world of supply and demand.
A government by relaxing trade regulations, not only opens up their own borders to the exportation of goods but the importation as well, thereby creating a strong culture of economic growth through cooperation, and integral to the continuation of this growth process is the industry that is global supply management.
In order to maintain the aforementioned competitive edge, companies are looking toward global supply management to aid in freeing up time, assets and capital. A company which specializes in athletic wear, for example, cannot be expected to also specialize in the complex world of the movement of goods. Attempting to do it all, often spreads resources too thin and something must give; usually profit margins. Their priority should be their core business; developing their product, advancing their own technologies to meet the demand of the end user or consumer.
Global supply management steps in to offer seamless methods of transportation, warehousing, cross-docking, inventory management, packaging, freight forwarding and distribution. Details regarding network configuration of suppliers, production, packaging, distribution and availability to end users are left to the expertise of the global supply management company, which in turn utilizes cutting edge software and technological advances to ensure that this global marketplace continues to grow and expand, welcoming developing nations and offering economic advantages where none would have existed were it not for this age of electronic advancement.
Along with the development of nations, comes increased cash flow as a direct result of global sourcing and the employment opportunities which come along with it. This increased cash flow, then creates a whole new group of consumers. Widening the global market even further.
The modes of transportation have also seen the benefits of technology vis a vis satellite tracking on ships, on rail and on transport trucks. Air freight is thoroughly monitored and schedules meticulously maintained. Food, medicines and other perishable goods can be safely transported due to electronically monitored temperature controlled containers and trailers. Health and welfare of the people of the world is yet another benefit of the technological world of global supply.
Unfortunately, with the increase of mobility of people and goods, comes very real concerns; not only can legitimate goods be transported but so too can illegal goods make their way through nations, sowing destruction. An obvious example would be drugs and arms but there are other less obvious concerns, food and raw material born pests and disease. The professional global supply chain management concern is aware and up to date on these threats and the methods employed by various governments to ensure the safety of their populace. Through government information website and e-mail updates, for example the CIFFA daily e-bulletins, technology allows the astute global management team to keep abreast of important industry controls and security alerts as well as civil unrest, strikes, natural and unnatural disasters allowing for competent and efficient managing of clients’ needs.
None of this would be possible were it not for the advances in computer technology and modern methods of communication. Regardless of the location of the client of a global supply management company, real time tracking and analysis is at their fingertips thanks to the progressive thinking within the global sourcing and supply management milieu. Supply chains welcome new methodology that simplifies tracking, tracing and analysis of product and data. The world wide web and the absolute necessity of an online presence of a supply chain or global sourcing company allows for a window access to the customer or on a smaller scale, the consumer. An example would be the application of a bar code sticker to product, followed by the use of a bar code reader. The reader is used to scan the bar code and coupled with specifically designed software each in turn receives the information contained within that bar code, interprets this information and then instantly uploads to a computer. From the computer, again with more specifically designed software, this information can be uploaded to a company’s web site, allowing employees and customers from all over the world to track the every movement of product in real time. Before this brave new world of technology, truly, the only access a customer possessed with regard to the movement of his goods was through a phone call and educated guess, at best. Hope and a prayer at worst.
Buyers, suppliers and end users have never before experienced the advantages of the world of trade that currently exists, the opening of borders through free trade, the creation of new industries, of new economic opportunities in countries that have, historically, been underdeveloped due to a lack of access to the global market.
The world is a smaller place, a place where the exchange of culture along with goods has become a reality. The science fiction world of a global village is just a little closer to reality thanks in no small part to the world of supply chain management and the enormous impact its growth has had on the marketplace thanks to technological advances, free trade and the increase of supply to meet demand.