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Management
Mohsen tabatabaie
85125073
Global Supply Chain[7]
• Definition :
An integrated process where several business entities
such as suppliers, manufacturers, distributors, and
retailers work together to plan, coordinate and
control materials, parts, and finished goods from
suppliers to customers. One or more of these
business entities operate in different countries.
Practicality and Usefulness
• 2. PORT ISSUES:
• If you are shipping by ocean, you absolutely need to consider capacity
issues and route your goods accordingly.
• Structures
– Supplier
– Distributor
– Logistics Requirements
• Processes
• Linkages of activities
– Buying
– Making
– Moving
MAJOR ENTITIES[8]
Retail
Supplier Manufacturer Distributor Customer
Outlets
• What is outsourcing?
• What parts of my supply chain should I keep "in-house" and what parts to
outsource?
• What if a third party has a higher variable cost but a lower fixed cost than in-
house production?
• Advantages
– Focus on core competencies – target your resources at what you do best
– Reduce costs – a third-party provider may have greater economies of scale
than you
– Access the third-party provider’s expertise
• What can you outsource?
– Transportation and related services
– Sales and marketing in target market
Outsourcing Configurations[12]
• Vertical Integration
• Arm’s-length purchases from outside suppliers
• Japanese keiretsu relationships with suppliers
New Product Pipeline Design[9,10]
Customs Customs
Carriers
Shipping Lines
Port Operators
Terminal Operators
Importer
Warehousing/Wholesale Warehousing/Wholesale
Retailer
DOE/Megaports Initiative
ISPS
Intelligence
Function
International Logistics [9,10]
• Facility Locations
• Sourcing
• Distribution
Facility location[6]
Physical Distribution[9,10]
4. P. O. Confirmation 2. Quotation
13. Payment Order 6. Ship Order
/ Instr.
14. Remittance
Buyer 15. Import 12. Export Supplier
Documents Documents
st Bank
Bank ife 7a nstr .+
an .M r Order/I
.M an
ife 5. Shippe oice 5. Shipper Order/Instr
7a Air Freight st Inv + Invoice
16. Proof of + Packing List
Delivery Terminal at Terminal
Destination st at Origin
anife
7a. M
Surface Carriers
• Transit time
– Important for highly perishable products
– Important when product is needed ASAP
• Predictability of delivery by a specific date
– Important when buyer needs product by specified date
• Cost of shipping per dollar of product value
– Important to economize on costs with bulky
commodities
International Inventory Issues [9,10]
Government
Transaction
Logistics
An Oversight System Implements and Enforces
Rules of Behavior Within and Across Layers
Logistics Layer
Customer
Truck Carrier Truck Carrier
U.S. Port Ocean
Rail Carrier Carrier Foreign Port
Global Business Issues[13]
• Export licenses
• Denied parties list
Time [13]
• Lead time
• Cycle time
• Transit time
• Export license approval cycle
• Customs clearance
Impact of Duty / Drawback, Taxes, Local
Content & Offset Trade [9,10]
• Drawbacks of an EMC
– Most are small, limited financial resources
– They look for sure profits – may see your product as
too risky
– Most EMCs don’t cover Canada
• Cost: 10-15% of value of shipment
Four marketing strategy challenges[16]
• E-Commerce
• Internet
• Intranets
• Extranets
• Supply chain management software
Supply Chains and the Internet [8]
• Integrate
• demand planning,
• production forecasting,
• materials requisition,
• order processing,
• inventory allocation,
• order fulfillment,
• transportation services,
• receiving, invoicing, and payment.
Example [17]
Example
Production Sales Representative (Brussels) Factory (Hong Kong)
Available Cash
• The supply chain is complex, globally integrated and extends beyond the
enterprise to third parties.
• Changes to the supply chain are being driven by company efforts to deliver
better customer value, reduce costs, increase responsiveness and resiliency.
• IT duties and customs barriers are factors in internal business optimization and
location decisions.
• New challenges are on the horizon as governments develop strategies to
address security concerns.
• Security and efficiency are mutually reinforcing.
• Supply Chain complexities make government-industry partnership essential.
• Traditional trade facilitation issues and platforms provide an opportunity to
expand global IT trade and also address new security concerns.
Use of TQM [15]
risk analysis in global Supply chain network
environment [14]
Supply chain risk management [3]
• example
• the firm’s objective is to maximize its global after-tax profit subject to capacity constraints in each plant
and demand requirements in each market.
• to make an open/shut decision of plants and shipment quantities from such plants to targeted markets
• uncertainties in market demand, volatility in exchange rates, differing country tax rates, and varying
import tariffs at different ports of call even within a country
Supply chain risk management [3]
the Bridging Role Typology [5]
the Bridging Role Typology [5]
Global supply chain design models[6]
Global supply chain design models[6]
Decision models in global supply chain
management [18]
• strategic, tactical, and operational SCM decisions
• Five illustrative models
9managing buyer–supplier behavior
9sourcing
9integrated operations
9marketing
9logistics
different modeling approaches [18]
Pro Con
• Heavy costs
• Maximum control
Use Strategic Alliances
Pro Con
• Convenience • Unreliable alliance-prone
• Large areas covered
Partner With An Asset-Based Third-Party
Pro Con
• Operational standards • Ignorance of complex
customs regulations
• Uniform identity and
• Lack of connections
marketing strength
• Local economic downturns
• Dedicated mgmt structure
Partnership With a Global Integrator of Logistics
Pro Con
• Customer friendly • Limited use
• In-country knowledge
• Less control
• True information systems
integration
• Uniform standards
A Real World Example
Oregon
Assembly/Test locations
BPSM
Japan
• 11 major logistics sites
Folsom Ireland
LAX X-Dock
SFO X-Dock
Miami
China
Supply Chain Organizations
X-Dock Taiwan
Arizona
• Materials
Colorado
– Indirect / Direct Materials
New Mexico Israel
Philippines
– Subcontractor
Costa Rica
Malaysia Malaysia
• Customer Fulfillment,
DNS BPSM
Planning, and Logistics
1-Worldwide Manufacturing and Distribution Supply
Chain Design for a Large Computer Hardware
Company[13]
• Goals
• Reduce cost
• Improve ROA
• Simplify the worldwide supply chain
• Objectives
• Redesign the entire worldwide manufacturing and distribution supply chain
• Determine how many plants and where they should be located
• Determine what process technologies should be in each plant
• Specify the loading on each plant and the service area for each plant
• Results:
• Recommended plant closings, re-chartering and re-tooling
• Reduced number of facilities from 33 plants to 12 plants
• Created three relatively self-contained customer-oriented supply zones: Americas, Europe,
Pacific Rim
• Estimated benefits:
– Reduced manufacturing / logistics cost by $375 Mil. annually
– Improved Corporate ROA by 3.2 points
• Recommendations have been implemented and benefits have been captured
Global supply chain structure before
study [13]
Global supply chain structure after
implementation
2-Global Spare Parts Network [13]
• Global Spare Parts Repair and Distribution Networks for a Hardware Manufacturer
• Goals
• Reduce Cost
• Improve ROA
• Objectives
• Redesign the entire global spare parts repair and distribution networks
• Determine how many parts distribution centers are needed, where located and what service
areas
• Determine how many repair centers are needed, where located, repair menu and service areas
• Results
• Recommended a mix of decentralized fast repair (menu) and complex central repair
• Recommended new stocking strategy
• Reduced the number of sites from 34 to 17 worldwide
• Benefits estimated / now being captured:
– Reduced spare parts repair and distribution costs by $81 Mil. annually
– Reduced spare parts inventory by $74 Mil.
– Improved Services ROA by 7.1 points
Picture of closed-loop service parts
repair and distribution flow [13]
3-Latin and South America Manufacturing and Distribution
Strategy for a Manufacturer of Commercial Fluids [13]
• Goals
• Reduce Cost
• Improve ROA
• Issues
• Existing plants make full product line
• Existing plants are autonomous and serve only their local market
• Markets are growing dramatically
• Trade is becoming freer
• Questions
• Should each plant specialize on fewer products and then serve a wider geographic area?
• Can you get there from here?
• Results
• Identified the opportunity to save $8 Mil. on $100 Mil. annual supply chain expenditure
• Defined the manufacturing locations where capacity should be expanded
• Identified one uncompetitive plant (Market can be supplied more cost effectively from other sources)
• Highlighted two plants of marginal competitiveness and defined the areas and magnitude of cost
improvement necessary to make them more competitive
• As a result of the study, significant cost reduction opportunities are actively being pursued at several plants
• The GSCM® model will be used again shortly to re-calibrate the entire supply chain with updated cost,
capacity and international trade information
Map showing Americas supply chain
locations [13]
4-Single Product Supply Chain [13]
• New Product Global Pipeline Design
• Questions:
• How should this new product fit into the existing
supply chain?
• What is the impact on capacity and fixed cost?
• At what point (demand) should a second source be
added? Where?
• At what point (demand) should a third source be
added?
Schematic of a typical new product bill of material structure with associated
material flows showing candidate locations: [13]
The Laptop to Europe Case
• Laptops are made in China
• Sales through Internet and Telephone in local sales
offices in Europe
• Inventory in Shanghai
• Orders are placed to Warehouse by Customer’s head
office in Hamburg untill 18.00 hours.
• Orders contain:
– Main type
– Software requirement
– Accessory requirement
The Laptop to Europe Case
• Warehouse starts operating at 0600 local
time.
– Orders are translated into pick orders and software loading orders
– Routing through warehouse is Main machine and Software loading
stations and Accessory route.
– Orders are joined and undergo quality control
– The cartons are labeled
• Delivery to customers
References
• [1] Supply Chain Management, M. Eric Johnson, David F. Pyke, The Tuck School of
Business Dartmouth College, Hanover, NH 03755, 603 (646) 2136, July 27, 1999
• [2] global operations strategy, charles j corbett, management 240G-1,240G2
• [3]Mark Goh et al., A stochastic model for risk management in global supply ...,
European Journal of Operational Research (2007), doi:10.1016/j.ejor.2006.08.028
• [4] Jiao, X-You, A-Kumar, An agent-based framework for collaborative negotiation in
the global manufacturing supply chain network, Robotics and Computer-Integrated
Manufacturing 22 240 (2006) 239–255
• [5] P.H. Andersen, P.R. Christensen, Bridges over troubled water: suppliers as
connective nodes in global supply networks, Journal of Business Research 1262 58
(2005) 1261–1273
• [6] M.J. Meixell, V.B. Gargeya, Global supply chain design: A literature review and
critique, Transportation Research Part E 41 (2005) 531–550
• [7] Russell, S. Roberta and Taylor, W. Bernard. Operations Management: Third Edition,
Devan Howe, OM 345, Boise State University,May 3, 2002, global supply chain
• [8] Yi-chen lan and Bhuvan Unhelkar editors,Global integrated supply chain systems,
IDEA group publishing(2006)
• [9] Gourdin Kent N., Global logistics management, Blackwell publisher (2001)
References
• [10] Donald F. Wood…[et al.], international logistics,Chapman&Hall publisher(1994)
• [11] Managing a Global vs. Domestic Supply Chain - Feature Article - World Trade, by
Andrea MacDonald, July 6, 2006
• [12] Robert J.Trent, Robert M. Monczka, Achieving Excellence in global
sourcing,MITSloan management review, VOL 47 NO1, 2005
• [13] Copyright © 1999 - 2005 Global Supply Chain Associates (GSCA) URL:
http://www.gsca.com
• [14] S. Balan et al. Risk analysis in global supply chain network environments/
European Journal of Operational Research (2006)
• [15] H.L. Lee, S. Whang, Higher supply chain security with lower cost: Lessons from
total quality management/ Int. J. Production Economics 96 (2005) 289–300
• [16] D.J. Flint, Strategic marketing in global supply chains: Four challenges / Industrial
Marketing Management 33 (2004) 45–50
• [17] J. Liu et al. A case study of an inter-enterprise workflow-supported supply chain
management system / Information & Management 42 (2005) 441–454
• [18] R. Narasimhan, S. Mahapatra, Decision models in global supply chain management
/ Industrial Marketing Management 33 (2004) 21–27