Global Supply Chain Efficiency
Introduction
The Obama administration’s decision to spend an estimated $50 billion in the modernization as well as improvement of transportation infrastructure in the U.S is timely and welcome. Whichever way one looks at it, this decision will have a major impact on global supply chain efficiency. In this text, I will look at how this decision by the Obama administration to improve transportation infrastructure might affect the efficiency of the global supply chain efficiency.
Global supply chain efficiency
According to Frazalle (2002), the world has become a truly global village and as such organizations now do business in the global landscape. This has consistently called for better management as well as administration of the existing supply chains. Organizations which relate in one way or the other i.e as service providers, customers or even suppliers in the supply chain exchange loads of information on a day to day basis. Decades ago, this kind of information exchange was effected using a wide range of ways i.e electronic data interchange, fax machines, telex, letters, telephones etc. in the modern day however, the Internet has been used to come up with more effective as well as efficient protocols of transmission.
The decision by the Obama administration to spend an estimated $50 billion in the modernization as well as improvement of transportation infrastructure in the U.S will have a great impact on the information exchange efficiency in the global supply chains. Long (2003) notes that there is need for a enhanced efficiency when it comes to information exchange in the global supply chain as the information systems involved in the supply chain demand vast inputs of data from both manual systems as well as sources that happen to be automated which include but are not limited to sensors, bar code readers etc.
The initiative by the administration will inevitably improve automation so as to support the desired information system integration with regard to the supply chains. Currently, the picture is not rosy. Just as an example of the great need for the additional spending in the modernization as well as improvement of transportation infrastructure in the U.S, Frazalle (2002) notes that currently, manual data is still being widely used and this is a clear impediment to the information efficiency in the global supply chain. The additional $50 billion might as well reduce the number of points at which information is entered in the chain. This is a definite boom for the global supply chain efficiency.
According to Branch (2008) firms are increasingly making use of estimates as opposed to actual production data when it comes to expending, management of materials as well as scheduling. In this regard, the additional spending in the modernization as well as improvement of transportation infrastructure in the U.S will shift the focus of firms across the industry from the utilization of estimates to the use of actual data with regard to the production plan when it comes to expending and scheduling amongst other things.
The additional funding will also result in enhanced coordination in the global supply chains. Coordination failures in the global supply chains have been blamed for widespread resource wastage and with this in mind, should the industry stakeholders accept to work hand in hand with the government, the global supply chain will benefit from enhanced coordination which will in one way or the other increase efficiency hence reducing resource wastage and overlap of functions.
Handfield et al. (2002) notes that the current global supply chain cannot be said to be efficient. He notes that this can be gleaned from the large inventory buffers businesses have to put in place to avert risk when it comes to their operations. Businesses are also increasingly forced to integrate vertically so as to control large amounts of materials.
According to Branch (2008), the manufacturing sector in the United States happens to be the world’s largest. However, it is important to note that currently, the U.S faces increasing competition from china and japan. The additional funding on transportation infrastructure might help redeem the dwindling manufacturing sector in the U.S. Globalization as Larsen et al. (2007) notes is largely to blame for the position we are in. Jobs are increasingly being exported and in that regard, the U.S is increasingly becoming a consumer rather than a producer. This will in the long term threaten American jobs and hence the decision by the government to fund the transportation infrastructure improvement will end up impacting positively on both the U.S as well as the global supply chain efficiency. This will be informed by the optimal management of the various manufacturing logistics which include but are not limited to demand forecasting, production scheduling as well as efficiency in sourcing raw materials.
Conclusion
It is good to note that efficiency n the global supply chain will have distinct advantages to business organizations. This is to say that apart from business organizations making cost savings and hence enhance profitability, they will not be required to insulate their operations from risk by having buffers in place when it comes to inventory.
References
Branch, A.E. (2008). Global Supply Chain Management and International Logistics. Taylor & Francis
Frazalle, E. (2002). Supply chain strategy: the logistics of supply chain management. McGraw-Hill Professional
Handfield, R.B., & Nicholas, E.L. (2002). Supply chain redesign: transforming supply chains into integrated value systems. FT Press
Larsen, T.S., & Schary, P.B. (2007). Managing the global supply chain. Copenhagen Business School Press DK
Long, D.C. (2003). International logistics: global supply chain management. Springer
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