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Supply Chain Management and Trading System Definition Essay

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Updated: Jul 18th, 2021

Introduction

The reliability and efficiency of sales management are largely determined not only by external factors, for instance, competition conditions or the indicators of demand but also the entire process of selling goods. In a market economy, when profit from sales depends on the number of consumers and interest in a particular brand, it is essential to achieve client recognition through the provision of quality services. One of the areas of control over the success of sales is supply chain management as the mechanism that determines the principles of logistics, transportation, and data exchange with buyers. The world trading system is a flexible and constantly changing structure, and in these conditions, it is crucial to organize the sales process for buyers could have no complaints about the product and sellers could offer relevant goods. This paper is aimed at assessing the principles of supply chain management and, in particular, its globalization, as well as the features of the worldwide trading system. Applying innovative approaches to creating reliable marketing paths is a valuable practice that allows winning consumer recognition and maintaining stable demand for certain products.

Pros and Cons of Worldwide Trading

Today, worldwide trading is a natural phenomenon, and a significant number of countries are involved in market relations. Financial flows, the exports and imports of goods, and other economic aspects influence individual industries and affect the development of states to a greater or lesser extent. Worldwide trading has both advantages, stimulating its development, and disadvantages, causing fears about the strength of some economies. According to Buchanan, the liquidity that market relations provide is a valuable property making it easier for investors to find partners and organize business interaction (162). However, some negative features can also manifest themselves when creating such relationships. Therefore, it is necessary to describe the pros and cons of worldwide trading in order to obtain a comprehensive picture of its significance and necessity.

Pros

One of the main advantages of worldwide trading development is the expansion of the labor market. The growth of export deliveries entails an increase in employment, which makes it possible to help people receive jobs. Another undisputable benefit that Buchanan mentions is enhancing the efficiency of introducing new technologies (161). The degree of equipment load increases, and opportunities are created for making and developing mass production. Finally, export earnings serve as a source of capital accumulation for industrial growth, which is also a significant advantage.

Cons

Despite the weighty advantages of worldwide trading, this phenomenon has some negative features that affect local economies. In particular, the sales of domestic goods will be reduced, which will lead to losses and the bankruptcy of individual enterprises. Consequently, revenues will fall, which will have a negative impact on the budget due to the reduction in tax charges. Also, as Grant et al. note, the dependence of countries on foreign supplies will increase, which will lead to the weakening of political independence (1). The authors give an example of selling fruit as products that are sold year-round due to partnership agreements, and the rejection of suppliers’ conditions may lead to consumer dissatisfaction with the lack of these products (Grant et al. 1). Therefore, when analyzing the manifestations of worldwide trading, it can be noted that it is a stimulus for innovation and maintaining contacts among countries but can have a disastrous effect on domestic economies.

Globalization of Supply Chain Management

The globalization of a market economy forces entrepreneurial structures of various sizes to look for and develop approaches to increase their competitiveness. Among the functional areas that are based on the consideration of business as part of the system of value added, a special role is given to supply chain management. According to Grant et al., with globalization, competition among companies has shifted from the national to international level, and positive dynamics in the field of logistics and its innovation is natural (156). At the same time, as the authors argue, working conditions on the market have become tougher, and the struggle for potential customers has become more acute (Grant et al. 156). Therefore, the promotion of the necessary strategic and tactical solutions for sustainable and progressive development in the short and long term is a prerequisite for supply chain management.

The reorganization of the global market situation has led to significant changes in logistics and supply chain management. Companies, regardless of their size, the level of competence, and market share should be able to adapt constantly. Therefore, the logistics sector tends to become a strategically important and decisive factor in the issue of competitiveness in national and international markets. As Grant et al. point out, in order to prevent a drop in sales, it is crucial to manage supply chains while taking into account trends in sales, for instance, demand for specific products or delivery preferences (232). One of the steps towards improving this system is involving innovations as mechanisms simplifying the process of control over logistics and enhancing the quality of goods delivery. Therefore, analyzing market needs and any changes timely is one of the key aspects of supply chain management in the context of globalization.

Possible Innovations in Supply Chain Management

Progress in supply chain management is natural because ever-changing market trends require for companies to adapt to new conditions and provide services in accordance with customers’ wishes. In addition to existing innovations, for instance, automated warehouse systems, additional options may appear. Since today, the trend towards ecology protection is widespread, Markman and Krause suggest that environmental innovation in supply chains will advance (8). This approach may imply using safe fuels for cargo transportation and transiting to the full automation of logistics to reduce the time of goods delivery.

As a logical stage in the development of this area, the improvement of technological equipment for supply chain management will occur. The methods of goods delivery will vary, and even today, it is possible to observe automatic vehicles carrying different products. As a result, the control system will be simplified, which is a valuable aspect in the context of competition. Therefore, the movement to innovations has a reasonable background and is dictated by modern trends.

Conclusion

Innovative approaches to supply chain management and the creation of reliable logistics systems in the context of globalization are essential aspects that influence consumer interest and profits. A market economy entails a number of features, and worldwide trading may have both positive and negative implications. The movement towards innovations is natural due to constant competition and the need to follow trends. The transition to the new forms of logistics control and equipment upgrades will probably be observed in the near future.

Works Cited

Buchanan, Mark. “Physics in Finance: Trading at the Speed of Light.” Nature News, vol. 518, no. 7538, 2015, pp. 161-163.

Grant, David B., et al. Sustainable Logistics and Supply Chain Management: Principles and Practices for Sustainable Operations and Management. 2nd ed., Kogan Page Publishers, 2017.

Markman, Gideon D., and Daniel Krause. “Theory Building Surrounding Sustainable Supply Chain Management: Assessing What We Know, Exploring Where to Go.” Journal of Supply Chain Management, vol. 52, no. 2, 2016, pp. 3-10.

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IvyPanda. 2021. "Supply Chain Management and Trading System Definition." July 18, 2021. https://ivypanda.com/essays/supply-chain-management-and-trading-system-definition/.

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IvyPanda. (2021) 'Supply Chain Management and Trading System Definition'. 18 July.

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