How Has Transportation Affected Globalization – In recent decades, the world has become much, much smaller than it used to be. The Internet and major improvements in transportation infrastructure have turned the world into one globalized international trade market.
This global market offers companies opportunities to reach new customers and provide a diverse selection of new employees, materials and products. While the opportunities of globalization are many, the risks it poses to your supply chain may be greater than you realize.
How Has Transportation Affected Globalization
In this article, you will learn how globalization affects supply chain management and how you can protect your supply chain from its worst effects.
Globalization And Trade Bounce Back From Covid 19: Report
The term “globalization” refers to the free movement of goods, services, and people around the world. In relation to supply chain management, globalization refers to the process by which a company operates on an international scale.
The globalization of trade offers companies the opportunity to reach new customers in new markets, dramatically changing the way manufacturers operate to be successful. Exposure to new markets means exposure to greater competition and greater risk – but also greater reward.
If you are a logistics manager or business owner, you may be wondering whether the impact of globalization on your supply chain will be beneficial or will only hinder your business.
The truth is that globalization has advantages and disadvantages and can significantly affect your supply chain. It all depends on the nature of your business and how you manage your supply chain.
What Is Globalization?
The onset of globalization means that supply chain management is more complex and business critical than ever before. As supply chain managers or business owners, you are responsible for optimizing your logistics, and it is your responsibility to know how globalization can benefit your business.
1. Reach new customers in new markets around the world – Globalization simplifies communication between business owners, suppliers and customers, making it easier to reach new markets and stay in touch with customers no matter where they are.
2. Increasing sourcing opportunities – Globalization allows companies to increase production by providing a diverse selection of workers, raw materials and products from regions of the world that were previously beyond their reach. This can result in significant labor costs.
3. Offer a Greater Choice of Goods and Services – Global sourcing means increasing the range of products and services you can provide to your customers.
Global Trade Takes A Beating—and With It The Global Economy
4. Grow and expand the scope of your business – Globalization makes communication almost seamless, making it easier to expand and diversify markets, giving business owners more opportunities to capitalize.
5. Save money and increase profits – More resources and usage means more opportunities to save costs and more opportunities to generate profits.
The benefits of a globalized supply chain are many, but it also brings new challenges for supply chain networking and management. To reap the benefits of globalization, you need to know the downsides and know how to respond to them.
1. Greater complexity – Global supply chains have global problems. As companies go global, they must scale up all aspects of their operations, especially their supply chain.
2. Increased supply chain risk – when your materials, factories and customers are scattered around the world, it means your business is completely at the mercy of global events such as natural disasters, port and border closures, and changes in the geopolitical landscape or recent event such as the covid-19 pandemic. Another example is the closure of factories in China for several weeks for the Chinese New Year, which can cause disruptions in the supply chain.
3. Increased Competition – You can bet that if your company has entered a new market, there are more companies like yours that have access to the exact same materials, products, production and customers as you. The global economy requires supply chains to be as lean and efficient as possible.
4. Greater Challenges in Data Collection – As various aspects of the supply chain are dispersed across the globe, the collection and management of process data becomes more complex and challenging.
5. More legal issues – cross-border business means doing business in countries with different legal systems, which can get complicated and expensive very quickly.
Entering A New Era Of Globalization
Globalization, for better or worse, is good for your supply chain, your business and the world. It’s true that globalization poses serious risks to your business, but only if you don’t take steps to protect your supply chain from its worst impacts. Because the benefits that globalization will bring to your business will far outweigh the risks.
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Allison Champion leads marketing communications in the space, where she creates content that addresses the unique challenges facing today’s multi-channel e-commerce brands. He has more than ten years of experience in content creation and marketing. October 29, 1929 is known throughout the world as Black Friday. It was the day of the stock market crash that started the Great Depression. Then there was the Great Recession of 2009, when the global economy experienced its worst downturn since World War II. Recovering from both devastating events took time and patience. So where do we sit a decade (and almost 90 years) later? Hello. Gross domestic product should remain between 2% and 3%, which is considered the ideal range. Anything that takes place at a higher rate is considered a boom and can eventually lead to a devastating crash.
The rise and fall of the global economy directly affects many industries. This is certainly true of the transportation industry. With the growth of the global market, the retail and manufacturing industries are gradually expanding. Their success means that the transport industry is becoming increasingly important. Whether a shipment is transported by air, truck, rail, water or intermodal, the demand for these services is now very high, forcing companies to be more strategic. They are thinking more about which carriers they will work with and how they will manage those partnerships.
Globalization’s Effect On Supply Chain Management
The holiday season is a great example of how the global economy affects the transportation industry. In a strong economy, the average consumer can afford unnecessary luxuries. As a result, more and more people will aggressively spend money online. These purchases mean they will rely heavily on carriers for on-time deliveries. Efforts are underway to make the holiday season less hectic. Carriers are spending more to expand capacity and are starting the preparation process much earlier this year. Hundreds of millions of dollars will be invested in the transportation industry to help meet demand growth in 2019 and beyond.
It’s no secret that brick-and-mortar stores continue to suffer. Meanwhile, e-commerce is constantly evolving and changing the way end users receive products. It is much easier for people to make a few clicks of the mouse, wait a few days and have their purchase appear at their fingertips, than to fight with traffic and other consumers. This change in the way products are bought and sold is also forcing the transportation industry to adapt.
A major issue still facing the trucking industry, especially LTL/FTL (Less Than Truckload/Full Truckload), is the lack of available drivers. The demand for truck drivers is constantly increasing. Retail and manufacturing industries consistently drive demand. In the future, their needs are only expected to increase, and non-fulfilment may soon have a negative impact on prices. With more products moving around the world and fewer people handling them, the cost of transporting goods could begin to undermine global economic stability and contribute to lower profits. LTL circuit space is limited and making sure you have a dedicated section is critical. Working to build relationships with the best carriers helps ensure your cargo is always moving through the supply chain network.
In the event that there are not enough barriers to supply chain planning, there is always the possibility of turbulence in the global market. The new dirty word on the streets is…tariffs. Just when the company thinks it has it all figured out… tariffs. I won’t go into the details here, but if you want to read more about tariffs and how they affect the entire supply chain, check out my colleague Samuel Cagle at Source One’s blog.
Unit 1: Globalisation
When times are good, it’s easy to spend money without thinking about the consequences. When times are tough, the first thing people want to do is cut costs. Surviving difficult times becomes much easier when smart business and good financial planning win. Strong relationships between
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