SESSION VII

GLOBAL SUPPLY CHAIN

Lecturer :

DR. NOFRISEL, SE, MM

PROGRAM STUDI MAGISTER MANAJEMEN

UNIVERSITAS INDONESIA

16 OCTOBER 2013

AGENDA

Review
Global Supply Chain Concepts

Conclusion

HAL 1

Outline
The role of global supply chain
Some implications

HAL 2

HAL 3

OVERVIEW

Supply Chain Stages

(as remains)

suppliers

manufacturer

distributors

customers

supplier

T
O

plant
R

supplier

DC

HAL 4

C
U

DC
supplier

retailers

M
E
R
S

Supply Chain Structure

Customer

Customer

Customer

Distribution
center

Customer

Distribution
center
Manufacturer

Tier 1

Tier 2

Tier 3

Supplier of services
HAL 5

Supplier of materials

Generalized Supply Chain Model

Relationship Management
Information, product, service, financial and knowledge flows
Material Flow
Supplier Network

Information Flow
Integrated
Enterprise

Market
Procurement
Distribution
LOGISTICS

Manufacturing

Capacity, information, core competencies, capital, and human resource

constraints
6

End Consumers

Materials
HAL 6

Distribution
Network

HAL 7

GLOBAL SUPPLY CHAIN CONCEPTS

Current Issues in
Operations and Supply Chain Management

1. Coordinating the relationship between mutually

supportive but separate organizations
2. Optimizing global suppliers, production, and
distribution networks
3. Managing customer touch points
4. Raising senior management awareness of
operations as a significant competitive weapon
5. Sustainability and the triple bottom line

HAL 8

International Supply Chains

International distribution systems
Manufacturing still occurs domestically, but distribution and typically
some marketing take place overseas.

International suppliers
Raw materials and components are furnished by foreign suppliers
Final assembly is performed domestically.
In some cases, the final product is then shipped to foreign markets.

Offshore manufacturing
Product is typically sourced and manufactured in a single foreign
location
Shipped back to domestic warehouses for sale and distribution

Fully integrated global supply chain

Products are supplied, manufactured, and distributed from various
facilities located throughout the world.
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Forces toward Globalization

HAL 10

Global market forces.

Technological forces.
Global cost forces.
Political and economic forces.

Global Market Forces

Pressures created by foreign competitors, as well as

the opportunities created by foreign customers.
Presence of foreign competitors in home markets
can affect their business significantly.
Much of the demand growth available to companies
is in foreign and emerging markets.
Increasing demand for products throughout the
world through the global proliferation of
information.

HAL 11

Global Market Forces

Particular markets often serve to drive
technological advances in some areas.
Companies forced to develop and enhance
leading-edge technologies and products.
Such products can be used to increase or
maintain market position in other areas or
regions where the markets are not as competitive

HAL 12

Technological Forces
Related to the products
Various subcomponents and technologies available in
different regions and locations
Successful firms need to use these resources quickly and
effectively.
Locate research, design, and production facilities close to
these regions.
Frequently collaborate, resulting in the location of joint
facilities close to one of the partners.
Global location of research-and-development facilities
driven by two main reasons:
As product cycles shrink, locate research facilities close to
manufacturing facilities.
Specific technical expertise may be available in certain areas or
regions
HAL 13

Global Cost Forces

Often dictate global location decisions

Costs of cheaper unskilled labor more than offset
by the increase in other costs associated with
operating facilities in remote locations.
In some cases cheaper labor is sufficient justification
for overseas manufacturing.
Other global cost forces have become more
significant
Cheaper skilled labor is drawing an increasing number of
companies overseas.

HAL 14

Political and Economic Forces

Exchange rate fluctuation

Regional trade agreements
Tariff system
Trade protection mechanisms
More subtle regulations
Local content requirements
Voluntary export restrictions
Government procurement policies

HAL 15

Four Types of Supply Chain Strategies

1. Efficient supply chains: utilize strategies aimed at
creating the highest cost efficiency
2. Risk-hedging supply chains: utilize strategies
aimed at pooling and sharing resources in a supply
chain to share risk
3. Responsive supply chains: utilize strategies
aimed at being responsive and flexible
4. Agile supply chains: utilize strategies aimed at
being responsive and flexible to customer needs

HAL 16

Logistics
Logistics: the art and science of obtaining,
producing, and distributing material and
product in the proper place and in proper
quantities
International logistics: managing these
functions when the movement is on a global
scale
Third-party logistics company: an
outside company used to handle logistics
functions
HAL 17

Issues in Facility Location

Proximity to customers: makes rapid delivery
easier
Business climate: can include presence of similarsized businesses, businesses in the same industry,
and other foreign companies
Total costs: object is to minimize overall cost
Infrastructure: adequate road, rail, air, and sea
transportation along with energy and
telecommunications

HAL 18

Issues in Facility Location Continued

Quality of labor: educational and skill levels must match
needs
Suppliers: proximity of important suppliers supports lean
production
Other facilities: location of other facilities can influence
a location decision
Free trade zones: a closed facility into which foreign
goods can be brought without being subject to the normal
customers requirements

HAL 19

Issues in Facility Location Continued

Political risk: risks in both the country of location

and the host country influence the decision
Government barriers: barriers in many
countries are being removed
Trading blocs: firms locate within a block to take
advantage of new markets or lower total cost

HAL 20

Issues in Facility Location Continued

Environmental regulation: these impact a certain

industry in a given location and must be included in
the decision
Host community: host communitys interest is
part of the evaluation process
Competitive advantage: the location should
provide the company with a competitive advantage

HAL 21

Lean Supply Chains

Value stream: the value-adding and nonvalue-adding activities required to design,

order, and provide a product or service
Waste reduction: the optimization of the
value-adding activities and the elimination of
non-value-adding activities

HAL 22

Lean Supply Chain Design Principles

1. Lean layouts
a. Group technology
b. Quality at the source
c. JIT production

2. Lean production schedules

a. Uniform plant loading
b. Kanban production control system

3. Lean supply chains

a. Specialized plants
b. Work with suppliers
c. Building a lean supply chain

HAL 23

Components of a Lean Focused Supply Chain

Lean suppliers
Able to respond to changes
Lower prices
Higher quality

Lean procurement
Key is automation (e-procurement)
Suppliers must see into the customers operations and
customers must see into their suppliers operation

Lean warehousing
Eliminate non-value-added steps and waste in storage
process

HAL 24

Components of a Lean Focused Supply Chain Continued

Lean logistics

Optimized mode selection and pooling orders

Combined multi-stop truckloads
Optimized routing
Cross docking
Import/export transportation processes
Backhaul minimization

Lean customers
Understand their business needs
Value speed and flexibility
Establish effective partnerships with suppliers

HAL 25

HAL 26

CONCLUSION

SUMMARY
Types of global supply chains
Various forces compelling companies to develop
global supply chains
Both advantages and risks are inherent in global
supply chains
Unknown-unknown risks to known-unknown risks
Variety of strategies to deal with the risks

Issues in global supply chain management

Concepts of:
international and regional products
centralized versus decentralized control
regional logistics differences
HAL 27

THANKYOU
nofrisel@yahoo.com

Jakarta 16 October 2013

Dr. Nofrisel, SE, MM

HAL 28