‘Efficiency and Performance of Global Supply Chain: Theory and Evidence’

There is a growing body of evidence that the global supply chain’s efficiency and performance crucially influences the results of organisations (Brandenburg, 2016; Closs & Mollenkopf, 2004). Baldwin (2012) extensively discussed the significance, evolving transition and continuing importance of global supply chains. The drivers behind the growing interests of global supply chains have emerged as major literature (Gereffi & Lee, 2012). With the growing focus on externally integrated logistics, the importance of maintaining efficient supply chains for international business has increased manifold (Sinha, 2019). It can be noted that while demand for goods across borders forms the foundation, the global supply chains are the lifeline of international trade. Global supply chains, however, possess different facets, and analysis involving them will not be comprehensive unless researchers take an integrated approach. In a bid to take this idea of a holistic approach to supply chain and foreign trade, the Foreign Trade Review (FTR) aims to put forward the contemporary and emerging research questions in this front through the publication of special issues. This special issue entitled, ‘Efficiency and Performance of Global Supply Chain: Theory and Evidence,’ is a step toward this broader objective. I am grateful to the Editor, FTR, and his team for assigning me the role of Guest Editor for this issue.

There are five contemporary papers and one book review in this issue. The article by Alassane D. Yeo, Aimin Deng and Todine Y. Nadiedjoa entitled ‘The Effect of Infrastructure and Logistics Performance on Economic Performance: The Mediation Role of International Trade’ attempts to establish the relationship between logistics infrastructure and logistics performance and the way it improves economic performance through international trade. The authors use Generalized Structured Component Analysis (GSCA) and mediation analysis using regression to show the mediating effect of international trade between infrastructure and economic performance, and between logistics and economic performance. The paper takes the Logistics Performance Index (LPI) by the World Bank to measure the country’s logistics performance. LPI is a significant index covering around 160 nations.

However, another branch of literature exists, which cautions against some drawbacks in the World Bank’s LPI computation and its interpretation (Rezaei et al., 2018; Martí et al., 2017). The paper by Satyendra Nath Chakrabartty, entitled ‘Logistics Performance Index: Methodological Issues,’ discusses the issues associated with the current method and provides an improved alternative to compute the index. The author proposes a non-parametric approach to avoid concerns associated with scaling and calculation of weights.

The article by Ashutosh Kar and Pratyay Ranjan Datta, entitled ‘Logistics Cost Dynamics in International Business: A Causal Approach,’ establishes the logistics cost dynamics in international trade. The empirical analysis establishes the causal relationships between the total-landed-cost (TLC), price-elasticity and demand for goods. The paper explains how the exporters lose business opportunities under free-on-board (FOB) shipment terms when the TLC goes up, and they have no control over the same. The authors introduce an interesting parameter called logistics-coefficient (Le) to determine the extent of integration of logistics activities such that the TLC is kept under control and reduces its influence on demand for price-elastic goods.

The other two papers focus on supply chain disruptions. The article by Pushpesh Pant, Hari Vishal and S. P. Sarmah, entitled ‘Does Disruptive Event Affect Supply Base Size: Evidence from an Emerging Economy,’ proxied disruption with the recession and focussed on emerging economies. They substantiated that buying firms tend to maintain a large supplier base to reduce individual– supplier dependence. However, the rate of increase in supplier base reduces substantially during the recession.

The paper entitled ‘The Supply Chain Disruption Framework Post COVID-19: A System Dynamics Model’ by Deepankar Sinha, Virupaxi Bagodi and Debasri Dey shows the influence of the current situation (the COVID 19-pandemic) on supply chains. The authors capture the impact of the pandemic on the inbound and outbound supply chain of the firms and model the supply shocks impacting the demand for goods and the resultant effects. They establish relationships and develop a systems-dynamics model. The authors propose the model for future policy and strategy experimentations, aiding government and firms for any product and market.

As a concluding remark, I can appropriately underline that this special issue covers several relevant perspectives of global supply chains and their impact on international trade/business. The significant propositions that the papers arrive at through technical analysis include:

Logistics performance plays a mediating role in international trade.

I am confident that future academic works can focus on these propositions and establish the associated theorems, simulation results and strategic formulations to further push the boundaries of research.

This issue also features an interesting review of the book ‘Sixty Years of European Integration and Global Power Shifts: Perceptions, Interactions and Lessons’, edited by Julien Chaisse, published from Oxford: Hart Publishing, 2020, ISBN 9781509933747. Dr. Esther Erlings from Flinders University, Australia, has carried out the review.