Example of supply chain logic

The following image provides an example of a manufacturing company supply chain.
Vigorous management of supply chains is one of the key success factors of a production company. One pre-condition for the existence of international supply chains is low trade costs. A change of any element with an impact on the total trade costs will affect GVCs. Companies continuously analyse their production processes and supply chains and adapt them based on changes to the environment. A real or anticipated change in operating environment could lead to significant changes in global supply chains. When trade costs fall sufficiently, it becomes profitable to shift all or part of production to a country where efficiency gains are larger than any additional trade cost due to relocation. However, the opposite is also true.