Executive Briefings

A Retrospective on How Globalization and Sourcing Have Evolved

As organizations entered the 21st Century, there was relative ease in moving goods between borders, says Fariborz Ghadar, the William A. Schreyer Professor of Global Management, Policies and Planning, and director for the Center for Global Business Studies at Penn State.  Long supply chains flourished as U.S. organizations marketed new innovations to emerging economies. Volatile changes, however, were on the horizon.

Early-decade - border and transportation restrictions. The earliest and most volatile shift occurred on September 11, 2001. This event forever altered the efficiencies of long supply chains, says Ghadar. "Following 9/11, moving goods across borders became more costly and time-consuming," he says. "While these constraints did not hinder globalization, they certainly introduced uncertainties into long supply chains that did not exist previously."

Mid-decade - politicized supply chains. In the years following 9/11, there were attempts by companies in globally competing countries to acquire U.S. ports and stakes in major U.S. markets. For example, Dubai Ports was in serious negotiations to acquire several U.S. ports before the U.S. government raised red flags over security concerns. "In essence, some countries were not allowed to integrate or basically expand their supply chains," says Ghadar.

Late-decade - reverse technology flows. For many foreign-born students who came to the United States for science and mathematical education, most remained in the country following their university studies to foster innovation as engineers, technicians and scientists. This proved to be a competitive advantage for U.S. companies, primarily in the technology sector. However, Ghadar says graduates are now returning to Asia, where they're developing innovations for their home countries. "With a substantial amount of engineers and scientists being trained in Asia, particularly in China and India, many new products will be designed and developed in the region," he says. "U.S. companies and supply management professionals must acknowledge the shift in the flow of technology and incorporate it into their supply chains."

With the end of the decade reeling from global economic recession and financial upheaval, organizations must chart a new path - one that adds greater certainty in the supply chain.

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As organizations entered the 21st Century, there was relative ease in moving goods between borders, says Fariborz Ghadar, the William A. Schreyer Professor of Global Management, Policies and Planning, and director for the Center for Global Business Studies at Penn State.  Long supply chains flourished as U.S. organizations marketed new innovations to emerging economies. Volatile changes, however, were on the horizon.

Early-decade - border and transportation restrictions. The earliest and most volatile shift occurred on September 11, 2001. This event forever altered the efficiencies of long supply chains, says Ghadar. "Following 9/11, moving goods across borders became more costly and time-consuming," he says. "While these constraints did not hinder globalization, they certainly introduced uncertainties into long supply chains that did not exist previously."

Mid-decade - politicized supply chains. In the years following 9/11, there were attempts by companies in globally competing countries to acquire U.S. ports and stakes in major U.S. markets. For example, Dubai Ports was in serious negotiations to acquire several U.S. ports before the U.S. government raised red flags over security concerns. "In essence, some countries were not allowed to integrate or basically expand their supply chains," says Ghadar.

Late-decade - reverse technology flows. For many foreign-born students who came to the United States for science and mathematical education, most remained in the country following their university studies to foster innovation as engineers, technicians and scientists. This proved to be a competitive advantage for U.S. companies, primarily in the technology sector. However, Ghadar says graduates are now returning to Asia, where they're developing innovations for their home countries. "With a substantial amount of engineers and scientists being trained in Asia, particularly in China and India, many new products will be designed and developed in the region," he says. "U.S. companies and supply management professionals must acknowledge the shift in the flow of technology and incorporate it into their supply chains."

With the end of the decade reeling from global economic recession and financial upheaval, organizations must chart a new path - one that adds greater certainty in the supply chain.

Read Full Article