In this video, we examine several examples of product and service supply chains. One of the challenges of supply chains is that they are largely hidden from view. We only see the end product or service. Ask a child where milk comes from, she'll probably answer, "The grocery store." Being oblivious to the many steps between the cow and a jug of milk on a shelf. In the same way, if we're asked how our mobile phones come to be, we probably only have some vague notions about a manufacturing in Asia somewhere. We're all well aware of the end results of supply chains. But we may be completely oblivious to the many activities and coordination that it takes to create and deliver the end product or service for our use. Take for example, a simple pair of cotton slacks. A good tailor or seamstresses could sew up a pair of slacks in few hours or less. What could be more simple? Well, when you look at the complete supply chain required to produce cotton slacks, it's remarkably complex. Cotton is harvested in fields in China, India, and elsewhere. The cotton passes through many steps on its way to being final cotton slacks on the shelf in a store. If a simple pair of slacks is so complex, what about something much more complex, like a commercial airliner? Take for example, the Boeing 787 Dreamliner passenger aircraft. This aircraft is unique because most of its structural components are made from carbon fibers, presence of fiberglass instead of aluminum. Boeing sources the major components of the 787 from suppliers around the world. For example, engines are made in the UK in England, the wing tips are made in Korea. The wing and fixed trailing edge are made in Japan, the horizontal stabilizer in Italy, and the cargo doors in Sweden, and so forth. The parts are all shipped to Everett, Washington, where they are assembled into the finished 787 aircraft. Boeing does this for a variety of reasons, but one reason is to placate the demands of national governments that sponsor their national airlines. These governments often require local content from aircraft manufacturers in order to provide work in expertise for their people. Sourcing parts from around the world for the 787 Dreamliner represents certain challenges. For example, Boeing had to design specialized cargo aircraft to transport large components to its Everett, Washington facility. The lower picture shows a 787 wings segment being loaded into a bloated dream lifter cargo aircraft. Here's the wing segment. Here's a simple representation of the supply chain of Amazon, an enormous online retailer with operations around the world. Amazon orders products from its suppliers, they ship product to one or more distribution centers. Customers order online from Amazon, which then ships the product to customers from a nearby warehouse. Information flows back and forth between customers and Amazon, and between Amazon and its suppliers. Money flows from customers to Amazon to suppliers, pretty simple. But when you consider the scale of Amazon supply chain, it must be complex indeed. With millions of suppliers, hundreds of warehouses in multiple countries, there's hundreds of thousands of warehouse workers serving hundreds of millions of customers around the world. Wow. This picture shows a portion, only a portion of a typical Amazon warehouse, it's enormous. Amazon currently has more than a 175 fulfillment centers around the world like this one, with more being built every year. But many supply chains are not just about moving physical goods, but are about moving information and delivering services. Here is a tourism supply chain, with levels of vendors working to deliver services to the end-user tourist. Tier two, suppliers such as food and drink purveyors and equipment manufacturers, serve tier one providers such as hotels, resorts, and transportation firms, who in turn provide goods and services to tour operators and aggregators. Tour operators and aggregators sell their tour products through travel agents, and through online travel sites. Finally, our tour products have delivered to tour customers, you and me. In aggregate, these layers of providers comprise a services supply chain. One of the largest service oriented supply chains is for outsourcing and offshoring, financing and accounting operations. In addition to reducing costs, these supply chains allow accounting and financial operations taken in 24 hours a day without interruption, which greatly increases efficiency and responsiveness for customers. A huge international foreign currency supply chain exists to facilitate massive currency exchange activities that occur globally every day. In order for these foreign exchange markets to operate, complex networks of forex suppliers, customers, vendors, and banks exist to coordinate and executes global supply chain operations as this figure illustrates. As a final example, rapidly evolving extra terrestial supply chains are under design for future space travel. There is increasing discussion about establishing permanent colonies on the moon, such as the US, China, Russia, and the EU. But to establish and support lunar colonies, elaborate supply chains will need to be created to move personnel to and from the surface of the moon. The yellow nodes in this diagram show potential supply depots in space to support lunar colonies. Looking even further ahead, the red nodes are possibly supply depots to support a feature effort to visit and colonize Mars. This is all very fascinating. In summary, supply chains are ubiquitous and critical for the proper functioning of our global economies. Supply chains are the mechanisms by which global trade flows are planned and executed. Almost by definition, without supply chains, there would be no global trade. Understandably, the scale and scope of supply chains are not well understood by many since they are invisible to end-users and are extraordinarily complex. Supply chains exists for any product or service that's bought and sold. Products such as clothing and aircraft, retailing and online retailing, services such as tourism, finance and accounting, and foreign currency all have supply chains. Finally, even space itself is developing supply chains. In the next video, we'll survey some important international supply chain strategies that are important for international managers to understand. Stay tuned.
