The impact of globalisation on supply chains

Published on November 22, 2010 Reviewed on June 30, 2016   40 min

Other Talks in the Series: Supply Chain Management

0:00
I'd like to welcome you to this presentation on the Impact of Globalization on Supply Chains. My name is John Mangan, and I'm a professor of Marine Transport and Logistics at Newcastle University in the United Kingdom.
0:15
Today's presentation is divided up into four parts. Firstly, we answer the question what is globalization, and we will divert to define and maybe even to measure globalization. The second part will look at the very considerable growth in global trade that has occurred over the of last 50 to 60 years, and in particular the importance of Marine containerization. In the third part of the presentation, we'll examine the whole area of extended logistics reach, looking at how firms through foreign direct investments setup subsidiaries overseas, which is obviously related to increase outsourcing and offshoring and the more recent phenomenon of nearshoring. And we look at all of the costs associated with this, understand the concentration of international trade traffic that goes with this extended logistics reach. And finally in the fourth part of the presentation, we look at enhancing the competitiveness of the global supply chain examining issues, such as sustainability and roll played by logistics service providers in truly facilitating the global supply chain.
1:26
I'd just like to start then with a very simple slide and on this slide you can see two pictures, they both relate to moving product by sea. The first, dates to 1912 and this in fact, a view of Dockers handling kegs and you could see there's a lot of manual handling here, it's labor intensive, and also obviously low technology, to not exploiting what we would call economies of scale. We fast forward to the bottom part of the slide, what you've got is one of the new Maersk vessels, these are these giant container ships, these are now trading across the seas with the consigned capacity booked at 14,000 TEUs and the TEU is a Twenty-Foot-equivalent unit. So most boxes that you see, such as those on this Maersk vessel, they are typically two TEU in length and this vessel has the capacity of 14,000 TEUs. So in less than a 100 years, you can see that the transition which has occurred from a very labor-intensive manual handling, low volumes for cargo as depicted on the top left hand inside of the screen. And then the bottom part of the screen, you've got this huge 14,000 TEU vessel operating with minimal crew, exploiting huge economies of scale. And in a sense, this evolution from manual handling to scale-based efficiency in logistic systems, has really been the driving force behind a lot of the growth in the international trades, globalization that we see today and the ability for global supply chains to function.
3:03
Answer to the first question, what exactly is globalization? What we mean by globalization?
3:12
Well, let's attempt the definition of globalization, "The term globalization has been in use for a number of decades, and it's generally regarded as what we would call an umbrella term, in other words, it's kind of a catchall term for a complex series of economic, social, technological, cultural and political changes, which continue to take place throughout the world." And it's an important aspect with this idea of globalization continuously unfolding. It's not a constant set phenomenon, it's constantly changing, taking a new shape. What we can conclude in this globalization, in essence, comprises three important flows, one is trade in goods and in freight, and increasingly in services, for example, software and financial services that increasingly move around the world today. Picking up on that then, the second aspect of globalization that concerns global capital flows, the financial flows and of course in the recent financial downturn, we saw just how quickly problems in one financial market can very quickly spread around the world. That is an obvious symptom of globalization. At the third flow that we refer to here in the slide, concerns the migration of people with globalization, another aspect of it is more and more people are moving around the world for work, for business, family, following opportunities and employment and creating new businesses and so on and so forth. So these are the three different components of globalization. I think it's sometimes a ward, which can conjure derogatory images and sometimes we see on our TV screens these anti globalization protests. Globalization is about the complex phenomenon and it means different things to different people, and no doubt, it has downsides as well as upsides, in any event are concerned here in this presentation, is around the impact of this phenomenon of globalization and supply chains and how today we've got supply chains wrapped around the world and how logistic systems facilitate and lubricate those supply chains and allow them to exist to operate effectively.
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The impact of globalisation on supply chains

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