Global Value Chain Management
Global Value Chain Management
Amber Douangboupha
Organizations compete in the global market with many goals in mind. These goals include increasing their competitive advantage, adding value, and reducing costs through global sourcing. Organizations today must rely on effective value chain management to compete in the global market. Global value chain management focuses on the network of interconnected establishments involved in coordinating a product from a raw material to the finished product owned by the consumer. Global value chain management consists of units collaborating to design, manufacture, and distribute products. The marketing of the product and the actual activity of selling the product is also involved. There are many challenges when managing chains that have units in different countries or regions. Organizations, their employees, and policy makers need to recognize each of these factors. A global value chain needs to be optimized in order to penetrate new markets. Each unit must interact closely with suppliers to achieve price stability (Nielson, Bo, Pedersen, Torban,, Pyndt, Jacob, 2008). Labor cost savings should be a main focus. It must be recognized that labor costs differ. It is also important to find local employees that can be trained and retained for a long period of time. Reducing operational costs should also be a main focus, which can be difficult. It is important to improve production techniques when possible. Planning efficiencies and reducing lead time will also play a big role in reducing operational costs. Ensuring the product quality and standardization of the products is a huge challenge, but must be closely monitored. There is also a chance of capacity issues. Monitoring material can become a challenge if a proper process for this is not in place. The availability of materials in global regions could also be a challenge that needs to be overcome. Lastly, the process of sharing information between all units should be
Amber Douangboupha
Organizations compete in the global market with many goals in mind. These goals include increasing their competitive advantage, adding value, and reducing costs through global sourcing. Organizations today must rely on effective value chain management to compete in the global market. Global value chain management focuses on the network of interconnected establishments involved in coordinating a product from a raw material to the finished product owned by the consumer. Global value chain management consists of units collaborating to design, manufacture, and distribute products. The marketing of the product and the actual activity of selling the product is also involved. There are many challenges when managing chains that have units in different countries or regions. Organizations, their employees, and policy makers need to recognize each of these factors. A global value chain needs to be optimized in order to penetrate new markets. Each unit must interact closely with suppliers to achieve price stability (Nielson, Bo, Pedersen, Torban,, Pyndt, Jacob, 2008). Labor cost savings should be a main focus. It must be recognized that labor costs differ. It is also important to find local employees that can be trained and retained for a long period of time. Reducing operational costs should also be a main focus, which can be difficult. It is important to improve production techniques when possible. Planning efficiencies and reducing lead time will also play a big role in reducing operational costs. Ensuring the product quality and standardization of the products is a huge challenge, but must be closely monitored. There is also a chance of capacity issues. Monitoring material can become a challenge if a proper process for this is not in place. The availability of materials in global regions could also be a challenge that needs to be overcome. Lastly, the process of sharing information between all units should be
References: Nielson, Bo, Pedersen, Torban, and Pyndt, Jacob (2008), ECCO A/S - Global Value Chain Management, Harvard Business Review