How Globalization Impacts Supply Chain Management?

In recent decades, the world has become much smaller than it used to be. The connection via the internet and significant improvements to transportation infrastructures has turned the world into one international trade market.

This global market offers businesses reaches new customers in various geographies and has access to a diverse selection of new workers, technology, materials, and products.
What is Globalization?

The term “globalization” refers to the free movement of goods, services, and people across international borders. In regards to supply chain management, globalization refers to the process in which a business operates on an international scale.

Pros and Cons of Global Supply Chain

Business owners or logistics managers may wonder whether the impact of globalization on your supply chain will be beneficial or will it make it harder for you to operate. 

It all depends on the nature of your business and how you manage your supply chain. There are pros and cons to globalization and it may, or may significantly affect your supply chain.

5 Benefits of a Globalized Supply Chain

At the onset of globalization, your supply chain management is more complex and business critical than ever before. As business owners or supply chain managers, you would eagerly want to know how globalization can benefit your operations.

1.    Reach new customers in new markets around the world
2.    Expansion of sourcing opportunities
3.    Larger selection of goods and services
4.    Grow and expand the scope of business
5.    Save costs and increase profits

5 Disadvantages of a Globalized Supply Chain

The pros of a globalized supply chain are many but they can also present new set of challenges to your network and how one manages the supply chain. To take advantage of the benefits of globalization, you need to know the shortcomings and how to respond to them as well.

1.    Greater complexity – As companies globalize they must scale up all aspects of their business, even their supply chain becomes complex.

2.    Increased supply chain risk – A complex supply chain means increased risk of global events, like natural disasters, port and border closures and changes to the geo-political landscape, or more recently, an event like the pandemic.

3.    Increased competition – The global economy requires supply chains to be as lean and efficient as possible hence higher competition.

4.    Greater data collection challenges – When different aspects of your supply chain are scattered around the globe, the process data collection and oversight grows in complexity and becomes more and more difficult.

5.    More legal issues – Operating across borders means operating in countries with different legal systems, which can get complicated and expensive very quickly.

How Will Globalization Affect Your Supply Chain?

Globalization is, for better or worse, a good thing for your supply chain, your business and the world at large. It’s true, globalization poses substantial risk to your business but only if you do not take steps to manage these potential effects and risks on your supply chain. It is certain that the benefits that globalization brings to your business far outweighs the risk.

In such a situation, Warp & Weft International (WWI) is the answer to your global supply chain needs to gain a competitive advantage in the marketplace.