Impacts of Globalization on Green Logistics

CARIBBEAN MARITIME INSTITUTE Kingston, Jamaica Warehouse and Inventory Management Research Essay Research Question: What impacts does globalization have on the movement of material and its sustainability? Report Submitted in Partial fulfillment of the Requirements of the Course. Presented to: Radcliffe Spence Presented by: Samantha Masters LSCM Year 3 Group F April 3, 2017  Table of Contents Title Page Table of Contents …………………………………………………………………..i Abstract ………………………………………………………………………….. . ii Introduction ……………………………………………………………………….2 Globalization…………………………………………………....……………...…...3 Brief History of Globalization……………………………………………………....3 Impacts of Globalization on Logistics………………………………...…...……….4 Impacts of Globalization on Sustainability………………..…………………...........6 Conclusion…………………………………………………………………………..7 References……………………………………………………….………………......8 Abstract This research essay will briefly discuss the impact of globalization on the movement of material and its sustainability.  Introduction Economic globalization currently represents one of the most important and dynamic influences on industrial competition (Fawcett et al, 1993). Significant changes resulting from economic globalization are increasing competitive pressure in industrialized markets and increasing accessibility to world markets. These increase the incentive to globalize manufacturing and marketing operations (Fawcett et al, 1993). As globalization continues, new competitive strategies are emerging and leading firms are reevaluating their approaches to global competition. One of the greatest challenges is to produce and deliver high-quality, low cost products through environmentally sound practices (Christopher, 2011). This essay will briefly discuss the impact of globalization on the movement of material and its sustainability. Globalization Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. (The Levin Institute, 2017) This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world. (The Levin Institute, 2017). Brief History of Globalization Globalization has existed for thousands of years. People, and, later, corporations, have been buying from and selling to each other in lands at great distances, such as through the famed Silk Road across Central Asia that connected China and Europe during the Middle Ages (Rodrigue, 2006). Likewise, for centuries, people and corporations have invested in enterprises in other countries. Many of the features of the current wave of globalization are similar to those prevailing before the outbreak of the First World War in 1914 (Rodrigue, 2006). Between 1910 and 1950, a series of political and economic upheavals dramatically reduced the volume and importance of international trade flows. Globalization trends reversed beginning with World War I, up until the end of World War II when the Bretton Woods institutions were created (that is, the (International Monetary Fund), or IMF, World Bank, and the General Agreement on Tariffs and Trade (later reorganized into the World Trade Organization, or WTO) (New World Ecyclopedia, 2013). In the post World War II environment, fostered by international economic institutions and rebuilding programs, international trade and investment dramatically expanded. By the 1970s, the effects of the flow of trade and investment became increasingly visible (New World Ecyclopedia, 2013). Impacts of Globalization on Logistics The early roots of logistics are in international transport. Developments in transport, navigation and communication have progressively expanded horizons. Measured in transport time and costs the world has shrunk to the dimensions of a global village (Ghiani, 2004). It is taken for granted the availability of products from around the world, and safe, fast intercontinental travel on container carriers and aircraft which is clearly links logistics and economic development (Ghiani, 2004). The connectivity of all regions of the world is essential for international trade. As a result, many projects aimed at supporting regional economic development focus on the infrastructure needed to support integration into the global economy. Much of the infrastructure to support international trade and business is established through logistics operations (Baker, 2014). Products can combine a multitude of locations from which ingredients are sourced, and an international transport network that links production locations to warehouses and multiple stores. The enormous geographical span of this logistics system cannot be recognized in the price of the product. This is as a result of transport having become just a commodity in the global village (Waters, 2003). Globalizing logistics networks holds consequences for or has an impact on: Inventory: Centralizing inventories across multiple countries can hold advantages in terms of inventory-holding costs and inventory levels that are especially relevant for high-value products. On the other hand, globalization may lead to product proliferation due to the need for localization of products and the need to respond to specific local product or market opportunities (Hoek et al, 2008). Handling: Logistics service practices may differ across countries as well as regulation on storage and transport. Adjusting handling practices accordingly is a prerequisite for globalization. Furthermore, the opportunity to implement best practice across various facilities may also be possible. Both of these practices assist the process of globalization (Hoek et al, 2008). Transport: Owing to globalization, logistics pipelines are extended and have to cope with differences in infrastructure across countries, while needing to realize delivery within the time-to-market. This may drive localization. On the other hand, the opportunity for global consolidation may drive international centralization. Within this consideration, global businesses face a challenge that can be summarized in terms of a simple trade-off between the benefits of being able to consolidate operations globally on the one hand, and the need to compete in a timely manner on the other (Hoek et al, 2008). Linked closely to the globalization of business is the increase in the complexity of supply chain management. Globalization leads to greater complexity, and this complexity provides some significant implications for logistics operations (Hugos, 2002). These include: extended supply lead times; production postponement with local added value; complicated node management; multiple freight transport options; extended and unreliable transit times; the need for greater visibility in the supply chain (Hugos, 2002). Impacts of Globalization on Sustainability As economic and environmental issues become increasingly entwined, this will also result in logistics companies shifting away from being providers of a commodity to becoming experts in creating innovative means to decarbonize supply chains and distribution processes (Grant et al, 2015). Efficient supply chains are considered key for a company’s economic success, but as market and regulatory demand for greener products rise, efficient, environmentally-friendly supply chains will increasingly be sought (Grant et al, 2015). Logistics’ unique role as a network industry, connecting businesses from all sectors and from all regions, makes it inherent to address the problems of carbon dioxide (CO2) emissions all along the supply chain (Cenigaa et al, 2015). The development towards logistics as a sustainability enhancer will not only come from providers rethinking their operations. Companies will radically adjust their view about their own logistics processes and come to see them as strategic levers that can influence their market position (Cenigaa et al, 2015). These improvements in companies’ supply chains will not only reduce their carbon footprint; they will, at the same time, help to reduce cost, increase quality and leverage new market opportunities. If companies consider their supply chain a key element of their business strategy, they will also become much more aware of potential improvements, in terms of cost savings, increased reliability, and carbon dioxide (CO2) reductions, that greening their supply chain can bring (Cenigaa et al, 2015). Conclusion Finally, globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology and has effects on the environment, on culture, on political systems, and economic development. The origins of globalization can be traced back to the expanding trade routes of early civilizations. Globalization has allowed for the safe, fast intercontinental transport of cargo around the world through logistics. Three of the major areas in which globalization has made an impact on logistics networks are: inventory, handling and transport policies. Some of the challenges faced in logistics and supply networks are: extended supply lead times; production postponement with local added value; complicated node management; multiple freight transport options; extended and unreliable transit times; the need for greater visibility in the supply chain. The impacts of globalization on sustainability of logistics includes : companies rethinking their operations; companies radically adjusting their view about their own logistics processes and coming to see them as strategic levers that can influence their market position; and companies’ reducing their carbon footprint and also reducing cost, and increasing quality of goods. References Baker, A. R. (2014). The Handbook of Logistics and Distribution Management. Kogan Page. Cenigaa,P; Sukalova,V. (2015). Future of Logistics Management in the Process of Globalization. Slovakia: Elsevier B.V. Retrieved from Future of Logistics Management in the Process of Globalization: http://www.sciencedirect.com/science/article/pii/S2212567115009089?via%3Dihub Christopher, M. (2011). Logistics and Supply Chain Management . FT Press. 4th edition. Ghiani, G; Gilbert, L; Musmanno, R. (2004). Introduction to Logistics Sytems Control and Planning. John Wiley & Sons Inc. Grant, D; Trautrim,A; Wong,C. (2015). Sustainable Logistics and Supply Chain Management. Kogan Page. Fawcett, S.E; Closs, D.J. (1993). Coordinated Global Manufacturing, The Logistics/Manufacturing Interaction an Firm Performance. University of Michigan. Hoek, R; Harrison, A. (2008). Logistics Management and Strategy. London : Pearson Education Limited. Hugos, M. (2002). Essentials of Supply Chain Management. Wiley. New World Ecyclopedia. (2013). Gobalization. Retrieved from: http://www.newworldencyclopedia.org/entry/Globalization Rodrigue, J. (2006). Transportation and Globalization. HOFSTRA University. Retrieved from: http://cnqzu.com/library/To%20Organize/Misc%20Stuff%20From%20The%20Deepweb/books/New%20folder/transportation%20and%20globalization.pdf The Levin Institute. (2017). What Is Globalization. Retrieved from: http://www.globalization101.org/what-is-globalization/ Waters, D. (2003). Logistics an Introduction to Supply Chain Management. Palgrave. Running Head: Impact of Globalization on Logistics and Sustainability Impact of Globalization on Logistics and Sustainability 2 Impact of Globalization on Logistics and Sustainability 11 4 Impact of Globalization on Logistics and Sustainability ii