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In the next few sections, we look at each in detail.

Long supply chains ............................................................................

Cross border transactions accounted for $10 trillion in trade in 2007. That

figure is expected to grow to more than $70 trillion by 2025. The world is being

knit into one giant marketplace. Companies are selling more goods overseas,

manufacturers are sourcing parts and goods from overseas suppliers, and

companies are outsourcing production to a number of foreign nations to save

money. Figure 8-2 shows the leading importers while Figure 8-3 shows leading

exporters.

The length of supply chains brings up new problems many companies aren’t

prepared for. How do you get the goods out of a foreign country? You may

discover, for example, that it takes 50 days to import parts from China one

month, but 55 days the next month. This uncertainty forces many companies

to keep expensive safety stock on hand. These issues also feed into the deci-

sion about where to source goods from. For example, it may be more expen-

sive to source goods from Vietnam than China, but the Vietnamese delivery is

more predictable. In that case, it might actually be easier to just source the

parts from Vietnam. Duties and tariffs also must be figured into the costs of

global trade.

1919.4

908.6

619.4 791.5

579.6

534.9

437.4

416.4

357.7

353.7

USA

Germany

China

United Kingdom

Japan

France

Italy

Netherlands

Canada

Belgium

Leading Importers in World Merchandise Trade, 2006

Figure 8-2:
Top 10
importers
(Data
source:
World Trade
Organi-
zation).

Chapter 8: It's a Small World: Effectively Managing Global Trade 143