ISQA 407Introduction to Global Supply & Logistics Management

Winter 2012

Portland State University

Agenda

• Quick review of last class• Lecture

• SCM Coordination – Bullwhip effect

• Pagell & Wu Presentation• Lecture

• SCM Coordination• Sustainability

• Final Exam Potential Questions• Q&A

Some Performance MeasurementsCustomer Service / Internal efficiency / Flexibility / NPIQuality – PPM, FPY, IC, FMEACost to Target – OPEX & ProcurementOn Time DeliveryFlexibility – cycle time improvementProductivity Improvement – output / hourSupplier’s Management ProgramProgress Toward Certification ISO 14,000Technology roadmap (products & IT infrastructure)Inventory turnsReturn rateCash-to-cash cycle timeUtilization / capacity

Measuring Performance – Cont.Forecast AccuracyFormal Sharing of Information – Markets & customersMinimize expediting and Schedule ChangesFocus on Total Cost - Not PriceOn Time A/P & A/RProgram to Manage Supplier Relationships

– NPI -> ObsolescenceContractual Protection and LiabilitiesPeriod Expenses – VariancesProject milestones / cycle time of projectsNumber of SKUs

SCOR Model & scorecard : (P. 152, 159)

7 Deadly Sins of Performance Measurements

1. Vanity – cognitive dissonance (IBM PC)2. Provincialism – only measure within an org group3. Narcissism – measure from your point of view, not the

customer4. Laziness – We know best5. Pettiness – only a small component of what matters6. Inanity – Measure what you want to change7. Frivolity – Not taking metrics seriously

IT systems

EDI : Several versions of Electronic Data Interchange exist: PO’s, invoices, advance shipment, and backorder status – Very efficient

ERP : Enterprise Resource Planning – includes operations, finance, HR, etc. (SAP, Oracle)

Procurement Systems: AVLs, PO’s, BOM’sAdvanced Planning & Scheduling : Capacity planning

across factories What-if” analysisTransport systems : Analyzes which method is best

base on your input of rates and lead-timesDemand Planning : Another “What-if” tool based on

historical and future forecasting

IT systems

Customer Relationship Management : (CRM) Sales force automation – potential orders and ATP (Siebel)

Supply Chain Mgnt : Where and what throughout the supply chain, Point of Sale Reporting (I-2)

Inventory Systems : Calculate EOQ based on supplier and capacity information

Transport Scheduling : Provided by UPS & Fed-x for tracking and planning

Warehouse systems : Picking orders, shipping, inventory locations, & backlog

SCM CoordinationBullwhip effect: small effects at the beginning of the

SCM have dynamic effects the farther you go up the value stream exhibit 6.1 (p. 172)

Factors that cause the effect:Demand Forecasting: looking at orders received or backlog

versus end customer dataOrder batching: orders place due to EOQ vs. real time

demandProduct rationing: Allocation creates double ordersProduct Pricing: marketing causes abnormal patterns with

“specials”

Collaborative planning, forecasting, & replenishmentBest practices : guidelines for sharing informationCollaborative Planning: Build a joint business plan

and transparent IT information flowCollaborative Forecasting: create multi-function

forecast & make transparentCollaborative Replenishment: generate real-time

orders to meet customer demandWhere to start? Value stream mapping / Lean

Sustainable Sourcing

CSR: Covers several principles- Community – for you and your suppliers- Diversity – MWBE- Environment – Upstream & Downstream- Ethics – code of conduct- Financial responsibility – transparency- Human rights – avoid complicity in abuse- Safety – ISO14000

Sustainable Sourcing

Definition : “selecting goods and services which promote a healthier community and environment. . . . Just as importantly, sustainable purchasing is NOT simply about paying a premium for a product and service attributes. . . . But aims to find a reasonable balance”

**Easton et al.

Challenges & Status to Sustainable Sourcing – Sourcing Strategy - Three barriers identified - buyers

1. Internal Corporate barriers (lack of know-how)• Lowest cost mind-set• Time pressures & fear of change

2. Market barriers (pricing, quality)• Lack of choice• Premium pricing

3. System wide barriers (NAFTA, China vs. local)• Lack of accepted standards• Free trade and globalization emphasis

Challenges & Status to Sustainable Sourcing – Suppliers

- Three barriers identified by suppliers1. Corporate barriers

- Inconsistency in value statements and practice- Weight of sustainable metrics in scorecard

2. Market barriers- TTM versus value goals

3. Framework barriers- Limited access to certifications by S-M size- Lack of industry wide standards

Three themes in research

- How do best practices take a sourcing strategy from “more sustainable” to “truly sustainable?” ie: continuous improvement vs. revolutionary change.

- Ecocentricity - Sourcing should include “greater good” of communities

- Integration of goals into day-to-day practices

A system: CLSC

Three examples: Walk the talk

On the other side…..Prius

http://www.leftlanenews.com/study-prius-production-harmful-to-environment.html

And lastly: Cruise Shipshttp://www.cbsnews.com/stories/2006/11/03/60minutes/main2149023.shtml

Pagell & Wu (2009) propositions

- Innovation capability is required- Management orientation toward sustainability

- Part of the value or mission statement or somewhere visible

- Sourcing should reach out to NGOs and competitors- Sourcing should treat suppliers as strategic partners- Metrics must be a process that includes sustainability- Develop measurement and reward systems- Align financial and environmental goals

CLSC – Reverse Flow is critical