Chapter 2 - Global Dimensions in Supply Chain

Class 6

Absolute Advantage

A country produces certain goods more efficiently or has unique resources that others lack (e.g., oil in Saudi Arabia).

Comparative Advantage

Countries gain by specializing in goods they can produce at a lower relative cost, even without being the most efficient overall.

Factor Endowment Theory

Trade advantages come from a nation’s resources, such as land, labour, capital, and entrepreneurship.

Rationale For Global Trade

Promotes specialization, efficiency, and global interdependence.

Contributing Factors to Global Trade

Technology & Information Systems, Population & Demographics, Global Interdependence, and Migration & Labour Mobility

Technology & Information Systems

Contributing Factors to Global Trade: Enable faster coordination across time zones

Population & Demographics

Contributing Factors to Global Trade: Growing, aging, populations shift demand patterns

Global Interdependence

Contributing Factors to Global Trade: The economic health of one nation affects others.

Migration & Labour Mobility

Contributing Factors to Global Trade: Provide workforce balance and lower production costs.

Supply Chain in the Global Economy

Purpose: Reduce tariffs, quotas, and trade barriers to promote efficiency and investment.

Enables faster flow of goods, services, and investment.

Bilateral FTAs

Between two nations (e.g., Canada–Chile, Canada–Colombia).

Regional FTAs

Three or more nations (e.g., USMCA, EFTA).

Global Markets & Strategy

1. Source materials and components worldwide.

2. Choose locations for factories, depots, and DCs.

3. Evaluate transportation alternatives and intermediaries.

4. Understand government regulations and trade policies.

5. Collaborate with 3PLs/4PLs for logistics support.

Product/Service Flow

4 Major International Flows Mirror Domestic SCM: Movement of goods across borders.

Information Flow

4 Major International Flows Mirror Domestic SCM: Visibility via digital tracking and EDI

Financial Flow

4 Major International Flows Mirror Domestic SCM: Currency exchange, tariffs, and payment systems.

Demand Flow

4 Major International Flows Mirror Domestic SCM: Shifting consumer preferences and global marketing.

Supply Chain Security: A Balancing Act

The goal is to balance efficient trade with strong security. Includes key security programs, security technologies and ports regulations

Trade Act of 2002

Requires electronic cargo filing 24 hours before vessel departure.

U.S. Maritime Transportation Security Act (2002)

Port vulnerability assessments + security standards for vessels.

FAST Program

Free and Secure Trade process for the Canada–U.S. border.

Security Technologies

Electronic filing, container seal standards, cargo tracking and screening systems.

Ports

Over 90% of US international trade passes through ports

• Vital for supply chain efficiency and security.