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Tag Archives: national supply chain

Nationalization vs Globalization and Supply Chain Challenges

supply chain challengesSupply chain challenges arise as companies make the leap from a regional supply chain to a national supply chain and eventually to a global supply chain.

The evolution from National to Global supply chain challenges

The national supply chain represents a close, company coupled, vertically integrated supply chain, direct control of material and supply chain services.

The global supply chain represents Off shore outsourcing, horizontal integrated supply chain, indirect control of supply chain material and service purchases

Implications of Supply Chain Challenges

The national supply chain shows cost of manufacture decreased primarily due to lower labor costs, less capital investment required.

The global supply chain sees length of supply chain became longer, more complex passing ownership and information between multiple vendors, high premium on information exchanges.

Resulting in longer lead times, higher inventory levels, greater chance of material obsolescence

The tipping point of a National vs Global Supply Chain

The national supply chain sees the cost of manufacturers starts to level based on based on combined productivity gains and limited domestic wage growth, energy benefits and capital investment. This causes globalization of the supply chain to be more advantageous.

The global supply chain makes Investment in IT technology that better integrates the information exchange between supply point transfers coupled with a closer geographic proximity to the end customer offsets the cost of labor offshore. This leads to a demand for returning the global suplly chain to a nationalized model.

Pitfalls of Supply Chain Expansion or Contraction

1. Job force readiness to accept and adapt to new technologies

2. Company willingness to invest in integrated IT performance to streamline hand offs between supply points