ISQA 407 Introduction to Global Supply & Logistics Management Winter 2012

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 • Vanity – cognitive dissonance (IBM PC) • Provincialism – only measure within an org group • Narcissism – measure from your point of view, not the customer • Laziness – We know best • Pettiness – only a small component of what matters • Inanity – Measure what you want to change • 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 • Internal Corporate barriers (lack of know-how) • Lowest cost mind-set • Time pressures & fear of change • Market barriers (pricing, quality) • Lack of choice • Premium pricing • 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 • Corporate barriers • Inconsistency in value statements and practice • Weight of sustainable metrics in scorecard • Market barriers • TTM versus value goals • 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…..Priushttp://www.leftlanenews.com/study-prius-production-harmful-to-environment.html

19. And lastly: Cruise Shipshttp://www.cbsnews.com/stories/2006/11/03/60minutes/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