Glocalization: A Roadmap to Survive Beyond the Hype

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By Dr Jones Mathew

In the era of the “localized” supply chain, about a century ago, countries’ core competencies were spread across the globe, and countries with limited access to global networks had to settle for practices of self-sufficiency. Then the idea of ​​networking to benefit from each country’s unique strengths began to dominate the world and “globalization” became the mantra for success. It was based on the belief that the threat of major wars was over or contained, and that an era of global cooperation was possible and imminent. This would help countries adopt the best supply chains and access materials from the best suppliers. We were almost there. However, geopolitical wrangling continued to create occasional problems. Most of them have been settled through international arbitration and quasi-judicial organizations. With the exception of small and medium annoyances here and there, the globalized economic system seemed to work just fine.

The real thunderbolt, however, was the pandemic. It arrived out of the blue, with incredible speed and range, and killed millions. The response to this pandemic has been uncoordinated at best and unsustainable at worst. For a virus that didn’t respect geography, individual countries offering their own kinds of lockdowns didn’t stem the death rate. Lockdowns had more consequences than simply immobilizing people and materials. It broke the backs of many economies, and even confused a whole generation of young “Coviid”.

The impact on supply chains and consumption has been significant. Countries and companies struggled to survive. It seemed that the honeymoon of globalization was over. We were back to looking inward rather than totally relying on international supply chain integration due to the huge vulnerabilities. For India, self-sufficiency may be easier to achieve given our great wealth of natural resources and a fairly good level of access to these resources. However, there were specific areas needing attention that required quick thought and action: moving available stocks to locations away from quarantine areas and closer to ports of collection; pre-purchase materials that were to come from affected areas; quantify the medium and long-term impact of the virus on supply chains; and perform risk assessment on critical business functions.

Also Read: “A Competitive Supply Chain that Ensures Fast Turnaround Times, Meets Growing Demand, and Increases Profitability is Essential for Small Businesses”

In the current era of post-pandemic glocalization – an integration from the local to the global – companies are still struggling to find a solid chemistry between the two. Performing a risk assessment to create and integrate a glocalized supply chain strategy requires the following:

  1. Assess the likelihood of a risk occurring on a low, moderate, and high scale
  2. Rate the business impact of each risk as low, moderate, or high
  3. Identify the source of the risk
  4. Assess the vulnerability of the source of risk on a low, moderate or high scale
  5. Examine Alternate Local Resources (ALR) to encourage any calamity
  6. Examine the time it takes to activate the ALR
  7. Enable ALR if 1, 2, and 4 above are high
  8. Migrate the system to ALR.

Risk identification requires deeper supply chain visibility beyond 1st and 2n/a rank providers. If a company perceives a risk that may arise due to geopolitical tensions, shortages of raw materials/components or currency fluctuations, to name a few disruptors and has the required tunnel visibility, it can protect itself from serious damage. SCM managers must develop special skills in analyzing the market and detecting model changes driven by a multitude of factors. The standoff between the United States and China, the war between Russia and Ukraine, the three-way struggle between China, Taiwan and the United States, the grain blockade, the shortage of chips and climate change should all be watched closely for early warning signs. Simulation models that account for these and other factors should be available to supply chain managers to help detect the need for glocalization as early as possible.

The next problem to solve is to ensure that the ALR reaches the level of quality necessary to manufacture and provide superior products and services. Several decades ago, Maruti Suzuki had a vision to develop an entire automotive ancillary industry around its car manufacturing plants, which then became suppliers of top quality components for global automakers. By investing early in these ancillary units, the company was able to leverage local power and global expertise.

The final step is to seamlessly integrate local supply chains with global supply chains. The end result should be to deliver better value to the end customer at greater cost-effectiveness for the business. Therefore, glocalization would require different sets of specialists. The first would be the Reconnaissance Expert (RE) – the one who must constantly map the environment for early disruptions in the supply chain; the next would be the glocalization initiator (IG) – the executive that retrieves information from the BR and activates ALR search activity based on the risk perception received from the BR; he is followed by the Glocalization Champion (GC) – the one who sells the need for ALR discovery and development within the hierarchy of the organization; and finally the Glocalization Integrator (GIn) – the one that federates the different teams in an agile way to exploit the opportunity of glocalization.

Given the current global scenario, it might make sense to build its internal/domestic supply chain capabilities. “Once bitten, twice shy” might be a good credo to follow. The stakes may be more than millions of dollars in lost sales. If a glocalization push is not part of the business or marketing strategy, it could even determine the very survival of the business.

(The author is a professor at the Great Lakes Institute of Management, Gurgaon. Opinions expressed are personal.)

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