Global Supply Chain Management
The Stories Under the Veil of Slogan:
Framework & Details
Xilong Liu
Contents
Why choose the title for the presentation?
intention
What will be discussed?
framework
Which will be offered in each part?
details
Intention
Academic researches
Eli Broad Graduate School of Management
The Stanford Global Supply Chain Management Forum
European Forum on Global Supply Chain management at Eindhoven University （Holland）
Hong Kong Logistics and Supply Chain Forum
Managerial Applications
2004 Boao Forum for Asia — BFA
Framework
Integrating the two areas of international business and supply chain management.
Consists of four main areas:
Supply management
Logistics
Operations management
Marketing
Framework
The hexagon of global supply chain management
A global supply chain framework
The 21st Century Logistics framework
Designed by department of marketing and supply chain management, Eli Broad college of business, Michigan State University.
——2004 . News ranking had MSU’s supply chain management program No. 1 for undergraduates and for graduates after MIT.
Studying the relationship between supply chain competencies and performance
The 21st Century Logistics framework
continued
A measurement model for both firm and supply chain performance
13 logistics and supply chain variables representing five key performance areas.
Customer service
Customer satisfaction; product flexibility; delivery speed
Cost management
Functional and integrated logistics and supply chain cost
Quality
Delivery dependability; responsiveness;
order flexibility; delivery flexibility
Productivity
Information systems support; order fill capacity;
shipment notification
Asset management
Fixed assets; working capital
application
Dada gathered from ., ANZ for different business environments.
Using regression models
Managers need to understand the relative importance of the various competencies in particular operating arena to enhance performance.
From an academic standpoint, the model appears to be robust across size and business scale differences.
Future research will be to further refine and clarify the model and its measures so as to provide clearer insights into the competency relational across more operation and cultural settings.
Supply management
global sourcing strategy and competitive advantage
Managing your supply chain for global competitiveness
Stanford graduate school of business
2004 august 22-27
Led by the world’s leading experts in global supply chain integration
Hau L. Lee & Seungjun Whang
Come to Stanford, in the heart of Silicon Valley, and gain the tools and insights to mobilize your whole organization in building supply chain excellence.
Sourcing importance
Peter Drucker
Sourcing and logistics would remain the darkest continent of business—the least exploited area of business for competitive advantage.
Global sourcing strategy
Logistics identifying which production units will serve which particular markets and how components will be supplied for production.
The interfaces among R&D, manufacturing and marketing on a global basis.
Global sourcing as a business practice
Toyota is a good case
Sourcing
Intrafirm sourcing
34% of world trade is managed by multinational companies on an intrafirm basis
outsourcing—contractual basis
Problems
Manufacturing costs
The costs of various resources
Exchange rate fluctuations
Availability of infrastructure
(transportation, communication, energy)
Industrial and cultural environments
Working with foreign host government
Operational problems
Long-term consequences
Outsourcing base on an arm’s-length or a strategic partnership basis.
Benefits of virtual network
Easy option to access the world markets
Reducing investment requirement improve ROE
Dependence
Operating in an uncertain business environment
Dependence on independent suppliers
IBM is a vivid case declining for this
Gradual loss of design and manufacturing abilities
Global sourcing in an unstable world economy
1997 the financial crisis in Asia
2001 the terrorist attack on America
2002 Argentina's financial crisis
2003 SARS spreading
Localized procurement—localization strategy
Shifting production and procurement abroad to match revenues in foreign currency
A number of new questions beg for answers
Summary and solutions
Global sourcing strategy requires close coordination of R&D, manufacturing, and marketing activities on a global basis
Modular production
Easy technology transfer making decentralized/localized production
feasible without losing the benefits of global integration
Attain strategic flexibility in sourcing
Company structure including a combination of quasi-hierarchical and
a pure hierarchical governance structure for different activities or
operations. (Teede et al. Dynamic capabilities and strategic
management)
Global sourcing using online reverse auctions
B2B E-business
It became a key method for both globally sourcing engineered components and as a tool to bargain with suppliers.
Key theoretical foundations supporting the use of online reverse auctions include:
Lower purchase prices result in reduced costs.
‘‘Total cost’’ RFQs represent actual total costs.
Qualified suppliers are interchangeable.
Costs are external to the buyer, rather than internally generated
Suppliers benefit from participating in online reverse auctions.
11 key issues in global supply base management
1. The importance of trust in buyer-supplier relationship
A detailed formal evaluation and selection of potential
suppliers with a proven track record
B-S involved in a project team
2. Communication is key
Identifying information required and providing it
3. The personal aspect of supply base management
4. Maintaining positive B-S relationship in difficult economic times
5. One size does not fit all
6. Supply chain design: we are all in this together
continued
7. Measuring supply base performance
8. Sharing accurate information: making sure that everyone is on the same page
9. Data represent different things at different times to different people
10. Reverse auctions: can your organization really afford them?
11. Do we have the right people to do the job?
Human factor is important
Logistics management
Global market segmentation for logistics services
Two research questions:
What logistics service factors account for in business customer satisfaction across national borders?
How do these differences reflect distinct segments in the global logistics services market?
LSQ—logistics service quality
Unobservable but perceived customers’ value
order discrepancy handling (OD) ;
order condition (OC);
order accuracy (OA);
order quality (OQ);
timeliness (TI)
Order
receipt
Personnel contact quality (PQ);
order release quantities (OR);
ordering procedures (OP);
information quality (IQ)
Order placement
LSQ segmentation
Satisfaction levels differ across customer segments due to the customization of LSQ dimensions.
Three types of market segments
Horizontal segments that apply to all customers worldwide (global)
Horizontal segments that exist across national borders (for example, within a specific region)
Vertical segments that exist within a specific national market
Research propositions
P1: Horizontal market segments exist such that different customer groups’ satisfaction level responses are driven by the same sets of LSQ dimensions of perception of order placement activities and perception of order receipt and in the same process manner.
P2: Horizontal market segments exist such that customers with similar organizational characteristics place similar emphasis on the LSQ dimensions of perception of order placement activities and perception of order receipt.
P3: Vertical market segments exist such that the effects of dimensions of LSQ on customers’ satisfaction level response are moderated by national and regional variables.
Factors influencing customers’ preferences for global logistics services
Benefits
First, costs can be reduced by avoiding redundant or superfluous logistics service offerings through the customization of logistics offerings for specific segments.
Second, this same customization of logistics models enhances firm revenue through increased customer satisfaction levels, which in turn increase lifetime customer value to the firm.
Third, firms can benchmark externally and internally on specific components of logistics services.
understanding
To benefit from these outcomes, global logistics providers must understand :
how customer preferences differ across LSQ elements.
how these elements influence satisfaction levels.
how these relationships are moderated by cultural and organizational differences.
Operations management
decision model in global supply chain management
Five models are discussed in managing buyer -supplier behavior, sourcing, integrated operations, marketing and logistics in global SCM.
We focus our attention on these models because they address the upstream and downstream aspects of SCM and illustrate different modeling approaches.
the models relate to (a) investment implications of innovation-based competition between buyer and supplier, (b) bidding by a prospective supplier of a product, (c) bid evaluation and supplier selection by a buyer dealing in multiple products, (d) integrated operations in a supply chain, (e) market integrated distribution.
Buyer-supplier behavior model
The objective functional of supplier S until the buyer B successfully innovates is given by:
Where
denotes the production rate at time t;
denotes the price function of the buyer firm B;
denotes the unit cost for production of the supplier S.
Buyer-supplier behavior model
The objective functional of buyer B is the expected gain from innovation, given by:
where,
is the net gain in demand for firm B’s product;
denotes the unit production cost of the firm B for achieving
successful innovation;
denotes the cost of the R&D effort of firm B;
denotes the innovation rate by firm B.
An institutional analysis of supply chain innovations in global marketing channels
background
What might account for the relative ease of implementing supply chain innovations among domestic . partners and for the relative difficulty of deploying the same technology among global distribution partners?
A model of supply chain innovation in global marketing channels
Supply chain innovations
Supply chain innovations combine developments in information and related technologies with new logistics and marketing procedures to improve operational efficiency and enhance service effectiveness.
Innovations include ECR (efficient consumer response), CR (continuous replenishment), automated ordering utilizing scanner data, and many other technology-enhanced processes and procedures in the out-bound supply chain.
Point-of-sale (POS), CR system transform a traditional “push” distribution channel into a demand “pull” system.
POS
A model of supply chain innovation in global marketing channels
Institutional arrangements
an efficient new IA enables the parties not only to maximize the economic value from an innovation but also to equitably share the joint profits that are generated.
Effective measurement is critical for contract feasibility since parties must be able to measure costs incurred and value received.
a distributor might own and operate the centralized warehouse while the retail chain might be the most logical owner–investor for a different problematic asset, such as the truck fleet, associated with the joint POS/CR system.
The IA utility of norms such as information sharing (willingness to exchange proprietary information), flexibility (willingness to adapt procedures), and solidarity (desire to maintain relationship)
A model of supply chain innovation in global marketing channels
Institutional environment
Regulative element refers to the demands of governments and regulatory bodies to comply with laws and other requirements.
two basic mechanisms of imposition and inducement such as subsidies, tax, tariff, or other concessions.
Normative element refers to a society’s values and norms that direct behavior through social obligations and expectations through the mechanisms of authorizing and acquisition.
Authorizing involves the development of socially appropriate codes of conduct while acquisition refers to mimicking the behaviors of other firms that are deemed legitimate.
continued
Cultural–cognitive element refers to the socially mediated construction of a common framework of meaning that provides templates and scripts for action.
two mechanisms, imprinting and bypassing .
Imprinting is organizational inertia where past practices are sacrosanct .
bypassing occurs where actors are so highly socialized into their role expectations that habitualized responses bypass formal organizational controls.
Global exchange problems
The specific characteristics of a global exchange may require such new investments and activities that the partners will require substantial contract, ownership, and social safeguards before adopting the innovation.
a global channel may suffer from a fragile IE in terms of regulatory, normative, and cultural–cognitive elements that prohibit the parties from developing a new IA.
Problems
Regulatory problems in global channels
China underdeveloped infrastructure; government regulations;
regional protectionism; FTZS ;tax
Normative problems in global channels
Japan respect traditional practices; strong loyalty
Cognitive-cultural problems in global channels
America individualism ;low-power; weak uncertainty avoidance
Japan collectivist; high-power ;strong uncertainty avoidance
China guanxi and personal connection
WTO will make china’s IE become gradually more supportive of supply chain innovations.
The intersection of research areas
Supply chain management
Strategy management
Marketing management
Institution
E-commerce
any other business and management areas
MANAGEMENT SCIENCE SPECIAL ISSUES
Marketing and Operations Management Interfaces and Coordination April, 2004
E-Business and Management Science
October and November, 2003
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Questions ?
we can discuss and conquer them together!!!
