SCMN 3730 AI Test PDF

Offshoring Alternatives: - Outsourcing: Contracting with independent suppliers outside the organization to provide products or services - Offshoring: Contracting with independent suppliers outside the organization who are located abroad - Nearshoring: Relocating to countrie...

Offshoring Alternatives: - Outsourcing: Contracting with independent suppliers outside the organization to provide products or services - Offshoring: Contracting with independent suppliers outside the organization who are located abroad - Nearshoring: Relocating to countries geographically closer - Re-shoring: Bringing offshore sources back to the home country - Global, Make: Global Production - Local, Make: Local Production/Re-shoring - Global Buy: Offshoring - Local, Buy: Outsourcing Global Supply Chains: Hidden Cost: - Factory-gate price: The unit price per item coming out of the factory - Inventory cost: Cost of pipeline inventory, safety stocks, and expediting cost - Transport costs: Cost of global shipping which can be volatile - Risk Costs: All extra cost associated with increased risk of global operations (e.g. stock-out, obsolescence, loss of IP, corruption) - Other costs: Duties, tariffs, insurance, legal, etc. Global Supply Chains: Performance Cycle Length: - Longer performance cycles for international operations: - Domestic is measured in days - International is measured in weeks or months - E.g. fashion merchandise takes 30 to 60 days - Reasons for longer order cycle to delivery cycle times: - Communication delays - Financing requirements - Special packaging requirements - Ocean freight scheduling - Slow transit times - Customs clearance - Overall this change requires higher asset commitment: - Inventory is in transit for longer periods Global Supply Chains: Cash to Cash Cycle: - Days of accounts receivable + Days of inventory held - Days of accounts payable = Cash-to-cash (C2C) Global Supply Chains: Regional Strategies: - Easier to create and operate separate regional strategies - However, duplication of activities led to: - Loss of economies of scale - Poor asset utilization - Growth oriented firms are integrating their regional strategies into global business strategies to eliminate duplication: - Requires global integration of the entire enterprise - Regionalization will remain viable for some firms Typology of Supply Chain Disruptions: - Origin of Disruption: - Natural - Man-made unintentional - Man-made Intentional - Severity of Disruption: - Minor disruption: - Delay of shipment - Theft of low value/impact goods - Moderate Disruption: - Delay of production - Recall of product - Catostrophic Disruption: - Loss of facilities/life - Loss or brand image/reputation Volatility: - Cost change more rapidly - Cost change with greater magnitude - Greater need for coordination Supply Risks: - Supplier Disruption: - Fire at Phillips plant (Alburquerque) affecting Nokia and Eriksson - Sole Sourcing: - Paint shortages for auto makers after Fukushima Process Risks: - Transportation: - 10,000 containers a year are lost overboard - KFC and DHL (network design) - Quality: - E-coli (Chipotle) - Horse meat scandal - Peanut scandal (USA) - Powder milk (China) Demand Risks: - CSR / Reputation: - Nestle & Nike for child labor - H&M, Mango, Disney, Gap, and Walmart for sweatshops - Coca-Cola and water scarcity - Nestle water extraction in Michigan - Panic Buying: - Atlantic hurricane season: fuel, food, and other supplies - Powder milk (extending from China) - Y2K Control Risks:  - Information Disruptions: - Hacking - Bullwhip Effect - Intellectual Property Rights: - General Motors (GM) lawsuit against Chinas’s Cherry Automobile Co. for alleged piracy of a mini car Environmental Risks: - Natural Disasters: - Tsunami: Fukushima - Flooding: Thailand - Earthquakes: Kobe - Hurricanes: Katrina - Ash cloud: Iceland - Global pandemics: SARS (viral disease) - Economic and Political: - Currency fluctuations - Internet bubble burst leading to inventory write-offs - Protest - Boycotts Fragile Supply Chains: - Low resistance; low recovery - Experience frequent disruptions while having slow and weak recoveries - Require unique market of regulatory conditions - Weak long-term prognosis (a forecast of the likely outcome of a situation) Hardy Supply Chains: - High resistance; High recovery - Alleviate potential risk easily while quickly rebound from events that are unavoidable Resistant but Sluggish Supply Chains: - High resistance; low recovery - Strong ability to adequately minimize disruptions, but insufficient ability to quickly recover - i.e. – the chimical industry Vulnerable but Responsice Supply Chains: - Low resistance, high recovery - Easily disrupted but have the capacity to quickly recover - i.e. – Fashion retail industry Resilience Rules of Thumb - Conditions of ‘Known’ Risk - Invest in Resistance Capacity - i.e – Chemical Industry - Consitions of Uncertanity - Invest in Recovery capacity - i.e – Fashion Industry (Zara es rapida) The Supply Chain is the Biggest Sustainability Impact: - The typical consumer goods company’s supply chain creates far greater social and environmental cost than its own operations, accounting for more than 80% of greenhouse-gas emissions and more than 90% of the impact on air, land, water, biodiversity, and geological resources. -McKiney 2016 Greenhouse Gas (GHG) Emissions: - Scope 1 emissions: are direct greenhouse (GHG) emissions that occur from sources that are controlled or owner by an organization (e.g. emissions associated with fuel combustion in boilers, furnaces, vehicles). - Scope 2 emissions: are indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling. Although scope 2 emissions physically occur at the facility when they are generated, ther are accounted for in an organization’s GHG inventory because they are a result of the organizations energy use. - Scope 3 emissions: are the result of activities from assets not owner or controlled by the reporting organization, but that the organization indirectly affects in its value chain. Water Stress: - Water Scarcity: depletion of available water sources - Water Pollution: degradation of available water sources - Water Stress: a lack of available water of sufficient quality for the desired purpose Virtual Transfers: - The buying company exports pollution to the supplier - While the suppler exports resources to the buying company Sustainability: - Emissions (gCO2/tkm) from highest to lowest - Largest → Air short hail, air long haul, HGV (truck), short sea, deep sea ← Smallest Forms of the Circular Economy: - Closed Loop Supply Chain: product is recovered after use to be disassembled by the original manufacturer to be used in making new products - Product As Service: similar in concept to a closed loop supply chain, but rather than selling the product for use the product is sold with the return or the product an up-front requirement - Industrial Symbiosis: the use of waste products from one organization as an input of value in another organization Challenges of the Circular Economy: - Information Asymmetry: how do you know who has materials of use and who would want to waste your materials? - Logistics: how do you get materials that are de-centralized both in time and space back to you? - Purity of Material: how can you be sure about the purity of materials being returned? - Quality: what condition will the product be returned in? De-Coupling: - Change from “push” to “pull” demand management - Reduce excess production  - Avoid obsolescence (outdated) and spoilage Benefits of Local Supply: - Local Suppliers can streamline operations as they are only producing goods for the local market, and thus don’t need to be as flexible as global suppliers - Local suppliers can provide smaller lot size deliveries more quickly - Sourcing from local suppliers can strengthen the local economy and a stronger local economy would increase local buying power - Companies tend to have greater familiarity with local suppliers than they do international suppliers - There can be complications when sourcing internationally. Customs, cultural differences, that kind of stuff - There is greater volatility in global sourcing due to lengthened lead times, leading to a need to increase safety stock which increases cost Benefits of a Global Supply: - Larger operations which can gain economies of scale and afford more expensive but environmentally friendly technology that serve a global customer base can reduce the environmental impact relative to local suppliers. - Ocean shipments uses far fewer carbon emissions per tonne of product relative to land or air transport, so transoceanic shipments can actually reduce carbon emissions in supply networks - The local area may not be the ideal area for production. Enev considering additional logistics and storage, imported food can be more environmentally friendly than locally grown - Just In Time Systems, which are enabled by local suppliers, actually increase GHG emissions due to smaller but more frequent shipments Regulatory Impact on Supply Chains: - Promote Activity - Encourage certain work in a specific country/region by providing financial or tax incentives - Contrain Activity - Limit types of activities that can be done in a country/region to reduce impacts Negotiation as a Process: Preparation, Open, Explore, Exchange, Agree Goals of Negotiation: - Tangibles: rate, price, terms, wording, settlements, things you can put in a contract - Intangibles: winning, maximizing my outcome, preserving reputation, principles, precedent, fairness Developing Negotiation Skills: Negotiation Strategies: - Distributive Bargaining: Firm positions taken by conflicting parties. Win-Lose - Integrative Bargaining: Principled negotiation where parties try to “enlarge the pie”. Win-Win. Distributive Bargaining: Objectives: - Learn other’s walk away points - Hide your walk away point - Move other party’s walk away point - Know alternatives Distributive Bargaining: Best Alternatives to Negotiated Agreement: - If alternatives are attractive, negotiators can set higher goals and offer fewer concessions - If there are no attractive alternatives then there is less bargaining power - Need to know your Best Alternative to a Negotiated Agreement (BATNA). This provides your “walk away” point for a negotiation Intergrative Bargaining: Elements: - Focus on commonalities rather than differences - Needs and interest rather than positions - Achieve needs of both - Exchange information and ideas - Invent options for mutual gain - Objective criteria Integrative Bargaining: Behaviors: - Firm on what matters - Flexible on how - Be creative - Show concern