Compare and contrast the advantages and disadvantages of having a global supply

Question

Compare and contrast the advantages and disadvantages of having a global supply chain. How might such things as Political and currency stability affect a supply chain? How might Environmental laws affect a supply chain. How would both labor law and stability affect the supply chain? Finally how would security and transportation cost impact the supply chain and a companies bottom line?  

You may use examples of companies that have been hurt or benefited from using a global supply chain. If you choose this method you will have to go in depth as to what worked well or failed and why. And how you would do things differently.

You may also write paper in your own words with your thoughts on each of these matters. You will have to back up your own thoughts with facts. This is NOT political science class so I am not looking for anyone to just state their opinion for or against Global trade.

Explanation / Answer

It is not possible to answer all your questions at a time. Please post 2 questions at a time. Answering to your few question below

Following is the advantage of having a global supply chain

1. International customers - Global supply chain provides an opportunity to increase their customer internationally across the different countries. This would involve firm to deliver the right product in the right quantity and in the right condition at the right place at right price. Hence this will help to increase the level of satisfaction of the customer.

2. Brand image - Going internationally will help the firm to create brand image in the minds of the customer. The firm is internationally recognized as a brand as well as product. The firm shall come up with different product line to compete with international market.

3. Expansion - Global supply chain would increase the chance of expanding their market to different part of the countries. The firm can target those countries where there are untapped markets.

4. Increase Sales and Profit - With the presence of firm in the international market, it is very obvious that the sales will increase and profit will grow.

Following are the disadvantage of having a global supply chain

1. Bullwhip effect - The variation in demand and supply of product leads to bullwhip effect. Most of the business does not forecast their sales which often impact operations of the business. Demand and supply are constantly changing and can be only predicted by using forecasting techniques. Due to bullwhip effect, the business suffers either excess stocks or stockout.

2. Capacity management - Some business do not understand the importance of capacity and hence often loose sales due to lack of capacity management.

3. Organization structure - The most important in business is organizational structure. Business needs to downsize the organizational structure to make decision quickly.

4. Opportunity Cost - There is an opportunity cost between transportation and inventory management. Business needs to leverage the cost which is best in terms of supply chain management.

Currencies play an important part in business transaction. It helps to determine the profit or more profit due to change in the value of currencies. Every owner should know and understand the risk of currency in the business.

Most of the E-commerce business has different modes of payment. The customer does payment after the delivery of the product. At that time if the value of currencies goes up, the owner is likely going to earn more compared to what he was expecting. On the other hand if the currencies depreciate, the owner is likely to earn less profit on the product sold through e-commerce.

The firm has to abide Environment law imposed by government of the country. The firm who do not abide will have to face penalty or even cancel the transaction. The environmental law consists of the product or service which do not deplete its environment and nature. The firm should take further step in clearance of air pollution or land pollution.

There should be substantial effect on labor law. There should be no biased in wages. Labor should be given good working condition, wages, bonus, incentives, medical bonus, etc.

Example - Retail companies like Walmart are situated in the big cities where the labors are paid high wage and there is sustainable profit for the company. While Cost-of-living strategy makes the employee happy, it some way of losing out profit. Hence the company should use comparable norm strategy to assure more long-term sustainability and profit for the company.

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