15000

14000

13000

12000

11000
90% of global demand is not
10000
fully satisfied by local supply
9000

8000 Supply chains are driving Exports

7000 growth in world trade GDP
6000

5000
Index: 1970 = 100

4000

3000

2000

1000

0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
6 0. 6 2. 6 4. 6 6. 6 8. 7 0. 7 2. 7 4. 7 6. 7 8. 8 0. 8 2. 8 4. 8 6. 8 8. 9 0. 9 2. 9 4. 9 6. 9 8. 0 0. 0 2. 0 4. 0 6. 0 8. 1 0.
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20
Source: The World Bank World Development Indicators
 Globalization of Supply Chains
(n=7,642 Companies)

60
Companies’
Expected SCM
14%
50 Globalization 43%
Companies’
Expected SCM
25%
Globalization
40 57
Companies’
Current SCM
Globalization 50
30
40

20

10 Series
1
0
2013 2018 2023
 Global Supply Chain Strategy
25
23
17% in 2005  21% in 2013  25% in 2018
22 22
21 21 21 21 21
20 19 19
18
17
16
15
15 14
13

10

0
ell BB en
s ev itt
al tlé ia er so
ft di
a
atc
h up ex ex dE
x
de
s
D B es ok li ev o n ro m m e
A iem In rM N N n icr ka Sw G A Ce Fe er
c
S ch elo U M S V M
us rc O
M
-B A
ser
u
n he
A
 Global Conversion (Firm
Supply Chain
Management
Value
and SBU
Activities,
Behaviors)
Stakeholder
Performance
 Goals of Global SCM
Develop and maintain strategic and operational
aspects of global supply chains
Identify and leverage industry globalization
drivers that affect global supply chains
Have knowledge of and leverage the worldwide
infrastructure for global supply chains
Manage coordination and integration of global
supply chains
 But most importantly,
identify leverage points for
• Identify leverage points for:
– Global logistics in global supply chains
– Global purchasing in global supply chains
– Global operations in global supply chains
– Global market channels in global supply chains
How global is the industry?
How global should the firm’s strategy be?
How global should the supply chains be?
 100%
Globalized

Need to educate the global marketplace

(e.g., potential wasting of resources)

Ideal
Industry Strategy
Average Alignment
Range

Not leveraging the global marketplace

(e.g., potential wasting of market opportunities)
100%
Domestic
 All Industries All Industries
All Industries In Five Years In Ten Years
100 Current
90

80 75 76
70 71 72
69 69
70 64 65
62
60

50

40

30

20

10

0
e t s ry s e n t s e
anc en o ck ne ard ar tio en b ile ar
m i tw a m dw
su
r
Ce Cl ac
h it
C of or
t
ui
p o
ar
In d ed S sp q tom H
an M r er an E u
s al C u t r ni
c A ter
he ts ri p
ir
T o p u
atc du o m tr
om
W In C A
E lec C

Cost Globalization Drivers

 Inventory Positions

Global Customers
Global Suppliers

Raw Work-in- Finished

Materials Process Goods
32.30% 17.94% 49.76%
 Purchasing Activities:
The View by C-Suite Executives
2013 2018 2023

Domestic Engage in domestic

Purchasing Level I 9% 5% 5%
purchasing activities only

Engage in international
Level II purchasing activities 23% 15% 12%
only as needed
International
Purchasing
International purchasing
Level III activities as a part of 19% 15% 12%
SCM strategy

Global purchasing
Level IV activities integrated across 19% 13% 10%
worldwide locations
Global
Purchasing
Global purchasing activities
Level V integrated across worldwide 30% 52% 61%
locations & functional groups
 Explaining Performance

70% 21 25%
Global Strategy


Global Supply Chains

To stay competitive, companies need to

increase the globalization efforts of their
supply chain by 25 percent in the next five
years and 43 percent in the next 10 years.
Total Cost Analysis
Chain Coordination
Strategic Alignment
Human Resources