How is the World of Logistics Affected by Globalization?
Whether by setting up multiple facilities in strategic international locations or building business alliances with foreign suppliers, manufacturing firms across the world are truly going global. They might develop a product in one country, manufacture it in a second and eventually sell it in a third, all in a day’s work!
This presents unique challenges for their partners. Supply chain and logistics management takes on a whole new aspect when overseas trade is involved, and manufacturers are quick to hire firms who can handle their growing needs.
Factors Responsible for the Growth of Globalization
With new trade agreements designed to improve the exchange of goods, services and technology across borders, the global manufacturing environment has undergone a revolution of its own. Let’s look at the main driving forces behind its growth:
- Global Markets – The potential for growth and intense competition in developing markets causes even small and medium-sized businesses to consider overseas expansion and operation upgrades. Manufacturers need to develop global networks to keep pace with the constant evolution in product markets as well as increasing demand from international customers.
- New Technology – Product diversity is growing at an unprecedented rate today, and production lifecycles are shorter than ever before. With an increased demand for complex, high-tech products, there’s been a huge leap in imports. Manufacturers need to adapt quickly, absorb new technology faster and make the most of low-cost locations for production.
- Global Costs – Cost factors driving global operations in the past have been replaced by newer strategies that account for total quality costs. There’s increasing focus on prevention instead of inspection, especially in terms of product design, R&D inputs, worker training and high quality workmanship. Global suppliers with a skilled workforce are in high demand.
Other Factors – Strong global supplier/sourcing networks help offset the financial impact of political and micro-economical forces. Fluctuations in foreign exchange rates and currency devaluations can severely affect global operations, unless production units have been established in several overseas locations (so production can be shifted as per the need).
So, How Does Globalization Affect Logistics?
Multinationals need logistic management partners with a global presence to help them adapt supply chains and maximize the benefits from tariffs, rules and standards in new trade zones. It’s no longer about dealing with multiple logistics firms, but rather consolidate partnerships with a few diligent and well-established providers.
In the global marketplace, manufacturing firms are increasingly looking for partners experienced in local culture, communications and logistics trends in key overseas locations. They’re also choosing firms who can handle every aspect of logistics, stay up-to-date with new trends and technology, and offer flexibility at every stage.
From upgrading weighing systems at the manufacturing facility to implementing efficient warehousing and transportation strategies, logistics providers are expected to do much more than their counterparts in the past. Anticipating market changes and staying abreast of IT developments has also become part of their routine.
Globalization has become an integral part of success in any sector, with firms of every size competing for a foothold in foreign markets in addition to local ones. Logistics companies need to adapt to these changing conditions quickly, if they want to build market influence, survive and outpace their competition.
About the Author:
Kevin Hill is a guest blogger for AMCS routing. Read more from his hand on the website www.scalesu.com