This essay is largely devoted to the discussion of supply chain management and the contemporary trading system. Before diving into the essay’s argument, there is a sense to define the meanings of these concepts properly. Supply chains “encompass the companies and the business activities needed to design, make, deliver, and use a product or service” (Hugos, 2018, p.1). Thus, supply chain management means regulating all processes involved in the transformation of raw materials into a final product or service (Hugos, 2018). As for the trading system, this concept generalizes the set of rules that objectively tell about buy and sell signals (Brzeszczyński & Ibrahim, 2019). During this essay, three aspects will be discussed: the pros and cons of the worldwide trading system, globalization of supply chain management, and possible innovations in the sphere of management. The modern trading system encourages local companies to become globalized, so it requires introducing efficient management techniques and continuous innovations in the supply chain.
Pros and Cons of the Worldwide Trading System
The worldwide trading system is a complex phenomenon that cannot be summarized just in a few words. To put it simply, it means the current system of trade relationships between states with all rules, procedures, and treatises between states (Staiger, 2021). This system was constructed after the Second World War and slightly adjusted after the 2008 economic crisis (Staiger, 2021). The major advantage of it is that it has allowed more opportunities for people to be employed in other countries. Before that, states’ economies were highly autonomous and closed, so almost all workplaces were designated for local residents. The worldwide trading system changed this status quo and introduced some standards and mechanisms for changing the place of work even beyond the native state boundaries. Besides, the new system ensured a more accessible transfer of global technologies to developing countries (Staiger, 2021). Since national economies were largely closed in previous formations of trade relations, the global flow of goods made it possible to spread innovations in countries where they did not exist.
Concerning the cons of the worldwide trading system, it may lead to dissatisfaction among national voters about the flow of migrant workers to the country. It is especially prevalent in European countries where right-wing populist parties improve their results using an anti-migrant agenda in their electoral campaigns (Rodrik, 2021). Such xenophobia and hostility towards people of a different race definitely create negative social consequences. Another problem with the worldwide trading system is that the globalization of the economy and increased foreign investments may lead to disastrous effects on the local economy. The use of quantitative methods with large samples shows the negative effect between foreign direct investment and domestic entrepreneurship, especially in developed countries (Danakol et al., 2017). As a result, this dissatisfaction with globalization may again cause right-wing attitudes as it was in the US with Trump’s presidency.
Globalization of Supply Chain Management
The calls of modernity expressed mostly in the increased globalization forced management experts to adjust their supply chain management techniques. The reason is that the scope of the market shifts from mere national to international, which creates new challenges related to language barriers, new standards, and increased competition (Hugos, 2018). For example, it will be more difficult for a fast-food company to operate in the local market if an international giant like Mcdonald’s enters the market with its excellent supply chain management system. Therefore, companies must rely on international experience and the best world practices to survive in a new, highly competitive environment.
It is also crucial in the global market to develop an effective logistic system in order to effectively deliver all the necessary raw materials and transfer the new goods to markets. If the transportation of goods forces a company to spend large amounts of money, such a business will fail in a globalized market. Therefore, the combination of the safest, fastest, and most affordable modes of transport can greatly influence the success of an enterprise. Concerning management capabilities, there should be a transparent and easy-to-use transportation model. Because the transportation of production resources may be transnational, it is impossible to maintain logistics that are not properly standardized.
Possible Innovation in Supply Chain Management
The increased globalization with the establishment of the worldwide trading system ensured the dissemination of technologies worldwide. In the contemporary world, innovations are not something that appears in one particular country. Instead, modern innovations are the combination of knowledge from the most developed countries, like the United States, Germany, South Korea, Japan, and so forth. Through the global market channels, these technologies move to developing countries of Latin America and Eastern Europe. One of the most vivid developments in this sense is the evolution of payment services. Before that, the transformation of many happened in quite bureaucratic ways with the use of bank checks printed on paper (Khan et al., 2017). Banking services have moved online in the current global market, so instant transactions between trading sides have become an essential part of the global economy. In addition, cryptocurrency payments are an integral innovation of modern trade because these payments are invisible to state authorities (Nelms et al., 2018). Thus, cryptocurrency use innovations may be considered a branch of possible innovation.
Another area of development in supply chain management is the improvement of logistics methods. The spread of more automatic vehicles in developed countries has coupled with the call for more ecologically suitable means of transportation. One of the relevant case studies is the development of self-driving vehicles in Estonia (Smith, 2021). The developers of this vehicle indicate: that “the self-driving shuttles are made to ease the last mile transit and delivery problems, offering alternative means of transport in closed areas and mixed traffic environments” (Smith, 2021). Some companies whose supply chain incorporates the delivery of goods to customers may find this option relevant in the near future.
Conclusion
This paper discussed in detail some aspects of management and modern trading systems. The text was divided into three sections with every part addressing specific issues of modern trade. The increased globalization of the world market has created both positive and negative effects. For example, while new markets have opened up more job opportunities around the world, increased migration is causing xenophobic sentiment in Western society. The new world forces companies to change their management strategy, making it more suitable for international trade. In the case of innovation, they have become international and global over time. Considering the ideas of possible innovations, the main breakthroughs are currently taking place in the development of payment methods and logistics. To be more specific, the spread of cryptocurrencies and automated vehicles may be influential technological changes in the 2020s.
References
Brzeszczyński, J., & Ibrahim, B. M. (2019). A stock market trading system based on foreign and domestic information. Expert Systems with Applications, 118, 381-399.
Danakol, S. H., Estrin, S., Reynolds, P., & Weitzel, U. (2017). Foreign direct investment via M&A and domestic entrepreneurship: blessing or curse?. Small Business Economics, 48(3), 599-612.
Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.
Khan, B. U. I., Olanrewaju, R. F., Baba, A. M., Langoo, A. A., & Assad, S. (2017). A compendious study of online payment systems: Past developments, present impact, and future considerations. International journal of advanced computer science and applications, 8(5), 256-271.
Nelms, T. C., Maurer, B., Swartz, L., & Mainwaring, S. (2018). Social payments: Innovation, trust, Bitcoin, and the sharing economy. Theory, Culture & Society, 35(3), 13-33.
Rodrik, D. (2021). Why does globalization fuel populism? Economics, culture, and the rise of right-wing populism. Annual Review of Economics, 13, 133-170.
Smith, A. (2021). Estonia’s Auve Tech develops hydrogen-powered self-driving vehicles – CEO Johannes Mossov. Auto Futures.
Staiger, R. W. (2021). A World Trading System for the Twenty-First Century. National Bureau of Economic Research.