SESSION VII

GLOBAL SUPPLY CHAIN

16 OCTOBER 2013

Lecturer :

DR. NOFRISEL, SE, MM

PROGRAM STUDI MAGISTER MANAJEMEN

UNIVERSITAS INDONESIA

AGENDA

Review

Conclusion

Global Supply Chain Concepts

HAL 1

Outline

The role of global supply chain

Some implications

HAL 2

1 OVERVIEW

HAL 3

Supply Chain Stages (as remains)

manufacturer suppliers distributors retailers customers

supplier

supplier

DC

DC supplier

R

R

R

R

R

R

plant

C

U

S

T

O

M

E

R

S

HAL 4

Supply Chain Structure

Tier 1

Tier 2

Supplier of materials Supplier of services

Tier 3

Customer Customer Customer Customer

Distribution

center Distribution

center

Manufacturer

HAL 5

6

Information, product, service, financial and knowledge flows

Ma

teria

ls

En

d C

on

su

mers

Capacity, information, core competencies, capital, and human resource constraints

Supplier Network

Market

Distribution Procurement

Manufacturing

Integrated

Enterprise Distribution

Network

Relationship Management

Generalized Supply Chain Model

Material Flow

Information Flow

HAL 6

LOGISTICS

2 GLOBAL SUPPLY CHAIN CONCEPTS

HAL 7

Current Issues in Operations and Supply Chain Management

1. Coordinating the relationship between mutually

supportive but separate organizations

2. Optimizing global suppliers, production, and

distribution networks

3. Managing customer touch points

4. Raising senior management awareness of

operations as a significant competitive weapon

5. Sustainability and the triple bottom line

HAL 8

International Supply Chains

International distribution systems Manufacturing still occurs domestically, but distribution and typically

some marketing take place overseas.

International suppliers Raw materials and components are furnished by foreign suppliers

Final assembly is performed domestically.

In some cases, the final product is then shipped to foreign markets.

Offshore manufacturing Product is typically sourced and manufactured in a single foreign

location

Shipped back to domestic warehouses for sale and distribution

Fully integrated global supply chain Products are supplied, manufactured, and distributed from various

facilities located throughout the world.

HAL 9

Forces toward Globalization

Global market forces.

Technological forces.

Global cost forces.

Political and economic forces.

HAL 10

Global Market Forces

Pressures created by foreign competitors, as well as

the opportunities created by foreign customers.

Presence of foreign competitors in home markets

can affect their business significantly.

Much of the demand growth available to companies

is in foreign and emerging markets.

Increasing demand for products throughout the

world through the global proliferation of

information.

HAL 11

Global Market Forces

Particular markets often serve to drive

technological advances in some areas.

Companies forced to develop and enhance

leading-edge technologies and products.

Such products can be used to increase or

maintain market position in other areas or

regions where the markets are not as competitive

HAL 12

Technological Forces

Related to the products

Various subcomponents and technologies available in different regions and locations

Successful firms need to use these resources quickly and effectively.

Locate research, design, and production facilities close to these regions.

Frequently collaborate, resulting in the location of joint facilities close to one of the partners.

Global location of research-and-development facilities driven by two main reasons: As product cycles shrink, locate research facilities close to

manufacturing facilities.

Specific technical expertise may be available in certain areas or regions

HAL 13

Global Cost Forces

Often dictate global location decisions

Costs of cheaper unskilled labor more than offset by the increase in other costs associated with operating facilities in remote locations.

In some cases cheaper labor is sufficient justification for overseas manufacturing.

Other global cost forces have become more significant

Cheaper skilled labor is drawing an increasing number of companies overseas.

HAL 14

Political and Economic Forces

Exchange rate fluctuation

Regional trade agreements

Tariff system

Trade protection mechanisms

More subtle regulations

Local content requirements

Voluntary export restrictions

Government procurement policies

HAL 15

Four Types of Supply Chain Strategies

1. Efficient supply chains: utilize strategies aimed at

creating the highest cost efficiency

2. Risk-hedging supply chains: utilize strategies

aimed at pooling and sharing resources in a supply

chain to share risk

3. Responsive supply chains: utilize strategies

aimed at being responsive and flexible

4. Agile supply chains: utilize strategies aimed at

being responsive and flexible to customer needs

HAL 16

Logistics

Logistics: the art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities

International logistics: managing these functions when the movement is on a global scale

Third-party logistics company: an outside company used to handle logistics functions

HAL 17

Issues in Facility Location

Proximity to customers: makes rapid delivery

easier

Business climate: can include presence of similar-

sized businesses, businesses in the same industry,

and other foreign companies

Total costs: object is to minimize overall cost

Infrastructure: adequate road, rail, air, and sea

transportation along with energy and

telecommunications

HAL 18

Issues in Facility Location Continued

Quality of labor: educational and skill levels must match

needs

Suppliers: proximity of important suppliers supports lean

production

Other facilities: location of other facilities can influence

a location decision

Free trade zones: a closed facility into which foreign

goods can be brought without being subject to the normal

customers requirements

HAL 19

Issues in Facility Location Continued

Political risk: risks in both the country of location

and the host country influence the decision

Government barriers: barriers in many

countries are being removed

Trading blocs: firms locate within a block to take

advantage of new markets or lower total cost

HAL 20

Issues in Facility Location Continued

Environmental regulation: these impact a certain

industry in a given location and must be included in

the decision

Host community: host communitys interest is

part of the evaluation process

Competitive advantage: the location should

provide the company with a competitive advantage

HAL 21

Lean Supply Chains

Value stream: the value-adding and non-

value-adding activities required to design,

order, and provide a product or service

Waste reduction: the optimization of the

value-adding activities and the elimination of

non-value-adding activities

HAL 22

Lean Supply Chain Design Principles

1. Lean layouts

a. Group technology

b. Quality at the source

c. JIT production

2. Lean production schedules

a. Uniform plant loading

b. Kanban production control system

3. Lean supply chains

a. Specialized plants

b. Work with suppliers

c. Building a lean supply chain

HAL 23

Components of a Lean Focused Supply Chain

Lean suppliers Able to respond to changes

Lower prices

Higher quality

Lean procurement Key is automation (e-procurement)

Suppliers must see into the customers operations and customers must see into their suppliers operation

Lean warehousing Eliminate non-value-added steps and waste in storage

process

HAL 24

Components of a Lean Focused Supply Chain Continued

Lean logistics Optimized mode selection and pooling orders

Combined multi-stop truckloads

Optimized routing

Cross docking

Import/export transportation processes

Backhaul minimization

Lean customers Understand their business needs

Value speed and flexibility

Establish effective partnerships with suppliers

HAL 25

3 CONCLUSION

HAL 26

SUMMARY

Types of global supply chains

Various forces compelling companies to develop global supply chains

Both advantages and risks are inherent in global supply chains

Unknown-unknown risks to known-unknown risks

Variety of strategies to deal with the risks

Issues in global supply chain management

Concepts of: international and regional products

centralized versus decentralized control

regional logistics differences HAL 27

THANKYOU nofrisel@yahoo.com

Dr. Nofrisel, SE, MM

Jakarta 16 October 2013

HAL 28