International Journal of Advance Research and Innovation

Vol. 9(2), Apr-Jun 2021, pp. 84-89

Doi: 10.51976/ijari.922113
www.gla.ac.in/journals/ijari
© 2021 IJARI, GLA University
Article Info
Received: 13 Jan 2021 | Revised Submission: 28 Feb 2021 | Accepted: 05 Mar 2021 | Available Online: 15 Mar 2021

Impact of Supply Chain Management in Globalization

Abhishek Roy*, Abhishek Chowdhary** and Ashok Kumar Madan***

ABSTRACT

Globalization has had a considerable impact on the logistics industry. The supply chain (SC) is the most
significant concept in logistics. Managing SC operations has become more difficult as a result of globalization.
Supply chains (SCs) are the pathways between suppliers and purchasers. The role of SCs is to safeguard a
product from the moment of its creation till it reaches the hands of a customer. Supply chain management
(SCM) is a crucial part of companies. It is the main driver of their success and customer loyalty. Marketing is
becoming an increasingly important part of the process, balancing procurement by providing critical demand
information and cultivating partnerships that help SC operations run more efficiently. These goods must cross
international boundaries to enter as many customers as possible. SCs are important for global markets because,
without them, suppliers’ goods will not be able to reach global markets efficiently. The paper’s objectives are to
discuss the aspects of Supply Chain Management and Global Supply Chain.

Keywords: Supply chain management; Globalization; Inventory; Logistics.

1.0 Introduction manufacturing. It is, therefore, necessary to provide

relevant information, recent development,
Producing and selling goods locally was popular drawbacks, and future advancements related to the
in the past because it was the most cost-effective supply chain industry. These may allow in creating
way. In this situation, goods were transported over better technologies that can help businesses to their
long distances and were out of reach for many advantage.
people. Manufacturing has shifted to lower-cost
locations as shipping costs have decreased and labor 2.0 Methodology
prices have risen in more industrialized countries.
For a specific reason: our planet is becoming This chapter explains the scientific methodology
increasingly interconnected. As global economies we used to write the paper. The analytical techniques
become more competitive, competition is shifting we used were analysis and synthesis. The research
away from individual companies and toward entire problem was divided into individual sections,
value chains. Supply chain management has gained components, and studied them to reveal their nature
popularity in the last century or so. using analysis as a scientific method. We began by
The focus has been on keeping the whole defining the solution’s subject - the global supply
process simple as compared to the current condition, chain - and then the specific elements needed to be
which is highly complex. The main aim of businesses discussed – advantages of getting incorporated into
worldwide is to keep their customers satisfied by global supply chain. Conclusively, we called the
providing them top-quality products and services in focus to the most common errors businesses make
the shortest of time. Supply chain management when it comes to global supply chain management.
ensures that businesses are effective in their approach The aim of the study was to weed out the primary,
with different kinds of operations like logistics, basic, and necessary facts and contexts that could tell
information technology, operations management, and us about the phenomenon under consideration.
_______________________
*,***Department of Mechanical Engineering, Delhi Technological University, Bawana Road, Delhi, India.
**Corresponding author; Department of Mechanical Engineering, Delhi Technological University, Bawana Road, Delhi,
India (E-mail: chowdharyabhi1@gmail.com)
 Impact of Supply Chain Management in Globalization 85

Using the scientific methods of synthesis, we These value chains organise and coordinate
found the associations, inconsistencies, and production in the primary, manufacturing, and
interconnections between these earmarked service sectors on a worldwide scale [9]. The
components, and then we were able to replicate the industrial representation of the global value chain has
investigation phenomenon with all basic features and become the backbone and primary nervous system of
relationships. knowledge was integrated by the global economy [10].
combining individual pieces making wholes - we
isolated the benefits of entering the global supply 2.2 Supply chain management and globalisation
chain, as well as the drawbacks and issues in global The term “supply chain” has gained widespread
SCM, from the information sources and added them recognition as a result of manufacturing’s
to the individual subchapters in the main chapter globalisation since the mid-1990s, notably the rise of
results. manufacturing in China. China’s imports to the
United States increased from around $45 billion per
Figure 1: Simplest Form of a Supply Chain year in 1995 to more than $280 billion in 2006.
Since the beginning of time, globalization has
necessitated the development of logistics solutions to
handle with complicated networks involving
different organisations across many nations under
various control [11].
Supply chain management is increasingly being
used to refer to strategic difficulties, while logistics is
increasingly being used to refer to tactical and
operational ones. The Council of Logistics
Management changed its name to the Council of
Supply Chain Management Professionals in 2005 to
reflect the growing link of supply chain management
with strategy. They make a clear distinction between
logistics and supply chain management [12]:
2.1 Supply chain • “In order to satisfy consumers’ expectations,
The supply chain is defined as a network of logistics is the component of the supply chain
interconnected links where value may be added. process that plans, implements, and regulates the
Figure 1 [3] depicts these interactions schematically. efficient, effective forward and reverse
They can exist between processes, goods, businesses, movement and storage of products, services, and
and industries, as [4-6] explains. Signifies the associated information between the point of
following: Reduced complexity and value added origin and the site of consumption.” While
activities are found at the bottom of the value chain • “Supply Chain Management is the systematic,
hierarchy. As you move up the value chain to the strategic coordination of traditional business
industry level, the complexity and value added functions and tactics across these business
operations grow. Another definition of the supply functions within a company and across
chain may be derived from the preceding: it is the businesses within the supply chain with the goal
integration of information and resource flows via a of improving the long-term performance of
sequence of value-added activities. Previously, the individual companies and the supply chain as a
industry was built on a cluster-based idea that was whole.”
localised. It has now transformed into a value chain The topic of globalisation and supply chains has
structure with higher geographic dispersion [7]. As a previously been discussed by a number of academics.
result, the global supply chain’s industrial level Some of the solutions are provided in the following
viewpoint may be described as being characterised paragraphs.
by greater complexity while simultaneously being According to Greg Shnerer, a supply chain and
related with rising levels of value added activities logistics expert based in Toronto, understanding the
[8]. impact of globalisation in the supply chain requires
86 International Journal of Advance Research and Innovation, Volume 9, Issue 2, April-June 2021

first knowing what a supply chain is and how it However, the behaviour pattern observed in
functions. Global transportation is an important part customers has changed over the year. In addition to
of supply chain logistics, and it would be impossible that, the technologies mentioned above have crowded
to run a supply chain without it in our globalised and markets and are inadequate for the global economy.
linked world [11]. As a result, there is immense pressure on supply
The pathways connecting suppliers and chain executives to adapt to the digital forefront
recipients are defined by Greg as supply chains. Then
he compares supply networks to the “behind the 4.0 Haphazard Management Practices in the
scenes labour” that goes into getting a product from Global Supply Chain (GSC) Industry
conception to consumer’s hands. These items must
traverse international boundaries in order to reach as Global supply chains pose new problems that
many markets as possible. Without supply chains, the must be considered to optimize opportunities while
items that suppliers manufacture would not be able to minimizing risks. As a result, several firms
reach global markets as effectively, hence they are attempting to enter the global market have gone
critical for global marketplaces [11]. astray. According to a recent study, onefourth of
Ani Mithra, a supply chain analyst, has the traditional supply chains in the corporate sector were
following opinion: The two concepts of globalisation not inspected for risk management []. However, there
and supply chain management (SCM) are are still many effective ways of reducing risk and
intertwined. To put it another way, they can’t live taking advantage of the ample opportunities in the
without each other. Globalization provides access to global market. In the discussion below, we have
new consumers and procurement sources. However, pointed out the haphazard management practices in
a global reach necessitates an awareness of many the global supply chain industry. In addition to that,
markets, including prospective partners and threats. we have also mentioned some points to rectify such
mistakes.
Figure 2: Emerging Technologies that Enable
Digital Supply Chain Transformation 4.1 Opaqueness of the industry
More businesses are realizing the importance of
coordinating a large number of carriers and suppliers
supplying a variety of products over the world.
Transparency and understanding of logistics
activities are becoming increasingly relevant as the
amount of import and export grows. Companies can
mitigate the uncertainties of a complex international
supply chain by enlisting the help of a logistics
partner [15].

4.2 Ignoring incoterms

An organization that enters foreign markets can
suffer from financial risks and losses if it fails to
3.0 Present Scenario of Technologies Related to learn about its partner’s business structure. Before
Supply Chain Management (SCM) engaging in trade, businesses must comply with basic
incoterms. Otherwise, this may result in a cost
It is indispensable for any business to opt for increase as well as a substantial lengthening of
technologies that are new, innovative, and leading- delivery time. Thus it is crucial to determine the risks
edge. A recent overview study by Prashant R. Nair et and the transportation costs associated with trade
al. [] gives an idea about new technologies used in before finalizing a contract.
India. Some of them include internet and web With a CFR Incoterm, for example, a business
services for the use of communication between may select “cheaper” products. Transport and
partners, using bar-coding in logistics, use of terminal expenses must be reimbursed in this
materials requirement planning, and enterprise situation, even if they are set by the business partners
solutions like Enterprise Resource Planning (ERP).
 Impact of Supply Chain Management in Globalization 87

at a high level. There is no way to say no to them. the earlier version of themselves. There are a
Felix Miletich advises confirming the parties’ plethora of other companies that can make up for the
obligations in-depth with the partner in advance, inefficiency of their competitors. Thus, there is a
agreeing to all in a written statement, and sending the strong motivation to do it correctly the first time and
documents to their partner or a transporter. every time [3].
Businesses will have disagreements over who pays
for what and what products will be kept at the 5.4 Reducing the sum of stock on hand
carrier’s discretion [14]. Businesses with a large number of international
contacts and suppliers can be able to minimize the
4.3 Improper management of inventory amount of inventory they need to maintain. It means
Customers nowadays mostly get their shipments they can save money on storage, robbery, and
2-3 days after placing an order. Companies that deal shipping items, among other things. Reduced overall
with shipping delays or regular and long travel times costs contribute to the competitive advantage that a
miss out on market opportunities [13]. Forecasting global supply chain provides. [3]
good resource management and looking for Almost every commodity can now be secured, as
alternative suppliers are all things we suggest. it can be manufactured anywhere in the world.
Working with an experienced logistics company that Earlier, this was not possible. GSC has made the
is familiar with local regulations and procedures and availability of such items very simple, no matter the
has significant representation in its country may help distance [2].
minimize the likelihood of shipment delays by
preventing issues with customs authorities. 5.6 The supply chain must remain operational at
all times
5.0 Key Benefits of Engaging in the Global Supply The chain never rests and is always on the move
Chain (GSC) Industry 24/7, due to time differences between countries.
People in the GSC are employed on various
Certainly, there are drawbacks to the global continents to satisfy supply chain requirements [8].
supply chain. These issues will be addressed in next
section. However, the advantages outweigh the 5.7 New markets and prospects
limitations associated with GSC. We have listed the Joining the GSC also opens up state-of-the-art
top ten advantages of becoming a part of the GSC: business opportunities. If a business has procured
items from India, then the probability of it exploring
5.1 Excellent Goods are Readily Available other country’s markets is high, as it can create better
There is an opportunity to procure outstanding scope for itself. Once it takes this initiative, new
goods easily and efficiently, that is of the highest opportunities follow [23, 24].
quality standards. Global supply is highly affordable
and easily accessible to get great deals on supplies. 5.8 Taking advice from others
[1] Businesses directly or indirectly work with each
other. As a result, this helps them to collaborate as
5.2 Cost-cutting well as make profits. Every country has its unique
Companies that participate in a GSC will lower way of conducting business that adds an intriguing
their product’s market value significantly, ensuring a aspect to the GSC as companies can benefit from one
competitive marketplace and their company’s another by learning from each other. The possibilities
economic sustainability. GSC was the first technique, created are immense [11].
out of the many, for using costcutting practices in
5.9 Adaptability
supply chains [4].
Companies that are part of a GSC have a better
possibility of succeeding and even growing through a
5.3 Drive to be a successful businessperson
downturn in the economy. However, their chance to
Companies that previously only operated on a
survive it without being in the GSC is bleak. There is
local level in their home market now have the
a basic rule, which states that if an organization is not
pressure to outperform their competitors as well as
working within a GSC network, it is lagging. [23]
88 International Journal of Advance Research and Innovation, Volume 9, Issue 2, April-June 2021

Figure 3: Mapping Global Supply Chains strategies, companies can bounce back in the GSC
competition. The third part highlights ten different
advantages of entering a GSC that can help any
business profitable. Lastly, we discuss certain
limitations related to SCM that include ever-
changing trends, innovation and developments in
technology, and political and natural factors. In a
nutshell, the findings were as:
1. Many businesses lack a transparent supply
chain; a logistics partner is recommended.
2. Businesses lack crucial specifics about
Incoterms and the business requirements of their
partners; recommendation: thoroughly check the
parties’ obligations with the partner ahead of
time, settle on anything in writing, and give the
information to the logistics partner or carrier.
3. Businesses address issues such as shipping
Figure 4: Logistics and Supply Chain delays or lengthy travel times; recommendations
include focusing on forecasting, good inventory
management, and finding alternate sources, as
well as working with a seasoned logistics
company.
4. Companies rely only on marine transport and, in
the case of failure, choose for the most
expensive choice - air travel; recommendation:
investigate other options, such as rail travel from
Asia to Europe, various mixes of air and sea
transport, and others (listed above).
5. Companies are hardly ever prepared for
unexpected issues that may arise during the
shipment of a consignment to the buyer;
5.10 A higher risk of surviving recommendation: look further into solvency of
Companies that are part of a GSC have a better Tier 2 and Tier 3 suppliers who supply their
possibility of succeeding and even growing through a main suppliers, know where each component
downturn in the economy. However, their chance to comes from and who manufactures it, and work
survive it without being in the GSC is bleak. There is with the logistics partner to develop a backup
a basic rule, which states that if an organization is not plan.
working within a GSC network, it is lagging [23]. We wanted to highlight the primary advantages
that firms may receive by participating in the global
6.0 Conclusions
supply chain in the following section. Because global
In this study, we have discussed several aspects supply is so competitive, it is possible to rapidly and
of the global supply chain and supply chain efficiently find exceptional items that have been
management. The current set of technologies used in produced to the highest quality standards. Companies
SCM include cloud computing, big data analytics, that are part of the global logistics network can
IoT, blockchain, 3Dprinting, and many more. The reduce their costs. As a result, the market position is
second part discusses the SCM mistakes made by more solid, and the company is more competitive.
organizations in their practices. The inability of Businesses that previously exclusively operated on a
organizations to be transparent, follow incoterms and local level in their home market are obliged to
manage inventory has increased their risks in the enhance their performance when they join the global
GSC industry. However, with the right management supply chain. Firms can also learn from others
 Impact of Supply Chain Management in Globalization 89

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