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Supply Chain Risk And What About Ethics?

Supply Chain Risk And What About Ethics?. Lee Buddress, Ph.D., C.P.M. Robert G. Gleason Professor and Director Supply and Logistics Program Portland State University. Supply Chain Risk. Events or actions that result in a transaction or project differing from budget or plan

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Supply Chain Risk And What About Ethics?

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  1. Supply Chain RiskAnd What About Ethics? Lee Buddress, Ph.D., C.P.M. Robert G. Gleason Professor and Director Supply and Logistics Program Portland State University

  2. Supply Chain Risk • Events or actions that result in a transaction or project differing from budget or plan • Events or actions that prevent delivery to customers as promised

  3. Order Winning Characteristics • Design • Lead Time • Cost • Quality/Durability • Service • What Risks Most Impact • Ability to Serve Customers • Profitability

  4. Supply Management Objectives • Continuity of Supply • Least Total Cost of Ownership • Create Competitive Advantage • Sustainable • What Risks Interfere With These Objectives

  5. Supply Chain Risks • Big, Expensive Risks with Low Probability • Medium Risks with Medium Probability • Smaller Risks with High Probability

  6. External Risks

  7. Supply Chain Risk Classification • External Risks • Governmental • Infrastructure • Supplier • Logistical • Price • Terrorism • Natural Disasters • Accidents

  8. External Risks: Governmental • Export Policies • Intellectual Property Protection • Protective Tariffs and Duties • Regulatory Changes • Taxes • Currency Fluctuations • Political Unrest

  9. External Risks: Infrastructure • Roads • Railroads • Ports • River • Sea • Airports • Congestion • Domestic Infrastructure

  10. External Risks: Suppliers • Operational • Equipment • Facilities • Management • Financial • Cultural/Language • Labor • Scalability • Quality • Lead Times • Monopoly/Oligopoly • Technology • Communication • Operational • Sustainability • Social Responsibility

  11. External Risks: Logistics • Supplier Selection • Transportation Equipment • On Time • Freight Damage • Leakage/Shrinkage

  12. External Risks: Price • Trends • Volatility

  13. External Risks • Terrorism • Physical Harm • Personnel • Cyber Attacks/Hacking • Natural Disasters • Earthquakes, Tsunamis • Weather Related • Lightening Strikes • Accidents

  14. Key External Risks • Labor Issues • Quality • Timing • Supplier Selection Process • Total Cost Analysis

  15. Things to Watch • East & Gulf Coast Longshore Contract • West Coast Longshore Grain Contract • Ongoing Row Over Refer Plug-ins • Port Subsidizes Shipping Firms • Carriers Add $150 per Container • UPS/Teamsters Contract Negotiations • New Panama Canal • EU/ Airline Row Over Carbon Emissions • Carrier Capacity Constraints

  16. Internal Risks

  17. Supply Chain Risk Classification • Internal Risks • Policies • Resources • Operational

  18. Internal Risks: Policies • Outsourcing • Low Bid • Freight Terms • Managing • Reverse Logistics • Excess Inventory • Repairs • Sustainability/Social Responsibility • No Standardization • Equipment • Procedures • No Formal Strategies • Not Having Policies

  19. Internal Risks: Resources • Labor • Finances • Equipment • Technology • Automation • Communication • Enterprise

  20. Internal Risks: Operational • Personnel • Numbers, Expertise • Demand Management • Customer • Supplier • Forecasting • Project Management • Specifications

  21. Order Winning Characteristics • Design • Lead Time • Cost • Quality/Durability • Service • What Risks Most Impact • Ability to Serve Customers • Profitability

  22. 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 • Forecasting • Project Management • Review Supplier Selection Process • Supplier Visits • Daily Diligence

  23. Key Risk Management Activity • How Suppliers Are Chosen • Supplier Visits • Supplier Mapping • Forecasting • Daily Diligence

  24. Risk and Ethics

  25. Ethics • More than Gifts and Gratuities • Cialdini’s Influence • Appearances

  26. Unethical Sales Practices • Commercial Bribery • False Shortages • False Price Breaks • Market Allocation • False Delivery Promises • Quotation vs. Invoice • False Representation • Counterfeit • Back Door Selling

  27. Unethical Purchasing Practices • Shopping Bids • Shopping Ideas • Samples • Favoritism • Payment Terms • Contract Quantities • Conflict of Interest International Ethics Issues • Cultural Issues • Reciprocity

  28. Foreign Corrupt Practices Act • Illegal to Make Payments Influencing Purchase Decisions • Exempts “Processing Payments” • Accounting Requirements • Applies to ALL Publicly Traded Companies

  29. Risk and Ethics • Risks to the Organization • Customer Loss • Reputation • Personal Risks • Job • Reputation • Personal Liability

  30. Columbia River Bar http://www.youtube.com/embed/ByGSMmenPDM?rel=0

  31. Questions, Comments, Observations, Conclusions, Arguments?

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