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

2. Agenda Quick review of last class Lecture SCM Coordination – Bullwhip effect Pagell & Wu Presentation Lecture SCM Coordination Sustainability Final Exam Potential Questions Q&A

3. Some Performance Measurements Customer Service / Internal efficiency / Flexibility / NPI Quality – PPM, FPY, IC, FMEA Cost to Target – OPEX & Procurement On Time Delivery Flexibility – cycle time improvement Productivity Improvement – output / hour Supplier’s Management Program Progress Toward Certification ISO 14,000 Technology roadmap (products & IT infrastructure) Inventory turns Return rate Cash-to-cash cycle time Utilization / capacity

4. Measuring Performance – Cont. Forecast Accuracy Formal Sharing of Information – Markets & customers Minimize expediting and Schedule Changes Focus on Total Cost - Not Price On Time A/P & A/R Program to Manage Supplier Relationships – NPI -> Obsolescence Contractual Protection and Liabilities Period Expenses – Variances Project milestones / cycle time of projects Number of SKUs SCOR Model & scorecard : (P. 152, 159)

5. 7 Deadly Sins of Performance Measurements 1.Vanity – cognitive dissonance (IBM PC) 2.Provincialism – only measure within an org group 3.Narcissism – measure from your point of view, not the customer 4.Laziness – We know best 5.Pettiness – only a small component of what matters 6.Inanity – Measure what you want to change 7.Frivolity – Not taking metrics seriously

6. IT systems EDI : Several versions of Electronic Data Interchange exist: PO’s, invoices, advance shipment, and backorder status – Very efficient ERP : Enterprise Resource Planning – includes operations, finance, HR, etc. (SAP, Oracle) Procurement Systems: AVLs, PO’s, BOM’s Advanced Planning & Scheduling : Capacity planning across factories What-if” analysis Transport systems : Analyzes which method is best base on your input of rates and lead-times Demand Planning : Another “What-if” tool based on historical and future forecasting

7. IT systems Customer Relationship Management : (CRM) Sales force automation – potential orders and ATP (Siebel) Supply Chain Mgnt : Where and what throughout the supply chain, Point of Sale Reporting (I-2) Inventory Systems : Calculate EOQ based on supplier and capacity information Transport Scheduling : Provided by UPS & Fed-x for tracking and planning Warehouse systems : Picking orders, shipping, inventory locations, & backlog

8. SCM Coordination Bullwhip effect: small effects at the beginning of the SCM have dynamic effects the farther you go up the value stream exhibit 6.1 (p. 172) Factors that cause the effect: Demand Forecasting: looking at orders received or backlog versus end customer data Order batching: orders place due to EOQ vs. real time demand Product rationing: Allocation creates double orders Product Pricing: marketing causes abnormal patterns with “specials”

9. Collaborative planning, forecasting, & replenishment Best practices : guidelines for sharing information Collaborative Planning: Build a joint business plan and transparent IT information flow Collaborative Forecasting: create multi-function forecast & make transparent Collaborative Replenishment: generate real-time orders to meet customer demand Where to start? Value stream mapping / Lean

10. Sustainable Sourcing CSR: Covers several principles -Community – for you and your suppliers -Diversity – MWBE -Environment – Upstream & Downstream -Ethics – code of conduct -Financial responsibility – transparency -Human rights – avoid complicity in abuse -Safety – ISO14000

11. Sustainable Sourcing Definition : “selecting goods and services which promote a healthier community and environment.... Just as importantly, sustainable purchasing is NOT simply about paying a premium for a product and service attributes.... But aims to find a reasonable balance” **Easton et al.

12. Challenges & Status to Sustainable Sourcing – Sourcing Strategy -Three barriers identified - buyers 1.Internal Corporate barriers (lack of know- how) Lowest cost mind-set Time pressures & fear of change 2.Market barriers (pricing, quality) Lack of choice Premium pricing 3.System wide barriers (NAFTA, China vs. local) Lack of accepted standards Free trade and globalization emphasis

13. Challenges & Status to Sustainable Sourcing – Suppliers -Three barriers identified by suppliers 1.Corporate barriers -Inconsistency in value statements and practice -Weight of sustainable metrics in scorecard 2.Market barriers -TTM versus value goals 3.Framework barriers -Limited access to certifications by S-M size -Lack of industry wide standards

14. Three themes in research - How do best practices take a sourcing strategy from “more sustainable” to “truly sustainable?” ie: continuous improvement vs. revolutionary change. -Ecocentricity - Sourcing should include “greater good” of communities -Integration of goals into day-to-day practices

16. A system: CLSC

17. Three examples: Walk the talk

18. On the other side…..Prius http://www.leftlanenews.com/study-prius-production-harmful-to- environment.html

19. And lastly: Cruise Ships http://www.cbsnews.com/stories/2006/11/03/60 minutes/main2149023.shtml

20. Pagell & Wu (2009) propositions -Innovation capability is required -Management orientation toward sustainability -Part of the value or mission statement or somewhere visible -Sourcing should reach out to NGOs and competitors -Sourcing should treat suppliers as strategic partners -Metrics must be a process that includes sustainability -Develop measurement and reward systems -Align financial and environmental goals

21. CLSC – Reverse Flow is critical