Supply Chain Management Best Practices, 3rd Edition

CHAPTER 9Globalization: It's a Not-So-Small World

Flashpoints

• The main attraction to offshoring is lower labor costs, but those savings tend to be short-term rather than long-term.
• Companies too often fail to calculate the total supply chain cost of offshoring, which includes total landed cost, inventory holding cost, and the cost of product obsolescence.
• When it comes to setting up your global supply chain, the ultimate best practice is to go to the countries and look for yourself.
• Reshoring is one of the fastest growing globalization trends as the one-two punch of the trade war and the pandemic have made it a competitive advantage to bring key supply chain tasks back closer to home.

Technology has increased the speed and pace of commerce to such an extent that companies of all sizes now think in terms of global supply chains. While globalization expert Thomas Friedman credits technologies such as personal computers, workflow software, and Internet search engines for “flattening” the world, in fact the process started at the midpoint of the twentieth century when container shipping was introduced.

In the 1950s, trucking executive Malcom McLean had one of those epiphanies that seem blindingly obvious in hindsight but took a while to catch on at the time: Instead of having stevedores at a port physically unload a truck and then store and secure the freight onboard a ship, McLean thought it made a lot more sense to leave everything in the trailer and load the entire container ...