Future of Globalization: Exporting Intellectual Property

To coincide with the fifth anniversary of the Global Network for Advanced Management in April 2017, Global Network Perspectives asked faculty across the 29 schools in the network: “What do you think the future of globalization looks like? How will this affect the economy in your country or region? How is your school preparing students for this world?” On April 20, in a session at the Global Network for Advanced Management Fifth Anniversary Symposium, a panel of experts, including former U.S. Secretary of State John Kerry, will lead a discussion of the future of globalization and the implications for business and management education.

Mark Pagell Chair in Global Leadership, Professor of Sustainable Supply Chain Management, UCD Michael Smurfit Graduate Business School

APRIL 19, 2017

Most supply chains are global, and they have been for decades. However, in the future supply chains are likely to, seemingly paradoxically, become both more local and more global.

Supply chains are likely to become more local by transitioning from centralized production that occurs in low-wage countries, far from customers, to multiple local production facilities close to final customers. This will occur for multiple reasons. First, the wage differentials between developed and developing countries are coming down rapidly removing the incentive to outsource to decrease labor costs. Second, many firms have recognized the risks of having production occur far from customers. Third, the costs of making products in countries with lax environmental laws and/or the practice of shipping materials and products long distances are likely to increase dramatically when carbon taxes that truly account for the costs of pollution and global warming are implemented. Finally, customers who expect ever more information on where and how things are made, while simultaneously demanding instant gratification and mass customization, will magnify these drivers. A local supply chain is more agile, easier to control, has a smaller footprint, and is not much more expensive than a global one; hence, in the future, goods production is bound to be more localized.

Simultaneously, flows of information in supply chains are likely to become more global. The non-physical processes in the chain will be done where the human capital is, and in today’s world that can be anywhere. Design centers are opening in every corner of the globe, top human talent is as likely to choose to live in Dubai as Dublin, and the costs of communicating globally keep falling. However, while global teams to design, source, market, and service a supply chain’s products and services may be becoming the norm, they are incredibly difficult to coordinate. Therefore, in the future supply chain managers will need to be better at selecting, incentivizing, and monitoring a global network made up of actors from many different cultures.

Ireland is a small country that depends on exporting; hence, the implication of these changes is sector dependent. Food and beverages are Ireland’s primary indigenous exports. These firms cannot reap economies of scale producing only for Irish markets, and need to export to be competitive at home and aboard. Localized production is then a threat to these firms, who will need to build on ongoing initiatives such as Origin Green because their economies of scale and brand identity rely on producing goods for export in Ireland. However, as the last remaining English-speaking member of the EU and a high-wage country that has historically invested in education, Ireland seems well placed to become a hub of developing intellectual property for export.

At the Smurfit School at University College Dublin, we are preparing supply chain management students to deal with this future in numerous ways. First, our MSC in supply chain management is a truly global program, with nearly 70% of the students coming from outside of Ireland. This guarantees that students learn in the types of global teams they will work in the future. In addition, all students do projects for companies with a global presence, and in many cases, these projects have to be managed virtually. Finally, our faculty brings the latest research on urban logistics, supply chain traceability, sustainable operations, modern slavery, and so on into the classroom to help out global student body keep up with global trends.

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