Impact of Globalisation on Supply Chain Management

This article discusses the impact of globalisation on supply chain management, focusing on the positive and negative effects. It also examines how companies like Unilever have restructured their supply chain to adapt to the global market.

International Marketing

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Globalisation and Its impact
Globalisation has made world a global village and hence has a greater impact on the business
operations at global levels. Globalisation has strengthened companies as it helped them in
getting attached with different partners all around the globe. This has helped the firms to not
get overly dependent on the internal suppliers (Butner, 2010). At the same time, it made the
companies to get over dependent on the external suppliers. Globalisation has both positive
and negative impact on the company’s operations. In such an environment, companies have
reorganised its supply chain to improve their relationship with external suppliers.
Unilever is a perfect example of a company that restructured its supply chain management
system so as to maintain the balance between its demand and supply. In the restructuring
process they have focused towards organising their foreign suppliers, assigning new supply
chain executives, technology and global procurement processes. At the same time they have
increased the supplier’s involvement (Manners-Bell, 2017). This has helped them to expand
in the foreign markets at much faster rate. Technology has helped them in gaining control of
the global supply chain. In the year 2000, when the technology started to multiply itself at a
much faster rate, Unilever also started its five year growth strategy. Following this strategy,
this firm has concentrated on adding numbers of external suppliers in their pool. Previously
the company was largely dependent on the internal suppliers Britain. This was done so as to
avail the resources and raw materials at lower cost. They have made their relationship with
different suppliers in different parts of the world on the basis of the price and quality they
offer. This has helped the company in lowering down its product’s final cost which acted as
an efficient marketing strategy to attract customers. This helped them in grabbing
opportunities in the global market as their pricing strategy was much more attractive than
their competitors. It also helped them in enhancing their quality which helped them in gaining
huge market base (Savitz, 2012). In the competitive environment it was very much beneficial.
Since the policies of the government and economic environment of UK was less supportive
then the business environment in other countries hence this company was getting raw
materials at lower cost in the international market. Deregulated environment and low cost
labourers has helped the firm in attaching with external suppliers.
There are many threats that also came up with this interdependency. First is the fact that any
hiccups in the business environment in any part of the world have a direct impact on the
business environment in other part of the world (Sheehan, 2017). This has threatened the

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companies as all their sources of income gets linked and hence compensating loss or price
rise in one part of the world from other part of the world is not easy. For example due to
political decisions such as Brexit, the rate of the global suppliers increased which has added
to the operational cost of the company. Another threat is that their relationship with local
suppliers get degraded which helps them in fulfilling the immediate demands.

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REFERENCES
Butner, K. (2010). The smarter supply chain of the future. Strategy & Leadership, 38(1), 22-
31.
Manners-Bell, J. (2017). Supply chain risk management: understanding emerging threats to
global supply chains. Kogan Page Publishers.
Savitz, E. (2012) Managing the risk of a globalised supply chain. Retrieved from:
https://www.forbes.com/sites/ciocentral/2012/10/04/managing-the-risks-of-a-
globalized-supply-chain/#1220ca4439d8
Sheehan, B. (2017) Best Supply Chains from Companies Around the World. Retrieved from:
https://www.hollingsworthllc.com/best-supply-chains-companies-around-world/