Sustainable Supply Chain Management Lecturers: Radim Lenort, David Holman, David Staš Summer School 2015 ŠKODA AUTO University Mladá Boleslav Czech Republic

Lecture Content Logistics management Supply chain management New trends in supply chain management Sustainable supply chain management

Logistics Management In order to understand logistics management, we can use the following mini-test: How long does it take (according to the European average) to deliver all materials required for production of a fluorescent lamp from suppliers to the manufacturer, production of semi-products, assembly of the lamp, its packing, delivery to distribution network, sale, unpacking and fitting into a ceiling? a) 50 min b) 22 h c) 5 months and 29 days d) 6 months

Logistics Management Definition of the Council of Supply Chain Management Professionals: Logistics management is the process of planning, implementing, and controlling the efficient, effective flow and storage of goods (materials, semi-products, finished products), services, and related information from point of origin to point of consumption for the purpose of satisfying customer requirements. Popular definition “7-Rs”: Logistics deals with the delivery: of the right product in the right quantity at the right time in the right quality at the right place for the right customer at the right cost

Logistics Management Basic principles of logistics management make reaching of logistics goals possible: Use of a systems approach: Logistics chain should be optimised as a whole, through integration and coordination its parts; It rejects optimisation of individual parts because optimal decisions obtained in that way are inconsistent. Use of a whole cost concept: Costs arising in logistics chain should be observed as a whole; In the opposite case, decrease of costs in one area can lead to their much greater increase in another area.

Supply Chain Management Material Warehouse Semi Products Warehouse Products Warehouse Materials from Suppliers Products to Customers Semi Products Manufacturing Products Manufacturing Material Handling Production Planning and Control Physical Distribution Integrated Logistics Management

Supply Chain Management Producer Semi Products Manufacturing Products Manufacturing Material Warehouse Semi Products Warehouse Products Warehouse Materials from Suppliers Products to Customers

Supply Chain Management Suppliers Producers Wholesalers Retailers Customers Supply Chain Management Definition of the Council of Supply Chain Management Professionals: Supply chain management encompasses the logistics management activities and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers and customers.

New Trends in Supply Chain Management The recent leading trend is lean supply chain management: The main idea of leanness is an elimination of all supply chain activities, which don't bring a value to products = they represent waste: Expensive inventory Unnecessary capacities Duplicate supply chain links Main goal is to achieve highly efficient supply chain = to minimise costs

New Trends in Supply Chain Management To achieve leanness a relative business environment stability is necessary Unfortunately, the recent environment is unpredictable and changeable Many crisis situations appear more and more frequently: Tsunami, Japan, March 2011, Toyota Motor company Suppliers and productions shutdown over the world 52% decline of the operational profit in the fourth quarter = about 350 millions EUR

New Trends in Supply Chain Management Two new trends appear as a response to this situation: Agile supply chain management – an ability of a supply chain to respond to major and unpredictable changes in the business environment very quickly Resilient supply chain management – an ability of a supply chain to turn back to original performance after a serious disruption

New Trends in Supply Chain Management The next recent and very important trends: Green supply chain management – an ability of a supply chain to minimise negative impact of logistics activities on environment Sustainable supply chain management – an integration of the aforementioned approaches

Sustainable Supply Chain Management It is an ability of a supply chain to balance its economic, environmental and social performance Environmental Performance Social Performance Good? Economic Performance Sustainability Best Better

Sustainable Supply Chain Management Volkswagen sustainability strategy: Strategic goal: By 2018, we aim to be the world’s most successful, fascinating and sustainable automotive manufacturer Key action areas: Economy, People, Environment

Sustainable Supply Chain Management Strategic goals of the key action areas by 2018: Economy: Leader in customer satisfaction Group return on sales before tax lower than 8% Annual sales of more then 10 million vehicles People: Top employer in the automotive sector Environment: Reduce energy and water consumption, waste and emissions per unit produced across the Group by 25%

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