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The Global Village in Your Pocket

How global value chains and effective supply chains create the products we use today.

Brendan Canavan | UPS

Have you ever considered how many people contributed to the smart phone you carry around with you?

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If your business is based in the U.S., the data shows that you may be missing out on this increasingly streamlined process.

This practically essential electronic device is made of hundreds of parts collected from dozens of places around the world. It’s pretty staggering to consider just how that works.

And increasingly, this is the new reality of commerce. Across the world, production occurs in stages, taking place in different countries.

This globalization of production means that in order to make, sell and distribute their products, companies must have robust supply chains that can adapt quickly and maximize opportunities around the world.

[Also on Longitudes: Reason, Reality and the Future of Trade]

Just look at the voyage your own smartphone took from production to assembly. The slideshow at the bottom of the post illustrates this journey:

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Your smartphone’s inner circuitry is created in China, where rare earth metals like Cerium and Neodymium are mined for this purpose.

Other more common metals like zinc, copper and nickel may be used in production as well, mined anywhere from the United States to Russia.

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Your phone’s memory chips and LCD touch pads are created in Korea. Some cellphone glass comes from Kentucky.

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Meanwhile, in Europe, manufacturers create various technologies that help optimize the phone’s display. In the U.S., manufacturers can source anything from glass to final product design.

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Many of these components move through UPS’s air express networks, converging at a high-tech factory in China or Vietnam.

And of course, it doesn’t end there. Now we have to distribute the phone.

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Once the device is assembled, it’s put on an airplane to Shanghai, and for European end-consumers, it’s then packed up on a jumbo jet flight headed to Dubai.

After picking up cargo in Dubai, UPS carries your device to Cologne, Germany, home of our European air hub.

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Your smartphone connects you with an astounding process of global trade and sophisticated supply chains.

If you live in the Americas, your device travels the opposite direction from the Asia/Pacific. It goes on a B747 or MD-11 long-range freighter that flies to Anchorage, Alaska, then down to Worldport, the UPS international air hub in Louisville.

From Worldport, it flies direct to Mexico or Canada. In the Caribbean, Central or South America, it gets routed through our Americas hub in Miami (sounds like a lot of stops, but this all happens in a few hours).

[Also on Longitudes: What Does it Mean to Trade in the 21st Century?]

There are all kinds of examples of how a global village works. Gadgets, t-shirts, car parts, medical supplies – companies that make these products can benefit from tapping into the global network.

If your business is based in the United States, the data shows that you may be missing out on this increasingly streamlined process.

Ninety-five percent of the world’s consumers live outside the U.S., and 70 percent of the world’s buying power is also outside the U.S. Yet only 1 percent of U.S. businesses export. There are trillions of dollars waiting overseas for U.S. businesses.

At UPS, we have mastered the art of the global supply chain – shipping goods for our customers to more than 220 countries and territories around the world. Our integrated network helps businesses get their products to market with speed and reliability every day.

It’s no wonder that UPS is a big advocate for free trade all over the world.

The two mega free trade agreements in the works, the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP), if passed, will also benefit trade for thousands of small and medium-size companies by streamlining the global supply chain even more. The agreements will also reduce the barriers to trade and add more than $300 billion annually to the global economy.

The next time you deploy your smartphone to text your friends, email your coworkers or call your mom, know that you’re also connecting with an astounding process of global trade and sophisticated supply chains. Is your business also this connected? goldbrown2

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Brendan Canavan is UPS Airlines president. Before his current role, the veteran UPSer led UPS operations in Asia/Pacific and Northern Europe. The former Villanova Wildcat has developed an insider's view on the opportunities of doing business across borders.

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Reprinted with permission of Longitudes, the UPS blog devoted to the trends shaping the global economy.

4 Comments

  1. William Laraque

    Global Trade Realities and Political Absurdities:
    Considering all the markets and countries involved in producing the cell phone in your pocket, is it not absurd to consider China the country of origin, as the WTO does? Because Foxcomm, a Taiwanese-owned enterprise,makes final assembly in China, the WTO considers China the country of origin of Apple iPhones. The “place where the last substantial transformation takes place” is considered to be the country of origin by WTO. TIVA or trade in value-added products, renders obsolete this determination by WTO.
    WTO refs may be obsolete, but in view of the “global village in your pocket,” the global trade narrative of US politicians is absurd!

  2. John Knight-Doe

    Aren’t rare earth metals like Cerium and Neodymium also mined in the DRC, Democratic Republic of Congo? by foreign multi-national Companies from different countries, where wars are being fought for control of the rare metals?

  3. Matt@scssince1986.com

    Very interesting…..
    The USA sold most of our rare earth & precious metal mines inside the USA to foreign countries in the last 20 years . Now they sell them back to us at a premium !?!
    Remember the 7 “P’s”————
    Prior proper planning prevents piss poor production
    60 minutes did a story on this

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