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Managing the Global Pipeline

Managing the Global Pipeline. Compiled by Rulzion Rattray. The Globalisation of Markets. Levitt, T. (1983) . Advances in Technology Driving the world to a converging commonality. Proletarianisation of: Communication, transport, travel

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Managing the Global Pipeline

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  1. Managing the Global Pipeline Compiled by Rulzion Rattray

  2. The Globalisation of Markets.Levitt, T. (1983). • Advances in Technology Driving the world to a converging commonality. • Proletarianisation of: • Communication, transport, travel • Global corporations which operate with resolute consistency at low relative cost using the entire world as a single market.

  3. Transport Source to User Costs Inventory Material Production Global Localised Trade Offs in Global Logistics • Important to recognise trade offs. • Key to recognise the service needs of the market

  4. Globalisation in Supply Chains • Liberalisation effect of WTO, etc. • No longer have to set up in target country, instead can concentrate on developing economies of scale. • Emergence of new manufacturing economies has resulted in increased competition and oversupply. • Companies will have to find new ways of remaining competitive by lowering costs in other ways. • Supply chain efficiency will become even more important

  5. The Myth of Globalisation.Susan Douglas & Yoram Wind. • Attacks Levitt's view of global standardisation as naive and over simplistic.Homogenisation not a clear & universal trend. • Contra Evidence of homogenisation: • Food firms adapt to national characteristics. • Growth of intra-country segmentation: • growing demand for differentiated products. • The myth of economies of scale: • Technical developments lowering scale requirements. • cost of production often only small part of total costs.

  6. Global Manufacture & Supply • Focussed factories: • Economies of scale, one factory for the world? • May overlook crucial logistics trade offs: • Transport costs & delivery times. • Requirement for local packaging • Centralised Inventories: • Centralising Inventory = less total inventory. Square root rule 25 to 4 5:2 i.e. 60% reduction Christopher, M., (1998), • However may overlook benefit of local to customer

  7. Postponement & Localisation • Localisation: • Even in relatively homogeneous markets like Europe their can be considerable variety of local taste. This may be better catered for in a local assembly operation. • Postponement: • Design products using simple common platforms, using common components. Assembly does not take place until required.

  8. Customer Service Explosion • Increasing perception that there is little technical difference between products. • Service crucial source of differentiation and competitive advantage. • Requirements: • Closely integrated marketing, manufacturing and supply strategies • Logistics of service delivery crucial!

  9. Strategic Lead time Management • Product and technology life cycles getting shorter. • Requirements for success: • Ability to innovate. • Ability to bring new products to market. • Logistical Lead time becomes crucial. • Time from sourcing and procurement though to recovery of investment by selling

  10. Organisational Integration • Recognition of the importance of taking a systems view of business. • Difficulty of achieving integration in functionally fixated organisations. • Move towards a requirement for generalists • Integration of all the different aspects of the organisation. • Philosophy of integration beyond the confines of the organisation. • Supply Chain Management. • Requires that all the players in the value system work together.

  11. Throughput Management • The process of linking manufacturing and procurement to the needs of the market. • Requirement for reducing the length of the supply chain pipeline! • Target: • Lower cost, higher quality, greater variety, more flexibility, faster response times.

  12. Globalisation • Move to commodity markets and component specialisation: • firms shop freely amongst the nations of the world • Singer Sewing machines: Shells from US, motors from Brazil, drive shafts from Italy, machine assembled in Taiwan • Increasing need for local customisation • Washing machines: Germans want fast spin & Italians slow, British front loaders, French top loaders, etc • Challenge how to achieve benefit of standardisation at the same time?

  13. References • Christopher, M., (1998), “Logistics and Supply Chain Management. Strategies for Reducing Cost and Improving Service”, Financial Times Pitman Publishing, London • Levitt, T. (1983), “The Globalisation of Markets”, Harvard Business Review May/Jun. • Douglas, S., & Wind, Y., (1987), “The Myth of Globalisation”, Columbia Journal of World Business, Winter.

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