Managing Global Supply and Risk Best Practices, Concepts, and Strategies

by Trent, Robert J.; Roberts, Llewellyn

• ISBN13: 9781604270143
• ISBN10: 1604270144
• Format: Hardcover
• Copyright: 2009-09-01
• Publisher: J. Ross Publishing

Summary

This book blends three distinct but interrelated topicsinternational purchasing, global supply management, and global risk management. It covers every aspect of global supply management and provides strategies forsupply professionals, and their companies, to reduce risks, enhance overall organizational effectiveness and obtain a competitive advantage.

Author Biography

Robert Trent, Ph.D., is the supply chain management program director, associate director of the Manufacturing Systems Engineering program, and George N. Beckwith professor of management at Lehigh University, where he teaches at the undergraduate and graduate levels. He holds a B.S. degree in materials logistics management from Michigan State University, an M.B.A. degree from Wayne State University, and a Ph.D. in operations management from Michigan State University. This well known subject matter expert has authored four highly regarded books within the procurement and supply management field, several research projects published through the Center for Advanced Purchasing Studies (CAPS) and numerous articles published in more than a dozen professional and academic journals and magazines. Dr. Trent is an active member of the Institute for Supply Management, serving for many years as the Professional Development Director of the NAPM of the Lehigh Valley and, at the national level, as a member of the ISM Educational Resources Committee. Llewellyn Roberts is President and founder of L. Roberts & Associates Inc., a firm that has provided a wide range of professional consulting and management development services to many of the largest and most successful companies in the world over the past twenty years. He is an industrial engineer, consultant and published author specializing in the fields of business performance improvement, procurement and strategic sourcing, and logistics and supply chain management. Mr. Roberts is a sought after and frequent speaker at professional conferences and universities worldwide and previously conducted lectures for the Executive Masters in International Logistics program at the Georgia Institute of Technology. He has developed and delivered training to thousands of participants from hundreds of different companies, on a wide variety of topics. Amongst its various services, L. Roberts & Associates currently provides training in warehouse design and layout and warehouse management under license to Supply Chain Planning Limited, Cranfield University (UK).

Table of Contents

Foreword	p. xiii
Preface	p. xvii
About the Authors	p. xxiii
Web Added ValueÖ	p. xxvi
Setting the Stage
The Changing Global Landscape	p. 3
The Growth in International Trade	p. 4
The Micro Effects from Macro Events	p. 7
Trade Imbalances	p. 7
Changing Supply and Demand Markets	p. 8
Changing Exchange Rates	p. 10
The Growth in International Purchasing	p. 11
Why Do We Engage in International Purchasing?	p. 12
Evolving Toward Global Supply Management	p. 15
A Global Supply Management Success Story	p. 19
Don't Forget About Supply Chain Risk	p. 20
Concluding Thoughts	p. 21
References	p. 22
Understanding International Purchasing
Managing International Logistics Issues	p. 25
International Logistics Complexities	p. 26
Longer Material Pipelines	p. 27
Increase in Total Supply Chain Costs	p. 28
Increased Supply Chain Risk	p. 30
Poor and Differing Logistical Infrastructures	p. 31
Differing Shipping Terms, Laws, and Acts	p. 32
Reverse Logistics Requirements	p. 36
Increased Use of Agents and Third Parties	p. 36
Environmental Issues and Concerns	p. 38
Supply Chain Security and Post 9-11 Requirements	p. 40
Concluding Thoughts	p. 41
References	p. 42
Sourcing in Emerging and Low-Cost Countries	p. 43
Overview	p. 43
Potential Problem Areas	p. 45
The China Syndrome	p. 48
The Challenges with China Sourcing	p. 49
Protecting Intellectual Property	p. 49
Is the Allure of China Fading?	p. 51
International Purchasing Offices	p. 55
Using IPOs to Support Global Outsourcing-a Case Example	p. 58
Finished Goods Outsourcing	p. 58
Concluding Thoughts	p. 60
References	p. 61
Total Cost of Ownership	p. 63
What Is Total Cost?	p. 64
Measuring Total Cost	p. 64
The Hidden Costs	p. 65
Types of Total Cost Models	p. 66
Total Landed Cost Models	p. 67
Supplier Performance Models	p. 69
Life Cycle Cost Models	p. 71
Total Cost Elements	p. 72
The Four A's of Total Cost Data	p. 72
Specific Total Cost Elements	p. 74
Calculating Total Landed Cost at Pets Supply, Inc	p. 76
Identifying Total Landed Cost Elements	p. 76
Inventory Carrying Charges	p. 78
Low-Cost Country Sourcing at UPS,	p. 80
Options Considered by UPS	p. 81
How UPS Identified Qualified Suppliers	p. 81
Managing the Risks of Low-Cost Country Sourcing	p. 82
Lessons Learned	p. 84
Concluding Thoughts	p. 85
References	p. 85
Additional International Topics	p. 87
Understanding Cultural Differences	p. 87
Eastern vs. Western Cultures	p. 88
Greeting Rituals	p. 90
Gift Giving	p. 91
Gestures and Eye Contact	p. 91
Perception of Time	p. 92
Meeting Customs and Conduct	p. 93
Use of Names, Titles, and Business Cards	p. 93
Negotiating Styles	p. 94
Language and Communication	p. 94
General Cultural Differences and Mannerisms	p. 96
Outsourcing Services Internationally	p. 97
Choosing the Right Service Provider	p. 98
Destination India	p. 101
Concluding Thoughts	p. 105
References	p. 106
Managing Global Supply Risk
Understanding Global Risk	p. 111
Marketplace Trends and Developments Affecting Risk	p. 112
Increased Globalization	p. 112
Outsourcing Noncore Capabilities	p. 113
Reduced Cycle Times	p. 114
State-of-the-Art Information Technology	p. 114
Proliferation of SKUs and Mass Customization	p. 115
The Environment and Recovery, Recycling, and Reuse of Products	p. 116
Changing Nature of the Marketplace	p. 117
Pressure to Reduce Cost	p. 117
Categories of Global Risk	p. 118
Unstable Geopolitical Climates	p. 118
Insecure Supply Chains	p. 119
Currency Fluctuations	p. 119
Local and Regional Economic Changes	p. 120
Logistics Infrastructure	p. 120
Cultural, Language, and Legal Differences	p. 121
Documentation Requirements and Customs Clearance	p. 121
Quality and Traceability	p. 122
Supplier Financial Solvency	p. 123
Appreciating Global Risk at Ohio Art	p. 123
A New Set of Issues	p. 124
Concluding Thoughts	p. 126
References	p. 126
Identifying, Preventing, and Managing Global Risk	p. 129
Identifying and Assessing Risk	p. 130
Identifying and Categorizing Risks	p. 131
Risk Assessment and Prioritization	p. 131
Risk Mitigation	p. 132
Monitoring and Managing Risk	p. 132
Approaches and Practices for Preventing and Managing Risk	p. 133
Probability and Severity Mapping	p. 133
Risk Contingency Planning	p. 134
Managing Currency Fluctuations	p. 137
Rigorous Supplier Evaluation and Selection Process	p. 139
Supplier Development	p. 142
International Purchasing Offices	p. 144
Total Cost Perspective	p. 144
Backup Sources	p. 145
Possession of Tooling	p. 146
Third-Party Data Services and Data Repository	p. 146
Use of Contracts	p. 147
Aligning Technology Roadmaps with Suppliers	p. 148
The Changing Face of Risk Management at DHL Supply Chain	p. 149
Managing Risk for a Health Care Products Company	p. 149
Coping with Hurricane Ike	p. 150
Insights Gained by the Risk Management Team	p. 151
Concluding Thoughts	p. 152
References	p. 152
Leveraging Supply Market Intelligence	p. 155
Defining Supply Market Intelligence	p. 156
Determining the Right Supply Strategy	p. 156
Uses, Categories, and Levels of Supply Market Intelligence	p. 159
Macro-Environmental SMI	p. 161
Country-Level SMI	p. 163
Industry and Commodity SMI	p. 164
Supplier SMI	p. 164
Sources of Supplier Market Intelligence	p. 165
Macro-Environmental SMI	p. 165
Geographic and Country-Specific SMI	p. 166
Industry and Commodity SMI	p. 168
Supplier SMI	p. 168
Concluding Thoughts	p. 171
References	p. 172
Pursuing Global Supply Management Excellence
Making the Case for Global Supply Management	p. 175
The Need for a Better Understanding	p. 176
Evolving Toward Global Supply Management	p. 177
Reaping the Benefits of Global Supply Management	p. 180
Linking Global Supply Management to Business Financials	p. 183
Reduced Purchase Costs from Global Supply Management	p. 184
Reduced Inventory from Global Supply Management	p. 185
the Best of Both Worlds	p. 186
Exploring the Differences between the Segments187
Concluding Thoughts	p. 194
Reference	p. 194
Developing Global Supply Strategies	p. 195
Understanding the Concept of Supply Strategies	p. 196
The Importance of Strategy Objectives and Goals	p. 197
Global Supply Strategy Constraints	p. 198
Characteristics of Effective Global Supply Strategies	p. 200
Global Supply Strategy Development	p. 201
A Leader's Approach for Developing Global Supply Strategies	p. 203
Asking the Right Questions	p. 206
Developing a Global Process at Dennison Chemicals	p. 208
Process Absolutes	p. 209
Global Facilitators and Inhibitors	p. 212
Dennison's Global Supply Process	p. 214
Concluding Thoughts	p. 215
Reference	p. 215
Factors that Define Global Success	p. 217
Global Supply Management Success Factors	p. 217
Access to Qualified Personnel	p. 218
A Formal and Well-Defined Process	p. 220
The Right Organizational Design Features	p. 221
The Ability to Measure Global Savings	p. 227
The Availability of Real-Time Communication Tools	p. 228
Systems that Provide Access to Critical Information	p. 228
An Awareness of Global Suppliers	p. 230
The Availability of Suppliers with Global Capabilities	p. 231
Operations, Manufacturing, and Internal Customer Buy-In	p. 232
Preselection Supplier Site Visits	p. 234
Concluding Thoughts	p. 234
References	p. 235
Creating a World Class Global Organization	p. 237
Characteristics of a Super Global Organization	p. 237
Executive Leadership	p. 240
A Weil-Defined Process	p. 240
Resource Commitment	p. 241
Information Technology Systems	p. 243
Organizational Design	p. 244
Measurement	p. 244
Communication and Coordination	p. 245
Global Supply Management Best Practices	p. 245
Best Practice: Supporting Global Supply Management at the Highest Corporate Levels	p. 246
Best Practice: Using Cross-Functional Teams to Support Global Supply Management	p. 246
Best Practice: Continuously Identifying and Reviewing Global Opportunities	p. 247
Best Practice: Retooling the Supply Management Workforce	p. 248
Best Practice: Providing Time to Pursue Global Opportunities	p. 249
Best Practice: Making Globalization Work within a Decentralized Culture	p. 250
Concluding Thoughts	p. 251
References	p. 252
Learning from Global Supply Leaders	p. 253
Evolving to the Highest Global Level at Air Products	p. 253
The Global Sourcing Initiative-the Next Generation of Globalization	p. 255
Expected Performance Outcomes	p. 257
Making the GSI Work	p. 257
Coordinating Supply Management across Many Countries	p. 258
Segmenting Worldwide Opportunities	p. 259
A Seven-Step Strategic Sourcing Process	p. 260
Global Systems Support	p. 263
Making Globalization Work-Some Examples	p. 263
Packaging	p. 264
Fragrances and Flavors	p. 264
Raw Materials	p. 266
Doing It Like the Textbook Says at Whirlpool	p. 267
It Starts with Strong Central Leadership	p. 268
Using Global Commodity Business Teams to Get the Job Done	p. 270
Establishing International Purchasing Offices	p. 271
Component Architecture Management Teams-a Bold, New Initiative	p. 272
Supply Chain Improvement Initiatives	p. 274
Concluding Thoughts	p. 275
Reference	p. 276
Looking Toward the Future
Defining the Future State	p. 279
Predictions Related to Global Supply Management	p. 279
Predictions Related to Global Risk Management	p. 287
Concluding Thoughts	p. 290
References	p. 291
Index	p. 295
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