ISQA 479 Zara Frisbee Slides Review

JIT and Lean

Difference Between Lean and Starving to Death?  How Lean is Too Lean?  11 Key Questions:  How Good is Your Forecasting?  How Well Do You Share Information?  How Much Material Do You Import?  What is Political Situation in Primary Countries of Origin?  For What Security Risks Are You Planning?

Difference Between Lean and Starving to Death?  At What Stage in PLC Are Your Products?  How Reliable Are Your Suppliers?  How Reliable Is Your Logistics System?  Transportation  Inventory Management  How Reliable Is Your Own Shop?  Do You Know Where Your System Constraints Are?  How Complex are Your Systems, Products?

Lean and Complexity  Complexity Often Originates With Creative (Engineering Driven) Cultures  Too Many Products  Too Much Product Complexity  Too Many Low Volume Products  Little Component Reuse  Too Many Parts  Many Non-Standard Parts

Lean and Complexity  Complexity Complicates Supply Systems  Requires More Suppliers  Larger Inventories  Slower  Require More People  Harder to Manage  Dramatically Increases Costs

Supply Chain Risk

 Anything that will cause a transaction to deviate from perfect.

Internal Risks  Functional Issues  Engineering Late  Sr Mgmt Approval  Poor Specifications  Specifications Late  Rush Orders  Poor Forecasting and Planning  Policy Issues  Cheapest Supplier  No Standardization  No Supplier Visits  Outsourcing  Lean  FOB Destination  ERP Selection

External Risks  Supplier Risks  Late Shipment  Quality  Financial Failure  Costs  Logistical Risks  Late Shipment  Freight Damage  Capacity Issues  Infrastructure  Costs  Global Risks  Global Economy  Currency Fluctuation  Political Instability  Natural Disasters  Raw Material Availability  National Risks  Inflation  Retirements

Infrastructure Risks  Infrastructure Deteriorating Faster than Repair  Congestion at All Levels  Difficulty Locating Logistical Capacity  Increased Lead Times  Increased Inventories  Increased Costs  Increased Supply Chain Uncertainty and Risk  Losing Ground to Other Countries

Strategic Sourcing

Supply System Objectives  Continuity of Supply  Minimize Administrative Costs  Minimize Inventories  Reduce Cycle Times  Increase Supplier Performance  Increase Forecast Accuracy  Maximize Use of Technology  Process Simplification  Maintain Strategic Focus

Performance Attributes  Perfect Order  On Time  Cycle Time  Flexibility  Total Cost  Reverse Logistics  Reliability  Responsiveness  Agility  Sustainability  Cost Management

Dave Hoover’s Purchasing Axioms  A Firm Has The Suppliers It Deserves  A Supplier Will Only Be As Good As It Has To Be  The Best Way To Get More From Suppliers Is To Ask For It

A Look Forward

What to Expect  Significant Inflation  Fuel Costs  Equipment Costs  Freight Rates  Japan Will Take A Decade to Recover  Key Electronics Components  Auto Manufacturers Are Rotating Production  Reevaluation of Outsource Decisions  High Transportation Costs  Increasing Congestion of All Modes  Continued Artificially Constrained Capacity

Trends of Importance

Trends Of Importance  From the ISM Conference  Risk Management  Talent (Retirements and Recruitment)  Green Supply  Supply Chain Analytics  Value Focus  Innovation  Global Networks  Supply Chain Investment

Trends of Importance?

Key Trends in Supply and Logistics  Globalization of Marketplaces  Outsourcing  Global Sourcing  Logistics  Risk Management  Technology Utilization  Sustainability  Inflation  Speculation  Consolidation  Privatization  Regional Economic Blocs  Education

Trends of Importance  Increasing Supply Chain Dispersion  Increasing Supply Chain Complexity  Increasing Supply Chain Risk  Increasing Volatility of Prices  Basic Materials  Currency Exchange Rates

Trends  Price of Oil  Influence on Costs of All Modes  Influence on the Price of Everything

ISM Price Index

Trends of Importance  Infrastructure Insufficiency  Increased Security Requirements  Pace of Technological Change Accelerates  Global Population Explosion

Global Population Forecast

 Population  7 Billion (October)  Over 5.5 Billion in Less Developed Countries  Africa: Growth So High Population Will Triple  1 Bil Now, 3.6 Bil Forecast by 2100  Yemen: 25 to 100 Million  Nigeria 162 to 730 Million  U.S. Faster Than Most Developed Countries  Immigration and High Hispanic Birthrate (311M – 478M)  All of This Assumes Food & Water Available

Another Issue: Reverse Outsourcing  Increased Logistics Costs  Security  Customs Clearance Delays  Long Lead Times  Hidden Costs  Firms Move Production from Asia to Closer to Home  Trouble Finding Suppliers

Influence of Trends on Supply Benefits Risks

Supply Chain Risks  Origin Risk Analysis  Natural Disasters  Labor Issues  Political Issues  Logistics Risk  Capacity  In-transit Loss or Damage  Labor Issues  Clearance Delays  Infrastructure Constraints

Supply Chain Risks  Inventory Risk  Loss or Damage  Obsolescence  Shrinkage  Technology Risk  Bad Selection Process  Lack of Training  Late Adopter

Supply Chain Risks  Social and Religious Conflict  Terrorism  Natural Resource Dependency  Natural Resource Depletion  Supply Chain Uncertainty  External vs Internal Risks

Internal Risks  Functional Issues  Engineering Late  Sr Mgmt Approval  Poor Specifications  Specifications Late  Rush Orders  Poor Forecasting and Planning  Policy Issues  Cheapest Supplier  No Standardization  No Supplier Visits  Outsourcing  Lean  FOB Destination  ERP Selection

External Risks  Supplier Risks  Late Shipment  Quality  Financial Failure  Costs  Logistical Risks  Late Shipment  Freight Damage  Capacity Issues  Infrastructure  Costs  Global Risks  Global Economy  Currency Fluctuation  Political Instability  Natural Disasters  Raw Material Availability  National Risks  Inflation  Retirements

Infrastructure Risks  Infrastructure Deteriorating Faster than Repair  Congestion at All Levels  Difficulty Locating Logistical Capacity  Increased Lead Times  Increased Inventories  Increased Costs  Increased Supply Chain Uncertainty and Risk  Losing Ground to Other Countries

Key Trends in Supply and Logistics  Globalization of Marketplaces  Outsourcing  Global Sourcing  Logistics  Risk Management  Technology Utilization  Sustainability  Inflation  Speculation  Consolidation  Privatization  Regional Economic Blocs  Education

Global Sustainability Changes  Population: UN Forecast  7 Billion (October)  Over 5.5 Billion in Less Developed Countries  Africa: Growth So High Population Will Triple  1 Bil Now, 3.6 Bil Forecast by 2100  Yemen: 25 to 100 Million  Nigeria 162 to 730 Million  U.S. Faster Than Most Developed Countries  Immigration and High Hispanic Birthrate (311M – 478M)  All of This Assumes Food & Water Available

A Look Forward: Game Changers  China Industry Domination Strategy  Alternative Energy  Aircraft  Automotive  BRIC Growth  Particle Deposition Technology  Quick Charge Batteries  $140/bbl Oil  Natural Disasters and SC Interruptions  Sustainability  Emma Maersk and Successors