2. SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement DBPC 4119 SUPPLY CHAIN MANAGEMENT THEORY Prof. Henry M. Bwisa bwihem@yahoo.com www.professorbwisa.com 0722858507

3. PURPOSE PROVIDE UNDERSTANDING OF VARIOUS THEORIES AND STRATEGIES OF SUPPLY CHAIN MANAGEMENT AND THEIR CONTRIBUTION TON THE ENHANCEMENT OF THE SUPPLY CHAIN FUNCTION AT NATIONAL AND GLOBAL LEVEL

4. OBJECTIVES PARADIGMS OF SUPPLY CHAIN MANAGEMENT APPROACHES TO IMPROVING ENVIRONMENTAL PERFORMANCE EVALUATE DESIGN AND EVALUATION OF SUPPLY CHAIN MANAGEMENT EFFECTS OF COMMERCE ON SUPPLY CHAIN MANAGEMENT CHALLENGES OF GLOBAL MARKETS AND SUPPLY CHAIN CONTRIBUTION OF SUPPLY CHAIN FUNCTION

5. Before I go further …..

6. LET’S SEARCH FOR A DEFINITION FOR PhD 11/06/20165

7. I spotted these street definitions …. P h D Pengine hana Dikri Pull her Down Permanent head Damage HarareGaborone Nairobi 11/06/20166

8. On a more serious note we discovered that a Ph.D. is… 1: A degree signifying expertise – Signifies the capability to conduct research – Some positions (e.g., professor, research scientist, managers at govt labs, etc.) only hire Ph.D.’s – An entry card into a community of experts in some “area” – By the time one graduates with a PhD, one is known and respected as an expert in that area What is an expert? Someone who knows more about some topic than anyone else (in the world!!!!!) 11/06/20167

9. What is a Ph.D? 2: An opportunity for a certain lifestyle – To think for a living – To make a large impact on something – To be your own boss Flexible hours Flexible pace Flexible topic – To travel – To constantly learn and attack new challenges – To make decent money 11/06/20168

10. So, what does PhD entail??? To earn a Ph.D., one must accomplish two things: (1) master a specific subject completely, and (2) extend the body of knowledge about that subject. To master a subject, a student searches the published literature to find and read everything that has been written about the subject. The essence of a Ph.D., the aspect that distinguishes Ph.D. study from other academic work, can be summarized in a single word: research. To extend knowledge, one must explore, investigate and contemplate. 11/06/20169

11. For PhD, Knowledge Production and Dissemination is key…. Individuals with a PhD: produce (research) and disseminate (teach) knowledge. Their pursuit of either may be mainly for the sake of (a) understanding, (b) use, or (c) a combination of (a) and (b). – Whatever the case PhD holders are the knowledge producers ; they are expected to live and work on the cutting edge, the frontiers of our knowledge. 11/06/201610

12. What can one do with a Ph.D.? Academia – Research faculty – Faculty at teaching university/college Industrial research lab National labs (government) Management consulting Start a company E nd of t hinking c apacity 11/06/201611

13. The objective of a PhD program should be to produce scholars who are competently trained in the latest methods of analysis as well being at the forefront of problem solving in the specific area of training 11/06/201612

14. Competently trained … what is competency? It is the ability, skills and/or knowledge that lead to superior performance. Some scholars see "competence" as a combination of knowledge, skills and behavior used to improve performance; or as the state or quality of being adequately or well qualified, having the ability to perform a specific role. We observe that a number of courses and programmes tend to concentrate on the gaining of knowledge and theory and to neglect performance (yet it is performance which essentially characterizes competence)... 11/06/201613

15. In order to achieve the said competencies … I will borrow from some great thinkers and educationists 11/06/201614

16. In 450 BC, Confucius, the great Chinese thinker and philosopher said … I hear and I forget (tell me and I will forget) I see and I remember (show me and I may remember) I do and I understand (involve me and I will understand) 15

17. Module 2 – Slide 16 Message of Confucian philosophy = to enhance learning retention Hear it See it Say it Do it Teach others What I hear, I forget. What I see, I remember. What I do, I understand. Confucius

18. In 1946 a US educationist and professor at Ohio State university, Edgar Dale, developed his most famous model, the cone of learning. Since then it has been globally quoted as the definitive evidence for how learners retain information when delivered in various styles and mediums and this has informed how to design training courses in specific ways

19. Dale’s Cone of Experience* * E. Dale, Audio-visual methods in teaching, 1954 Passive Active Experiential Learning least effective most effective text text word word picture +word picture +word demonstration demonstration experiment experiment project project % = Average retention rate is designated by a nature of involvement !!!

20. Cone of Learning Learners retain: 10% of what they read 20% of what they hear 30% of what they see 50% of what they see and hear together 70% of what they say or repeat 90% of what they say, while doing what they are talking about. (remember the Hear, See, Say, Do, Teach others)

21. I HEAR AND I FORGET I SEE AND I REMEMBER I DO AND I UNDERSTAND 20

22. In 1984 American educationist, David Kolb published his learning styles model in his book 'Experiential Learning: Experience As The Source Of Learning And Development‘. Kolb's learning styles model and experiential learning theory are today globally acknowledged by academics, teachers, managers and trainers as truly seminal works. David A. Kolb believes “learning is the process whereby knowledge is created through the transformation of experience” (1984, p. 38). The theory presents a cyclical model of learning, consisting of four stages shown below. One may begin at any stage, but must follow each other in the sequence.

23. concrete experience (or “DO”) reflective observation (or “OBSERVE”) abstract conceptualization (or “THINK”) active experimentation (or “PLAN”). Kolb’s Experiential Learning Cycle

24. The ExperientialLearning Cycle Kolb’s four stages operationalized

25. The ExperientialLearning Cycle

26. Experiencing Perform; do it Provide a concrete experience that: – Can be an individual or group experience, but involves doing. – Most likely will be unfamiliar to the learners – a first-time activity. – Pushes the learner beyond previous performance levels. – May be “uncomfortable” to the learner (The “Groan Zone”). – Includes the risk of failure.

27. The ExperientialLearning Cycle

28. Sharing Results; reactions; observations Get the participants to talk about their experience. Share reactions and observations. Discuss feelings generated by the experience. Let the group (or individual) talk freely and acknowledge the ideas they generate.

29. The ExperientialLearning Cycle

30. Processing Discussing; analyzing; and reflecting on the experience Discuss how the experience was carried out. Discuss how themes, problems, and issues are brought out by the experience. Discuss how specific problems or issues were addressed. Discuss personal experiences of members. Encourage the group to look for recurring themes.

31. The ExperientialLearning Cycle

32. Generalizing Connecting the experience with real world examples Find general trends or common truths in the experience. Identify “real life” principles that surfaced. List key terms that capture the learning.

33. The ExperientialLearning Cycle

34. Applying Apply what was learned to a similar or different situation Discuss how new learning can be applied to other situations. Discuss how issues raised can be useful in the future. Discuss how more effective behaviors can develop from the new learnings. Help each individual feel a sense of ownership for what was learned.

35. The ExperientialLearning Cycle

36. Evaluation of learning

37. In 1956, Benjamin Bloom developed a taxonomy of learning that has come to be known as Bloom’s taxonomy (Bloom & Krathwohl, 1956). It is a hierarchical structure representing six levels of thinking and learning skills that range from basic learning objectives such as knowledge of content through higher-order learning such as synthesis, evaluation, and creativity. Bloom’s taxonomy formed the basis for early work on the development of instructional objectives for classes and curricula. Recently, emphasis has shifted from instructional objectives, which describe what instructors do and the content of material presented during classroom instruction, to student learning outcomes, which describe what students can do as a result of their educational experiences. Instructional objectives were typically described as things (knowledge, understanding, content, facts) that could be delivered during a lecture or presented in written text. In contrast, student learning outcomes are described using concrete verbs (behaviors that can be observed in the student) rather than nouns. Whereas passive activities such as lecturing are efficient methods for transmitting basic facts and knowledge, active learning strategies that engage students in learning do encourage the development of higher-order

38. Creating Evaluating Analysing Applying Understanding Remembering BLOOM’S REVISED TAXONOMY Creating Generating new ideas, products, or ways of viewing things Designing, constructing, planning, producing, inventing. Evaluating Justifying a decision or course of action Checking, hypothesising, critiquing, experimenting, judging Analysing Breaking information into parts to explore understandings and relationships Comparing, organising, deconstructing, interrogating, finding Applying Using information in another familiar situation Implementing, carrying out, using, executing Understanding Explaining ideas or concepts Interpreting, summarising, paraphrasing, classifying, explaining Remembering Recalling information Recognising, listing, describing, retrieving, naming, finding

39. * B. Bloom, Taxonomy of Educational Objectives, 1956 L. Anderson & D. Krathwohl, Bloom’s Revised Taxonomy, 2001 ** Edorigami Wiki, Bloom’s Digital Taxonomy Bloom’s Taxonomy of Educational Objectives* Collaborating 21 st Century Essential !!! Collaborating 21 st Century Essential !!! **CreatingEvaluating Analysing Applying Understanding Remembering interpreting, restating in your own words High Order Thinking Skills Medium OTS Low OTS executing, using, implementing finding, integrating, comparing monitoring, checking, eksperimenting constructing, designing inventing remembering main concepts, not fully understanding whole material order of knowledge/skills acquisition order of knowledge/skills acquisition

40. Remembering The learner is able to recall, restate and remember learned information. – Recognising – Listing – Describing – Identifying – Retrieving – Naming – Locating – Finding Can you recall information?

41. Classroom Roles for Remembering Teacher roles Directs Tells Shows Examines Questions Evaluates Student roles Responds Absorbs Remembers Recognises Memorises Defines Describes Retells Passive recipient

42. Creating The learner creates new ideas and information using what has been previously learned. – Designing – Constructing – Planning – Producing – Inventing – Devising – Making Can you generate new products, ideas, or ways of viewing things?

43. Classroom Roles for Creating Teacher roles Facilitates Extends Reflects Analyses Evaluates Student roles Designs Formulates Plans Takes risks Modifies Creates Proposes Active participant

44. Some researcher superimposed Benjamin Bloom’s taxonomy on Edgar Dale’s cone of learning

45. Oakland Unified School District Technology Learning Center http://tlc.ousd.k12.ca.us/tlc/sitetech/agendas/documents_81202/Dale's%20Cone.pdf http://tlc.ousd.k12.ca.us/tlc/sitetech/agendas/documents_81202/Dale's%20Cone.pdf

46. Silesian University of Technology – Poland – 2010 Recent research INNOVATION IN THE LEARNING PROCESS IN THE SILESIAN UNIVERSITY OF TECHNOLOGY - ELECTRIC CIRCUIT THEORY CASE STUDY J.Rutkowski Silesian University of Technology – Poland – 2010 http://rutkowski.iele.polsl.pl http://rutkowski.iele.polsl.pl

47. Dale’s Cone - Bloom’s Taxonomy Plane Lecture e-slides ReadingHearingLooking + HWatchingParticipatingDoing Remembering Understanding Applying Analysing Evaluating Creating Textbook Laboratory Discussion forum f2f & online Classes f2f Quizzes online Project Lecture blended video podcasts discussion forum online f2f Obligatory Not effective Assessment Program Lecture f2f laptop ppt Lecture f2f (tablet PC) + video podcasts online Lecture f2f (tablet PC) (animations, simulations) Lecture f2f chalk+blackb. Learning Content Thinking skills Experience s

48. Let’s look at all the four: Confucius, Edgar, Kolb and Bloom together

49. Kolb’s Experiential learning cycle REMEMBER CREATE BLOOM’S TAXONOMY I HEAR I FORGET I SEE I REMEMBER I DO I UNDERSTAND Confucian philosophy

50. WkWk ContentLearning domainEvaluation 1 Definitions. Metaphors, supply versus value chains, theory Cognitive (thinking) Passive teacher centered lectures I HEAR I FORGET; TEACHING ABOUT Abstract conceptualization Formative through Questionin goral quizzes, 2Supply chain integration, internal value chain, problems, the bullwhip effect, SC theories, SC sustainability 3Sustainability cont’d, intersections with economic social environmental performance, SCM risk 4Info and SCM, SCOR, evolving issues 5- 11 group field work relating theory to real world of supply chain management Affective ; group work - I SEE I REMEMBER; Reflective observation, Concrete experiencing None 12-Seminarian group presentationsPsychomotor presentations, I DO I UNDERSTAND;Activ e experimentation Summativ e project 14Examination COURSE STRUCTURE 6/11/201649H.M. Bwisa

51. Course evaluations based on course structure and guided by revised Bloom’s taxonomy The course will be evaluated via class participation, group presentations and an end of semester project as an examination CATs will comprise of regular classroom queries and class presentations End of semester project will be a practical assignment that addresses real issues in the Kenyan environment and calls for the application of the theoretical knowledge gained from this unit in particular and other course units in general 6/11/201650H.M. Bwisa

52. LECTURE NOTES

53. Week 1

54. And now on to the lecture notes

55. DEFINITION A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value chainssuppliercustomer raw materialsvalue chains

56. METAPHOR The “chain” metaphor in “supply chain”: the sequence of events involved in the process of supply is like a chain, or, more precisely, like a “chain of events.” Use of the term “supply chain” therefore invokes a series of culturally accepted and understood characteristics such as linear, sequential, and controlled processes

57. Supply Chain All facilities, functions, activities, associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flows An integrated group of processes to “source,” “make,” and “deliver” products

58. What is a supply chain? Main flows: products (services), information, money

59. Supply Chain Illustration

60. Supply Chain for Denim Jeans

61. Supply Chain for Denim Jeans (cont.)

62. Supply Chain Processes

63. Value vs. Supply Chain Value chain – every step from raw materials to the eventual end user – ultimate goal is delivery of maximum value to the end user Supply chain – activities that get raw materials and subassemblies into manufacturing operation Terms are used interchangeably

64. More strictly Supply chain consists of series of activities in which a product or a material is just transferred from the original point to the final point. In the value chain, instead of just transferring certain values are added to what is being transferred. e.g.- take an apple supply chain FARMERS- WHOLESALER-RETAILER-CONSUMER if the apples just pass through the channels with out any grading sorting then its a supply chain. If, however at each stage value is added to the apples like grading, sorting, packaging, cool storing etc. then this is called value chain.

65. Business literature is now drawing a sharper difference between “supply” chains and “value” chains Supply chain: linear process where parts and inputs are formed into a final product brought to market Value chain: circular process involving the creation, development, production and distribution of a product, creating value at each step -- regular feedback from suppliers and buyers about the value they are deriving From Supply Chains to Value Chains

66. The Demand Chain The Demand Chain is the mirror image of the supply chain. It is a sequence of backward-reaching processes, initiated by the end-customer, that enable companies to anticipate demand characteristics within a given market. Fisher cited in Walters (2002) identify the problem of demand uncertainty as being the major driver for establishing a demand chain model for a company

67. 66 Supply Chain: Manufacturing Example

68. 67 Supply Chain: Manufacturing Example

69. Supply Chain: Service Example

70. 69 Supply Chain Management Defined Supply chain management is the design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer. - Institute for Supply Management

71. 70 Theory of Supply Chain Management Supply chain management allows companies to focus on their unique skill sets. Supply chain management requires a common understanding of supply chain objectives and individual roles, an ability to work together, and a willingness to adapt in order to create and delivery the best products and services possible. SCM is the theory of comparative advantage applied at the company level.

72. 71 Theory of Supply Chain Management Companies seek to design business models that meet customer needs better than competitors. Success depends on the ability to Design, Make, and Deliver innovative, high quality, low cost products and services that customers demand.

73. Supply chain management :theory, practice and future challenges. John Storey and Caroline Emberson. The Open University Business School, Milton Keynes, UK, and Janet Godsell and Alan Harrison. Cranfield School of Management, Cranfield, UK. The current issue and full text archive of this journal is available at www.emeraldinsight.com/0144- 3577.htmwww.som.cranfield.ac.uk/.../theorypract iceandfuturechallenges.pdf www.emeraldinsight.com/0144- 3577.htm

74. Week 2

75. 74 Supply Chain Integration Common

76. 75 Internal Value Chain Elements Executive Management defines company strategy and allocates resources to achieve it. Supply Management coordinates the upstream supply base, finding the right suppliers and building the right relationships with them. Operations transforms the inputs acquired from suppliers into more highly valued products. Logistics moves and stores materials so they are available when and where they are needed. Marketing manages the downstream relationships with customers, identifying their needs and communicating to them how the company can meet those needs.

77. 76 Internal Value Chain Elements Human Resources designs the systems used to hire, train, and develop the company’s employees. Accounting maintains business records that provide information needed to control operations. Finance acquires and controls the capital required to operate the business. Information Technology builds and maintains the systems needed to capture and communicate information among decision makers. Research and Development (R&D) is responsible for new product design.

78. 77 Internal Value Chain: Local Focus R & D Operations Logistics Marketing Human Resource Management Accounting Finance Supply Management Information Technology Executive Management

79. 78 Internal Value Chain: Company Focus R & D Operations Logistics Marketing Human Resource Management Accounting Finance Supply Management Information Technology Executive Management Upstream Suppliers Downstream Customers

80. 79 Internal Value Chain: Company Focus R & D Operations Logistics Marketing Human Resource Management Accounting Finance Supply Management Information Technology Executive Management Upstream Suppliers Downstream Customers

81. 80 SCM: Linked Value Chains R & D Operations Logistics Marketing Human Resource Management Accounting Finance Supply Management Information Technology Executive Management R & D Operatio ns Logistics Marketin g Human Resourc e Manage ment Accounti ng Finance Supply Manage ment Informati on Technolo gy Executiv e Manage ment R & D Operatio ns Logistics Marketin g Human Resourc e Manage ment Accounti ng Finance Supply Manage ment Informati on Technolo gy Executiv e Manage ment R & D Operatio ns Logistics Marketin g Human Resourc e Manage ment Accounti ng Finance Supply Manage ment Informati on Technolo gy Executiv e Manage ment R & D Operatio ns Logistics Marketin g Human Resourc e Manage ment Accounti ng Finance Supply Manage ment Informati on Technolo gy Executiv e Manage ment Focal Firm SupplierSupplier’s Supplier CustomerCustomer’s Customer

82. 81 Supply Chain Management Problems The goal of supply chain management is to use technology and teamwork to build efficient and effective processes that create value for the end customer. The goal is compromised when processes, value chain elements, and/or companies work toward local rather than global optimum.

83. Let’s note The supply chain is a complex group of companies that move goods from raw materials suppliers to finished goods retailers. These companies work together when meeting consumer demand for a product; supply chains allow companies to focus on their specific processes to maintain maximum probability. Unfortunately, supply chains may stumble when market conditions change and consumer demand shifts

84. The Bullwhip Effect in Supply Chain The bullwhip effect on the supply chain occurs when changes in consumer demand causes the companies in a supply chain to order more goods to meet the new demand. The bullwhip effect usually flows up the supply chain, starting with the retailer, wholesaler, distributor, manufacturer and then the raw materials supplier. This effect can be observed through most supply chains across several industries; it occurs because the demand for goods is based on demand forecasts from companies, rather than actual consumer demand.

85. The bullwhip effect refers to an economic condition relating to materials or product supply and demand. Observed across most industries, the bullwhip phenomenon creates large swings in demand on the supply chain resulting from relatively small, but unplanned, variations in consumer demand that escalate with each link in the chain. The bullwhip effect is caused by unforeseen variables in demands on the supply chain

86. 85 The Bullwhip Effect Variation in demand is exaggerated as information moves upstream away from the point of use. Variation in demand is exaggerated due to infrequent demand and/or inventory level information exchange and order batching.

87. 86 The Bullwhip Effect

88. Inventory: Bullwhip Effect Order Quantity Time Retailer’s Orders Order Quantity Time Wholesaler’s Orders Order Quantity Time Manufacturer’s Orders The magnification of variability in orders in the supply-chain. A lot of retailers each with little variability in their orders…. …can lead to greater variability for a fewer number of wholesalers, and… …can lead to even greater variability for a single manufacturer.

89. Copyright 2006 John Wiley & Sons, Inc.10-88 Bullwhip Effect Occurs when slight demand variability is magnified as information moves back upstream

90. 89 The Bullwhip Effect Bullwhip effect - the inaccurate or distorted demand information created in the supply chain Causes are generated by: Poor communication throughout the supply chain Poor ordering practices Poor reaction to backlogs

91. Consequences of the bullwhip effect can lead to either inefficient production or excessive inventory as the producer needs to fulfill the demand of its predecessor in the supply chain. This also leads to a low utilization of the distribution channel. Bullwhip effect costs can be as high as 12 to 25%

92. Methods intended to reduce uncertainty, variability, and lead time (bullwhip effect) Just In Time replenishment (JIT) Strategic partnership Information sharing smooth the flow of products – coordinate with retailers to spread deliveries evenly – reduce minimum batch sizes – smaller and more frequent replenishments

93. © 2007 Wiley92 The Bullwhip Effect Counteracting the Effect: – Change the way suppliers forecast product demand by making this information available at all levels of the supply chain – Share real demand information (POS terminals) – Eliminate order batching – Stabilize pricing – Eliminate gaming

94. Some theories

95. 94 Strategy Strategy is the basis from which a consistent allocation of resources is made to achieve some objective. The objective of “for-profit” organizations is to make money; the best way to achieve this objective may be to focus on satisfying the customer.

96. 95 Contingency Theory Contingency theory recognizes the need for managers to consider the relationship between a changing environment, managerial decision-making, and performance. Situational awareness is key to effectively aligning company resources in a changing competitive environment.

97. 96 Industrial Organization Theory Market forces constrained by the power of suppliers, buyers, existing rivals, potential rivals, and providers of substitute products/services should drive decision- making. Industrial Organization core questions: 1.Where does market power exist? 2.What are the sources of that power?

98. 97 Resource-Based Theory Resource-based theory emphasizes management of internal sources to establish a unique skill set. Unique skills/processes (core competence) lead to competitive advantage, the ability to deliver distinctive products/services in a way that adds value in the eyes of the customer.

99. 98 Four Decision Areas for Strategy 1.Environment – Internal – company culture, functional relationships, reward and measurement system – External – competitive, economic, legal, and political environments

100. 99 Environmental Considerations

101. 100 Four Decision Areas for Strategy 1.Environment – Internal – company culture, functional relationships, reward and measurement system – External – competitive, economic, legal, and political environments 2.Resources – all assets a firm can bring to bear, including: people, technology, infrastructure, materials, and money. – Success requires investment in knowledge and processes

102. 101 Four Decision Areas for Strategy 3.Objectives – unifies decision-making throughout a company. – Focusing on the right objectives is the key to a winning business strategy. 4.Feedback –input to the control mechanism, insuring the company strategy adapts to a changing competitive environment. – Marketplace – custom expectations, company capabilities, and competitor actions – General – exchange rates, government policies, technologies, weather and other natural occurrences

103. 102 Strategic Thinking: Traditional View A valid business model must answer two questions: 1.What is our business? – Who are our customers? – What is the real value that we offer them? 2.How can we do it better than anyone else? – Unique organizational capabilities – Almost always process based

104. 103 Supply Chain Strategy Seeks to leverage the resources and skills of diverse companies in the supply chain to deliver exceptional value to the end customer. Addresses: – How the capabilities of other chain members can be used to create value for the end customer – How their own strategy and actions impact the ability of the supply chain to create value for the end customer

105. 104 Supply Chain Strategy Rather than “What is our business?” the SC strategist inquires: What is the overall supply chain’s value proposition? How does our company uniquely help the chain deliver on its value proposition?

106. 105 Supply Chain Strategy Rather than “How can we do it better than anyone else?” the SC strategist asks: What valued capabilities do other members of the chain possess? How can we bring these complementary competencies together in a way customers value? What type of relationships should we maintain with other members of the supply chain? Are any customer-valued competencies missing? If so, who is best positioned to develop them? How much of the value-added process should we control?

107. 106

108. What is Sustainable Business? To some it is “triple bottom line” reporting – economic, social and environmental. Put simply, it is: “future-proofing your business”

109. What is Sustainable Supply Chain? Resources are consumed in line with replenishment patterns General business decisions consider long-term business interruption impacts Total Risk and costs continue to fall over time. This is not JUST an environmental issue

110. Sustainable Supply Chain Sustainable supply chain management (SSCM) is the strategic, transparent integration and achievement of an organization’s social, environmental, and economic goals in the systemic coordination of key inter-organizational business processes for improving the long-term economic performance of the individual company and its supply chains (Carter & Rogers, 2008, International Journal of Physical Distribution and Logistics Management, Volume 38, Number 5). 109

111. 110

112. Week 3

113. Intersections Of Economic With Social And/Or Environmental Performance Cost savings due to reduced packaging waste (Mollenkopf et al., 2005; Rosenau et al., 1996), and the ability to design for reuse and disassembly (Christmann, 2000; Hart, 1995; Shrivastava, 1995c). Reduced health and safety costs, and lower recruitment and labor turnover costs -resulting from safer warehousing and transportation and better working conditions (Brown, 1996; Carter et al., 2007). Lower labor costs – Better working conditions can increase motivation and productivity, and reduce the absenteeism of supply chain personnel (Holmes et al., 1996; McElroy et al., 1993). Proactively shaping future regulation – companies that proactively address environmental and social concerns can influence government regulation when this regulation is modeled after a company’s existing production and supply chain processes, leading to a difficult-to-replicate competitive advantage for companies and their suppliers (Carter and Dresner, 2001). 112

114. Reduced costs, shorter lead times, and better product quality - associated with the implementation of ISO 14000 standards, which provide a framework for environnemental management systems (Hanson et al., 2004; Montabon et al., 2000; Tibor and Feldman, 1996). Enhanced reputation – engaging in sustainable behavior can make an organization more attractive to suppliers and customers (Ellen et al., 2006), to potential employees (Capaldi, 2005), and to shareholders (Klassen and McLaughlin, 1996). 113

115. …. And Just Why Do We Want One? Making profits for a while isn’t particularly difficult. The challenge is to do it sustain-ably. If we consume more resources than the total system can deliver to us, then other resources will be wasted waiting for the late ones. Wastage = Financial loses.

116. Sustainability…..Why???? To reduce costs…energy To reduce risk…waste bills, water shortages To reduce absenteeism…less toxins, cleaner air To improve productivity…natural light and ventilation To increase property value…low operating costs To create healthier environments…landscaping. To lead…staff and students To Increase profits – on an ongoing basis …..

117. So, what is the problem…? Humans are the only species on earth that create waste We are using the earths resources faster than they can be replenished We are creating substance that nature can not manage…can not break down We are destroying the earths bio-diversity at an increasingly fast pace With 80% of the planets resources and 80% of the planets wealth sitting in the hands of just 20% of the worlds population…we are not being fair to all people. We are consuming and living way beyond the means of this one…finite planet.

118. SCM Risk – What should we think about? Who am I dependent on? Who am I dependent on? Which systems are critical and which are not? Which systems are critical and which are not? What could take me down, and how long would the outage last? What could take me down, and how long would the outage last? What contingencies does my business have in place? What contingencies does my business have in place? What contingencies do my suppliers have in place? What contingencies do my suppliers have in place? - Lisa Hauser, Marsh Consulting

119. Many Companies believe that it is necessary to achieve sustainability across their supply chains. So why isn’t it happening?

120. Why the lack of emphasis With basic environmental management processes achieved – there is little low hanging fruit left. Consumers often do not see it as a benefit worth supporting and driving Short term focus of user, consumer, management or government Lack of strategic management (no or poor vision., mission statements e.g. leaving out employees in the mission statement)

121. So what can you do? As a consumer and a professional, give emphasis on sustainable options. Create transparency across your entire supply chain Convert everything to dollars where you can…..an example is the reaction of fast food companies to potential “Fat Tax” (you pollute you pay) movements !!

122. So what can you do? Encourage your company members through brain-storming sessions, project teams and feedback loops. Encourage suppliers to become more sustainable; be a watchdog. Educate your customers so they see that your sustainability could result in fewer interruptions to their supply – this would give your organisation a competitive advantage.

123. So what can you do? There is a world-wide shortage of skills. Why? Because we are not committed to training. We need to train more to ensure that the workforce is sustainable. Companies need In-house training, OJT, Human resource development programmes – Question – how many companies out there do this?

124. The Process of Improvement Step One – Culture (ownership culture – ours not theirs, TEAM, collective responsibility) Step One – Culture (ownership culture – ours not theirs, TEAM, collective responsibility) Step Two – Evaluate your organisation and your suppliers e.g SWOT ANALYSIS Step Two – Evaluate your organisation and your suppliers e.g SWOT ANALYSIS Step Three – Get the right people involved e.g STAKEHOLDER ANALYSIS Step Three – Get the right people involved e.g STAKEHOLDER ANALYSIS Step Four – Make SMART Plans – include reporting processes and formats Step Four – Make SMART Plans – include reporting processes and formats Step Five – Take Action Step Five – Take Action Step Six – Measures/Evaluation/review progress Step Six – Measures/Evaluation/review progress Step Seven – Benchmark (or be benchmarked) Step Seven – Benchmark (or be benchmarked)

125. 7 sustainability steps for companies 1.culture. 2.educate the organization on sustainability. It is imperative to show employees the benefits of sustainability and what it can do for a company and our environment. 3.complete a sustainability audit of our company’s supply chain. We need to develop a baseline measure for where we are today in order to gauge where we need to go. 4.Determining the goals and objectives for the sustainable supply chain. When developing goals and objectives, companies must make sure their goals are SMART (Specific, Measurable, Attainable, Relevant, and Timely) and that they are focused on sustainability. 5.determine what actions need to take place in order to meet these objectives. 6.Measures must be in taken in order to see how effective we are with our projects. These sustainability measures must be posted and discussed at company meetings. Measuring objectives will drive results! Once we reach a measure we need to raise the bar and focus on getting more sustainability within our supply chain processes. If we are falling short of our measures we need to find out what is preventing us from reaching our goals? 7.Benchmark where your company is in regards to sustainability. Even though we have goals, and have projects and measures in place, we need to seek out other companies that are trying to achieve sustainability. What are they doing that we can incorporate in our organizations? How can we replicate and incorporate their successful sustainability initiatives? We need to leverage the learning that is occurring in other companies and incorporate it into our organizations, which in turn will benefit society.

126. Case Study One – Palliser Estate Committed to achieving Zero Waste. Committed to achieving Zero Waste. Vineyard waste from pruning is mulched and left to break down between the grapevine rows. Under vine areas are mown rather than sprayed. Vineyard waste from pruning is mulched and left to break down between the grapevine rows. Under vine areas are mown rather than sprayed. "We are organic in style as much as possible" says Sharon Goldsworthy, "but we must reserve the right to go in with a spray if there is no other option and we may lose our crop. The reality is sometimes different from the theory.“ "We are organic in style as much as possible" says Sharon Goldsworthy, "but we must reserve the right to go in with a spray if there is no other option and we may lose our crop. The reality is sometimes different from the theory.“ Other things the judges liked: Other things the judges liked: Strong community leadership Strong community leadership Ongoing support of trust set up to support local school Ongoing support of trust set up to support local school Educating staff to reduce waste Educating staff to reduce waste Very successful policy in place to reduce energy consumption Very successful policy in place to reduce energy consumption Seaweed fertilisers used in trial blocks Seaweed fertilisers used in trial blocks Manuka planted to host wasps which kill caterpillars on vines Manuka planted to host wasps which kill caterpillars on vines Strong involvement with groups seeking to improve the industry Strong involvement with groups seeking to improve the industry Seek out other vineyards to form discussion groups Seek out other vineyards to form discussion groups NZ Business Council for Sustainable Development – ANZ & BFEA Harvest Award

127. Case Study One – Palliser Estate Palliser Estate Winery comprises 70 ha in Martinborough – certified to ISO14001. Palliser Estate Winery comprises 70 ha in Martinborough – certified to ISO14001. Operating with a "triple bottom line"; a collective commitment to profit, environment and social aspects. Operating with a "triple bottom line"; a collective commitment to profit, environment and social aspects. The award judges noted: This commitment has led to the development of a wide range of policies that have been well thought through and carefully implemented." The award judges noted: This commitment has led to the development of a wide range of policies that have been well thought through and carefully implemented." NZ Business Council for Sustainable Development – ANZ & BFEA Harvest Award

128. Case Study Two – The Warehouse As part of its commitment to Zero Waste, The Warehouse actively encourages waste elimination through its supply chain. Using its buying power as leverage, The Warehouse is able to influence its suppliers toward minimising the amount of material used in packaging. As part of its commitment to Zero Waste, The Warehouse actively encourages waste elimination through its supply chain. Using its buying power as leverage, The Warehouse is able to influence its suppliers toward minimising the amount of material used in packaging. For Example: Menswear Buyer Ewa Liddington recently initiated the redesign of packaging for a range of men’s t- shirts, polo shirts and singlets. The original plastic bag and hanger were replaced with cardboard band wraps. This replacement eliminates 12 grams of plastic per unit. With sales of over 300 thousand garments this packaging change equates to a direct saving of around 4 tonnes of waste plastic per year. For Example: Menswear Buyer Ewa Liddington recently initiated the redesign of packaging for a range of men’s t- shirts, polo shirts and singlets. The original plastic bag and hanger were replaced with cardboard band wraps. This replacement eliminates 12 grams of plastic per unit. With sales of over 300 thousand garments this packaging change equates to a direct saving of around 4 tonnes of waste plastic per year. NZ Business Council for Sustainable Development – ANZ & BFEA Harvest Award

129. Case Study Three – Macpac Reduced it’s impact on the environment (Biodiversity Loss) by increasing efficiency and reducing greenhouse gas emissions. Reduced it’s impact on the environment (Biodiversity Loss) by increasing efficiency and reducing greenhouse gas emissions. An investment programme has started in which the firm will invest in around 20 hectares of native forest restoration. In a related scheme the firm made interest-free loans to staff to install energy-saving products at home. An investment programme has started in which the firm will invest in around 20 hectares of native forest restoration. In a related scheme the firm made interest-free loans to staff to install energy-saving products at home. NZ Business Council for Sustainable Development – ANZ & BFEA Harvest Award

130. Case Study Four - BP "BP has proved that reducing greenhouse gas emissions can be good for a company's financial bottom line. Since 1997 BP internationally has reduced its greenhouse gases by 10% from a 1990 base line and at the same time created $US650 million in value. Other companies can also achieve these results." "BP has proved that reducing greenhouse gas emissions can be good for a company's financial bottom line. Since 1997 BP internationally has reduced its greenhouse gases by 10% from a 1990 base line and at the same time created $US650 million in value. Other companies can also achieve these results." PETER GRIFFITHS, CEO, BP OIL NEW ZEALAND LIMITED PETER GRIFFITHS, CEO, BP OIL NEW ZEALAND LIMITED NZ Business Council for Sustainable Development – ANZ & BFEA Harvest Award

131. So, Where are we Heading? Companies living/breathing the need for sustainable business principles. Companies living/breathing the need for sustainable business principles. More links found between pollution and diseases – maybe as many as 200 from cerebral palsy to more than 37 types of cancer. More links found between pollution and diseases – maybe as many as 200 from cerebral palsy to more than 37 types of cancer. Greater government controls to manage sustainability – driven by voters Greater government controls to manage sustainability – driven by voters Shareholders demanding measures of “sustainability” in financial accounts Shareholders demanding measures of “sustainability” in financial accounts

132. On the Positive Side Eco-friendly actions/companies are now being recognised. Eco-friendly actions/companies are now being recognised. The hippies of 40 years ago, now have money – and they want clean, green and organic; but with style. The hippies of 40 years ago, now have money – and they want clean, green and organic; but with style. This is a new, emerging and potentially huge market !! This is a new, emerging and potentially huge market !!

133. Quotes to remember Dick Hubbard -If you're not sustainable yourself how can you demand it of others. Ghandi - The world has enough for everyone’s needs but not for everyone’s greed. Einstein - The world will not move beyond its current state of crisis using the same thinking that got us there in the first place.

134. 133 What Is the Supply Chain? Also referred to as the logistics network Suppliers, manufacturers, warehouses, distribution centers and retail outlets – “facilities” and the Raw materials Work-in-process (WIP) inventory Finished products that flow between the facilities SuppliersManufacturersWarehouses & Distribution Centers Customers Material Costs Transportation Costs Transportation Costs Transportation Costs Inventory Costs Manufacturing Costs Sorry, misplaced slides (136-144). Nevertheless to be used as bonus slides

135. 134 The Supply Chain SuppliersManufacturersWarehouses & Distribution Centers Customers Material Costs Transportation Costs Transportation Costs Transportation Costs Inventory CostsManufacturing Costs

136. 135 The Supply Chain – Another View SuppliersManufacturersWarehouses & Distribution Centers Customers Material Costs Transportation Costs Transportation Costs Transportation Costs Inventory Costs Manufacturing Costs Plan Source Make Deliver Buy

137. 136 What Is Supply Chain Management (SCM)? A set of approaches used to efficiently integrate – Suppliers – Manufacturers – Warehouses – Distribution centers So that the product is produced and distributed – In the right quantities – To the right locations – And at the right time System-wide costs are minimized and Service level requirements are satisfied Plan Source Make Deliver Buy

138. 137 History of Supply Chain Management 1960’s - Inventory Management Focus, Cost Control 1970’s - MRP & BOM - Operations Planning 1980’s - MRPII, JIT - Materials Management, Logistics 1990’s - SCM - ERP - “Integrated” Purchasing, Financials, Manufacturing, Order Entry 2000’s - Optimized “Value Network” with Real-Time Decision Support; Synchronized & Collaborative Extended Network

139. 138 Why Is SCM Difficult? Uncertainty is inherent to every supply chain – Travel times – Breakdowns of machines and vehicles – Weather, natural catastrophe, war – Local politics, labor conditions, border issues The complexity of the problem to globally optimize a supply chain is significant – Minimize internal costs – Minimize uncertainty – Deal with remaining uncertainty Plan Source Make Deliver Buy

140. 139 The Importance of Supply Chain Management Dealing with uncertain environments – matching supply and demand – Boeing announced a $2.6 billion write-off in 1997 due to “raw materials shortages, internal and supplier parts shortages and productivity inefficiencies” – U.S Surgical Corporation announced a $22 million loss in 1993 due to “larger than anticipated inventories on the shelves of hospitals” – IBM sold out its supply of its new Aptiva PC in 1994 costing it millions in potential revenue – Hewlett-Packard and Dell found it difficult to obtain important components for its PC’s from Taiwanese suppliers in 1999 due to a massive earthquake U.S. firms spent $898 billion (10% of GDP) on supply-chain related activities in 1998

141. 140 The Importance of Supply Chain Management Shorter product life cycles of high-technology products – Less opportunity to accumulate historical data on customer demand – Wide choice of competing products makes it difficult to predict demand The growth of technologies such as the Internet enable greater collaboration between supply chain trading partners – If you don’t do it, your competitor will – Major buyers such as Wal-Mart demand a level of “supply chain maturity” of its suppliers Availability of SCM technologies on the market – Firms have access to multiple products (e.g., SAP, Baan, Oracle, JD Edwards) with which to integrate internal processes

142. 141 Supply Chain Management and Uncertainty Inventory and back-order levels fluctuate considerably across the supply chain even when customer demand doesn’t vary The variability worsens as we travel “up” the supply chain Forecasting doesn’t help! Manufactur er Wholesale Distributo rs Consume rs Multi- tier Supplie rs Retailer s Time Sales Time Sales Time Sales Time Bullwhip Effect

143. Week 4 Summarizing the weeks Important issues

144. 143 Factors Contributing to the Bullwhip Demand forecasting practices – Min-max inventory management (reorder points to bring inventory up to predicted levels) Lead time – Longer lead times lead to greater variability in estimates of average demand, thus increasing variability and safety stock costs Batch ordering – Peaks and valleys in orders – Fixed ordering costs – Impact of transportation costs (e.g., fuel costs) – Sales quotas Price fluctuations – Promotion and discount policies Lack of centralized information

145. 144 Today’s Marketplace Requires: Personalized content and services for their customers Collaborative planning with design partners, distributors, and suppliers Real-time commitments for design, production, inventory, and transportation capacity Flexible logistics options to ensure timely fulfillment Order tracking & reporting across multiple vendors and carriers Shared visibility for trading partners

146. 145 Supply Chain Management – Key Issues Forecasts are never right – Very unlikely that actual demand will exactly equal forecast demand The longer the forecast horizon, the worse the forecast – A forecast for a year from now will never be as accurate as a forecast for 3 months from now Aggregate forecasts are more accurate – A demand forecast for all CV therapeutics will be more accurate than a forecast for a specific CV-related product Nevertheless, forecasts (or plans, if you prefer) are important management tools when some methods are applied to reduce uncertainty

147. 146 Supply Chain Management – Key Issues Overcoming functional silos with conflicting goals PurchasingManufacturingDistribution Customer Service/ Sales Few change- overs Stable schedules Long run lengths High inventories High service levels Regional stocks SOURCE MAKEDELIVERSELL Low pur- chase price Multipl e vendors Low invent- ories Low trans- portatio n

148. 147 Supply Chain Management – Key Issues ISSUECONSIDERATIONS Network Planning Warehouse locations and capacities Plant locations and production levels Transportation flows between facilities to minimize cost and time Inventory Control How should inventory be managed? Why does inventory fluctuate and what strategies minimize this? Supply Contracts Impact of volume discount and revenue sharing Pricing strategies to reduce order-shipment variability Distribution Strategies Selection of distribution strategies (e.g., direct ship vs. cross-docking) How many cross-dock points are needed? Cost/Benefits of different strategies Integration and Strategic Partnering How can integration with partners be achieved? What level of integration is best? What information and processes can be shared? What partnerships should be implemented and in which situations? Outsourcing & Procurement Strategies What are our core supply chain capabilities and which are not? Does our product design mandate different outsourcing approaches? Risk management Product Design How are inventory holding and transportation costs affected by product design? How does product design enable mass customization? Source: Simchi-Levi

149. 148 Supply Chain Management Operations Strategies STRATEGYWHEN TO CHOOSEBENEFITS Make to Stock standardized products, relatively predictable demand Low manufacturing costs; meet customer demands quickly Make to Order customized products, many variations Customization; reduced inventory; improved service levels Configure to Order many variations on finished product; infrequent demand Low inventory levels; wide range of product offerings; simplified planning Engineer to Order complex products, unique customer specifications Enables response to specific customer requirements Source: Simchi-Levi

150. 149 Supply Chain Management – Benefits A 1997 PRTM Integrated Supply Chain Benchmarking Survey of 331 firms found significant benefits to integrating the supply chain Delivery Performance16%-28% Improvement Inventory Reduction25%-60% Improvement Fulfillment Cycle Time30%-50% Improvement Forecast Accuracy25%-80% Improvement Overall Productivity10%-16% Improvement Lower Supply-Chain Costs25%-50% Improvement Fill Rates20%-30% Improvement Improved Capacity Realization10%-20% Improvement Source: Cohen & Roussel

151. 150 Supply Chain Imperatives for Success View the supply chain as a strategic asset and a differentiator – Wal-Mart’s partnership with Proctor & Gamble to automatically replenish inventory – Dell’s innovative direct-to-consumer sales and build-to-order manufacturing Create unique supply chain configurations that align with your company’s strategic objectives – Operations strategy – Outsourcing strategy – Channel strategy – Customer service strategy – Asset network Reduce uncertainty – Forecasting – Collaboration – Integration Supply chain configuration components

152. 151 Value of Information and SCM

153. 152 Information In The Supply Chain Source Make Deliver Sell SuppliersManufacturers Warehouses & Distribution Centers Retailer Order Lead Time Delivery Lead Time Production Lead Time Each facility further away from actual customer demand must make forecasts of demand Lacking actual customer buying data, each facility bases its forecasts on ‘downstream’ orders, which are more variable than actual demand To accommodate variability, inventory levels are overstocked thus increasing inventory carrying costs It’s estimated that the typical pharmaceutical company supply chain carries over 100 days of product to accommodate uncertainty Plan

154. 153 Taming the Bullwhip Reduce uncertainty in the supply chain – Centralize demand information – Keep each stage of the supply chain provided with up-to-date customer demand information – More frequent planning (continuous real-time planning the goal) Reduce variability in the supply chain – Every-day-low-price strategies for stable demand patterns Reduce lead times – Use cross-docking to reduce order lead times – Use EDI techniques to reduce information lead times Eliminate the bullwhip through strategic partnerships – Vendor-managed inventory (VMI) – Collaborative planning, forecasting and replenishment (CPFR) Four critical methods for reducing the Bullwhip effect:

155. 154 Methods for Improving Forecasts Accurate Forecasts Panels of Experts Internal experts External experts Domain experts Delphi technique Moving average Exponential smoothing Trend analysis Seasonality analysis Judgment Methods Time-Series Methods Causal Analysis Market Research Analysis Relies on data other than that being predicted Economic data, commodity data, etc. Market testing Market surveys Focus groups

156. 155 The Evolving Supply Chain

157. 156 Supply Chain Integration – Push Strategies Classical manufacturing supply chain strategy Manufacturing forecasts are long-range – Orders from retailers’ warehouses Longer response time to react to marketplace changes – Unable to meet changing demand patterns – Supply chain inventory becomes obsolete as demand for certain products disappears Increased variability (Bullwhip effect) leading to: – Large inventory safety stocks – Larger and more variably sized production batches – Unacceptable service levels – Inventory obsolescence Inefficient use of production facilities (factories) – How is demand determined? Peak? Average? – How is transportation capacity determined? Examples: Auto industry, large appliances, others?

158. 157 Supply Chain Integration – Pull Strategies Production and distribution are demand-driven – Coordinated with true customer demand None or little inventory held – Only in response to specific orders Fast information flow mechanisms – POS data Decreased lead times Decreased retailer inventory Decreased variability in the supply chain and especially at manufacturers Decreased manufacturer inventory More efficient use of resources More difficult to take advantage of scale opportunities Examples: Dell, Amazon

159. 158 Supply Chain Integration – Push/Pull Strategies Hybrid of “push” and “pull” strategies to overcome disadvantages of each Early stages of product assembly are done in a “push” manner – Partial assembly of product based on aggregate demand forecasts (which are more accurate than individual product demand forecasts) – Uncertainty is reduced so safety stock inventory is lower Final product assembly is done based on customer demand for specific product configurations Supply chain timeline determines “push-pull boundary” Supply Chain Timeline Raw Materials End Consumer Push StrategyPull Strategy Push- Pull Boundary “Generic” Product“Customized” Product

160. 159 Choosing Between Push/Pull Strategies Pull Push Pull Push Economies of Scale LowHigh Low High Demand Uncertainty Industries where: Customization is High Demand is uncertain Scale economies are Low Computer equipment Industries where: Standard processes are the norm Demand is stable Scale economies are High Grocery, Beverages Industries where: Uncertainty is low Low economies of scale Push-pull supply chain Books, CD’s Industries where: Demand is uncertain Scale economies are High Low economies of scale Furniture Where do the following industries fit in this model: Automobile? Aircraft? Fashion? Petroleum refining? Pharmaceuticals? Biotechnology? Medical Devices? Source: Simchi-Levi

161. 160 Characteristics of Push, Pull and Push/Pull Strategies PUSHPULL Objective Minimize CostMaximize Service Level Complexity HighLow Focus Resource AllocationResponsiveness Lead Time LongShort Processes Supply Chain PlanningOrder Fulfillment Source: Simchi-Levi

162. 161 Supply Chain Collaboration – What Is It? Many different definitions depending on perspective The means by which companies within the supply chain work together towards mutual goals by sharing – Ideas – Information – Processes – Knowledge – Information – Risks – Rewards Why collaborate? – Accelerate entry into new markets – Changes the relationship between cost/value/profit equation

163. 162 Supply Chain Collaboration Cornerstone of effective SCM The focus of many of today’s SCM initiatives The only method that has the potential to eliminate or minimize the Bullwhip effect Manufacturer Distributors/ Wholesalers Suppliers Retailers Collaborative Demand Planning Collaborative Logistics Planning Transportation services Distribution center services Synchronized Production Scheduling Collaborative Product Development Logistics Providers

164. 163 Benefits of Supply Chain Collaboration CUSTOMERSMATERIAL SUPPLIERSSERVICE SUPPLIERS Reduced inventory Increased revenue Lower order management costs Higher Gross Margin Better forecast accuracy Better allocation of promotional budgets Reduced inventory Lower warehousing costs Lower material acquisition costs Fewer stockout conditions Lower freight costs Faster and more reliable delivery Lower capital costs Reduced depreciation Lower fixed costs Improved customer service More efficient use of human resources Source: Cohen & Roussel

165. 164 Supply Chain Collaboration Spectrum Source: Cohen & Roussel Number of Relationships Extent of Collaboration ManyFew Limited Extensive Transactional Collaboration Synchronized Collaboration Cooperative Collaboration Coordinated Collaboration Not Viable Low Return The green arrow describes increasing complexity and sophistication of: – Information systems – Systems infrastructure – Decision support systems – Planning mechanisms – Information sharing – Process understanding Higher levels of collaboration imply the need for both trading partners to have equivalent (or close) levels of supply chain maturity Synchronized collaboration demands joint planning, R&D and sharing of information and processing models – Movement to real-time customer demand information throughout the supply chain

166. 165 Successful Supply Chain Collaboration Try to collaborate internally before you try external collaboration Help your partners to work with you Share the savings Start small (a limited number of selected partners) and stay focused on what you want to achieve in the collaboration Advance your IT capabilities only to the level that you expect your partners to manage Put a comprehensive metrics program in place that allows you to monitor your partners’ performance Make sure people are kept part of the equation – Systems do not replace people – Make sure your organization is populated with competent professionals who’ve done this before

167. 166 Emerging Best Practices in SCM Strategy

168. 167 The SCOR Model

169. 168 Collaboration and the SCOR Model The Supply-Chain Council (SCC) is a global, not-for-profit trade association open to all types of organizations – 800 world-wide members – Multi-industry SCC sponsors and supports educational programs including conferences, retreats, benchmarking studies, and development of the Supply-Chain Operations Reference-model (SCOR), the process reference model designed to improve users' efficiency and productivity Promotes research and thought leadership in the supply chain management area Adoption of common standards for reference to process, information and material goods flows is essential to enable trading partner collaboration

170. 169 Quantify the operational performance of similar companies and establish internal targets based on “best-in- class” results Benchmarking Characterize the management practices and software solutions that result in “best- in-class” performance Best Practices Analysis Process Reference Model Capture the “as-is” state of a process and derive the desired “to- be” future state Business Process Reengineering Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best-in- class” results Characterize the management practices and software solutions that result in “best- in-class” performance Process Reference Models Process reference models integrate the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework

171. 170 SCOR Structure Supplier Plan Customer Custome r’s Custome r Suppliers’ Supplier Make Delive r Source Make DeliverMakeSource Deliver Source Deliver Internal or External Your Company Source SCOR Model Return Building Block Approach ProcessesMetrics Best PracticeTechnology

172. 171 Customers Suppliers P1 Plan Supply Chain Plan P2 Plan Source P3 Plan Make P4 Plan Deliver SourceMakeDeliver S1 Source Stocked Products M1 Make-to-Stock M2 Make-to-Order M3 Engineer-to-Order D1 Deliver Stocked Products D2 Deliver MTO Products D3 Deliver ETO Products S2 Source MTO Products S3 Source ETO Products Return Source P5 Plan Returns Return Deliver Enable D4 Deliver Retail Products SCOR 7.0 Model Structure

173. 172 Material Flow SCOR Level 1 Operations Strategy Analyze Basis of Competition SCOR Level 2 Configure supply chain Align Performance Levels, Practices, and Systems Implement supply chain Processes and Systems Implement supply chain Processes and Systems SCOR Implementation Roadmap Competitive Performance Requirements Performance Metrics Supply Chain Scorecard Scorecard Gap Analysis Project Plan AS IS Geographic Map AS IS Thread Diagram Design Specifications TO BE Thread Diagram TO BE Geographic Map Information and Work Flow AS IS Level 2, 3, and 4 Maps Disconnects Design Specifications TO BE Level 2, 3, and 4 Maps Develop, Test, and Roll Out Organization Technology Process People SCOR Level 3

174. 173 Consumer Foods – Project Time (Start to Finish) – 3 months – Investment - $50,000 – 1 st Year Return - $4,300,000 Electronics – Project Time (Start to Finish) – 6 months – Investment - $3-5 Million – Projected Return on Investment - $ 230 Million Software and Planning – SAP bases APO key performance indicators (KPIs) on SCOR Model Aerospace and Defense – SCOR Benchmarking and use of SCOR metrics to specify performance criteria and provide basis for contracts / purchase orders Examples of SCOR Adoptions

175. 174 The SCOR Model As Context for This Course Supplier Plan Customer Customer’s Customer Suppliers’ Supplier Make Deliver Source Make DeliverMakeSource Deliver Source Deliver Internal or External Your Company Source Return Segment Analysis, Marketing Planning Marketing Data Suppliers Pharmacies, Hospitals, Doctors Marketing and Sales Functions Doctors, Hospitals Patients Pharmaceutical sales and marketing activities have their own set of logistics related activities that can be fully described using the SCOR model

176. 175 The SCOR Model As Context for This Course Supplier Plan Customer Customer’s Customer Suppliers’ Supplier Make Deliver Source Make DeliverMakeSource Deliver Source Deliver Internal or External Your Company Source Return Two interrelated “supply chains” work together to deliver drugs to market: – The Marketing and Sales “supply chain” which is principally information-based – The Logistics supply chain which is principally product-based Supplier Plan Customer Customer’s Customer Suppliers’ Supplier Make Deliver Source Make DeliverMakeSource Deliver Source Deliver Internal or External Your Company Source Return Sales Manufacturing & Distribution

177. Chapter 12 Version 6e176 Channels for Consumer Products Producer Consumers Retailers Wholesalers Agents or BrokersWholesalerChannelRetailerChannelDirectChannelAgent/BrokerChannel

178. Chapter 12 Version 6e177 Channels for Business-to-Business Products Producer Industrial User Industrial Distributor Agents or Brokers Agents or BrokersAgent/BrokerChannel Industrial Distributor DirectChannel Producer Government Buyer DirectChannel Agent/Broker Agent/Broker Industrial Channel

179. Week 5 to 12

180. Studies have revealed that Kenyan firms do experience the bullwhip effect. An example is the Kenya pipeline company. In a group of not more than three select a Kenya organization that may be experiencing (or prone to experiencing) the bull whip effect. Assess the magnitude of the effect and identify factors that lead to the bull whip effect. Propose/recommend remedial actions and present the report in class. Using inputs from the class refine the report and submit it to the management of ther organization.

181. END OF SEMESTER PROJECT IDENTIFY A KENYAN ORGANIZATION THAT IS NOT (OR IS NOT EFFECTIVELY) INVOLVED IN SUPPLY CHAIN MANAGEMENT. IDENTIFY WHAT IT IS LOSING FOR NOT DOING SO (COST- BENEFIT ANALYSIS) AND WRITE A PROPOSAL TO RECOMMEND ITS INVOLVEMENT IN IT.

182. RULES FOR THE END OF SEMESTER EXAMINATION YOU MAY WORK IN GROUPS BUT THE END PROJECT MUST BE INDIVIDUAL PROJECTS FOUND TO BE SIMILAR WILL BE CONSIDERED AN EXAMINATION IRREGULARITY (CHEATING) AND MARKED OUT OF ZERO PERCENT A SOFT COPY OF THE PROJECT MUST BE SUBMITTED TO bwihem@yahoo.com LATEST A DAY BEFORE THE OFFICIAL UNIVERSITY EXAMINATION DATE bwihem@yahoo.com A HARD COPY MUST BE SUBMITTED (NO PRESENTATIONS) IN PERSON ON THE OFFICIAL UNIVERSITY EXAMINATION DAY EVERY STUDENT WILL SIGN THE EXAMINATION ROLL CALL ON SUBMISSION OF THE HARD COPY FAILURE TO SUBMIT BY THE SAID DEADLINES WILL BE DEEMED AN EXAMINATION FAILURE I.E. A ZERO MARK WILL BE AWARDED

183. The end THANK YOU P.O BOX 7228 (00300) NAIROBI, KENYA Tel: 254722858507 bwihem@gmail.com www.mukmik.com www.professorbwisa.com