Globalization impact on supply chain - Essay Example

The supply chain has also seen the impact of globalization on its management, and the globalization practice can be seen in various companies that have global operations and market places (Monczka et al 2010). The essay analyses the globalization practice with discussion on its key elements related to the supply chain management. Furthermore, there is discussion of major benefits as well as risks associated with the globalization practice in the supply chain management so that the issues associated with the practice in the companies can be analyzed.

This is analyzed with the help of the case study of a manufacturing organization with barriers on implementation of the globalization practice. Analysis of the globalization practice The forces and practice of globalization are changing the supply chain. The supply chains are becoming disintegrated. Product designers, marketers and manufacturers are widespread over various continents with organizations that have different languages, cultures as well as different business objectives. The key elements of the globalization practice in supply chain management are integrated supply chain, maintenance of flexibility, balancing of risks and rewards, and clear understanding of the global marketplace and management of costs and complexities (Kersten 2011).

It is necessary to understand the global landscape and companies should also have a proper plan in place for the recognition of how to capture the opportunities present in the new market. Maintenance of flexibility is another key element in the globalization practice and the supply chains that are global in nature have to remain flexible enough so that they can quickly shift to the new identified opportunities and grab them quickly (Creating the Optimal Supply Chain 2012). The principles of the supply chain are basic, but the execution of globalization practice in the supply chain is different and complex as under this practice, the company has to navigate through the complexities of the global supply chain in the areas such as sourcing, manufacturing and the process of delivering across different parts of the world (Mangan et al 2008).

Managing component costs and logistics costs is another key element of the globalization practice in supply chain management. Component costs include costs related to raw material, energy, facility, labour, overhead, and productivity. Logistics costs include transportation, warehousing, administration, packaging and inventory (The Faculty of Thunderbird and The American Graduate School of International Management 2000). The impact of globalization on supply chain is vast. It has made supply chains to become more efficient and has helped the companies to create competitive advantage with creation of strong infrastructure.

The impact of globalization practice is such that competitors from different areas around the world are competing against the established market leaders that have a depth of resources, deep customer loyalty and known brands. This has happened because of the flexibility in the supply chai