Vertical Integration, Global Supply Chains and reliable power in India

The New York Times (July 27, 2011) describes a vertically integrated global supply chain built by the Adani Group – with coal mined in their mines in Indonesia, South Korean manufactured ships transporting it 4,000 miles to their port in Mundra (India) and then on to their power plants to generate electricity. Mining rights and their port in Australia are the future. All this to avoid the unreliable contract execution for Indian coal located 1,000 miles away, transported by a slow and unreliable state owned Railway.  The solution generated by the Adani group to scour the world and tradeoff distance for reliable supply illustrates the seemingly nonintuitive ways that global supply chains can be competitive in developing countries – whose voracious demand for electricity outstrips the available power supply and domestic capacity to plan.  Is this vertical integration globally a repeat of America’s gilded age (as described in the article) and a normal part of development ? Is the supply chain solution of the Adani group now more vulnerable to global risks – a tradeoff from domestic risk ? Give that the source of power remains coal, albeit the better quality coal from Indonesia, should we regard their supply chain as a more environmentally friendly solution compared to the domestic coal alternative ?

About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues, Sustainability and tagged , , , , , . Bookmark the permalink.

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