Global Production Networks

In a context of intense global competition and diminishing profit margins in many industrial activities, logistics offer additional opportunities to improve the efficiency of production through distribution strategies. In this context, Global Production Networks (GPNs) are accounting for an emerging and active branch of investigation of the various paradigms of globalization. While the term globalization implies many issues depending on the perspective considered, economic interdependencies in trade, production and consumption � core elements of GPNs � are a major factor accounting for its dynamics. Global production networks have various structures according to the nature of their production and the markets they service. The term GPN itself is semantically very revealing:

• Global. Refers to the underlying geography of the global economy. It considers space as a facilitator of economic efficiency, notably in terms of comparative advantages, but also as a constraint in terms of distance and market fragmentation. It expresses the locational reality of the global economy.
• Production. Refers to the variety of activities involved in the creation and transformation of resources, parts and final products. It expresses the value generation reality, both for goods and services, of the global economy.
• Networks. Refer to the complex web of interactions, both physical and immaterial (information), of production and its underlying logistics. It expresses the transactional and distribution reality of the global economy.

GPNs are bound to the interactions of supply and demand, as they reconcile the material needs of the consumers (let it be an individual or a corporation) to have the right product, in the right quantity, at the right price, at the right location and at the right time, and the capacity of production and distribution systems to accommodate such needs. The embededness they reflect is thus multidimensional, as markets, production and distribution become more linked in a complex web of flows. The development of GPNs has lead to a substantial growth of flows of commodities, parts and finished goods, hinting at mobility requirements that must be accommodated. In such a context, global freight transport systems have faced additional demands in absolute terms, but also in terms of the average distance goods are carried over. By keeping the quantity transported constant, but increasing its distance, additional transport demand is implied, literally through a multiplying effect as more distributional capacity gets tied with the same quantity of physical flows.