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ISQA 479

ISQA 479. Strategic Alliances Procurement and Outsourcing. Donut Report. Budapest Subotica Bologna. Strategic Planning. Mission Statement Vision Statement Strategies Long-Term Action Plan Commits Organizational Resources Creates Competitive Advantage Performance Measures.

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ISQA 479

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  1. ISQA 479 Strategic AlliancesProcurement and Outsourcing

  2. Donut Report • Budapest • Subotica • Bologna

  3. Strategic Planning • Mission Statement • Vision Statement • Strategies • Long-Term Action Plan • Commits Organizational Resources • Creates Competitive Advantage • Performance Measures

  4. Porter’s Five Forces Model

  5. Porter’s Five Forces of Competition • New Market Entrants • Entry ease/barriers • Geographical factors • Incumbents resistance • New entrant strategy • Routes to market • Supplier Power • Brand reputation • Geographical coverage • Product/service level • Quality • Relationships w/ customers • Bidding processes • Capabilities • Competitive Rivalry • Number & size of firms • Industry size & trends • Cost bases • Product/service ranges • Differentiation, strategy • Buyer Power • Buyer choice • Buyer size/number • Change cost/frequency • Product/service importance • Volumes, • JIT scheduling • Product & Technology Development • Alternatives price/quality • Market distribution changes • Fashion & trends • Legislative effects

  6. Characteristics of Supplier Alliances • Operational • Strategic • 3rd Party Alliances

  7. Criticality Grid: Managerial Objectives High Patent Look Ahead Strategic Alliances M Prop Tech A R K E Market Driven Market Driven T Min Admin Cost Supply Continuity Ind Std Automate Operational Alliance Commodity Low Low High INTERNAL Volume, Importance Volume, Pervasive

  8. Criticality Grid: Contract Applications High Patent Look Ahead Evergreen Agreements M Prop Tech Strategic Alliances A R K E Petty Cash Multi-Year T Purchase CardsSystems Contracts Ind Std Blanket OrdersOperational Alliances Commodity Low Low High INTERNAL Volume, Importance Volume, Pervasive

  9. Supplier Relationships • Risk and Numbers of Suppliers • Industry Standard • Custom • Supplier Performance • Managing Supplier Relationships • Interdependencies • Motivation • Reward Power • Punishment Power

  10. Supplier Relationship Goals • Long-term • Collaborative • Early Supplier Involvement • Growth Capabilities • Create Competitive Advantage

  11. Make/Buy • Products Never Make • Products Always Make • In Between Products

  12. Make/Buy • Industry Standards, Proprietary Products and Make/Buy • Procurement from Suppliers • Procurement by Manufacture • Fluid Decision • Revisit at Regular Intervals • As Economic Conditions Change • As Internal Conditions Change • Always Maintain Internal Capability

  13. Reasons to Make • Quantities Too Small • Quality Too Critical • Timing Too Critical • Trade Secrets (for a time) • Cheaper • Keep Crew Busy • Avoid Sole Source (perhaps) • Union Shop

  14. Reasons to Buy • Quantities Too Large • Supplier Quality Acceptable • Have Sufficient Lead Time • Lack of Necessary Competencies • Lack of Capacity • Cheaper • Reciprocity

  15. Outsourcing • Strategic Decision • Activity is Not Core Competency • Will, In Future Completely Depend on Suppliers • Will No Longer Maintain Internal Capability

  16. Reverse Outsourcing Increased Logistics Costs Customs Clearance Delays Long Lead Times Hidden Costs Firms Move Production from China to Mexico

  17. Outsourcing The ‘China Price’ vs the Real Price Managing Outsourced Products or Processes Increased Logistical Importance Increased Demand on Capacity Supplier Carrier What Are Our Suppliers Doing?

  18. Managing Supply Chain Sustainability and Risk: Keys to Success Lee Buddress, Ph.D., C.P.M. Robert G. Gleason Professor and Director Supply and Logistics Program Portland State University leeb@sba.pdx.edu

  19. The Importance of Supply Chain Management • How to Increase Shareholder Value • Supply Chain Management is the Key • Changes in Supply Chains • Extensive • Lengthy • Complex • Geographically Disbursed • Global Nature Creates Uncertainty`

  20. Supply Chain Risk

  21. Supply Chain Risk • Most Research Focused From Buying Firm Down Through Suppliers • The Firm Itself and the Path to Customers Should Be Included • Definitions: • Events or actions that result in a transaction or project differing negatively from budget or plan • Events or Actions that Prevent Delivery to Customers As Promised.

  22. External Supply Chain Risks:Categories • Governmental • Infrastructure • Supplier • Logistical • Terrorism • Natural Disasters • Accidents • Ethics • Price

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

  24. External Risks: Infrastructure • Transportation Equipment • Roads • Railroads • Ports • River • Sea • Airports • Congestion

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

  26. External Risks: Logistics • On Time • Freight Damage • Leakage/Shrinkage • Equipment Availability

  27. External Risks • Terrorism • Physical Harm • Personnel • Cyber Attacks • Natural Disasters • Earthquakes, Tsunamis • Weather Related • Accidents

  28. External Risks: Price • Trends • Volatility • Global Economics

  29. Internal Supply Chain Risks: Categories • Policies • Administrative Resources • Operational Activities • Organizational Resources • Ethics

  30. 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

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

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

  33. Internal Risks: Ethics • Conflicts of Interest • Supplier Relationships • Organizational Reputation

  34. .Sustainability

  35. Sustainability • Triple Bottom Line • Environmental Sustainability • Social Responsibility • Organizational Sustainability

  36. Environmental Sustainability • Non-Renewable Resource Use • Energy Consumption • Effluent Discharge • Atmospheric Emissions • Hazardous Material Use

  37. Social Responsibility • Ethics • Gender Equity • Living Wage • Appropriate Labor • Labor Relations

  38. Organizational Sustainability • Profitability • Customer Perception • Customer Satisfaction • Long-Term Viability

  39. Past Research • Sustainability and Risk Studied in Isolation • Usually Interact • Actions in One Area Create Outcomes in Others

  40. Risk and Sustainability Interactions

  41. Risk and Sustainability Supply Chain Risk Sustainability Environmental Non-Renewable Resource Energy Consumption Emissions Hazardous Materials Social Responsibility Ethics Gender Equity Living Wage Labor and Relationships Organizational Profitability, LT Viability Customer Perceptions Customer Relationships • External • Governmental • Infrastructure • Supplier • Logistical • Terrorism • Natural Disasters • Accidents • Internal • Policies • Administrative • Operational • Organizational • Ethics

  42. Risk and Sustainability Interaction Examples • Policy: Buy from Low Price Supplier • Distant Location • Risks of Lengthy Supply Chains • Social Responsibility • Refuses to Pay Minimum Wage • Reflects Badly Onto Buying Organization • Undermines Reputation With Customers • Governmental Intervention • Environmental Questions • Organizational Sustainability

  43. Risk and Sustainability Interaction Examples • Ethics • Resonates From Supplier to Internal Risks to Social Responsibility • Bribes Paid to Influence Buying Decisions • Supplier Reputation • Buying Organization Reputation • Governmental Intervention • Organizational Sustainability • Marketing • Financial

  44. Risk and Sustainability Interaction Examples • Logistical Risks • Internal Operations – Continuity • Slow Steaming • Emissions – Governmental Restrictions • 200 Mile Limit – Low Sulfur Diesel • Energy Consumption • Profitability • Steamship Lines • Buying Organizations

  45. This Research • Recognition of Internal Supply Chain Risk Creation • Intersection of Two Research Streams • Supply Chain Risk • Supply Chain Sustainability • Recognizing Interactions • Strategies to Consider Collectively

  46. Future Research • Empirical Investigation • Do Firms Recognize Internal Supply Chain Risk Creation? • Do Firms Recognize Sustainability and Risk Interactions? • Do Firms Strategize Collectively? • How Do They Do It? • Interactions are Always Interesting

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

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