Chapter 1 - Global Supply Chains

What are the major flows in a supply chain?

Products/Materials, Services, Information, and Financial/Cash Flows

What is supply chain management?

Managing the efficient and effective flows of products, services, information, and finances from supplier’s supplier to the customer’s customer.

What role does transportation play in a supply chain?

It physically connects supply-chain members and enables products to move between suppliers, producers, distributors, retailers, and customers.

What is absolute advantage?

A country has an absolute advantage when it can produce a good at a lower cost than another country.

What is comparative advantage?

Countries can benefit from trade by specializing in what they produce relatively more efficiently, even if one country has lower costs for several products.

Who developed the theory of absolute advantage?

Adam Smith in The Wealth of Nations in 1776.

What does BRIC stand for

Brazil, Russia, India, China

What does VISTA stand for?

Vietnam, Indonesia, South Africa, Turkey, and Argentina

Why were BRIC and VISTA countries important to global supply chains?

They represented growing sourcing opportunities and potential new markets.

What factors contribute to increased global trade and economic development?

Population, urbanization, land/resources, technology, information, labor mobility, communication, infrastructure, and globalization

How does population affect global supply chains?

Population represents both a labor supply and a source of consumer demand.

What is urbanization?

The movement and concentration of population from rural areas into cities.

What is a megacity?

A city with more than 10 million people.

Why does urbanization matter to transportation?

It concentrates demand but creates infrastructure, congestion, distribution, and sustainability challenges.

Why are land and natural resources important to global trade?

Differences in available land, energy, food, water, and raw materials influence where goods can be produced efficiently.

How can technology reduce resource scarcity?

Through innovations such as desalination, fracking, biotechnology, and improved information and communication systems.

What helped increase the volume of global trade?

Trade agreements, reduced tariffs, and greater acceptance of importing finished products.

Why is transportation critical to globalization?

It allows goods and services to move efficiently between geographically separated markets.

How can transportation improve a country’s competitiveness?

Efficient transportation lowers landed costs (the total expense of product from factory to the final destination), increases market access, and supports global sourcing and trade

In which direction does the financial flow normally move?

Primarily backward from the customer toward suppliers as payments.

Why is information flow important in a supply chain?

It coordinates demand, inventory, transportation, production, and replenishment decisions.