Presentation on theme: "Global Supply Chain Procurement and Distribution"— Presentation transcript:
1 Global Supply Chain Procurement and Distribution Chapter 11Global Supply Chain Procurement and Distribution
2 Copyright 2011 John Wiley & Sons, Inc. Lecture OutlineProcurementE-ProcurementDistributionTransportationThe Global Supply ChainCopyright 2011 John Wiley & Sons, Inc.
3 Copyright 2011 John Wiley & Sons, Inc. ProcurementThe purchase of goods and services from suppliersCross enterprise teamscoordinate processes between a company and its supplierOn-demand (direct-response) deliveryrequires the supplier to deliver goods when demanded by the customerContinuous replenishmentsupplying orders in a short period of time according to a predetermined scheduleCopyright 2011 John Wiley & Sons, Inc.
4 Copyright 2011 John Wiley & Sons, Inc. OutsourcingSourcingselection of suppliersOutsourcingpurchase of goods and services from an outside supplierCore competencieswhat a company does bestSingle sourcinga company purchases goods and services from only a few (or one) suppliersCopyright 2011 John Wiley & Sons, Inc.
5 Categories of Goods and Services Copyright 2011 John Wiley & Sons, Inc.
6 Copyright 2011 John Wiley & Sons, Inc. E-ProcurementDirect purchase from suppliers over the Internet, by using software packages or through e-marketplaces, e-hubs, and trading exchangesCan streamline and speed up the purchase order and transaction processCopyright 2011 John Wiley & Sons, Inc.
7 Copyright 2011 John Wiley & Sons, Inc. E-ProcurementWhat can companies buy over the Internet?Manufacturing inputsthe raw materials and components that go directly into the production process of the productOperating inputsmaintenance, repair, and operation goods and servicesCopyright 2011 John Wiley & Sons, Inc.
8 Copyright 2011 John Wiley & Sons, Inc. E-ProcurementE-marketplaces (e-hubs)Websites where companies and suppliers conduct business-to-business activitiesReverse auctionprocess used by e-marketplaces for buyers to purchase items; company posts orders on the internet for suppliers to bid onCopyright 2011 John Wiley & Sons, Inc.
9 Copyright 2011 John Wiley & Sons, Inc. DistributionEncompasses all channels, processes, and functions, including warehousing and transportation, that a product passes on its way to final customerOrder fulfillmentprocess of ensuring on-time delivery of an orderLogisticstransportation and distribution of goods and servicesDriving force today is speedParticularly important for Internet dot-comsCopyright 2011 John Wiley & Sons, Inc.
10 Distribution Centers (DC) and Warehousing DCs are some of the largest business facilities in the United StatesTrend is for more frequent orders in smaller quantitiesFlow-through facilities and automated material handlingPostponementfinal assembly and product configuration may be done at the DCCopyright 2011 John Wiley & Sons, Inc.
11 Warehouse Management Systems Highly automated system that runs day-to-day operations of a DCControls item putaway, picking, packing, and shippingFeaturestransportation managementorder managementyard managementlabor managementwarehouse optimizationCopyright 2011 John Wiley & Sons, Inc.
12 Copyright 2011 John Wiley & Sons, Inc. A WMSCopyright 2011 John Wiley & Sons, Inc.
13 Vendor-Managed Inventory Manufacturers generate orders, not distributors or retailersStocking information is accessed using EDIA first step towards supply chain collaborationIncreased speed, reduced errors, and improved serviceCopyright 2011 John Wiley & Sons, Inc.
14 Collaborative Logistics and Distribution Outsourcing Collaborative planning, forecasting, and replenishment create greater economies of scaleInternet-based exchange of data and informationSignificant decrease in inventory levels and costs and more efficient logisticsCompanies focus on core competenciesCopyright 2011 John Wiley & Sons, Inc.
15 Copyright 2011 John Wiley & Sons, Inc. TransportationRaillow-value, high-density, bulk products, raw materials, intermodal containersnot as economical for small loads, slower, less flexible than truckingTruckingmain mode of freight transport in U.S.small loads, point-to-point service, flexibleMore reliable, less damage than rails; more expensive than rails for long distanceCopyright 2011 John Wiley & Sons, Inc.
16 Copyright 2011 John Wiley & Sons, Inc. TransportationAirmost expensive and fastest, mode of freight transportlightweight, small packages <500 lbshigh-value, perishable and critical goodsless theftPackage Deliverysmall packagesfast and reliableincreased with e-Businessprimary shipping mode for Internet companiesCopyright 2011 John Wiley & Sons, Inc.
17 Copyright 2011 John Wiley & Sons, Inc. TransportationWaterlow-cost shipping modeprimary means of international shippingU.S. waterwaysslowest shipping modeIntermodalcombines several modes of shipping-truck, water and railkey component is containersPipelinetransport oil and products in liquid formhigh capital cost, economical uselong life and low operating costCopyright 2011 John Wiley & Sons, Inc.
18 Internet Transportation Exchanges Bring together shippers and carriersInitial contact, negotiations, auctionsExamplesCopyright 2011 John Wiley & Sons, Inc.
19 Copyright 2011 John Wiley & Sons, Inc. Global Supply ChainInternational trade barriers have fallenNew trade agreementsTo compete globally requires an effective supply chainInformation technology is an “enabler” of global tradeCopyright 2011 John Wiley & Sons, Inc.
20 Obstacles to Global Chain Transactions Increased documentation for invoices, cargo insurance, letters of credit, ocean bills of lading or air waybills, and inspectionsEver-changing regulations that vary from country to country that govern the import and export of goodsTrade groups, tariffs, duties, and landing costsLimited shipping modesDifferences in communication technology and availabilityCopyright 2011 John Wiley & Sons, Inc.
21 Obstacles to Global Chain Transactions Different business practices as well as language barriersGovernment codes and reporting requirements that vary from country to countryNumerous players, including forwarding agents, custom house brokers, financial institutions, insurance providers, multiple transportation carriers, and government agenciesSince 9/11, numerous security regulations and requirementsCopyright 2011 John Wiley & Sons, Inc.
22 Copyright 2011 John Wiley & Sons, Inc. Duties and TariffsProliferation of trade agreementsNations form trading groupsno tariffs or duties within groupcharge uniform tariffs to nonmembersMember nations have a competitive advantage within the groupTrade specialistsinclude freight forwarders, customs house brokers, export packers, and export management and trading companiesCopyright 2011 John Wiley & Sons, Inc.
23 Copyright 2011 John Wiley & Sons, Inc. Duties and TariffsCopyright 2011 John Wiley & Sons, Inc.
24 Copyright 2011 John Wiley & Sons, Inc. Landed CostTotal cost of producing, storing, and transporting a product to the site of consumption or another portValue added tax (VAT)an indirect tax assessed on the increase in value of a good at any stage of production process from raw material to final productClicker shockoccurs when an ordered is placed with a company that does not have the capability to calculate landed costCopyright 2011 John Wiley & Sons, Inc.
25 Web-based International Trade Logistic Systems International trade logistics web-based software systems reduce obstacles to global tradeconvert language and currencyprovide information on tariffs, duties, and customs processesattach appropriate weights, measurements, and unit prices to individual products ordered over the Webincorporate transportation costs and conversion ratescalculate shipping costs online while a company enters an ordertrack global shipmentsCopyright 2011 John Wiley & Sons, Inc.
26 Recent Trends in Globalization for U.S. Companies Two significant changespassage of NAFTAadmission of China in WTOMexicocheap labor and relatively short shipping timeChinacheaper labor and longer work week, but lengthy shipping timeMajor supply chains have moved to ChinaCopyright 2011 John Wiley & Sons, Inc.
27 China’s Increasing Role in the Global Supply Chain World’s major source of supplyAbundance of low-wage laborWorld’s fastest growing marketRegulatory changes have liberalized its marketIncreased exporting of higher technology productsCopyright 2011 John Wiley & Sons, Inc.
28 Models in Doing Business in China Employ local third-party trading agentsWholly-owned foreign enterpriseDevelop your own international procurement officesCopyright 2011 John Wiley & Sons, Inc.
29 Challenges of Sourcing from China Getting reliable information in more difficult than in the U.S.Information technology is much less advanced and sophisticated than in the U.S.Work turnover rates among low-skilled workers is extremely highCopyright 2011 John Wiley & Sons, Inc.
30 Global Terrorism and Global Chains Increase security measuresadded time to supply chain schedulesIncreased supply chain costs24 hours rules for “risk screening”extended documentationextend time by 3-4 daysInventory levels have increased 5%Other costs include:new people, technologies, equipment, surveillance, communication, and security systems, and training necessary for screening at airports and seaports around the worldCopyright 2011 John Wiley & Sons, Inc.
31 Copyright 2011 John Wiley & Sons, Inc. Copyright 2011 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein.Copyright 2011 John Wiley & Sons, Inc.