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Global Supply Chain Management

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Title: Global Supply Chain Management


1
Global Supply Chain Management
  • The Stories Under the Veil of
    Slogan
  • Framework Details

Xilong Liu
2004.5
2
Contents
  • Why choose the title for the presentation?
  • intention
  • What will be discussed?
  • framework
  • Which will be offered in each part?
  • details

3
Intention
  • Academic researches
  • Eli Broad Graduate School of Management
  • The Stanford Global Supply Chain Management Forum
  • European Forum on Global Supply Chain management
    at Eindhoven University (Holland)
  • Hong Kong Logistics and Supply Chain Forum
  • Managerial Applications
  • 2004 Boao Forum for Asia BFA

4
Framework
  • Integrating the two areas of international
    business and supply chain management.
  • Consists of four main areas
  • Supply management
  • Logistics
  • Operations management
  • Marketing

5
Framework
The hexagon of global supply chain management
6
A global supply chain framework
  • The 21st Century Logistics framework
  • Designed by department of marketing and
    supply chain management, Eli Broad college of
    business, Michigan State University.
  • 2004 U.S. News ranking had MSUs supply
    chain management program No. 1 for undergraduates
    and No.2 for graduates after MIT.
  • Studying the relationship between supply
    chain competencies and performance

7
The 21st Century Logistics framework
8
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9
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10
continued
11
A measurement model for both firm and supply
chain performance
  • 13 logistics and supply chain variables
    representing five key performance areas.
  • Customer service
  • Customer satisfaction product
    flexibility delivery speed
  • Cost management
  • Functional and integrated logistics and
    supply chain cost
  • Quality
  • Delivery dependability responsiveness
  • order flexibility delivery flexibility
  • Productivity
  • Information systems support order fill
    capacity
  • shipment notification
  • Asset management
  • Fixed assets working capital

12
application
  • Dada gathered from U.S., ANZ for different
    business environments.
  • Using regression models
  • Managers need to understand the relative
    importance of the various competencies in
    particular operating arena to enhance
    performance.
  • From an academic standpoint, the model appears to
    be robust across size and business scale
    differences.
  • Future research will be to further refine and
    clarify the model and its measures so as to
    provide clearer insights into the competency
    relational across more operation and cultural
    settings.

13
Supply managementglobal
sourcing strategy and competitive advantage
  • Managing your supply chain for global
    competitiveness
  • Stanford graduate school of business
  • 2004 august 22-27
  • Led by the worlds leading experts in global
    supply chain integration
  • Hau L. Lee Seungjun Whang
  • Come to Stanford, in the heart of Silicon
    Valley, and gain the tools and insights to
    mobilize your whole organization in building
    supply chain excellence.

14
Sourcing importance
  • Peter Drucker
  • Sourcing and logistics would remain the darkest
    continent of businessthe least exploited area of
    business for competitive advantage.
  • Global sourcing strategy
  • Logistics identifying which production units will
    serve which particular markets and how components
    will be supplied for production.
  • The interfaces among RD, manufacturing and
    marketing on a global basis.
  • Global sourcing as a business practice
  • Toyota is a good case

15
Sourcing
  • Intrafirm sourcing
  • 34 of world trade is managed by multinational
    companies on an intrafirm basis
  • outsourcingcontractual basis
  • Problems
  • Manufacturing costs
  • The costs of various resources
  • Exchange rate fluctuations
  • Availability of infrastructure
  • (transportation, communication,
    energy)
  • Industrial and cultural environments
  • Working with foreign host government
  • Operational problems

16
Long-term consequences
  • Outsourcing base on an arms-length or a
    strategic partnership basis.
  • Benefits of virtual network
  • Easy option to access the world markets
  • Reducing investment requirement improve
    ROE
  • Dependence
  • Operating in an uncertain business
    environment
  • Dependence on independent suppliers
  • IBM is a vivid case declining for this
  • Gradual loss of design and manufacturing
    abilities

17
Global sourcing in an unstable world economy
  • 1997 the financial crisis in Asia
  • 2001 the terrorist attack on America
  • 2002 Argentina's financial crisis
  • 2003 SARS spreading
  • Localized procurementlocalization strategy
  • Shifting production and procurement abroad to
    match revenues in foreign currency
  • A number of new questions beg for answers

18
Summary and solutions
  • Global sourcing strategy requires close
    coordination of RD, manufacturing, and marketing
    activities on a global basis
  • Modular production
  • Easy technology transfer making
    decentralized/localized production
  • feasible without losing the benefits of
    global integration
  • Attain strategic flexibility in sourcing
  • Company structure including a combination
    of quasi-hierarchical and
  • a pure hierarchical governance structure
    for different activities or
  • operations. (Teede et al. Dynamic
    capabilities and strategic
  • management)

19
Global sourcing using online reverse auctions
  • B2B E-business
  • It became a key method for both globally sourcing
    engineered components and as a tool to bargain
    with suppliers.
  • Key theoretical foundations supporting the use of
    online reverse auctions include
  • Lower purchase prices result in reduced costs.
  • Total cost RFQs represent actual total
    costs.
  • Qualified suppliers are interchangeable.
  • Costs are external to the buyer, rather than
    internally generated
  • Suppliers benefit from participating in online
    reverse auctions.

20
11 key issues in global supply base management
  • 1. The importance of trust in buyer-supplier
    relationship
  • A detailed formal evaluation and selection
    of potential
  • suppliers with a proven track
    record
  • B-S involved in a project team
  • 2. Communication is key
  • Identifying information required and
    providing it
  • 3. The personal aspect of supply base management
  • 4. Maintaining positive B-S relationship in
    difficult economic times
  • 5. One size does not fit all
  • 6. Supply chain design we are all in this
    together

21
continued
  • 7. Measuring supply base performance
  • 8. Sharing accurate information making sure
    that everyone is on the same page
  • 9. Data represent different things at different
    times to different people
  • 10. Reverse auctions can your organization
    really afford them?
  • 11. Do we have the right people to do the job?
  • Human factor is important

22
Logistics managementGlobal market segmentation
for logistics services
  • Two research questions
  • What logistics service factors account for in
    business customer satisfaction across national
    borders?
  • How do these differences reflect distinct
    segments in the global logistics services market?

23
LSQlogistics service quality
  • Unobservable but perceived customers value

24
LSQ segmentation
  • Satisfaction levels differ across customer
    segments due to the customization of LSQ
    dimensions.
  • Three types of market segments
  • Horizontal segments that apply to all customers
    worldwide (global)
  • Horizontal segments that exist across national
    borders (for example, within a specific region)
  • Vertical segments that exist within a specific
    national market

25
Research propositions
  • P1 Horizontal market segments exist such that
    different customer groups satisfaction level
    responses are driven by the same sets of LSQ
    dimensions of perception of order placement
    activities and perception of order receipt and in
    the same process manner.
  • P2 Horizontal market segments exist such that
    customers with similar organizational
    characteristics place similar emphasis on the LSQ
    dimensions of perception of order placement
    activities and perception of order receipt.
  • P3 Vertical market segments exist such that the
    effects of dimensions of LSQ on customers
    satisfaction level response are moderated by
    national and regional variables.

26
Factors influencing customers preferences for
global logistics services
27
Benefits
  • First, costs can be reduced by avoiding redundant
    or superfluous logistics service offerings
    through the customization of logistics offerings
    for specific segments.
  • Second, this same customization of logistics
    models enhances firm revenue through increased
    customer satisfaction levels, which in turn
    increase lifetime customer value to the firm.
  • Third, firms can benchmark externally and
    internally on specific components of logistics
    services.

28
understanding
  • To benefit from these outcomes, global
    logistics providers must understand
  • how customer preferences differ across LSQ
    elements.
  • how these elements influence satisfaction levels.
  • how these relationships are moderated by cultural
    and organizational differences.

29
Operations managementdecision model
in global supply chain management
  • Five models are discussed in managing buyer
    -supplier behavior, sourcing, integrated
    operations, marketing and logistics in global
    SCM.
  • We focus our attention on these models because
    they address the upstream and downstream aspects
    of SCM and illustrate different modeling
    approaches.
  • the models relate to (a) investment implications
    of innovation-based competition between buyer and
    supplier, (b) bidding by a prospective supplier
    of a product, (c) bid evaluation and supplier
    selection by a buyer dealing in multiple
    products, (d) integrated operations in a supply
    chain, (e) market integrated distribution.

30
Buyer-supplier behavior model
  • The objective functional of supplier S until the
    buyer B successfully innovates is given by

31
Buyer-supplier behavior model
  • The objective functional of buyer B is the
    expected gain from innovation, given by

32
An institutional analysis of supply chain
innovations in global marketing channels
  • background
  • What might account for the relative ease of
    implementing supply chain innovations among
    domestic U.S. partners and for the relative
    difficulty of deploying the same technology among
    global distribution partners?

33
A model of supply chain innovation in global
marketing channels
34
Supply chain innovations
  • Supply chain innovations combine developments in
    information and related technologies with new
    logistics and marketing procedures to improve
    operational efficiency and enhance service
    effectiveness.
  • Innovations include ECR (efficient consumer
    response), CR (continuous replenishment),
    automated ordering utilizing scanner data, and
    many other technology-enhanced processes and
    procedures in the out-bound supply chain.
  • Point-of-sale (POS), CR system transform a
    traditional push distribution channel into a
    demand pull system.

35
POS
36
A model of supply chain innovation in global
marketing channels
37
Institutional arrangements
  • an efficient new IA enables the parties not only
    to maximize the economic value from an innovation
    but also to equitably share the joint profits
    that are generated.
  • Effective measurement is critical for contract
    feasibility since parties must be able to measure
    costs incurred and value received.
  • a distributor might own and operate the
    centralized warehouse while the retail chain
    might be the most logical ownerinvestor for a
    different problematic asset, such as the truck
    fleet, associated with the joint POS/CR system.
  • The IA utility of norms such as information
    sharing (willingness to exchange proprietary
    information), flexibility (willingness to adapt
    procedures), and solidarity (desire to maintain
    relationship)

38
A model of supply chain innovation in global
marketing channels
39
Institutional environment
  • Regulative element refers to the demands of
    governments and regulatory bodies to comply with
    laws and other requirements.
  • two basic mechanisms of imposition and
    inducement such as subsidies, tax, tariff, or
    other concessions.
  • Normative element refers to a societys values
    and norms that direct behavior through social
    obligations and expectations through the
    mechanisms of authorizing and acquisition.
  • Authorizing involves the development of
    socially appropriate codes of conduct while
    acquisition refers to mimicking the behaviors of
    other firms that are deemed legitimate.

40
continued
  • Culturalcognitive element refers to the socially
    mediated construction of a common framework of
    meaning that provides templates and scripts for
    action.
  • two mechanisms, imprinting and bypassing .
  • Imprinting is organizational inertia where
    past practices are sacrosanct .
  • bypassing occurs where actors are so
    highly socialized into their role expectations
    that habitualized responses bypass formal
    organizational controls.

41
Global exchange problems
  • The specific characteristics of a global exchange
    may require such new investments and activities
    that the partners will require substantial
    contract, ownership, and social safeguards before
    adopting the innovation.
  • a global channel may suffer from a fragile IE in
    terms of regulatory, normative, and
    culturalcognitive elements that prohibit the
    parties from developing a new IA.

42
Problems
  • Regulatory problems in global channels
  • China underdeveloped infrastructure
    government regulations
  • regional protectionism FTZS
    tax
  • Normative problems in global channels
  • Japan respect traditional practices
    strong loyalty
  • Cognitive-cultural problems in global channels
  • America individualism low-power weak
    uncertainty avoidance
  • Japan collectivist high-power
    strong uncertainty avoidance
  • China guanxi and personal connection
  • WTO will make chinas IE become gradually more
    supportive of supply chain innovations.

43
The intersection of research areas
  • Supply chain management
  • Strategy management
  • Marketing management
  • Institution
  • E-commerce
  • any other business and management areas
  • MANAGEMENT SCIENCE SPECIAL ISSUES
  • Marketing and Operations Management Interfaces
    and Coordination April, 2004
  • E-Business and Management Science
  • October and November, 2003

44
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46
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47
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