The Impact of Globalization on Logistics

 

 

As political and ideological borders are dissolving, the world is getting closer together. Trade barriers and custom duties are being dismantled while innovative communication and information are creating new possibilities. While the conditions for global trade and business have improved tremendously over the last 20 years, there are also new sets of risks and challenges to go along with the rising opportunities. 

New Challenges

Globalization doesn’t just create new opportunities for businesses across the world, it also creates new competitions in many sectors. While companies, even in their home markets, are feeling the heat of competition globally, their competitors are reaping the benefits of massive cost advantages due to factors such as lower cost production. The pressure to improve the quality and costs of services is sparking a constant demand for transportation, storage, communications, planning and control services of products and goods.

The Benefits for Supply Chain and Logistics

Since the consumer base for various products and goods is continuously increasing as global commerce equalizes businesses, companies are pushing for ways to become more efficient by optimizing their supply chains. This in turn creates more job opportunities since supply chains are used as a competitive weapon to meet supply and demand. The need to store products and ship them without wasting valuable resources is increasing due to a rise in innovative technology. These innovative products are typically trendy and the consumer base for them is unpredictable, as is the product’s life span. While functional products rely on market-responsive supply chains whereas innovative products rely on physically efficient supply chains simply because a market-responsive supply chain cannot accurately predict consumer response to an innovative product. Globalization has also made it increasingly difficult to predict demand, so more effective measures have to be utilized. 

The impact of globalization on logistics has yet to be fully realized, but it is clear that competition and traditional business rules will never be the same.

 

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