GoingGlobal?

Logistical Factorsto Consider BeforeEstablishing GlobalSupply ChainOperations

May 2008

Going Global?

Logistical Factors to ConsiderBefore Establishing Global Supply Chain Operations

SUMMARY

In today’s global economy, many US-centric manuacturers and distributorsare increasingly eeling the pressure to become niche, competitive play-ers overseas as well as domestically. American-based companies seekingto expand their product lines internationally or the rst time or attemptingto enlarge their existing global ootprints will need to keep up with globaltrade growth and increased competitive demands. To succeed in the globalmarketplace, companies wanting to capitalize on the compelling interna-tional market’s opportunities must prepare their supply chain operations orthe onslaught o logistical challenges o oreign markets.

OVERVIEW

Beore his 1492 voyage to the “New World,” Christopher Columbus spentseveral years trying to explain his belie that the world was round. Heexerted all his passions, eorts and energies in convincing any and all whowould listen that the world was a sphere and not a fat landmass.Ironically today — over 500 years ater Columbus’s insistence that theworld was round — advances in transportation, technology and telecom-munications have seemingly “fattened” the Earth once again, making com-munications and global interaction with oreign markets highly accessibleand instantly viable.While there may be many advantages to having a fatter world, we shouldnot assume that fat equals simple. In many cases, fatness does not diminishcomplexities. This is especially true in the arena o international transporta-tion logistics, where a fatter world does not simpliy the daunting logisticalchallenges o managing global supply chains.I your company has been contemplating broadening its supply chains inter-nationally, it would not be alone. Today’s highly competitive global market-place demands, at the very minimum, some level o active involvement orparticipation in oreign markets due to rapidly changing market conditions,aggressive competition and dramatic growth in oreign exchange.

Diagram

May 2008WHITE PAPER

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May 2008

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showcases an arresting statistic which underscores just how muchoreign exchange transactions have increased between 1970 and 2004. Thedramatic night-and-day dierence within this 34 year timerame stronglyvalidates just how much world commerce has expanded by leaps andbounds. Such statistics command attention and reinorce an undisputableact: i your strategy is to stay wholly domestic, your competition is com-ing (or will soon come) rom every area o the globe.“Even i a company only has domestic suppliers and domestic customers,it must always be analyzing whether it would be better to go overseas. Andcompanies are always subject to global competition, they must be conduct-ing constant analysis o their global competitors,” says Yossi She, Direc-tor, Center or Transportation and Logistics, MIT.

“With the emergence o the ree-trade movement,low-cost country sourcing,and the rising afuenceo large segments o the world’s population,companies now aim togain market penetration inoreign markets as deeplyas the penetration theyenjoy at home.”

John FontanellaAMR Research, 2008

Foreign Exchange Transactions

Diagram 1-1

From a March 2006 “Meeting the Challenges of the Global Supply Chain”presentation by ORACLE

$10 Billiona day

1970

$10 Billiona second

2004

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