ISQA 407 Introduction to Global Supply & Logistics Management Winter 2012 Portland State University

Agenda Introductions Syllabus review & Course expectations Key concepts of SCM Outsourcing & GPN Strategy Q&A

Supply Chain Management Defined “A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into immediate and finished products and the distribution of these finished products to customers.” (p. 3) ….but also, Design for “X” (manufacturing, service, sustainability, etc..), Closed loop supply chain, finance, marketing.

4 What Is the Supply Chain? Also referred to as the Global Production Network Suppliers, manufacturers, warehouses, distribution centers, channels, design centers, & back again! Including: Raw materials Work-in-process (WIP) inventory Finished products that flow between global facilities to the customer & back again

Extended supply chain (p. 27) The concept of global production network (GPN) Source: Ernst & Kim, 2001

6 The Supply Chain – Another View SuppliersManufacturersWarehouses & Distribution Centers Customers Material Costs Transportation Costs Transportation Costs Transportation Costs Inventory Costs Manufacturing Costs Design Source Make Deliver Buy Return Plan

7 What Is Supply Chain Management (SCM)? A set of approaches used to efficiently integrate Suppliers Manufacturers Warehouses Distribution centers Channels Design So that the product is produced and distributed In the right quantities To the right locations And at the right time System-wide costs are minimized and Service level requirements are satisfied Design Plan Source Make Deliver Buy Return

8 Why Is SCM Difficult? Uncertainty is inherent to every supply chain Travel times (Asia -> West) Breakdowns of machines and vehicles (24/7) Weather, natural catastrophe, war (Japan Earthquake) Local politics, labor conditions, border issues (N. Korea) The complexity of the problem to globally optimize a supply chain is significant Minimize internal costs (DFx, NPI, MFG) Minimize uncertainty (Risk Mitigation, continuity of supply) Deal with remaining uncertainty (Shortages, consumer taste)

Decisions regarding 5 key areas Production – Master production schedule Inventory – how much is held and at what state? Location – production, warehouse, etc… Transportation – Air, water, land, & how? Information – ERP, MRP, CRM, EDI, RFID, etc. Many more when developing a strategy…..

Strategic Planning Steps: Strategies to Achieve Goals Supply System Strategies May Involve Staff Technology Resources Time Supply Base

Strategic Planning Steps: Strategies to Achieve Goals Corporate Goal Congruency Internal Customer Impacts External Supplier Impacts Defining Resources to Implement Defining Resources to Sustain Defining Structure

Strategic Planning Steps: Markets Customer buying habits: bulk or small Response Customers are willing to live with Variety Service requirements Price Innovation expectations

Strategic Considerations Vertical Integration Outsourcing Manufacturing Location Warehouse Location Inventory Strategy Logistical Configuration Automation Sustainability Risk Analysis and Mitigation

General Supply Chain Strategies Supply Base Reduction Supply Base Addition Supplier Development Inventory Strategies VMI Consignments Lean Operations Simplification Standardization Automation Risk Management Identification Mitigation Cost Reduction Administrative Commodities Services Leveraging Technology Lead Time Management Sustainability

Supply Chain Management Activities Forecasting Product Design Process Design Purchasing Inbound Transportation In-House Transportation Inventory Planning and Control Production Planning and Control Process/Quality Control Distribution Maintenance

Responsibilities of Sourcing Professionals Beyond just continuity of supply.. Labor rights Child labor Working conditions Benefits and hours Employee safety considerations Environmental considerations Pollution/emissions/utilization of scare or protected resources Recycling/Reclaim Utilization of hazardous materials (IE: ozone depleting substances, lead, etc.) Who is responsible? What is produced via mfg process? What is included in the finished product? Have we disclosed to end customer? What is the impact to the company? (CSRs, tracking. Expensive)