Supply Chain Management Issues - Lesson 3

Lesson 3: Societal, Business-Related and Organizational Issues Impacting SCM

• Competence: Discussion and analysis of societal, business-related, and organizational issues impacting SCM.
• Course Outcomes: Students will be able to identify the effects of current and future trends in supply chain management and assess supply chain processes to optimize them.
• Learning Outcomes: Students will enumerate and analyze societal/regulatory issues and business-related/organizational issues impacting SCM.

Learning Module 3.1 Gross Domestic Product

• Gross Domestic Product (GDP) is highlighted by logistics, which accounts for 7.5% of U.S. GDP in 2016, a low point since 2009.
• Logistics has an impact on interest rates, inflation, productivity, energy costs, availability, employment, and the U.S. economy.
• Globalization involves international marketing, manufacturing, and distribution.

Business-Related Issues

• Customer service and satisfaction are key for profitability in business.
• Human resources are crucial for delivering customer satisfaction.
• Technology and financial aspects are organizational issues in SCM, impacting efficiency.

Supply Chain Management and Gross Domestic Product (GDP)

• There is no study capturing all aspects of supply chain costs.
• Improvements in a nation's productivity positively affect prices for consumers, businesses, and governments.

Globalization and Global Trends

• Logistics costs (as a percentage of U.S. GDP) declined from 1980 to the early 2000s, rising significantly in the new millennium.
• Organizations are increasingly involved in international marketing, manufacturing, or distribution.
• Global trends like increasing complexity in integrated SCM, international trade, and the need for skills & competencies are mentioned.

Sustainability in the Supply Chain

• Increasing concern for environmental, health, safety, and sustainability in supply chains.
• Companies are embracing EHS&AS in their operations (for example, Nike's sustainable distribution center in Belgium).
• Alternative energy sources are predicted to replace fossil fuels in coming decades (with possible implications for supply chains).

Supply Chain Infrastructure

• Infrastructure (e.g., roadways, rail systems) is often created by government for multiple purposes like moving people, safeguarding, and expanding business.
• Insufficient infrastructure impacts the efficiency of supply chains. This includes problems with transportation, waterways, and infrastructure in the U.S.

Regulatory Issues

• Supply chain management is subject to various types of regulations (local, state, federal, and international).
• Legislation like the Sarbanes-Oxley Act (SOX) in 2002 is mentioned as an example of regulations impacting supply chains (for transparency in corporate financial statements).
• Other risks are briefly mentioned, including economic, environmental, geopolitical, and societal issues.

Cyber Supply Chain Best Practices

• Security requirements should be included in RFPs and contracts to mitigate potential risks.
• Suppliers must comply with and participate in security assessments.
• Companies should proactively address cyber vulnerabilities in their supply chains (e.g., one-strike policies, proper inspection of parts).

Disaster Preparedness and Relief

• Disasters (natural and otherwise) can greatly impact supply chains and commerce.
• Disaster relief, and the ability of organizations to function normally despite disruption are relevant points.
• Flu pandemics are highlighted as a potential threat with wide-ranging implications, especially in supply chain management.

Customer Service and Satisfaction

• Customer service is crucial for organizational success in supply chains.
• Customer satisfaction arises from well-managed supply chain and marketing efforts.
• Right product, at the right place, right condition, right price, and right time are essential for customer satisfaction and supply chain implementation.

Organizational Issues (i.e., Technology)

• Technology significantly impacts various facets of businesses, especially supply chains.
• Internet of Things (IoT), big data, cognitive analytics, cloud storage, and supply chain digitization are mentioned.
• Mentioning of Drones, wearable technology, driverless vehicles, robotics, and 3-D printing.

Techniques for Evaluating Supply Chain

• Tools for evaluating supply chains are necessary to ensure efficiency and proper functioning.
• Techniques like the bullwhip effect, supplier analysis, and transportation mode analysis are useful for decision making.
• Importance of coordination between supply chain elements.

Supplier Selection Analysis

• Selecting suitable suppliers is critical to supply chain success, which involves considerations of financial performance, product quality, and delivery speed.

Transportation Mode Analysis

• Evaluating the trade-off between holding/storage costs and shipping costs helps in transportation mode selection.
• Considerations like cost, on-time delivery requirements, and compatibility with other logistics procedures are relevant factors affecting decisions.

Warehouse Storage

• Large warehouses are part of the global supply chain.
• Efficient placement of goods inside warehouses is important for efficiency and minimizing wasted travel time.