🌍Intro to International Business Unit 9 – Global Operations & Supply Chain

Key Concepts in Global Operations

• Globalization involves the integration of economies, industries, and supply chains across national borders
• Offshoring relocates business processes or manufacturing to another country to reduce costs or access resources
• Outsourcing contracts with external suppliers or service providers to perform specific functions or produce goods
• Comparative advantage refers to a country's ability to produce a particular good or service at a lower opportunity cost than another country
• Economies of scale reduce the average cost per unit as production volume increases by spreading fixed costs over more units
• Standardization involves producing uniform products or services to achieve consistency, efficiency, and cost savings across global markets
• Localization adapts products, services, or marketing to meet the specific needs, preferences, or regulations of a particular country or region
• Global integration coordinates and aligns operations, strategies, and decision-making across multiple countries to achieve synergies and optimize performance

Supply Chain Fundamentals

• Supply chain management oversees the flow of goods, services, and information from raw materials to end customers
• Upstream supply chain includes activities related to sourcing, procurement, and inbound logistics
• Downstream supply chain encompasses activities related to distribution, sales, and customer service
• Tier 1 suppliers provide materials or components directly to the focal company
  • Tier 2 suppliers supply materials or components to Tier 1 suppliers
  • Tier 3 suppliers provide raw materials to Tier 2 suppliers
• Vertical integration involves a company owning and controlling multiple stages of the supply chain (raw materials, manufacturing, distribution)
• Horizontal integration occurs when a company acquires or merges with a competitor to expand market share or product offerings
• Bullwhip effect amplifies demand variability as it moves upstream in the supply chain, leading to increased inventory levels and costs
• Supply chain visibility enables real-time monitoring and tracking of goods, information, and financial flows across the entire supply chain

Global Sourcing Strategies

• Global sourcing involves identifying, evaluating, and selecting suppliers from around the world to procure materials, components, or services
• Low-cost country sourcing focuses on sourcing from countries with lower labor, material, or overhead costs (China, Vietnam, Bangladesh)
• Best-cost country sourcing balances cost savings with other factors such as quality, reliability, and intellectual property protection
• Total cost of ownership considers all relevant costs associated with sourcing, including price, transportation, inventory, duties, and potential risks
• Supplier selection criteria include price, quality, delivery, flexibility, innovation, and sustainability
• Supplier relationship management fosters long-term, collaborative partnerships with key suppliers to drive continuous improvement and mutual benefits
• Ethical sourcing ensures that suppliers adhere to social, environmental, and labor standards (fair wages, safe working conditions, no child labor)
• Local content requirements mandate that a certain percentage of a product's components or value be sourced from the country where it is sold

Logistics and Transportation

• Logistics management plans, implements, and controls the efficient flow and storage of goods, services, and information from origin to consumption
• Inbound logistics manages the movement of materials and components from suppliers to the company's facilities
• Outbound logistics coordinates the movement of finished products from the company to customers or distribution centers
• Transportation modes include air, ocean, rail, road, and intermodal (combination of two or more modes)
• Third-party logistics providers (3PLs) offer outsourced logistics services such as transportation, warehousing, and customs clearance
• Freight forwarders arrange and coordinate the transportation of goods on behalf of shippers, often consolidating shipments to secure better rates
• Incoterms are standardized international trade terms that define the responsibilities, costs, and risks associated with the transportation and delivery of goods
• Reverse logistics manages the return, repair, or disposal of products from customers back to the company or its suppliers

Inventory Management

• Inventory management controls the flow and storage of materials, work-in-progress, and finished goods to meet customer demand while minimizing costs
• Safety stock is extra inventory held to buffer against uncertainties in demand or supply and prevent stockouts
• Reorder point is the inventory level at which a new order should be placed to replenish stock
• Economic order quantity (EOQ) determines the optimal order size that minimizes total inventory holding and ordering costs
• Just-in-time (JIT) inventory management aligns raw material orders with production schedules to minimize inventory holding costs and improve efficiency
• ABC analysis categorizes inventory items based on their value and importance, with A items being the most valuable and C items being the least valuable
• Inventory turnover measures how quickly a company sells and replaces its inventory, calculated as the ratio of cost of goods sold to average inventory
• Vendor-managed inventory (VMI) is a collaborative approach where suppliers are responsible for maintaining and replenishing inventory at the customer's site

Technology in Global Supply Chains

• Enterprise resource planning (ERP) systems integrate and manage various business processes, including supply chain, finance, and human resources
• Supply chain management (SCM) software helps plan, execute, and optimize supply chain activities, such as demand planning, procurement, and logistics
• Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags attached to objects, enabling real-time inventory visibility
• Blockchain is a decentralized, secure ledger technology that can enhance supply chain transparency, traceability, and trust among participants
• Internet of Things (IoT) connects physical devices, vehicles, and equipment with sensors and software, enabling real-time monitoring, optimization, and automation
• Big data analytics leverages large volumes of structured and unstructured data to gain insights, predict trends, and support decision-making in supply chain operations
• Cloud computing provides scalable, on-demand computing resources and services, enabling supply chain collaboration and data sharing across multiple parties
• Artificial intelligence (AI) and machine learning (ML) can optimize supply chain processes, such as demand forecasting, route planning, and quality control

Risk Management and Resilience

• Supply chain risk management identifies, assesses, and mitigates potential disruptions or threats to the flow of goods, services, and information
• Operational risks arise from internal factors, such as equipment failures, labor disputes, or IT system breakdowns
• Financial risks include currency fluctuations, commodity price volatility, and supplier bankruptcies
• Geopolitical risks encompass trade wars, tariffs, sanctions, and political instability in sourcing or selling countries
• Natural disasters, such as earthquakes, hurricanes, and floods, can disrupt supply chains and damage infrastructure
• Contingency planning develops alternative courses of action to maintain operations during disruptions or emergencies
• Business continuity management establishes processes and procedures to ensure the continuation of critical business functions during and after a disruption
• Supply chain resilience is the ability to anticipate, adapt to, and recover from disruptions while maintaining continuity of operations and customer service

Sustainability in Global Operations

• Sustainability balances economic, social, and environmental considerations to meet the needs of the present without compromising the ability of future generations to meet their own needs
• Carbon footprint measures the total greenhouse gas emissions caused directly and indirectly by an individual, organization, or product throughout its life cycle
• Circular economy aims to minimize waste and maximize resource efficiency by designing products for reuse, repair, remanufacturing, and recycling
• Closed-loop supply chains recover and reuse materials from end-of-life products to create new products, reducing waste and resource consumption
• Life cycle assessment (LCA) evaluates the environmental impacts of a product or service throughout its entire life cycle, from raw material extraction to disposal
• Sustainable sourcing involves procuring materials and services from suppliers that adhere to social, environmental, and ethical standards
• Green logistics minimizes the environmental impact of transportation and distribution activities through fuel efficiency, route optimization, and alternative energy sources
• Corporate social responsibility (CSR) is a company's commitment to operating in an economically, socially, and environmentally sustainable manner while balancing the interests of diverse stakeholders