Global Supply Chain Management Definition


This term paper is related to the research carried out for the Global Supply Chain Management. This kind of supply chain management is becoming sole essential and important for all kinds of businesses with the increase in the globalization and offshore outsourcing. This is why, understanding the importance and basic interpretation of global supply chain management must be known to all the business related entities and people involved. Another reason for understanding it is that most of the companies in the world are inadequate in working for better automation and staff support for setting up business strategies and global business trade. In order to increase the global trade along with the maximum amount of competitive pressures, significant changes are needed to be made in the business strategies and the way companies work. All these goals could be accomplished with the help of global supply chain management implementation in the company. so, this research paper would include all the necessary descriptive details regarding the main topic.

Global Supply Chain Management

(Long, 2003, p43) Global supply chain management is the advanced and globalize picture of the old traditional supply chain management. Typical supply chain management covers all the activities which involve procurement, sourcing, logistics, management, and conversion activities. People associated here are the suppliers, third-party service providers, intermediaries and most importantly, the customers of the company. In the traditional model of supply chain management keeps track of the costs involved in the procurement procedures of the company and makes sure that the procurement work is done in cost-effective way while decreasing the number of risks involved in the other purchasing activities of the business. The major difference between both types of supply chain management is that global supply chain management takes care of the business’s interest on global basis internationally by contacting the international business commodities, rather the local dealers or national contractors. Every large organization’s business is directly affected by the global supply chain management and every multinational organization has got the picture of it, no matter what.

Global supply chain management helps the company in improving its overall performance and revenues by offering excellent opportunities to comprehend, recognize and develop the business strategies for global supply chain integration across the company and the supply base of the business entity. This is because of the fact that most of the companies at present regard strategically managed global supply chain management as their sole success factor. Global supply chain management provides current and future managers of the company with the opportunity and chance to be on the front position of up-and-coming opinions, thoughts, ideas and technologies which assure to make available distinguishing improvements and benefits for better and enhanced prospective business. Eventually, global supply chain management reduces costs, weight on the production and allocation time in subject to meet predictable requirements and limitations on international trade content, counterbalance trade, and joint competence for various products and time intervals.

(Pontrandolfo, Gosavi, Okogbaa, Das; 2002,) Managing the global supply chain has now become a norm and its management has urged manufacturers to re-study and restructure their business process and procedures for better working models along with the modern technologies which could support the business strategically. Global supply chain management is no wonder far complex than the normal supply chain management model in a domestic sense. The results of the global supply chain management are different in the form of multi-currency, multicultural, economic and multi-socio-political structure. The comprehensive and main objective of global supply chain management is to relate all the internationally working organizations in such a way which could link the distribution network, marketplace, procurement activities, assembly process, manufacturing process, and production process along with consistent time continuation so that the customers could be served with higher level of services in cost-effective manner. this kind of supply chain management has paved a new way of managing business strategies and systems in a computer literate modern technological environment in a global infrastructure.

Table one

Competencies required for efficient Global Supply Chain Management

Factors Affecting Global Supply Chain Management

There are some factors which affect global supply chain management and the business strategies directly. These factors are listed as under:

  • Costs – Includes local labor rates, currency exchange rates, overall international business charges, and international freight tariffs.
  • Customs duty – Includes impact of WTO/GATT which changes over time, and duty rates tariffs which could be differentiated by commodity and assembly level.
  • Time – includes lead time, cycle time, customs clearance, transit time, and export license approved cycle.
  • Export regulations – Includes export licenses and denied parties list.
  • Offset trade and Local content – Includes content for preferential duty rates, and local content requirement for government purchases.
  • Taxes on corporate income – Includes different markups by country, tax havens or not havens, and make versus buy affect.
  • Different weather conditions in different countries.

Part from the fact of dealing with all these issues, there are some questions which must be answered by the business commodities before starting up the global supply chain management. First of all, the company should analyze the resources it would need for outsourcing purposes. The company must make a decisive plan for better outsourcing plan. It would help the business in future growth and enhanced performance from the company staff. If the company is not interested in outsourcing its work to other third-party, then it must prepare and train its staff so that the business could avoid time delays and unwanted time intervals. This would ultimately help in maintaining the customer satisfaction rate while retaining the existing customers and making new ones more than before.

Another question or problem to come over with is to take care of the supplier side and to do the right supplier selection. Selection of suppliers is one of the most critical things to do in the strategic business because it might save the company from future bad experiences or complications. This is why selection of right supplier is considered very crucial and complex, which should be made based on the research carried out by the management and decision-makers of the company. this activity could be time-consuming, but it would result as very beneficial and fruitful for the business in the future because it would not only save the time of the company’s business transactions, but would also bring more revenues in the future.

(Mentzer, Myers, Stank; 2007, p256) Better and perfect planning is needed in every globalize business. Every single point must be kept in mind before starting on the practical work for the company. this includes well planned allocation of company’s plants as well. the plants should be located on such locations which could be considered best in every sense, while saves costs for the business as well. the starting issues in setting up global supply chain management could be difficult and complicated to see in the beginning, but once solved strategically, global supply chain management would result as the most beneficial and wise decision taken by the management of the company.


Douglas Long, 2003, International Logistics: Global Supply Chain Management, Published by Springer, p43.

Pierpaolo Pontrandolfo, Abhijit Gosavi, O. Geoffrey Okogbaa, Tapas K. Das; 2002, Global supply chain management: a reinforcement learning approach, International Journal of Production Research, Web.

Masaaki Kotabe, Michael J. Mol; 2006, Global Supply Chain Management, Published by Edward Elgar, p774.

John T. Mentzer, Matthew B. Myers, Theodore P. Stank; 2007, Handbook of Global Supply Chain Management, Published by Sage Publications, p256.

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