[1] It is a governing system of rules, structures and institutions that guide, control, and lead supply chains, through policies and regulations, with the goal of creating greater efficiency.
[1] Governing systems are put into place by different actors, such as international organizations and individual firms, within the global supply chain.
This has led to the idea that there should be governing system in place to help guide these global supply chains to perform more efficiently.
[3] It deals with the flow of materials through the global supply chain to ensure that the system produces efficiently per capita.
[1] The various stakeholders that work together to encourage good governance are looking to ensure sustainability and Corporate Social Responsibility in the international system.
These stakeholders have vested interest in the capacity of the system to be sustainable and thus lobby for governance strategies that will support this goal.
The five main principal that are identified as critical for good governance are; legitimacy, direction, performance, accountability, and fairness.
[7] Corporations must allow stakeholders to be involved in the policy formulation process in the global supply chain and their objectives and concerns must be represented in the final governance strategy.
Corporations will engage in a governance strategy in order to achieve greater benefits from the global supply chain.
O'Shea, Golden, and Olander [8] identify risks from global supply-chain disruptions as another of the primary pressures that influence governance strategy formulation and implementation.
Climate change and extreme weather patterns have a growing impact on the supply of key supply-chain inputs, this forces firms to take action in terms of preserving these resources and innovating around the problem (i.e. Finding a substitution).
[8] Environmental considerations being made in global supply-chain governance are also often an attempt to promote good corporate social relationships.
[9] The world social forum advocates for the groups that they feel are oppressed or exploited by the global supply chain.
The ideology behind creating governance strategies to support this system is to improve the efficiency and to hold actors accountable to a certain standard.
That being said there is a basic theoretical understanding that supports the merits of having a governance strategy in place and encourages actors to take part in one.
O’Rourke [11] argues that there are two main external pressures being placed on actors in the global supply chain that contribute to the formulation of governance strategies.
Lesson drawing between firms is a highly effective way for innovation to spread throughout the system and best practices to be identified.
The main objective of the Just in Time model is to eliminate the need for stocking inventory at every level of production in the global supply chain.
[13] By supplying materials only when they are needed corporations save on the cost of storage and the potential for overproduction of a product is eliminated.
"[15] Internal integration focuses on coordination and collaborative efforts between all the different departments of the firm, such as HR and Marketing, Purchasing and Manufacturing etc.
[15] External integration focus is on its relationship with its partners and occurs when "two or more companies share the responsibility of exchanging common planning, management, execution, and performance measurement information.
Firms that chose to have inventory at every level do not do this for efficiency but because of a lack of external integrated governance across the supply chain.