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supply chains

Global value chain suppliers are our connection to SMEs

Yara Salem's picture

 
SME connectors can boost the supply chains of apparel, and other industries (Credit: India Kangaroo, Flickr Creative Commons)

This is the second post in the “Supply Chain Junkie" series, which gives personal insights on supply chains- -the “new normal" of doing business that is currently being prioritized by IFC.

Fashion is about constant change and that holds true for the business strategies of apparel Global Value Chains (GVCs) in response to customer preferences and global developments. The global economic crisis has played a major role in the biggest changes to the operational model of these chains, forcing them to cut costs by further consolidating their operations through long-term strategic decisions on supplier countries and supplier firms.
 

Women's Untapped Potential: Examining Gender Dynamics in Global Trade

Cornelia Staritz's picture

A woman inspects her broccoli crop in Honduras. Source: http://www.flickr.com/photos/feedthefuture/6942506316/Maria knows she is good at selecting ripe tomatoes, but she doesn’t know any women who own nurseries like the one where she works in Honduras. Susan does housekeeping for a hotel in Kenya, but there is little chance that she would ever lead a safari. Salma, at a call center in Egypt, can calm down angry customers, but she has never seen a female manager in her office.

Global value chains (GVCs) are essential to modern trade, and women’s labor is essential to many products and services that are traded across countries. But many limitations hold women back from participating more fully and equally to men in this important and growing global labor force, as we show in a collaborative project by the International Trade Department and the Gender Division at the World Bank. Though the names above are fictional, the situations are representative of what we found in case studies in the horticulture sector in Honduras, the tourism sector in Kenya and the call center sector in the Arab Republic of Egypt.

Shocks Hit Workers Twice In Offshoring Industries: Lessons From Mexico

Daniel Lederman's picture

Factory in Mexico. Source: Alan Grinberg -- http://www.flickr.com/photos/agrinberg/5536586224/The world is increasingly interconnected, and nowhere is a better example of that than the border between Mexico and the US. Lined with factories, the division between the two countries is blurred by a comprehensive trade agreement, international production chains, and other economic and social ties. On the Mexican side of the border, close to 3,000 factories import components and raw materials, workers assemble goods, and most of the finished products are destined for the US.

Is this good for Mexican workers? These export-oriented industries provide nearly two million jobs, a boon for development. But it turns out that these jobs can disappear quickly: the economic health of the US has a large impact on Mexican workers’ employment status, with downturns and booms amplified through a number of channels. Although the US economy is rarely volatile, this is an important finding that could have policy implications around the world. Mexico is similar to the increasing number of countries that have encouraged export-oriented industry as a strategy for development and enacted trade reforms integrating the local economy with the world market.

More Than the Sum of Its Parts: Why Logistics Matter for Your Kindle

Ben Shepherd's picture

Electronics Factory. Source: http://www.flickr.com/photos/poorlenz/22590873/sizes/m/in/photostream/Picture a global supply chain. The one that puts together the Amazon Kindle, for example: The flex circuit conductors are made in China, the wireless card is made in South Korea, and the tablet is assembled in Taiwan. The system works because each location specializes in something, whether it is relatively cheap labor, a cluster of machinery, or technical skills. But unlike a product made in a single factory, the Kindle’s components must cross borders.

The ease of crossing those borders – including through seaports or airports – is crucial to the production network. And, as it happens, fluidity is more important to trade in components than trade in final products. This makes sense, logically – it is easy to see how a whole holiday season’s worth of Kindles could be held up if the flex circuit conductors or wireless cards don’t get to Taiwan on time.

Shifting Focus in Trade Agreements – From Market Access to Value-Chain Barriers

Bernard Hoekman's picture

Chain. Source: http://www.flickr.com/photos/pratanti/5359581911/Value chains are an ever more prominent feature of global commerce, with goods being processed – and value being added – in multiple countries that are part of the chain. No longer is trade as simple as manufacturing in one country and selling in another. Rather, goods often cross many borders, undergoing processing and accruing components in diverse settings before ending up in a retail store. A new database developed by the OECD and WTO provides greater clarity into value-added trade trends. Looking at the world through a “value-added” lens challenges our conventional thinking about trade policy, and in particular, the focus of where policy makers should be spending their efforts. This new perspective makes clear that to truly benefit from the dynamism of value chains, governments will need to cooperate in new ways -- with each other and with members of the private sector.

Re-thinking Trade Policy Priorities in a Supply-Chain-Driven World

Bernard Hoekman's picture

Supply trucks in Lao. Source: World Bank.A company importing desktop computers into Russia expects border processing times of up to six weeks. Chinese customs authorities take so long inspecting drug shipments that a global healthcare company must hold nine days’ worth of inventory. Concerned about the prevalence of theft, a cell phone manufacturer must provide a security detail for overland shipments in Mexico.

These are examples of the supply chain barriers that, as a whole, are more detrimental to world trade than tariffs, according to a new report, Enabling Trade: Valuing Growth Opportunities, released today at the World Economic Forum in Davos. The study, a collaborative effort between Bain & Co., the World Bank and the World Economic Forum, concludes that a concerted effort to reduce supply chain barriers to levels observed in the best performing countries could increase global GDP by some 4.7 percent – six times more than what could be achieved from eradicating all remaining import tariffs.

Shoe molds and scuba divers: How natural disasters affect our supply chains

Thomas Farole's picture
Photo courtesy of ianmyles through a Creative Commons license

Available in ภาษาไทย

Like the massive earthquake in Japan earlier this year, the floods in Thailand are again exposing the vulnerabilities of fragmented global supply chains.

Last month, a team of economists from the World Bank’s International Trade Department encountered some flooding side-effects during a visit to the Indonesian production site for ECCO, a Danish company that manufactures footwear. In order to transfer production to the factory in Indonesia, the workers needed the specific shoe molds used in the Thai factory. But there was a problem: The Thai factory was under three meters of water.

Shoe molds and scuba divers: How natural disasters affect our supply chains

Thomas Farole's picture

A scuba diver in Mexico. Source: http://www.flickr.com/photos/akumaldiveshop/5824559898/sizes/m/in/photostream/Like the massive earthquake in Japan earlier this year, the floods in Thailand are again exposing the vulnerabilities of fragmented global supply chains.

Last month, a team of economists from PREM's International Trade Department encountered some flooding side-effects during a visit to the Indonesian production site for ECCO, a Danish company that manufactures footwear. The news from Thailand: the ECCO production site there was under three meters of water, a problem for shoe-making. In order to transfer production to the factory in Indonesia, the workers needed the specific shoe molds used in the Thai factory. These specialized molds would have taken several weeks to manufacture, which would have further delayed production. So ECCO hired scuba divers to enter the Thai factory and recover the molds. They then shipped them via air to other factories around the region, including ECCO Indonesia.