Introduction

The development of logistics services and communication technologies has revolutionized supply chain management and has created a “global” market. Shippers and consignees require efficient logistics services that can move their goods to the right place, at the right time, in the right condition, and at the right price (Grant et al. 2006). It is, therefore, of great importance that linkages within and between Asian countries be strengthened to facilitate trade and integrate supply chains for better access to the global market.

The purpose of this paper is first to introduce a number of key supply chain issues that impact the operations of manufacturers and traders in Asia and the rest of the world. The second objective is to illustrate the key role played by Asia-based logistics providers in managing dynamics that occur within any given supply chain. The last section of the paper describes a case study that illustrates how supply chain decisions are made and how a particular Asian manufacturer was able to integrate itself into the global supply chain of a major car manufacturer located in the United States (US).

World markets have become increasingly “globalized.” To a large extent, this reflects the fact that the majority of, if not all, countries are adjusting to the strong trade liberalization pressures observable around the world. This pressure stems from international trade agreements, including the North American Free Trade Agreement (NAFTA) and the General Agreement on Trade in Services under the auspices of the World Trade Organization. There is also the development of trading blocs like the European Union (EU), Association of Southeast Asian Nations (ASEAN), and the Asia-Pacific Economic Cooperation (APEC). These trade policy initiatives have a common objective: to open up new trading opportunities by facilitating and enhancing international trade.

Global economic integration relies upon efficient global supply chains, but integration can only succeed if there is cooperation among trading nations. Certain countries, especially in some regions of Asia, are served by relatively few logistics service providers, under less than favorable operating conditions, and where risks are higher. For these countries, this situation results in a failure to develop their international trade potential, higher prices for imports, lower foreign exchange earnings from exports, restricted investment and employment and, thus, in limited economic growth. The logistics costs associated with the distribution of any product can account for a high proportion of its sale price (Banomyong, Cook, and Kent 2008). There is therefore, potentially, considerable scope for efficiency gains that will reduce costs, which in turn will be reflected in the price of a given product. This reduction cannot be implemented without local manufacturers and traders being in complete control of their respective supply chains.

Supply chain management is an integrative approach for planning and controlling the material flow from suppliers to end users (Carter and Ferrin 1995). It is used as a technique to create and maintain a firm's competitive advantage. The management of supply chains is important in ensuring that customers' demands are met, as well as in preventing excess in stocks that may lead to high holding costs or losses through obsolescence. One of the goals of supply chain management is to meet customer service objectives while simultaneously minimizing transport, inventory, and other associated costs (Cooper, Lambert, and Pagh 1997).

The integration of supply chains in Asia can provide a foundation for further economic cooperation and development. For some countries in Asia, inadequate transport infrastructure and high logistics service costs have constrained supply chain development and integration. Major infrastructure investments are already being undertaken in many Asian countries and more are planned (Asian Development Bank [ADB] 2007). Physical connectivity between neighboring countries will be significantly improved on the completion of these infrastructure investments. The improving infrastructure, coupled with expanded cross-border cooperation among Asian countries, will accelerate the process of integrating the Asian supply chain with the rest of the world and the global market.

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