MIM 524 Global Sourcing Class one

1. MIM 524 Global Sourcing Class one

2. Introduction Welcome to Global Sourcing & Supply – MIM 524!

3. Agenda for the class • Welcome to Global Sourcing! • Class Logistics/Expectations • Review of Syllabus • Careers in SCM • SCM & the Firm • Team Formation & Case Arguments • Zin Oblisk • Commodity Assignment • Guava Puree

4. Typical Class Flow…Subject to change • Typically arrive by 5:00 to meet with students prior to class if necessary • Available to meet other times by appointment • Start at 5:30 –Start with initial lecture/discussions (one small – 10 min break) • Approx 7:00 – dinner break (25-30 min) • I will be available to answer questions, etc. • Please be sure to clean up any food or drinks in room • Dinner Break time might change depending on guest speaker schedules • Third hour will be either team/group discussion, guest speakers or follow on lecture • Fourth hour will be Current events discussion and review of next sessions materials plus one small break (10 Min) • Note: Current Events discussion will go toward class participation scores as well as other activities including peer reviews

5. Class Attendance/Participation • Attendance is critical • My lecture will NOT be a repeat of the reading • If you are unable to attend, please email me and make arrangements for a class mate to get you hand outs, etc. • Sign In sheets will be used for each class • You will be responsible for all materials covered in class • Open classroom discussion is key to solidifying the concepts and checking for understanding • Class Participation Graded on • Attendance/Class Participation & Discussion • Current Events • Peer Evaluation/Comprehensiveness

6. Grading • Case Submittal = 20% (Team) • Case Presentation = 10% (Team) • IKEA Written Abstract = 5% (Individual) • Starbucks Written Abstract = 5% (Individual) • Commodity Study = 25% (Team) • Final Exam/Presentation = 25% (Team) • Class Participation (current events, class discussion and peer evaluations) = 10% (Individual) • Please note, you will form a team of 4-5 members for the case study, commodity study and the final exam/presentation. • Grade will be applied across all members • Individual grades for IKEA/Starbucks Abstracts and Class Participation Only

7. Submittals/Due Dates • Papers, Studies, Presentations should be submitted BOTH: • Via Email – DawnMSUmoore@yahoo.com • Hard Copy at the beginning of class • Late submittals will result in a reduction in grade • Important Due Dates: • IKEA Abstracts – June 28th • Case Submittals and Presentations – July 12th • Starbucks Abstract – July 26th • Commodity Studies – Aug 2nd • Final Presentations – Aug 9th • Peer Reviews will be completed during class and go toward class participation grade.

8. My Contact Information • Email: DawnMSUmoore@yahoo.com - Preferred method of contact • Email me with a way to contact you and I will respond as soon as possible • Quick clarification questions via email are fine as well • Phone: 503-712-8857 for immediate issues only during the weekday (more than likely need to leave a message) • Evening and weekend contact number – 503-267-7663 • I will be available prior to class, at the dinner break and after class if needed. • Able to schedule other meeting times with advanced notice.

9. Additional Items • Syllabus Overview • Text Book • Required Reading • Commodity Study Guidelines • Some Commodity Ideas • Please return from Dinner break tonight with your teams formed. • I will have a sign up sheet at the front of class.

10. Questions?

11. Team Exercise Zin Obelisk

12. Careers In Source and Supply Chain Management • Transactional Specialists • Buyer • Commodity Specialist/Manager • Materials Specialist/Manager • Materials Engineer • Supplier Quality Engineer (SQE) • Supply Chain Analyst • Materials Planning • MFG Program Manager (MPM)

13. Importance of Supply Management to the Firm • Continuity of Supply • As % of Product Value • Impact on Profitability • Competitive Advantage

14. Importance of purchasing to business Admin. 5 12 Services 18 Capex 3 Spares 60-85 60-80 50-70 60-80 12 Trade- items Production parts 50 25-50 10-40 Retailers • Computers Consumer • electronics Automotive Pharma Service Typical structure industry

15. Types of Purchases • Production Materials • Raw Materials • Parts and Components (Sub- Assemby) • Capital Equipment • Machinery • Vehicles • Capital Projects • Construction

16. Types of Purchases • MRO Supplies • Operating Supplies • Spare Parts • Services • Repair Services • Buildings and Grounds • Professional Services & Consulting • Travel • Marketing & Advertisement

17. Basic Purchasing Objectives • Maintain Continuity of Supply • Least Total Cost of Ownership • Develop Purchasing as Strategic Asset • Create Competitive Advantage

18. Basic Purchasing Activities • Sourcing • Finding Potential Suppliers • Qualifying Suppliers • Selecting the Supplier and the Contract Type • Single Purchases • Multi -year Agreements

19. Basic Purchasing Activities • Contract Administration • Tracking Progress • Expediting • Progress Payments • Other Life-of-Contract Activities • Developing and Managing Long-Term Supplier Relationships • Managing Change in the Supply System

20. Assigned Reading • MIT Sloan Management Review – Achieving Excellence in Global Sourcing by Robert J. Trent & Robert M Monczka

21. Changes in the Business Environment What Are Business System Changes?

22. Changes in the Business Environment • Globalization of Trade • Deregulation in many industries • Product commonality across cultures and countries • Formation of trade blocks (NAFTA, EU) • Improved transportation • More sophisticated information and communications technology • Regulation of Banks and squeeze of credit markets • Process Orientation • Outsourcing • Best-in-class Supplier Networks

23. Supply Chain Issues • Co-ordination of Purchasing Requirements – Pooling of Purchase and Standardization • Across Departments • Across Divisions • Across Countries • Integration of Purchasing, Inventory Management and Logistics (Design for Supply Chain) • Integration of Purchasing and Engineering with Production Planning (Design for Cost)

24. Supply Chain Issues • Make or Buy • Outsourcing • Offshoring • Reciprocity Agreements: Countertrade • Quality Management and Lean Manufacturing • Cycle Time Reduction • Environmental Issues – Sustainability & Regulation • ROHS, Halogen Free

25. Barbie Example 􀂾 An icon of international outsourcing, among other things. 􀂾 Barbie has matured into a multi-billion-dollar a year industry, with sales and production on a global scale. 􀂾 Mattel Inc., Barbie’s parent company, estimates that three Barbie dolls are sold every second of every day. 􀂾 Design is performed in California. U.S 􀂾 Oil and plastic Pallet are made in Taiwan 􀂾 Her nylon hair is made in Japan; 􀂾 Her body molds are made in the U.S.; 􀂾 She is assembled in Indonesia and Malaysia; 􀂾 She is clothed in China

26. Example - Boeing

27. Strategic Planning – Global Sourcing • Vision Statement • Strategies • Long Term Action Plan • Commitment of Organizational Assets • Creates Competitive Advantage • Performance Measures • Metrics based/Score Cards

28. The initials TQRDCEB stand for: • Technology • Quality Responsiveness Delivery Cost Environment Business

29. Strategy Development • Corporate Strategies • Supply Strategies • Commodity Studies • Commodity Strategies • Individual Supplier Strategies

30. New strategic developments in purchasing Leveraged purchasing and supply strategies Global sourcing Supplier integration Early supplier involvement in new product development Reciprocity agreements and compensation agreements Environmental issues and business integrity 1. Seller’s market Buyer’s market 2. Increasing pressure on sales prices and margins leads to:

31. Supply System Strategy • Key Activities • Sourcing • Continuity • Least Total Cost • Three Flows of Supply Chain Management • Information • Materials • Funds • Manage in Both Directions

32. Supply System Strategy • Four Emerging Trends • Outsourcing • Technology Utilization • Sustainability • Risk Management

33. Guava Puree Case In class

34. Risk Identification Ties to Current Events

35. Sustainability and Risk • Survival = Risk Management • Risk Identification • Forecasting Risk • Supplier Selection Risk • Supplier Performance Risk • Logistics Risk • Inventory Risk • Ongoing Operations Risks (Business Continuity Planning) • Focus is on Both Immediate and Long Term • Formal Evaluation and Mitigation Plans

36. Scotts Miracle Gro Case • Case Argument Assignments

37. Current Events

38. Next Class • Cultural Issues in Supply Mgt • Outsourcing/Offshoring • IKEA Case In Class Discussion • Abstracts due at beginning of class • Scott’s Case – Lecture/Team Break Outs • Current Events – Bring your articles • Guest Speaker – Morgan Hartnell

39. Questions?