Global supply chains: other voices.
In this introduction we outline the highlights of each essay and present some avenues for further research for supply chain and other academic disciplines.
Catherine L. Mann is the Barbara '54 and Richard M. Rosenberg Professor of Global Finance at Brandeis University. Previously she served at the World Bank, the Peterson Institute for International Economics, the Federal Reserve Board of Governors, and on the staff of the President's Council of Economic Advisers. Dr. Mann has worked extensively with developing countries and remains heavily involved with import and export issues both at the Federal Reserve and in other venues. Dr. Mann's essay suggests that global sourcing decisions can be understood based on an analysis of global networks combined with evaluations of national capabilities in emerging markets.
Dr. Mann focuses her essay on the importance of researching trade facilitation (TE) policies to understand the current and evolving patterns of global sourcing. Economic research documents that trade facilitation policies increase a country's participation in global trade. However, which type of trade facilitation policies is best suited for policy-maker attention depends on the specifics of a country's products and supply chains.
The latter finding is a natural starting point for supply chain researchers, who often work at the product and firm level. The country-level results have to be the sum of individual firm decisions, and there is fertile ground for research into how individual companies make decisions that affect country-level results. Some examples include:
(1) Where do TF policies get included in sourcing decisions? At the strategic level--i.e., are potential supplier countries "qualified" before looking at individual suppliers? At the tactical level, when considering whether a supplier has the right geography to serve customers? In other words, does the presence of a particular TF policy (e.g., expedited customs clearance) qualify or disqualify a country as a potential source, or does the state of a country's TF policies and environment come into play when choosing between particular suppliers?
(2) Given that TF plays some role in supplier selection, which TF policies matter most? The economics research suggests that the importance of TF policies varies by product type on a country basis. Can supply chain researchers confirm these findings in firm-level studies, through secondary, survey, and/or case study? If so, what is the mechanism that values, for example, improved access to customs information over streamlined customs inspection in the supplier selection process?
(3) Are there also potential prescriptive results from TF research? Given that most TF policies are formulated at the regional or national level, which of these policies should individual companies support, perhaps as part of their government relations, to improve the effectiveness and flexibility of their suppliers and global supply chains?
In addition, Dr. Mann notes the availability of significant amounts of data on TF for the formulation and checking of hypotheses. For example, the World Bank Enterprise Survey (http://www.enterprisesurveys.org) contains numerous indicators of each country's trade and economic environment, but also allows access to firm level data for purposes of within country comparisons. Similarly, logistics capabilities by country (based on forwarder responses) can be found in the World Bank's Logistics Performance Index work (http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTTRANSPORT/EXTTLF/0.,contentMDK:21514122~menuPK:3875957~pagePK:210058~piPK:210062~theSitePK:515434,00.html). Such archival data is a logical starting point for responding to the call by Calantone and Vickery (2010) for appropriate use of secondary data sources in supply chain management research.
To summarize, economists interested in trade and global supply chains have confirmed, with country-level data, that trade facilitation policies can influence global sourcing decisions. As part of this effort, sponsoring organizations such as the World Bank and OECD have initiated large-scale, multinational data collection efforts to document each country's participation in global supply chains, including surveys at the firm level. Now it is up to supply chain researchers to see how the trade facilitation policies affect firm-level decision making. Connecting the two levels of analysis--country/global versus firm/supply chain--may lead to important insights on how firms can and should shape their business environments for years to come.
Jean-Paul Rodrigue is Associate Professor of Geography and Global Studies at Hofstra University. He is the very accomplished, latest academic in a long line of transportation geography scholars. Dr. Rodrigue has written the modern authoritative textbook on transportation geography, and he is called upon regularly to consider the relationship of geography to the development of global commerce and global supply chains.
In his essay, Dr. Rodrigue points out that supply chains can be conceptualized as the link between two separate geographies--the geography of production and the geography of consumption. This spatial perspective leads to many interesting questions.
(1) Are "denser" production geographies only supportable if they are linked to "denser" consumption geographies, or can they depend on many weaker linkages?
(2) How can one reconceptualize the link between production and consumption geographies in terms of capabilities? Hard infrastructure? Distance and time? These are old questions, but they are even more important in a world where international trade and global sourcing are an essential part of the business landscape. Furthermore, the geography literature may be a source of new insights into these important issues (Dicken 2011).
(3) If certain institutional gaps are identified in the two geographies (Khanna and Palepu 2010), how can the supply chain linkage compensate for these gaps? Are there generalizable characteristics of these geographies and their linkages which may lead to supplier clustering and concentration?
Dr. Rodrigue also lays out a concrete example of the potential importance of spatial considerations in supply chain organization. Geographers and economists have identified knowledge sharing and the need for complementary skills as two important drivers of industrial clusters such as fashion in Northern Italy and high tech in Silicon Valley (Porter 1990). Dr. Rodrigue documents clustering of third-party logistics installations around key transportation infrastructure in North America. This suggests another set of research questions.
(1) Do knowledge and vertical partnerships also explain 3PL clusters in North America, or are 3PLs close to each other for different reasons?
(2) Is proximity a factor in the movement of management personnel between 3PLs, and if so are the capabilities and influence of these clusters upgraded through this interchange of personnel?
(3) Finally, are integrated services more or less likely to be available in these cluster settings, and what are the characteristics of the "coopetition" that seems to accompany this landscape?
In summary, there are at least two potential research streams that emerge from Dr. Rodrigue's essay. First, what are the implications of conceptualizing supply chains as linking two geographies, the geography of production and the geography of consumption? Second, the Journal of Supply Chain Management recently emphasized the importance of the new social network theories. Might there also be a "geographic network" theory that would lead to insights about how supply chains evolve? The geography discipline has many tools to explore this possibility.
Gary Gereffi is Professor of Sociology at Duke University, where he directs the Center on Globalization, Governance & Competitiveness. Dr. Gereffi's definition of commodity chains as the "whole range of activities involved in the design, production, and marketing of a product," and his distinction between buyer-driven and producer-driven commodity chains remains the touchstone for social scientists interested in understanding the drivers of national and international development. When Dr. Gereffi first set out these ideas in the early 1990s, they immediately led to classification schemes, case studies and other valuable studies of international business relationships. Now typically referred to as "global value chains," the result has been the Global Value Chains Website (http://www.globalvaluechains.org) which has more than 600 publications listed as of November, 2011.
Joonkoo Lee is Postdoctoral Research Scholar at the Center on Globalization, Governance & Competitiveness, Social Science Research Institute at Duke University. He has written extensively on global value chains and their implications for businesses in developing countries.
Drs. Gereffi and Lee point out that the shape and governance of supply chains matters at three different levels. Industry/firm, nation and international success is increasingly dependent on the level and effectiveness of participation in global value chains. Thus it is important to understand the governance and shapers of these value chains, and it is not surprising that organizations such as the World Bank, the World Trade Organization, and the U.S. Agency for International Development have promoted studies on these issues.
Drs. Gereffi and Lee detail two perspectives which each suggest starting points for supply chain research. The first, "top-down" perspective leads to questions about which firms are leading supply chains and how that leadership plays out in supply chain structures. They supplement the familiar governance extremes of markets and hierarchies (Williamson 2008) with three additional possibilities--modular governance, relational governance and captive governance. The primary differences are driven by the ease with which information is exchanged on supply specifications and the level of control exerted by the lead firm. This typology has been well-studied and verified in the development literature (Gereffi, Humphrey and Sturgeon 2005; Gereffi 2011). Given the importance of leadership and governance to supply chain academics and practitioners (Choi and Linton 2011), it may be worthwhile to bring a slightly different starting point to studies of the origins and evolution of global supply chains. Specifically:
(1) Are "producer-driven" and "buyer-driven" supply chains really different in their relationship dynamics, especially beyond the focal firm and first tier suppliers? Does the proposed spectrum of information sharing really hold up at the firm level and the product level?
(2) What are the implications of these differences for which suppliers and nations are sources of long-term value in global supply chains? Gereffi and Lee illustrate this concern by showing that Korea, not China, is the primary source of value for the iPhone, even though the iPhone is assembled in China.
But there is also a "bottom up" approach to analyzing global value chains, which is directly concerned with how suppliers and their national governments can maintain competitiveness. As purchasing power and market opportunities shift to emerging economies, supplier strategies will likely change as well. Gereffi and Lee draw several conclusions from global value chain studies which could be verified by supply chain researchers.
(1) If "lead firms" originate in emerging markets, their suppliers will have shorter production runs and a higher mix of products versus servicing global value chains.
(2) Regional suppliers servicing emerging market buyers will be more likely to engage in product development and design versus those serving global value chains.
Finally, Gereffi and Lee highlight the anxieties of policy makers confronted with global value chains. Specifically, they note the perception that development may no longer bring with it improved working conditions, good jobs, or more social resources. Supply chain researchers interested in questions of corporate responsibility and sustainability may wish to study the cited research supporting these concerns.
This discussion forum is meant to introduce supply chain scholars to the views of a leading economist, geographer and sociologist, respectively, on global sourcing and supply chain structure, which is now a "mainstream" issue for supply chain researchers (Giunipero, Hooker, Jospeh-Matthews, Yoon and Brudvig 2008). These fields often start from a different level of analysis, such as national or transnational concerns. They apply different tools, whether that is governance theories, econometrics, or spatial analysis. They may be focused on policy issues including improving trade or understanding a shifting international landscape. We hope that these different approaches to familiar research problems will lead to even better ideas for our research community on how to analyze, conceptualize and understand global supply chains.
Calantone, Roger J., and Shawnee K. Vickery. "Introduction to the Special Topic Forum: Using Archival and Secondary Data Sources in Supply Chain Management Research," Journal of Supply Chain Management, (46:4), 2010, pp. 3-11.
Choi, Thomas, and Tom Linton. "Don't Let Your Supply Chain Control Your Business," Harvard Business Review December 2011.
Dicken, Peter. Global Shift: Mapping the Changing Contours of the World Economy, Gth ed., Guilford, New York, NY, 2011.
Gereffi, Gary. "Global Value Chains and International Competition," Antitrust Bulletin, (56:1), 2011, pp. 37-64.
Gereffi, Gary, John Humphrey, and Timothy Sturgeon. "The Governance of Global Supply Chains," Review of International Political Economy, (12: 1), 2005, pp. 78-104.
Giunipero, Larry C., Robert E. Hooker, Sacha Jospeh-Matthews, Tom E. Yoon, and Susan Brudvig, "A Decade of SCM Literature: Past, Present, and Future Implications," Journal of Supply Chain Management, (44: 4), 2008, pp. 66-86.
Khanna, Tarun, and Krishna G. Palepu. Winning in Emerging Markets: A Roadmap for Strategy and Execution, Harvard Business Press, Cambridge, MA, 2010.
Porter, Michael. The Competitive Advantage of Nations, Free Press, New York, 1990.
Williamson, Oliver E., "Outsourcing: Transaction Cost Economies and Supply Chain Management," Journal of Supply Chain Management, (44:2), 2008, pp. 5-16.
Arizona State University
Arnold Maltz (Ph.D., The Ohio State University) is an associate professor of supply chain management at Arizona State University in Tempe, Arizona. His primary interests are in global logistics and supply chain management, with particular attention to the cross-border movement of materials. Dr. Maltz has taught graduate logistics courses for non-academic groups, including oil companies and other international firms. He recently collaborated on a series of articles regarding how firms rate countries with regard to sourcing attractiveness. He is an associate editor for the Journal of Supply Chain Management.
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|Publication:||Journal of Supply Chain Management|
|Date:||Jul 1, 2012|
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