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Managing Supply Chain Sustainability and Risk: Keys to Success Lee Buddress, Ph.D., C.P.M. Robert G. Gleason Professor and Director Supply and Logistics Program Portland State University leeb@sba.pdx.edu
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Supply Chain Risk ISQA 479
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The Importance of Supply Chain Management How to Increase Shareholder Value Supply Chain Management is the Key Changes in Supply Chains Extensive, Lengthy, Complex Geographically Disbursed Global Nature Creates Uncertainty Uncertainty Creates Risk
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Supply Chain Risk Most Research Focused From Buying Firm Down Through Suppliers The Firm Itself and the Path to Customers Should Be Included Definitions: Events or actions that result in a transaction or project differing negatively from budget or plan Events or Actions that Prevent Delivery to Customers As Promised.
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External Supply Chain Risks: Categories Governmental Infrastructure Supplier Logistical Terrorism Natural Disasters Accidents Ethics Price
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External Risks: Governmental Export Policies Intellectual Property Protection Protective Tariffs and Duties Regulatory Changes Taxes Currency Fluctuations Political Unrest
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External Risks: Infrastructure Transportation Equipment Roads Railroads Ports River Sea Airports Congestion
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External Risks: Suppliers Operational Equipment Facilities Management Financial Cultural/Language Resources Labor Scalability Quality Lead Times Monopoly/Oligopoly Technology Communication Operational Sustainability Social Responsibility Ethics
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External Risks: Logistics On Time Freight Damage Leakage/Shrinkage Equipment Availability
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External Risks Terrorism Physical Harm Personnel Cyber Attacks Heart Bleed Natural Disasters Earthquakes, Tsunamis Weather Related Accidents
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External Risks: Price Trends Volatility Global Economics
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Internal Supply Chain Risks: Categories Policies Administrative Resources Operational Activities Organizational Resources Ethics
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Internal Risks: Policies Outsourcing Low Bid Freight Terms Not Managing Processes Reverse Logistics Excess Inventory Sustainability/Social Responsibility No Standardization Equipment Procedures No Formal Strategies Not Having Policies Ethics Repairs
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Internal Risks: Resources Labor Attract, Retain Finances Equipment Technology Automation Communication Enterprise
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Internal Risks: Operational Personnel Numbers Expertise Demand Management Customer Supplier Forecasting Specifications Project Management
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Internal Risks: Ethics Conflicts of Interest Supplier Relationships Supplier Ethics Organizational Reputation
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. Sustainability
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Sustainability Triple Bottom Line Environmental Sustainability Social Responsibility Organizational Sustainability
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Environmental Sustainability Non-Renewable Resource Use Energy Consumption Effluent Discharge Atmospheric Emissions Hazardous Material Use
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Social Responsibility Ethics Gender Equity Living Wage Appropriate Labor Labor Relations
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Organizational Sustainability Profitability Customer Perception Customer Satisfaction Long-Term Viability
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Past Research Sustainability and Risk Studied in Isolation Usually Interact Actions in One Area Create Outcomes in Others
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Risk and Sustainability Interactions
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Risk and Sustainability Interaction Examples Policy: Buy from Low Price Supplier Distant Location Risks of Lengthy Supply Chains Social Responsibility Refuses to Pay Minimum Wage Reflects Badly Onto Buying Organization Undermines Reputation With Customers Governmental Intervention Environmental Questions Organizational Sustainability
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Risk and Sustainability Supply Chain Risk External Governmental Infrastructure Supplier Logistical Terrorism Natural Disasters Accidents Internal Policies Administrative Operational Organizational Ethics Sustainability Environmental Non-Renewable Resource Energy Consumption Emissions Hazardous Materials Social Responsibility Ethics Gender Equity Living Wage Labor and Relationships Organizational Profitability, LT Viability Customer Perceptions Customer Relationships
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Risk and Sustainability Interaction Examples Ethics Resonates From Supplier to Internal Risks to Social Responsibility Bribes Paid to Influence Buying Decisions Supplier Reputation Buying Organization Reputation Governmental Intervention Organizational Sustainability Marketing Financial
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Risk and Sustainability Interaction Examples Logistical Risks Internal Operations – Continuity Slow Steaming Emissions – Governmental Restrictions 200 Mile Limit – Low Sulfur Diesel Energy Consumption Profitability Steamship Lines Buying Organizations
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Risk Prevention/Remediation Safety Stock Safety Lead Time Additional Suppliers Geographic Dispersion Ts and Cs Business Continuity Ours Suppliers Training ISO 31000 2009 Supply Chain Mapping Review Supplier Selection Process Supplier Visits Daily Diligence Forecasting Project Management
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Key Risk Management Activity How Suppliers Are Chosen Supplier Visits Supplier Mapping Forecasting Daily Diligence
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Food For Thought
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Natural Disasters Earthquake Major Storm Fire Lightening Strike Tornado
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East Asia Supply Locations
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Earthquakes and Volcanos
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Frequency of Occurrence of Earthquakes, 2012 8 Plus 2 7 - 7.9 12 6 - 6.9 108 5 - 5.9 1401 4 - 4.9 9,534 3 - 3.9 2,453 2 - 2.9 3,111 Total Earthquakes 2012 = 16,667 Total Earthquakes 2004 = 31,194 Source: USGS
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2013 Earthquakes 9.0 Magnitude+ 0 8.0−8.9 Magnitude 2 7.0−7.9 Magnitude 15 6.0−6.9 Magnitude 114 5.0−5.9 Magnitude 1.064 Totals 1,195 Total fatalities 1,463
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Typhoon Patterns
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Questions Supply Chain Risks? Sustainability Concerns? Not Just Asia
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Supply Chain Concerns Europe Severe Storms Political Instability Economic Instability U.S.A. Severe Storms Drought Infrastructure Mexico Corruption Drug Wars Infrastructure India Corruption Infrastructure Quality
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Supplier Selection Criteria Supply Chain Risk External Governmental Infrastructure Supplier Logistical Terrorism Natural Disasters Accidents Internal Policies Administrative Operational Organizational Ethics Sustainability Environmental Non-Renewable Resource Energy Consumption Emissions Hazardous Materials Social Responsibility Ethics Gender Equity Living Wage Labor and Relationships Organizational Profitability, LT Viability Customer Perceptions Customer Relationships
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Conclusions Re-evaluate How We Select Suppliers Not Just The Supplier The Supplier’s Environment Recognize Internal Supply Chain Risk Creation Recognizing Interactions Supply Chain Risk Supply Chain Sustainability Strategies to Consider Collectively
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Questions, Comments, Observations, Conclusions, Arguments?
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