Download - Lecture 5 industry studies student
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Industry Studies: Consumer Goods Industry
Topic: Leveraging a Global Supply Chain
Topic Number: 5
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2
Overview
Organisations operating within the consumer goods industry are required to source and make products globally in order to take advantage of efficiencies around the world. Despite, the many advantages of global sourcing in can be a complex task for organisations to coordinate and ensure the smooth running of an operation.
In today’s lecture we will explore the dynamics of a global supply chain and how organisations are able to efficiently move materials and products around the world.
We will also explore the latest trends and techniques in this area that enable organisations to get a competitive edge.
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3
Learning Outcomes
• Determine and be able to discuss the dynamics of a global supply chain
• Critically evaluate the issues relating to vertical integration of a supply chain
• Evaluate and articulate the changing nature of distribution approaches due to technological advancements
• Identify and describe the advantages and disadvantages of the different distribution methods
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Importance of Supply Chains
Supply chains cannot tolerate even 24 hours of disruption. So if you lose your place in the supply chain because of wild
behavior you could lose a lot. It would be like pouring cement down one of your
oil wells. Thomas Friedman
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A complex…
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What is a global supply chain?
International logistics is the management of the flow of
materials, parts, supplies and other resources from suppliers
to the firm; the flow of materials, parts, supplies and
other resources within and between units of the firm
itself; and the flow of finished products, services, and goods from the firm to customers.
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Domestic vs International Logistics
Distance involved in shipping
Number of transport modes
involved
Regulatory context
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International Logistics and Materials Management
Finished Products,
Services, and Goods
Suppliers
Firm
Customers
Materials, Parts,
Supplies, and Other
Resources
Materials Management
Physical Distribution
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Do you know where an aeroplane is made?
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Elements of a global supply chain?
With the supply chain typically accounting for 80 per cent of total business costs and driving working capital performance, it is a common goal to create a more
efficient supply chain to improve profitability.
Source: Deloitte, 2014
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Interactive ExceriseGo to the Deloitte website:
http://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Multimedia/Real%20Estate/31570apSupplyChain.swf
Go through each section to understand the elements of the global supply chain
Source: Deloitte, 2014
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Supply Chain Survey: Key Findings
Source: PWC, 2014
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Strategic Context for International Supply Chains
Superior Value Business Strategy
Production Processes Production Technologies
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What is a global supply chain strategy?
Source: Slack & Lewis, 2011
Activity of strategic
importance?
Does company
have special
knowledge?
Is company’s performance
superior?
Is operations performance improvement
likely?
Explore outsourcing
Explore keeping this activity in-house
No No No No
Yes YesYes Yes
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Generic Sourcing Strategies
Source: Slack & Lewis, 2011
Con
trib
uti
on
to C
om
peti
tive
Ad
van
tag
e
Relative Capability PositionWeaker Stronger
Not
crit
ical
Cri
tica
l
Invest to perform internally
(if high potential for opportunism)
Outsource(if possible to mitigate risk of
opportunism)
Perform internally to develop
(if high potential for opportunism)
Outsource(if possible to mitigate risk of
opportunism)
Outsource(if possible to mitigate risk of
opportunism)Keep internal
(if lack of capable suppliers and spin-off
not feasible)
Outsource(if possible to mitigate risk of
opportunism)
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A re-cap: Complexities of International Operations
Managers must decide where and how to
obtain the resources the firm needs to
produce its products.
Resources Location Logistics
Managers must decide where to build admin facilities, sales
offices and plants; how to design them;
and so on
Managers must decide on modes of transportation and
methods of inventory control.
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Benefits of Global Supply ChainConsider the comparative advantage theory
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Benefits of Global Supply ChainGain the best supplies at:
Best PricesExcellent Standards
Quickly & Efficiently
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Benefits of Global Supply ChainSignificant cost saves
Where would you produce?
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Benefits of Global Supply ChainExtremely efficient: Always on
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Benefits of Global Supply ChainCompetitive advantage
Ability to source more unique products/offerings: consider VRIN framework
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Costs of Global Supply ChainSignificant Investment
Time Money Resources
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Costs of Global Supply ChainBottle-necks & Inefficiencies: Bull Whip Effect
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Costs of Global Supply ChainMarket Instability
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Issues with 3rd party suppliers
Lack of controlLack of
accountabilityLack of
oversight
Price increases
Reputational consequences
Consumer backlash
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Issues with 3rd party suppliers
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Reputation Damage
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End of presentation
© Pearson College 2013