Globalization of Business Logistics - Research Paper Example

Logistics Table of Contents Introduction 3 Rationale to the Research 5 Literature Gap 6 Review of Literature 8 Supply Base Localisation 8 Implications of Supply Base Localisation 10 Innovative Approaches of Supply Chain Localisation 12 Key Findings and Justification 13 Conclusion 18 References 21 Introduction Logistics and management of business run in a parallel manner since massive changes are incorporated within the society due to globalisation. There are various significant concepts relating to logistics that elaborate on promoting innovativeness to maintain greater competitiveness for the companies operating in the modern era. One of such concepts is determined to be supply chain localisation, which induced a huge scope of innovativeness and even enhanced the ability of the companies to maintain their respective competitive position over chief business market competitors. Notably, with major shift in the domain of manufacturing, companies associated with the same are inclined towards adopting supply chain localisation, as it ensures delivery of goods at lower rate and also within stipulated timeframe. With the major intention to lower down the costs of manufacturing, a huge change in the system of operation can be witnessed and thus paved the way towards outsourcing the major needs of production (Department of Science and Technology, 2008). This has even induced a huge need of innovation and development of technologies. By outsourcing, several units of production through a proper chain within the domain of manufacturing process and the different needs of the same could be met efficiently. Furthermore, with the motto of lowering down the manufacturing expenses, the modern organisations are planning to shift their production units in the area wherein the availability of the raw materials are high. This shifting could be noted to enhance their ability in complying with the diverse challenges and the different needs of the consumers (Lakshmikanthan & Tabiri, n.d.). With the innovations made in the field of logistics, the companies belonging to this present day context have been able to develop and maintain their competitive position as per the expectations. Deviations from the previous state of production processes are even going to inflict the various needs of the same and also enhance the abilities of the companies to meet the socio- economic needs. Depending on different economic benefits and other requisites, the production based decision of a company can be ascertained. Identifiably, the companies of this modern world are involved in developing various strategies such as lowering down the manufacturing costs for maintaining long-term sustainability in the respective industries wherein they operate. In this regard, the innovative approaches of logistics play a decisive role in developing different procedures for dealing with varied challenges related to the process of supply chain management (SCM). Thus, the strategic selection of low cost regions is acting as an added advantage for the companies to ensure long-term sustainability with addressing and mitigating the challenges faced during the conduct of varied operational functions (Department of Science and Technology, 2008; Lakshmikanthan & Tabiri, n.d.). In relation to the above context, the essay elaborates on the development that could be integrated into industries by initiating supply base localisation for maintaining their competitive advantage in the global domain. By reviewing the available literatures relating to the specific field, a detailed understanding could be developed about the different approaches that are integrated into the system of enhancing competitive advantage. Furthermore, by identifying the importance of promoting innovativeness relating to the approach of SCM localisation, a detailed understanding could also be made regarding the similar subject matter. Rationale to the Research The research has been centred on the notion of global sourcing and its influences on the performance of various industries operating in the global arena. Globalisation has emerged as one of the driving factors, making the modern organisations to make strategic thinking and making effective decisions for attaining their predetermined business or operational objectives. It is worth mentioning that numerous changes have been incorporated within the system of manufacturing and production to meet the diverse needs of the consumers. Justifiably, based on the changing settings of industrial environment, various techniques of logistics within the production system have been adopted and applied by the companies to secure their business position and reputation (Liu & et. al., 2010). Notably, the development in global sourcing has certainly enabled the manufacturing companies to avail various services and likewise enhanced their ability to perform in a better manner. With the development in technologies, a huge change in the production procedures prevalent within the system of management can be witnessed. Thus, based on this notion, it can be affirmed that there is a need for conducting research in the field of specific innovation due to the influence of globalisation (Gattorna, 2013). Logistics and the implications of the same have always been a complex set of theories that arise numerous complications for the organisations to enhance their competitive edge and the ability to perform in this competitive landscape. Furthermore, the need of innovativeness is always been observed to impose considerable impact on the overall development of the organisations to perform in the global arena efficiently (Nicita & et. al., 2013). Commendably, logistics has induced a huge amount of scope for the organisations to develop their ability in promoting innovation. With this concern, the essay contributes in determining the different technical and strategic innovativeness, which needs to be developed in a parallel manner towards the incorporation of logistics into the system of operation. By developing the ability of the companies to meet the changing needs of the global environment, there exists a huge need of enhancing the capacity of organisations to make such changes. Considerable level of changes in the concept of logistics development can be witnessed, making the companies to get shifted from global outsourcing to develop local value chain in a more efficient and smooth manner. Furthermore, this is even going to increase the capacity of the organisations to perform and develop their ability to comply with the distinct global needs (Lakshmikanthan & Tabiri, n.d.). Apart from this, the prevalence of diversification is identified to be prominent in the global domain, which is influencing the companies of this modern day context to adopt innovative strategies for nurturing competitive advantage. In this regard, the localisation of supply chain is an important factor for the organisations to consider for attaining greater competitive advantage over their major competitors (Nicita & et. al., 2013; Lakshmikanthan & Tabiri, n.d.). Literature Gap The increased level of globalisation has made ample changes in the global domain of business and altered the different specifications related with the concepts that ensure sustainable domain within the business environment prevailing in the international arena. The alterations incorporated within the business society have integrated a series of development that in turn enhanced the abilities of the companies to get acquainted with the diverse culture prevalent within the globe. However, the factor concerning the rising extent of globalisation has also incorporated a series of changes within the business operations systems based on different needs and specifications (Okpara, 2007). These changes have affected the global domain in a positive as well as negative manner. Furthermore, due to the existence of intermingled nature within the global economy, massive development is evident within the social system. The economic development of a country is even noted to get affected by the influence of the dynamic global trends (Okpara, 2007). The organisations in the present era are facing challenges owing to the development of the globalised market and the integration of new along with innovative strategies. Hence, to enhance overall business or operational performance, the companies are recognised to get involved into making a sequence of changes for performing effectively in the global domain as compared to others. These changes have identified an innovative strategy for maintaining the procedure of value chain in raising the capacity of the organisations to perform better in the international arena. However, the implications of value chains and their impacts are noted to be an area or the subject, which require further research to acquire adequate knowledge about the same (Li & et. al., 2006). Moreover, very less theoretical as well as empirical evidences are available that provides a detailed understanding about the impact of Supply Chain Management (SCM) on the development of a competitive advantage of a firm operating globally. Hence, a further rigorous research is to be conducted for elucidating a proper justification of the impact of the value chain maintenance to ensure continuous growth and development for long term (Li & et. al., 2006). Identifiably, the functions of logistics incorporating within the localisation of supply chain in automobile industry still remain under observed. The use of logistics and the series of innovativeness that have been invented are most prominent in the automobile industry irrespective of geographical location. Furthermore, there are very few empirical evidences that provide understanding about the impact of resource management with the use of supply localisation on developing competitive edge as compared to others in the respective operational domain. Nonetheless, the complexities involved with maintaining a competitive domain is even missing from the available literary resources (Okpara, 2007; Li & et. al., 2006). It is to be stated that depending on the needs of dynamic nature of the global industries, the management of supply localisation needs to be thoroughly reviewed for ensuring greater growth as well as development. It is projected that the lack of empirical evidences in the specific field is going to increase the chances of improper management of resources, affecting the overall traits of management at large. This even creates a backlog for the companies to identify the prospects and develop their strategies to meet the diversified needs of the customers. Thus, supply chain localisation and its impacts need to be thoroughly researched to ensure the development of strategies that would help the modern organisations irrespective working in any industry to ensure long-term sustainability (Okpara, 2007; Li & et. al., 2006). Review of Literature Supply Base Localisation According to Wong (2011), globalisation within the business has emerged as a huge challenge for the companies that are operating in the global domain. Apart from this, diversification in the modes of business has also appeared as a major issue amid the firms, which restricts them to meet the needs of the dynamic business trends. Thus, a series of changes must be incorporated within the business to fulfil the above stated objectives (Wong, 2011). Correspondingly, the study of Lakshmikanthan & Tabiri (n.d.) revealed that there exist several factors such as changes in technology as well as business market conditions that hinder in meeting which have been influencing the needs of the society. With the integration of different business trends, companies are presently nurturing a low cost manufacturing phenomenon to maintain their sustainable growth and development. Proper maintenance of various resources and assets for lowering the costs of production has been a major strategy for the companies to enhance their competitive edge. To enhance the individual ability of the organisations for managing resources in an optimum way, the organisations need to perform in a better manner and increase capacity to maintain competitive position (Lakshmikanthan & Tabiri, n.d.). According to Nicita & et. al. (2013), the development in the procedure of supply chain has been a global phenomenon for the organisations to enhance the productivity level in terms of lowering the costs involved with the process of production. Nurturing the opportunities that are imposed by the heterogeneous settings of the firms has certainly enhanced their ability to cope up with the diverse challenges and made them perform in a better way in future (Nicita & et. al., 2013). According to Giovannetti & et. al. (2013), the wider application of innovative technologies in the operational domain and the development of various concepts of marketing has in turn enhanced the abilities of the small and medium enterprises (SMEs) to enlarge their customer base. Giesecke (2012) stated in this regard that there are several advantages, which can be reaped from framing different effective manufacturing strategies such as lowering the production costs. There are a series of advantages that are attached with the development of manufacturing (Giovannetti & et. al., 2013; Giesecke, 2012). Organisations in the present day competitive domain are majorly inclined towards lowering costs for managing their product sales and enhancing their ability to perform efficiently as compared to others (Lakshmikanthan & Tabiri, n.d.). With prime focus on the manufacturing industries, the incorporation of logistics has been a major operational aspect, which tends to ensure progression of various concepts that are related with manufacturing. SCM and its efficiency has always been an area of concern for the companies that are operating into manufacturing industry (Lakshmikanthan & Tabiri, n.d.). According to Giovannetti & et. al. (2013), the recent emphasis evidenced the fact that an efficient SCM is compulsory for an industry to maintain its competitive domain. DaDamio & et. al. (2011) argued in this regard that strategic development frames an important aspect in the operational structure of any organisation in the global domain, which aids in generating greater level of customer value. Furthermore, to enhance the competitive advantage, the companies are more inclined towards developing a local supply base so as to gain maximum amount of profit (Giovannetti & et. al., 2013; DaDamio & et. al., 2011). Implications of Supply Base Localisation Developing production base in a country has been a huge demand among the manufacturers since the era of internationalisation of the local market. The establishment of production units in the planned market where the company’s desire want to develop future market is noted to be a strategy for the manufacturers since the beginning of the 20th century. It is worth mentioning that the manufacturers of automobile products are majorly inclined towards establishing their production units close to the selling units as well as in an area where manufacturing costs will be low. This would facilitate them to maintain costs of manufacturing and likewise enhance competitive advantage in the global market (Zhao & Gao, 2009). According to Sturgeon & et. al. (2008), the progression made in the global value chain procedure is even likely to enhance the ability of the organisations to perform in an efficient manner (Holweg & et. al., 2009). In this regard, Andersson & Segerdahl (2012) stated the fact that by developing various units within the local market, the product sales and growth in a larger volume in the global domain can be ensured. With regards to the above context, Sturgeon & Biesebroeck (2010) inferred that with the formation of a series of value chain, the companies are trying to develop their respective level of competence and performance to fulfil the global needs of competitive domain. Correspondingly, the continuously changing market structure needs a proper planning of the resources and management of various other developmental programs that would ensure a stable growth and development even in the competitive environment. By localisation of the supply chain, a company can ensure a stable growth and development and even enhance the level of productivity based on applying the strategy of lowering the cost of raw materials (Camuffo & Volpato, 2010; Holweg & et. al., 2009). However, Gereffi (1999) reflected on the economic barriers that have been created due to the economic spread of events based on changes made in international boundaries throughout the globe. Thus, localisation of supply chain enhances the abilities of the organisations to maintain a proper amount of control in their operations (Corwin & Puckett, 2009). Schmid & Grosche (2008) highlighted the fact that the progression in the procedure of an international SCM has many complications. This might be owing to the reason of making ineffective decisions relating to the above stated subject matter and the adverse conditions prevailing in the respective field among others. These complexities even impose considerable impact on meeting the individual needs of the people (Camuffo & Volpato, 2010). According to Canis (2011), the stagnation that may be caused by the far located supply chain could be illustrated from the situations faced by Japanese automobile industry during the time of any natural disaster. The global automobile sector that was availing various spare parts from the Japanese industries faces a severe challenge during this disruption. The chances of making a business stagnant could be nullified by taking heed of localisation of supply chain (Canis, 2011). Thus, it can be concluded that the techniques of localisation of SCM can enhance the organisational ability to perform as well as help in maintaining the level of competencies in the global domain at large. Innovative Approaches of Supply Chain Localisation ‘Supply chain localisation’ has been an innovative strategy for the companies dealing with manufacturing of various products. During the initial years of globalisation, the companies were majorly inclined towards developing their resources from the markets located at various regions throughout the globe. This development is noted to be changing the diverse needs of manufacturing procedures with affecting the competency level of the organisations in dealing with diverse challenges that they are likely to face while accepting the same. Commendably, it is even observed that the companies to develop their competitive edge are undergoing strategic innovativeness in terms of controlling production related costs (Giovannetti & et. al., 2013; Giesecke, 2012). According to Giovannetti & et. al. (2013), the changes in the mode of operation and diversity in the business are acting as a positive influence for the companies to maintain constant growth and development in the global domain. Additionally, innovativeness is duly considered to be an efficient tool, which ensures constant growth for the companies in the form of enhancing their ability to perform efficiently. From an argumentative perspective, Salamonsen (2014) commented that the strategy of ‘supply chain localisation’ would even instigate the manufacturers to apply innovative approaches for meeting the diverse needs of the global companies. While enhancing the ability of the local firms to meet the international standards, the logistics would again initiate the scope for conducting a quality research and development (R&D) process. Furthermore, this would even cause a huge amount of variability in the process of production, resulting in providing goods in the market at a cheaper rate and likewise attract the customers at large (Salamonsen, 2014). According to Hultman & et. al. (n.d.), the localisation of supply base would enhance the speed of SCM and lower the chances of causing discrepancies during the operations. Moreover, this would even ensure that a proper strategy could be initiated to minimise the time taken for maintaining effective flow of goods within the procedure of supply chain. As per the viewpoints of Nicita & et. al. (2013), organisations of this modern day context are much inclined towards developing their competitive domain for fulfilling the requirements of the changing society. Correspondingly, a huge shift in the needs of the business society has been integrating a series of changes within the system of operations, assisting the global organisations to make continuous growth and development (Nicita & et. al., 2013). Key Findings and Justification Innovativeness is one of the prime needs of the organisations to sustain in this competitive landscape. The development of international linkages is majorly based on the formation of relationship of businesses with various units that are located throughout the globe. This idea of establishing global business has in turn enhanced the ability of the organisations to conduct their respective businesses worldwide in an efficient manner. Several challenges have been apparently observed to emerge across national boundaries while performing logistics based functions. The companies, to meet the diversified needs of the global market, have set up strategies that would enhance their individual capabilities to maintain competitive advantage and ensure constant growth along with development. Considering the fact that the companies of this contemporary world deal with diverse suppliers as well as operators while performing distinct operational functions, there lays the necessity of making greater strategic development. Furthermore, to address as well as mitigate the challenges that are likely to face in the global domain, the organisations are developing their competency level in gaining greater knowledge about various approaches that serve the above stated purpose. In this regard, such approaches can be measured in the form of making effective decisions regarding the development of localised markets and strengthening R&D capabilities among others. More importantly, to enhance the competency level in the global arena, the organisations of this modern world remain majorly inclined towards developing their respective manufacturing abilities to align with the standard needs (Nicita & et. al., 2013). Conversely, managing costs have been also a major need for developing different attributes that are related with the production and manufacturing of the products in global domain. Depending on the level of complexities, the managers at the international arena are developing their abilities of performance based on considering the diverse requirements of the consumers (Martin & Rickard, 2012). With this concern, the prime intents of the organisations are identified to maintain their competitive position and develop strong consumer base within the global arena. Logistics, backed by the use of supply base localisations, is even likely to develop the overall traits of the market and enhance the individual ability of the organisations to sustain in this competitive landscape (Liu & et. al., 2010). It is projected that by sourcing from the local market, the organisations will be able to deal with manufacturing the products at a cheaper rate. Furthermore, this would even enable them to deal with the challenging environment in an efficient manner as compared to others. Localisation of supply chain tends to enable the companies in meeting the needs of competitive domain effectively by making better use of available resources and taking effective decisions among others (Nicita & et. al., 2013). These activities certainly support the companies to manage diverse situations and also international relationship. With lowering the manufacturing costs of the products, the companies will be able to manage the diversified conditions prevailing in the international market and align the same with their respective business or operational objectives (Sanchez-Rodrigues, 2006). From a positive viewpoint, the modern organisations can attract the customers and likewise enlarge their customer base by availing supplies from a local base, which would result into providing them with the products at cheaper prices. In this present day context, the organisations strive to maintain their competitive advantage as compared to others for ensuring long-term sustainability in terms of minimising product costs. However, this is noted to be restricting the organisations to make innovative approaches that are related with the production and also lowering the chances of diversification by a greater degree (Henriksson & Nyberg, 2005). There lay the chances of lacking in adopting different technicalities that are related with the changing needs of the global consumers. This deviation from the standard is likely to create huge amount of distress amid the consumers and affect the organisation to perform efficiently globally. Conversely, the organisations that tend to perform their operations based on the localised supplies also face challenges in terms of availability of resources. The improper allocation of resources can create stagnation of business and affect the global performance of the same in long run (Gattorna, 2013). However, the localisation of supply chain will restrict the organisations to face any legal obligation while performing in the global domain. Strategic integration of supply chain management could enhance the ability of the businesses to flourish in the international arena. This could be made possible only with the making of strategic thinking such as promoting localisation of supply chain and managing diverse resources that are available globally. Furthermore, by reducing the costs of supply chain, the organisations reap the benefit of controlling transportation as well as production costs in an efficient manner, which results into maintaining timeliness of jobs (Giesecke, 2012). Additionally, by the localisation of supply base, the chances of disruption in the process gets minimised by a certain level. Correspondingly, maintaining an effective supply chain becomes quite difficult when the business peripherals are located at different locations rather at international destinations. This eventually results into creating barriers that restrict the businesses to accomplish their desired targets in the global domain (Sanchez-Rodrigues, 2006). By enhancing the control and coordination among the different units related with the procedure of supply chain, the formation of an effective relationship could be ensured. With the localisation of supply chain, a huge change can be noticed in the strategic thinking procedure of the organisations belonging to this present day context (Giesecke, 2012). Such change in the form of lessening costs and efficiently handling varied operational units is identified to improve the quality of the products and generate greater customer value. It will be vital to mention that efficient handling of available resources could only be possible with effective management of different approaches of SCM (Henriksson & Nyberg, 2005). From the review of the literatures, it is quite clear that by forming, developing and preserving a ‘supply base localisation’, the large organisations are able to ensure the development of local small-scale businesses. In this regard, the international giants tend to promote innovativeness for maintaining their global image. This is even going to enhance the organisations’ competitive domain, as the chance of conducting continuous researches as well as promoting innovativeness could not be nullified (Giovannetti & et. al., 2013). It has been quite evident that to meet the changes in the dynamic global environment, there lays the requirement of maintaining continuous growth with respect to R&D process. Furthermore, to comply with the challenges that are imposed with the changing needs of globalisation and rapid industrialisation, an organisation needs to develop its ability relating to the factor of innovativeness. Hence, by embracing ‘supply base localisation’ in the field of logistics, organisations open up the scope for making continuous research and developing the entire system of innovation (Sanchez-Rodrigues, 2006). Notably, a series of strategies have been adopted by the modern organisations in the field of logistics in order to enhance their ability to perform in the global arena. It is worth mentioning in this context that to maintain competitive position, such organisations are inclined towards embracing the approach of ‘supply chain localisation’ by a considerable extent (Henriksson & Nyberg, 2005). With the development of an effective SCM based on the local market, the organisations might provide different services at a cheaper rate to the customers, resulting in attracting the customers and enlarging customer base in the global arena. This might help the organisations to trade goods at a cheaper rate and conduct operational functions in alignment with the predetermined organisational objectives. The above discussed aspects further denote that an efficient handling of resources is going to provide the organisations with an additional advantage to perform better in the global domain by efficiently handling the operations (Nicita & et. al., 2013). In the field of logistics, localisation of supply base plays a decisive part in providing a better understanding to the companies about how the available resources could be managed and the techniques used to maintain the flow of goods. With this concern, such companies can manage their respective strategic thinking in relation to the above discussed context while performing different operational functions in national along with international levels (Sanchez-Rodrigues, 2006). Conclusion Logistics is regarded as an important component for the business organisations that are performing in the global domain. This concept has its root from the development made in internationalisation, which has brought an identifiable change within the changing business environment of this present day context, ensuring steady growth along with development in the respective business markets and industry. Specially mentioning, such change initially affected the traditional methods leading towards the development of products. This phenomenon has been acting as a positive force for developing the ability of the organisations to deal with the diverse challenges that they often face during the conduct of varied operational functions. These challenges are even most likely to prevent the ability of the organisations to maintain their respective prominence in the international business markets. In this similar context, the approach of supply chain localisation could be noted acting as an efficient move for the companies to enhance their capacity to maintain competitive advantage as compared to others. It is quite obvious that by the localisation of supply chain, the organisations can ensure greater sustainable development and likewise improve their respective performance as per the industry norms and standards. Furthermore, by availing different resources at a cheaper rate, the companies will be able to produce goods at a cheaper rate and meet with the needs of potential customers at large. The formation of an efficient SCM process, which would enhance the efficiency of the organisations to perform in a better way, is an important need for them to provide quality and efficient services in the present globalised market. With reduced amount of legal complications and efficient handling of resources, the organisations can avail the opportunity of strengthening their competitive abilities based on the diverse needs of international markets. It can be apparently observed that the chances of having complexities are even low for such organisations that are operating with the assistance of local supply chain. Specially mentioning, by lowering the time taken in transporting goods from one region to other, the organisations can also ensure greater control in their operational costs and likewise raise profitability level as per the desired targets. In relation to the above context, it has been earlier stated that by lessening the overall operational costs involved, the organisations dealing with supply base localisations will be able to provide quality services to their consumers at a lower rate and thus enlarge customer base by a considerable degree. On a further note, the strategic management of supply chain would prove to be quite beneficial for the organisations to manage different operational functions and services, as the localisation of the units will certainly help to monitor, control and coordinate the different units that are involved in the process of supply chain. This will even raise the ability of the organisations to cater to the diverse needs of different international consumers and also enhance their overall performance as per the desired level. While catering to the needs of the international business markets, the organisations will even be able to initiate continuous growth and promote innovativeness. 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