David Simchi Levi Case Study
The author, David Simchi-Levi, contends that the current economic slowdown in China is partly due to a change in the global supply chain strategies of American and European manufacturing companies.
The author uses a series of separate surveys conducted by different organisations to show that the practice of producing closer to the consumer, or “near-shoring”, is resulting in a decline in manufacturing activity in China. He suggests that global companies are moving from a global supply chain strategy to a situation where American companies are moving production to the USA or Latin America and European companies to countries in Eastern Europe.
The increase in oil prices over the last decade is first reason Simchi-Levi …show more content…
Companies with high capital investment in manufacturing will find it harder to change their supply chain, than companies with labour intensive production. Similarly, multinational companies with significant markets all over the world will have a far more complex supply chain than this article suggests. The impact of near shoring will also vary by country and state within the regions identified. For example, Germany and Japan have been able to maintain significant elements of their supply chain …show more content…
While wages, exchange rates, transport costs and automation may all point towards a company achieving a competitive advantage through a geographically diverse supply chain, risks associated with safety and security, cultural similarity, responsiveness and intellectual property may more than offset the cost benefits.
4. Implications for marketing strategy and the achievement of competitive advantage.
This article highlighted three main implications for marketing strategy. Firstly, that a competitive advantage can be achieved through effective supply chain management; secondly that any competitive advantage achieved is not just a result of higher efficiency or productivity; and thirdly that the supply chain needs to be reviewed on an on-going basis and will be influenced by the unique environment the company operates in.
Effective supply chain management is a way to improve organisational performance through supply chain practices that achieve competitive advantages for the company. Organisations that focus on better supply chain management practices such as speed to market, use of technology and supply chain integration can gain competitive advantage