Global Trade Process and Supply Chain Management

As a result of increased globalization of industrial supply chains, effective supply chain management requires sound alignment with the global trade processes. The design of the global supply chain and the determination of the right level of postponement are both tied intimately to the prevailing network of trade agreements, regulations, and local requirements of the countries in which the company is operating in. Moreover, the dynamic changes and uncertainties of these agreements and requirements must be anticipated. In addition, the complexity of the cross-border trade processes results in uncertainties in the lead time and costs involved in global trade, which naturally forms part of the consideration of global sourcing, and the resulting safety stocks or other hedging decisions. Governments, exporters, importers, carriers, and other service providers have to work together to reduce the logistics frictions involved in the global trade processes. The benefits accrue not only to the exporters, importers, and the intermediaries but ultimately they could foster bilateral trade. The only way to reduce the frictions is to gain a deep understanding of the detailed process steps involved to improve upon it by using information technologies and potentially re-engineer the processes. But the payoffs to such investments can be huge. This chapter provides some preliminary discussion of the inter-relationships between global trade processes and supply chain management, with the objective to stimulate research in this area.