Final answer:
The largest share of multinationals' logistics costs is often spent on shipping finished goods, which can become costly due to congested transportation networks. Improvements in transportation, technology, and international trade have led to reduced costs and enhanced supply chain efficiency. Strategic location choice and technological advancements are key to overcoming supply chain challenges.
Step-by-step explanation:
The largest percentage of multinationals' logistics costs is typically spent on shipping finished goods over congested street networks and/or jammed freeways, as this can significantly increase costs and reduce profits. Being located near uncrowded freeways can be ideal for logistics, as it allows easier travel for both workers and materials to and from a facility. Additionally, having access to rail or water transport options can further enhance cost-effectiveness in shipping logistics.
Advancements in technology, transportation methods, vehicles, and the development of policies to maintain supply chains during national emergencies can help address many of the challenges faced in supply chain management. Moreover, sharing new technologies with developing countries and committing to improved labor policies on both international and national levels can result in faster product distribution and a stronger labor force, which are crucial elements in the global supply chain.
Globalization has been driven by several factors, including substantial improvements in shipping and air cargo, which have reduced transportation costs. Progress in computing and telecommunications has simplified and reduced the expenses of managing long-distance economic connections. Additionally, international agreements have promoted greater trade, thereby further connecting global markets.
As shipping goods via modes such as cargo ships, as shown in Figure 1.9, plays a vital role in the global economy, it is clear that transportation costs are a major focus for multinational companies aiming to optimize their supply chain.