It is not the strongest of the species that survives, nor the most intelligent, but the one most

responsive to change
Charles Darwin (1809 1882)

Enable a Supply network highly responsive to fluctuations in Demand Business networks

Supply. .
1

. . and Product Conditions

GLOBAL SUPPLY CHAIN & LOGISTICS ISSUES

Archana P Archana S Arthi P Ashwanth Bhagyaraj P

AGENDA

Global Supply Chain Inventory Management Issues Logistics Issues Role of IT in Global SCM Quality in Global SCM

SCM is an important tool in reducing costs and increasing effectiveness

Minimize Inventory Manage Performance & Risk

End to End Visibility & Collaboration

Synchronize Supply to Demand

Demand Supply

SOURCE

SUPPLY

MAKE

SELL

MOVE

SERVICE

CUSTOMER

Manage Cost & Compliance

Supply Network Strategy and Design

Collaborative Demand and Supply Planning Service Parts Planning and Logistics

Customer Demand Response & Execution Manufacturing Network Planning & Execution Logistics and Fulfillment Management

Supply Network Traceability

Global Supplier Networks

Sourcing: the process of securing inputs (raw materials, components, and supplies) either internally or externally for a firms productive processes Outsourcing: the sourcing of inputs from external suppliers, i.e., the buy decision

Why Global Sourcing?

To reduce costs due to less expensive labor, less restrictive work rules and lower land and facilities cost To improve quality To increase exposure to worldwide technology To improve the delivery of supplies process To strengthen reliability of supply by substituting domestic with foreign suppliers To gain access to materials that are only available abroad due to technical specifications or product capabilities To establish presence in foreign market To react to competitors offshore sourcing practices

Global sourcing

The three major configurations that have emerged for the global sourcing function are:
Vertical integration Industrial clusters, including the Japanese keiretsu Independent outsourcing

Make or Buy Decision

Make or buy decision: determining which productive activities should be performed internally (make) and which ones should be subcontracted to independent companies (buy) The global progression of the purchasing function (buy) includes the following four phases:
domestic purchasing only foreign purchasing based on need foreign purchasing as a part of the procurement strategy integration of the global procurement strategy

Global Supply Chain Issues

May become more expensive due to increased transportation and communication cost, if mismanaged Longer supply chains can lead to longer and/or uncertain lead times Additional inventories leading to increased inventory carrying costs Difficulty in getting parts to production site on time Lower quality parts or components lead to increase in costs per unit and have to be shipped back to supplier (eg) Chinese sourced milk powder and infant formula contained melamine above specified levels and had to be recalled affecting the brand image of companies Social and labor problems Cultural Issues

Moxober

Leading mobile phone manufacturing company serving mainly two market, Europe and Asia Used to be a vertically integrated company and produced nearly all the component parts by itself. Recently, changed to a global supply chain focusing on key technologies and its core competency, while outsourcing major component manufacturing activities, such as the manufacturing of peripherals like batteries and chargers, memory chips, and LCD panels.

Multi-agent system for Moxober supply chain coordination

The first issue to coordinate Moxober manufacturing supply chain is To determine the make-or-buy decisions

Supply Chain Network Configuration for a specific customer order

Highly customized customer demands and volatile markets shift manufacturing supply chain coordination from static strategic decisions to dynamic operational decisions. Global supply chain coordination must coincide with the product fulfillment process.

LOGISTICS ISSUES

Aswanth

Logistics

Logistics is defined as a business planning framework for the management of material, service, information and capital flows.

It includes the increasingly complex information, communication and control systems required in today's business environment.

Logistics Issues
Increased risk throughout the supply chain
Increasing Export, Import Compliance regulations Fluctuating Fuel, Oil prices

Poor customer service

Inability to make accurate commitments to delivery dates leads to lost opportunities and finally loss in market share Poor responsiveness to unexpected supply chain events

Increased Inventory and Warehousing costs

Increased inventory buffers and suboptimal asset utilization Timely, costly and error prone manual exception handling

Inflated Transport Costs

Expedited shipments/increased transportation spend from lack of visibility and collaboration Poor visibility into the supply network and inability to apply transport resources in a holistic fashion, missing significant saving potentials

Transportation Issues

The volume of both domestic and international logistics flows has increased rapidly in Asian countries in response to the expansion of global operations. Significant logistics infrastructure development is occurring in some countries in Asia. The extensive distances between countries within the region are motivating development of air, sea and intermodal transportation. However, logistics infrastructure and institutional measures in Asia lag far behind developments in North America and Europe.

Transportation Issues

Congestion on streets, at ports and at airports reduces logistics efficiency. The lack of sufficient infrastructure therefore becomes a source of bottlenecks in the performance of logistics operations and can be a barrier to economic development. Reasons contributing to the lack of efficiency in transport logistics throughout Asia include insufficient funds for infrastructure provision, poor policy direction by governments, prioritisation of policies that favour industrial sector growth, and inability to meet the demands created by high economic growth.

Currency and payment contract issues

There may be issues such as currency conversion and fluctuations. Air freight is quoted in the currency of the origin country. Ocean terminal and other accessorial origin charges are also in origin country currency. Warehouses in other countries will invoice in origin currencies. Currency conversion and dynamics can create unfavorable or favorable cost variances which have to do with logistics performance.

Freight and Delivery Issues

This is often the way that logistics is viewed in many companies. Rush ship an order. Expedite in a component. But there is more. Products moves should complement the corporate strategy. If the emphasis is on cost reduction, lower inventories, customer service or whatever, then products must move in a way that is consistent with the emphasis. Product must also flow, not just move, from, to, between and among vendors, manufacturing sites, warehouses and customers. If it does not flow, then there is not a supply pipeline. Instead there are imbalances in inventories with components and finished goods not being where they should be.

Logistic Case study - PRESSGO

PRESSGO LTD. faces many logistical issues, which as a company it will need it deal with in the coming weeks, months, and years in order to remain competitive in the market and to stay afloat. PRESSGO LTD. sells tablecloths, candles, and porcelain, and has been experiencing wonderful growth over the past few years. However, almost all of the growth has been in the sector of tablecloths, and the lack of consumption of the other products has led to a lack of growth for the stock and unhappy shareholders, who have not been receiving dividends. One of these was that a relocation of the company away from Hong Kong, which many shareholders supported, would be extremely difficult logistically One way to handle this issue might be to have a small satellite office in Tokyo, but leave most of the company where it is now, thus easing the pressure to do business in Japan (where many of the products are sold) but keeping relocation issues to a minimum.

Logistic Case study - PRESSGO

Another logistical issue was that of too many vice presidents of the company, all of whom were about to hit mandatory retirement age around the same time. This problem, however, should take care of itself. Another logistical issue was that distribution in general seemed to be uncoordinated. Two planes were in use, yet deliveries were addressed as problematic and customers were complaining. It is clear that the organization needs to sit down and reconfigure how to use the resources already in place, including the planes. Warehouse operations also were addressed in the meeting. These too need to be better organized and better centralized. Decisions about what is stored where and for how long need to be made in a more transparent and methodical way.

ROLE OF IT IN GLOBAL SUPPLY CHAIN

Arthi P

EDI

Structured transmission Transmission of electronic documents Can replace the bill of lading and even checks with appropriate EDI messages Processing of messages takes place by computers only Human involved only in error condition This includes the technologies like FTP,HTTP etc.

EDI process

In global context, EDI is used to link exporters with customs to facilitate quick processing of customs forms, thus speeding up of delivery across borders Used especially in the food manufacturing and car making industries where suppliers restore inventory in high volumes Relatively expensive to implement but focuses on the the business to business value chain
message flow document format

transmission

RFID

Uses the transfer of data through radio waves via an electronic tag Superior and more efficient way of identification Far better than manual counting or bar codes Do not require a reader Unlike bar codes it can read multiple items at a time Real time information allows manufacturers, suppliers and distributors to keep track of products and components throughout the manufacturing process Provides increased efficiency and visibility across the supply chain

Application of RFID

Health care industry-to gain knowledge about the medicine available Retailing industries-objects present in the shops Also used in electronic tolling booth Companies such as Walmart and Procter & Gamble claim that use of RFID saves them 8.3 billion USD and 400 Million a year respetively

eCommerce

Buying and selling over electronic system It includes the total online process Encompasses wide range of technology Classification of business Applications Online payments Shopping Tracking Group buying

Case study Dell SCM

Supply chain management is essential to Dell operations around the world, with both factory operations and internal systems dependent on SCM systems to provide real-time information about key business functions. The Dell SCM system must handle an enormous number of transactions and pieces of information, and includes multiple core components necessary to keep operations running smoothly: Configuration management Procurement Cost Inventory Accounts Payable

Performance Gains in Dells SCM

Scales Supply Chain Management using Oracle RAC 10g was found to be very successful

QUALITY IN GLOBAL SUPPLY CHAIN

Archana S

Quality-Definition

In manufacturing, a measure of excellence or a state of being free from defects, deficiencies, and significant variations, brought about by the strict and consistent adherence to measurable and verifiable standards to achieve uniformity of output that satisfies specific customer or user requirements. ISO 8402-1986 standard defines quality as "the totality of features and characteristics of a product or service that bears its ability to satisfy stated or implied needs."

Quality issues and methodologies that are relevant in current supply chain management.

1.Benchmarking In The Supply Chain Benchmarking or goal setting allows a company to assess the opportunities they may have for improving a number of areas in their supply chain including productivity, inventory accuracy, shipping accuracy, storage density and bin-to-bin time. The benchmarking process can provide a company some estimate of the benefits achieved by the implementation of any improvements. Types of Benchmarking Internal Benchmarking External Benchmarking Competitive Benchmarking

Quality at Toyota

Toyota views selection of the right supplier as key to smooth relations. Toyota as a manufacturer must be convinced that the supplier has given a realistic bid at which it can produce sustainably. As Toyota will need to hold the supplier to the contract for around five years, they are willing to walk away from a potential supplier who has quoted unrealistically low costs. Toyota visits the plants of potential suppliers with a team consisting of a Quality Engineer, Production Tooling Engineer and Logistics Specialist. All systems are tracked from goods-in to final output and a quality evaluation is carried out. A final opinion is issued using a traffic-light style system with three grades: Acceptable (invited to bid), Some Concern (invited to bid but concerns are raised), Unacceptable (not invited to bid).

2.Total Quality Management (TQM)

TQM can be defined as the management of initiatives and procedures that are aimed at achieving the delivery of quality products and services. TQM looks at the overall quality measures used by a company including managing quality design and development, quality control and maintenance, quality improvement, and quality assurance. TQM takes into account all quality measures taken at all levels and involving all company employees. TQM in global setting is challenging because of cultural and environmental differences

Warehouse Safety

Safety in American warehouses is regulated by a series of standards from the Occupational Safety and Health Administration, commonly known as OSHA OSHA issues many publications on safety issues in a warehouse and the solutions that can be adopted by businesses to reduce accidents and minimize injury. The list below is their top 10 areas for which they issue citations. Forklifts Hazard communication Electrical, wiring methods Electrical, system design Guarding floor & wall openings and holes Exits Mechanical power transmission Respiratory protection Lockout/tagout Portable fire extinguishers

Supply Chain Standard

SCOR is a supply chain process reference model containing over 200 process elements, 550 metrics, and 500 best practices including risk and environmental management Organized around the five primary management processes of Plan, Source, Make, Deliver and Return Developed by the industry for use as an industry open standard - Any interested organization can participate in its continual development
Supplier processes Supply Chain Supply Chain
Plan

Customer processes Customer processes

Source

Make

Deliver

Return

Return

Process, arrow indicates material flow direction Process, no material flow

Motorola Case

SPC was one of the first applied, specifically in the Austin Assembly facility.
The essential elements of SPC were defined as: (1) problem-solving team integration, (2) training programs, (3) improvement in employee attitude, (4) improvement in communication among employees and between management and employees, (5) a quality certification program and (6) design of experiments. The SPC training was implemented at all levels of the organization, based on the responsibilities and activities of each employee (work-oriented training); e.g., operators and inspectors were trained on how to collect data, on the creation and understanding of control charts

Outcomes

From the SCM perspective, first of all, cross-functional collaboration was encouraged. Motorola certified most of its suppliers and in turn avoided the incoming inspection procedure and reduced the rate of rejected parts. Using SPC they evaluated process capability of the suppliers. Suppliers who were able to deliver a high-quality product were considered as part of the suppliers base which lead to reduction in the number of suppliers.

Conclusion

Important objectives shared by the global manufacturing and supply chain functions are to simultaneously lower costs and increase quality by eliminating defects from both processes. A firms should focus on making those products and performing those activities that are critical to its operations and in which it has a distinct advantage. Cost-minimization strategies and the drive for global efficiencies often force MNEs to move offshore to lowercost manufacturing areas, especially in Asia and East Europe.