Global Supply Chain Management and Frameworks

Introduction

In the contemporary competitive business world, it is prudent for business establishments to utilize modern technologies to produce, handle, and distribute products (Jacoby, 2009). Global supply chains refer to the networks made across the world by different organizations to produce and market their products (Carter and Rogers, 2008; Jacoby, 2009; Pettit, Fiksel and Croxton, 2010). Many proponents of global supply chains have shown their importance. Jacoby (2009) states that they transform natural resources, raw materials, and components into finished products that are distributed to customers.

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They start with environmental, organic, and political rulings of natural resources that are accompanied by extraction of unrefined materials, and have several connections (Jacoby, 2009). However, Carter and Rogers (2008) warn that undertaking satisfactory conditions is a challenge. They advise company managers to adopt the best supply chain systems for organizations. This paper focuses on discussing the strengths and weaknesses of different analytical frameworks to global supply chains, i.e., supply chain management, global commodity chains, and global production networks.

Supply chain management

Supply chain management was developed to demonstrate the importance of integrating key firm processes (Carter and Rogers, 2008). According to Carter and Rogers (2008), it refers to the management of interrelationships between upstream and downstream activities about suppliers and consumers to provide high-quality goods that add value to consumers with fewer costs to supply chains in general. According to “this framework, original manufacturers are those that offer products, services, and information that benefit consumers and other stakeholders” (Carter and Rogers, 2008, p.378).

Strengths in supply chain management

First, there is a cost advantage (Christopher, 2011). Companies have at least one typified competitor who would be producing goods at low cost and would have the largest volumes (Christopher, 2011). This would be “so due to the economy of scale that enables predetermined prices to spread over larger volumes” (Carter and Rogers, 2008, p.375). Second, there is a competitive advantage (Mangan, 2012).

It implies that an organization should ensure control over other business establishments in terms of consumer preferences (Christopher, 2011). The basis of success is based on various factors but could be represented by a triangle connection of a company, i.e., three Cs that illustrate a three-way relationship. According to Porter (2004), companies do not buy goods from producers, but benefits that could be either tangible or intangible.

Goods and services from manufacturers should be differentiated from those of other competitors to gain superiority in the market (Porter, 2004). For firms to be successful, it would be crucial for them to use the available options to find positions that would be based on both cost advantages and value advantages (Taylor, 2008). The SCM has offered organizations ways of attaining consistency of quality goods and services by participating in programs that improve processes to synchronize demand and supply. Chains can optimize the entire chain instead of a sub-optimizing chain based on local interests.

As a result, the overall production planning and distribution improve, leading to cost reduction. Final products become more attractive, and this results in more sales that increase companies’ performance outcomes. In addition, “the incorporation of SCM leads to competition in markets across the world” (Taylor, 2008, p.13). It is critical to note that this framework matches demand and supply that use minimal inventory and aims at fulfilling consumers’ demands by efficient utilization of resources. This increases efficiency in distribution.

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Weaknesses of supply chain management

“One part of the supply chain can disable the ability to deliver merchandise and make money” (Christopher, 2011, p.12). If a firm outsources part of its supply chain without the consent of a vendor, he or she could disrupt the firm. Problems would arise, especially during ordering, accounting, and marketing (Carter and Rogers, 2008). This is because of the multiple parts of a supply system.

SCM leaves suppliers vulnerable because it creates uneven bargaining situations among dealers and customers. Works done by Mangan (2012) indicate that this would be the case, especially where the providers should conform to the clients’ rules or lose the trade, and clients benefit from a range of low-cost options. Furthermore, suppliers break business regulation to cater for customers’ interests (Carter and Rogers, 2008). Also, human rights violations could blackmail a company’s name against their consumers when the malpractice would be discovered.

Global commodity chain (GCC)

A commodity chain refers to methods utilized by companies to acquire resources, convert them into goods, and distribute them to customers. Arguably, it has many links that connect many places of manufacturing and distribution. In the works of Pettit, Fiksel, and Croxton (2010) on ensuring supply chain resilience, GCC refers to an analysis that considers social aspects of world production using hypothetical firmness. It concentrates on business literature regarding operational costs. It is based on types of authority that allow different kinds of economic organizations, sensitivity to multiple ways of organizing and dispensing goods, and the effects on socio-economic development (Carter and Rogers, 2008).

Strengths of GCC

GCC advocates for the specialization of labor tasks among firms in society. Many scholars have cited that GCC posits that the most significant trend is how processes that produce one product are divided and spread across the networks. This is evident in Carter and Rogers (2008) arguments, that the technological and administrative approaches used by organizations enable them to coordinate labor processes.

Even though Carter and Rogers (2008) have demonstrated that GCC promotes the development of confidence among firms, facilitating reciprocal organizing for easier problem-solving methods, Mangan (2012) has challenged their views. GCC cross-examines the authority that regulates networks and intervenes the vertical and horizontal linkages that make commodity chains, which are categorized according to the structure of the government and control associations that unite them.

Weaknesses of global commodity chains

Although GCC concentrates on improving the quality of products through specialization, it is organized around influential power imbalances that result in firms looking for market access and shaping technological management of production costs (Gereffi, 1994). The costs are associated with different stages of manufacturing to increase control of chains. Results from The Economic Staff (2004) have indicated that the control of authority impacts the geographical supply of industrious actions. This is because the highly technologically developed countries have superior branding roles compared with the third world countries where labor costs are lower.

About manufactured goods, Gereffi (1994) demonstrates that multinational companies that operate outside their countries produce goods that are used by foreigners. This implies that they no longer produce merchandise for their own countries. It is important to note that nations that have advanced technologically obtain more benefits, and have more power than those that are not advanced (The Economist Staff, 2014). A study was conducted in the United States of America by Cox (1999) to demonstrate the effects of governance on-chain distribution. The researcher showed that even administrative structures needed coordination.

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Management roles have been assumed by firms that are leading in terms of technology (Cox, 1999). The researcher concluded that powerful administrative authorities decide the division of labor in commodity chains and define the conditions in which gain actors access to it. It is evident that the global commodity chain is beneficial to countries that have developed (Bair, 2009) Standard cost-effective actors have ignored the relationships among economic actors, obligations, and expectations that are derived from human actions (Bair, 2009; Levy, 2000). Also, good character and long-term relationships are not the only ways of peripheral economies.

Bair (2009) tries to distinguish administrative structures from trust in companies. He argues that, unlike administrative structures that are characterized by monitoring devices and impersonal contractual ties, confidence is a government arrangement that relies on societal interaction between individuals. Furthermore, it is difficult for inter-business synchronization to capture the changes in many chains (Levy, 2000). Firms face challenges in predicting how they should relate and how they are connected and governed.

Global production networks

These connote networks that are interconnected and have links that extend across state limitations and join parts of the state and sub-state boundaries (Taylor, 2008). They, create worth by transforming materials and non-materials into wanted goods and services. There is linearity between the joints and the links in global production networks (Coe, Dicken, and Hess, 2008).

Strengths of global production networks

Cox (2003) states that global production networks help consumers to identify a variety of non-firm actors as components of the entire manufacturing system. Second, it enables firms to predict beyond the linear progression of the products in the investigation to disclose the complex flow of capital, knowledge, and people that are involved in the production of goods and services (Cox, 2003). It is vital in the identification of different service companies that are involved in circulatory processes. The networks bring into view links and synergies between the processes of creating value in various production connections.

Cox (2003) is supported by Coe and colleagues (2008). They emphasize the compound nature of the interrelationships that exist in the manufacturing networks. The interrelationships are to be authorized by agreements on the distribution of labor. GPNs are essential in social, artistic, and political structures (Coe et al. 2008).

Weaknesses of global production networks

Coordinating GPNs is a major problem because they are composed of many actors from the local environment (Henderson et al., 2002). This means that the country of origin remains vital in influencing how it operates across the networks and in particular locations where it is expected to operate, while companies are influenced by the type of network in which it is operating. It is significant to note that a state can use the material to exert power and ensure that there is both local and national benefit (Levy, 2000). This implies that a nation should have the hypothetical capability to rule over the access of assets within its territory. Thus, wealthy countries would gain more than poor countries. Levy (2000) portrays the approach as one that favors producers and ignores consumers. This is evident where investigations of GPNs concentrate on companies, deriving consumers’ consumption from the process.

Conclusion

In conclusion, it is important to note that different supply chain frameworks play critical roles in ensuring that consumers’ demands are met, and the goods produced are of high quality. They help organizations to produce goods at low cost and conveniently distribute them to consumers. Supply chain management is crucial in ensuring that firms are managed well. The global commodity chain is important in ensuring that commodities meet the global standards, and global production networks help to understand how goods circulate, i.e., from the producers to the consumers.

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References

Bair, J, 2009. Frontiers of commodity chain research. California: Stanford University Press.

Carter, C.R., and Rogers, D.S., 2008. A framework of sustainable supply chain management: moving toward new theory. International journal of physical distribution & logistics management, 38(5), pp. 360-387.

Christopher, M., 2011. Logistics and supply chain management. New Jersey: Pearson Education.

Coe, N.M., Dicken, P., and Hess, M., 2008. Global production networks: realizing the potential. Journal of economic geography, 8(3) pp. 271-295.

Cox, A., 1999. Power, Value, and Supply Chain Management: Supply Chain Management. An international journal, 44(4) pp. 167-175.

Cox, A, 2003. Power, rents and critical assets. In: A. Cox, P. Ireland, C. Lonsdale, J. Sanderson and G. Watson, ed. 2003. Supply chains, markets and power: Managing buyer and supplier power regimes. New York: SUNY Press. Ch.1.

Gereffi, G., 1994. The organization of buyer-driven global commodity chains: how US retailers shape overseas production networks. Contributions in Economics and Economic History, 3(12) pp. 95-122.

Henderson, J., Dicken, P. Hess, M. Coe, N. and Yeung, H.W., 2002. Global production networks and the analysis of economic development. Review of international political economy, 9(3) pp. 436-464.

Jacoby, D., 2009. Guide to Supply Chain Management: How Getting it Right Boosts Corporate Performance. New York: Bloomberg.

Levy, D.L., 2000. Political contestation in global production networks. Academy of management review, 33(4) pp.943-963.

Mangan, J., 2012. Supply chain strategies. In: J. Mangan, C. Lalwani and T. Butcher, ed. 2000. Global logistics and supply chain management. New Jersey: John Wiley & Sons. Ch.4.

Pettit, T. J, Fiksel, J. and Croxton, K. L., 2010. Ensuring supply chain resilience: development of a conceptual framework. Journal of Business Logistics, 31(1) pp.1-21.

Porter, M. E., 2004. Competition advantage: creating and sustaining superior performance, Massachusetts: Harvard Business Press.

Taylor, M., 2008. Power, conflict and the global Economy. London: Routledge.

The Economist Staff, 2014. Guide to supply chain management. New York: Perseus Books Group.

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