finance
The global supply chain has evolved significantly due to globalization and the increasing occurrence of free trade among nations. While globalization brings multiple benefits, such as improved resource access and integrated supply networks, it also heightens the vulnerability of these chains to disruptions. The COVID-19 pandemic has starkly demonstrated this fragility, serving as a crucial test of corporate innovation, resilience, and adaptability.
As a result, businesses are increasingly moving from offshore to nearshore and local sourcing options. This article discusses the concept of "Glocal"—a combination of global and local strategies that embraces a global outlook while valuing the specific needs and priorities of local enterprises.
A supply chain is a network of individuals, organizations, resources, activities, and technologies involved in the production and delivery of goods and services from their origin to end users. This process comprises several stages—suppliers, manufacturers, distributors, wholesalers, and retailers—each contributing value in distinct ways.
Supply Chain Management (SCM) represents the coordinated effort to supervise the flow of goods and services from their origin to consumption. The objective of SCM is to achieve a balance between supply and demand while optimizing resource management. This creates sustainable relationships that maximize value for all parties involved, economically, socially, and environmentally.
Global supply chains are intricate networks that operate across national borders, facilitating international business transactions. These chains encompass the movement of goods, services, information, finances, and risks among partners located in various countries and continents.
For example, a company that sources raw materials from Brazil, manufactures products in Vietnam, and sells them in Canada exemplifies a global supply chain. Effective management of such networks is essential for attaining a competitive advantage, necessitating thorough planning, organization, and coordination across all functions—from sourcing and production to logistics.
Global supply chains offer numerous benefits, including:
However, global supply chains also harbor risks and complexities:
The COVID-19 pandemic and various geopolitical conflicts have underscored the vulnerabilities present in global supply chains, prompting companies to reassess their sourcing strategies.
Globalization has played a crucial role in the development of global supply chains, characterized by liberalized trade and the seamless movement of capital, goods, and services across borders.
The principle of comparative advantage is central to globalization, enabling countries to produce goods and services more efficiently than others. This leads to increased competition, necessitating that governments implement policies to enhance national competitiveness through innovative trade strategies.
Several factors are considered when evaluating national competitiveness:
While globalization offers growth possibilities, it can result in economic disparities, labor market exploitation, and heightened supply chain vulnerabilities. Notable disruptions have occurred due to unforeseen events, emphasizing the necessity for local sourcing solutions.
A supply chain disruption is an unexpected crisis that adversely affects supply chain activities, hindering a business's ability to procure, manufacture, or deliver products. Such disruptions can significantly impact operations and profitability.
Key contributors to supply chain disruptions include:
These factors can lead to diminished productivity, increased costs, and strained relationships between suppliers and customers.
Recent global events underscore the importance for businesses to balance efficiency with resilience. The pandemic brought supply chain vulnerabilities to light, leading many organizations to adopt local sourcing as a strategy to reduce risks associated with global dependencies.
Local sourcing offers several advantages, such as:
Both globalization and localization have their respective benefits and drawbacks. Unchecked globalization may result in economic imbalances, while excessive protectionism in localization can hinder growth. A balanced approach that leverages global opportunities while nurturing local industries is ideal.
The term "glocal" reflects this perspective, advocating for a global mindset that prioritizes local needs.
Record-breaking weather events (floods, wildfires, heatwaves) in 2024–2025 have caused major supply chain disruptions, especially in Europe and South Asia. Companies are increasingly factoring climate risk into sourcing and logistics decisions.
The return of protectionist policies, renewed US-China and US-Mexico trade tensions, and the war in Ukraine continue to disrupt global supply chains, driving up costs and leading to supplier diversification and nearshoring.
Over 90% of American companies are diversifying suppliers or planning to do so, often combining nearshoring with continued Asian sourcing. This increases resilience but also adds complexity to supply chain management.
The widespread adoption of AI, automation, predictive analytics, and real-time monitoring is transforming supply chain management, enabling faster adaptation to disruptions and better demand forecasting.
Companies are adopting advanced risk management strategies, such as stress testing (time to recover, time to survive), scenario modeling, and supplier risk assessments, to proactively manage vulnerabilities.
"Atmanirbhar Bharat Abhiyan" focuses on fostering economic self-reliance through five essential pillars: Economy, Infrastructure, Technology-driven systems, Demography, and Economic Demand. This vision aspires to strengthen India's economy by encouraging local production and consumption.
While the scheme has boosted MSMEs and local production, challenges remain: low disbursal rates, infrastructure gaps, and risks of protectionism affecting trade relations.
The complexities of globalization have advanced global supply chains while revealing their weaknesses. The COVID-19 pandemic has triggered a movement toward local sourcing, advocating for a "glocal" approach that marries global and local strengths. By fostering self-reliance and supporting local industries, nations can enhance their competitiveness and secure sustainable growth.