Supply Chain Globalization and the Complexities of Cost-Minimization Strategies

Abstract

We review the evolving literature on globalization with three aims in mind. First, we introduce the concept of globalization within the context of supply chain management. Second, with an eye toward information that may be useful for supply chain planners, we detail the motivation for global integration of the supply chain. Our third aim is to address global supply-chain issues that may be at odds with cost-minimizing strategies. Specifically, in this time of political debate regarding trade legislation, these issues involve the consideration of country of origin when sourcing, and the disparate demands of customers when marketing. A country offering inexpensive components may be associated with poor quality. Thus, despite inexpensive inputs, the overall profitability of the supply chain may suffer as perceived quality deteriorates. Similarly, a largely standardized product across multiple markets may present the lowest cost alternative from a production standpoint, but a high degree of standardization may reduce the attractiveness of the product in the eyes of the end consumer, and reduce overall profitability.