550 likes | 811 Views
MIM 558 Class 2. Strategy Forecasting. Current Events. Thailand Egypt Mexico. Leola Milling. ISM Report on Business: Reasons for its Value. Timeliness Released on First Business Day Each Month Data From Preceding Month Accuracy Carefully Selected Sample Generalizability
E N D
MIM 558Class 2 Strategy Forecasting
Current Events • Thailand • Egypt • Mexico
ISM Report on Business: Reasons for its Value • Timeliness • Released on First Business Day Each Month • Data From Preceding Month • Accuracy • Carefully Selected Sample • Generalizability • Leading Indicator • Change Index Leads Activity Index By Quarter of a Business Cycle
ISM Report on Business • Change Indices • Derivation
Forecasting • Foundation of: • Operations Planning • Production Planning • Supply and Logistics Planning
Types of Forecasts • Economic • Global Business Cycles • National Business Cycles • Industry Trends • Company Trends • Technological Forecasts • Product Life Cycles • Rate of Technological Change
Types of Forecasts • Demand Forecasts • By Dollar Value • By Product • Supply Forecasts • Availability • Prices
Why Do We Forecast? • To Minimize Uncertainty • To Anticipate Change
What are Change Determinants? • Technology • Politics • Law • War and Threat • Strikes and Threat • Nature • Depletion • Discovery • Disaster
What are Change Determinants? • Demographics • Income • Tastes/Needs • Mergers, Acquisitions & LBO’s • Global Economic Conditions • Environmental Concerns • Sustainability • Risk
Three Directions of Forecasts: Demand Forecasts • General Forecasts • International, National, State and Local Conditions • Our Industry • Marketing and Sales Forecast: Our Firm, Specific Products • Production Schedule • Direct Material Inventory and Purchasing Activity • Machine Utilization • Maintenance Schedule • MRO Requirements Indirect Inventory and Purchasing Activity
Three Directions of Forecasts: Supply Forecasts • Capacity • Availability • Lead Time and Changes • Supply Chains • Technology • Material Requirements/Critical Materials • Product / Component Life Cycle Issues • Prices • Labor Issues
Three Directions of Forecasts:Logistics • Requirements • Availability • Lead Time • Technology (SC Visibility) • Labor Issues • Pricing
Other Supply Chain Forecasts • Currency Exchange Rate Fluctuations • Oil Prices • Rate of Inflation • Labor Contract Expiration • Supplier • Dock Workers • Other Logistics
Forecasting Keys • Accurate Historical Data • Understand Causes of Change • Forecast In Both Directions • Monitor Forecast vs Actual Regularly • Adjust Forecasts as Conditions Change • Examine Causes of Forecast Error
Economic Concerns Industry Consolidation Privatization Unemployment Global Economic Environment Intellectual Property Rights Hacking and Computer Security
Independent and Dependent Demand • Independent Demand • Generated by Customers • Use Forecasting to Determine • Dependent Demand • Demands on Suppliers • Calculate to Determine
Management of Independent and Dependent Demand • Changing Order Quantities • Changing Order Timing • Forecasting and Planning • Collaborative Planning, Forecasting and Replenishment (CPFR)
Game Changer #1 • Global Population Changes Will Drive Shortages in Basics of Life • Water • Food • Unrest Results
Global Sustainability Changes • Population • 7 Billion (October) • Over 5.5 Billion in Less Developed Countries • Africa: Growth So High Population Will Triple • 1 Bil Now, 3.6 Bil Forecast by 2100 • Yemen:25 to 100 Million • Nigeria 162 to 730 Million • U.S. Faster Than Most Developed Countries • Immigration and High Hispanic Birthrate (311M – 478M) • All of This Assumes Food & Water Available Source: UN Forecasts
The Global Example • UN Forecast • World Population 2011: 7.0 Billion • World Population 2050: 9.3 Billion • Today: Half of Population in Urban Areas • 2050: 70% in Urban Areas • 2050: 27 Mega-Cities of Over 10 Million • 2050: 97% of Growth from LDCs • How Will Infrastructure Support Growing Population?
The Northwest Example • Population Increase in Next 15 Years • Washington +23% • Oregon +25% • Port of Portland Forecast • Cost of Congestion Study • Trucks Between Seattle and Portland • Population 400 Million by 2043
Game Changer #2 • Recent Supply Chain Strategies Shifting • Outsourcing • Single Sourcing • Lean Philosophies • Sustainability as a Source Selection Criterion • Supply Chain Risk Analysis
Outsourcing • Firms Rethinking Outsourcing • Rising Wage Rates • Rising Transportation Costs • Currency Exchange Rates • Long Lead Times • Recent Survey (Global Retail Goods Firms): • 50% of firms in survey are considering moving out of China • 26% actually doing it
A Look Forward: More Game Changers • China Industry Domination Strategy • BRIC Growth • Particle Deposition Technology • Quick Charge Batteries • $140/bbl Oil • Natural Disasters and SC Interruptions • Sustainability • Emma Maersk and Infrastructure
Maersk Triple E Class • Size: 1312’ x 194’ • 18, 000 TEU
Shipping and U.S. Ports • Emma and Triple E Ships All in Asia to Europe Service • None Coming to U.S. • Only 5 Ports With Capacity • Longshoremen
Panama Canal • Widening and Expansion Due 2015 • New Container Ships Too Large to Fit • Large Bulk Carriers Too Large to Fit
What About Mileage? • Strings may still call LA/Long Beach • On to – say- New Orleans • LA to the Canal 2939 NM • The Canal 48 NM • Canal to Head of Pass 1873 NM • HoP to New Orleans 95 NM • Total LA to NO 5296 NM • Source: Coast Pilot 2013
What About Mileage? • LA to NO: 5296 NM @ 18 Knots • Plus Canal Transit Time • Plus Mississippi Transit Time • Roughly an additional 315 hours • An Additional 13 Days Transit Time
What About Mileage? • Shanghai to LA 5667 NM • Shanghai to Canal 8108 NM • Difference: 2441NM • At 18 Kts = 135 Hours or 5 – 6 Days
What About Mileage? • Train from LA to Chicago: 3-4 Days • Train from NO to Chicago: 2 Days • Faster and Cheaper to Discharge in California and Rail to Midwest or East.
2012 TEU Traffic • 1. Los Angeles 7,940,511 • 2. Long Beach 6,061,091 • 3. New York/New Jersey 5,503,485 • 4. Savannah 2,944,678 • 5. Oakland 2,342,504 • 6. Seattle 2,033,535 • 7. Hampton Roads 1,918,029 • 8. Houston 1,866,450 • Source: American Assn. of Port Authorities
What About Cost? • Canal Toll As of October, 2013 • $74 per TUE • ** Calculated on Total Ship TEU Capacity • Maersk Announces No Canal Use • They Will Use Suez Canal Even Though It Is Longer • Railroads Vow Not to Lose Traffic
So… • To Use the Canal • Much Longer Sea Time • Much Longer Total Transit Time • Expensive Canal • Will There Be A Sea Change? • What About the Northwest Passage? • What About Nicaragua?
Things to Watch • West Coast Longshore Grain Contract • Ongoing Row Over Refer Plug-ins • New Panama Canal • EU/ Airline Carbon Emissions • Carrier Capacity Constraints