1. Managing Supply Chain Sustainability and Risk: Keys to Success Lee Buddress, Ph.D., C.P.M. Robert G. Gleason Professor and Director Supply and Logistics Program Portland State University leeb@sba.pdx.edu

2. Supply Chain Risk ISQA 479

3. The Importance of Supply Chain Management  How to Increase Shareholder Value  Supply Chain Management is the Key  Changes in Supply Chains  Extensive, Lengthy, Complex  Geographically Disbursed  Global Nature Creates Uncertainty  Uncertainty Creates Risk

4. Supply Chain Risk  Most Research Focused From Buying Firm Down Through Suppliers  The Firm Itself and the Path to Customers Should Be Included  Definitions:  Events or actions that result in a transaction or project differing negatively from budget or plan  Events or Actions that Prevent Delivery to Customers As Promised.

5. External Supply Chain Risks: Categories  Governmental  Infrastructure  Supplier  Logistical  Terrorism  Natural Disasters  Accidents  Ethics  Price

6. External Risks: Governmental  Export Policies  Intellectual Property Protection  Protective Tariffs and Duties  Regulatory Changes  Taxes  Currency Fluctuations  Political Unrest

7. External Risks: Infrastructure  Transportation Equipment  Roads  Railroads  Ports  River  Sea  Airports  Congestion

8. External Risks: Suppliers  Operational  Equipment  Facilities  Management  Financial  Cultural/Language  Resources  Labor  Scalability  Quality  Lead Times  Monopoly/Oligopoly  Technology  Communication  Operational  Sustainability  Social Responsibility  Ethics

9. External Risks: Logistics  On Time  Freight Damage  Leakage/Shrinkage  Equipment Availability

10. External Risks  Terrorism  Physical Harm  Personnel  Cyber Attacks  Heart Bleed  Natural Disasters  Earthquakes, Tsunamis  Weather Related  Accidents

11. External Risks: Price  Trends  Volatility  Global Economics

12. Internal Supply Chain Risks: Categories  Policies  Administrative Resources  Operational Activities  Organizational Resources  Ethics

13. Internal Risks: Policies  Outsourcing  Low Bid  Freight Terms  Not Managing Processes  Reverse Logistics  Excess Inventory  Sustainability/Social Responsibility  No Standardization  Equipment  Procedures  No Formal Strategies  Not Having Policies  Ethics  Repairs

14. Internal Risks: Resources  Labor  Attract, Retain  Finances  Equipment  Technology  Automation  Communication  Enterprise

15. Internal Risks: Operational  Personnel  Numbers  Expertise  Demand Management  Customer  Supplier  Forecasting  Specifications  Project Management

16. Internal Risks: Ethics  Conflicts of Interest  Supplier Relationships  Supplier Ethics  Organizational Reputation

17. . Sustainability

18. Sustainability  Triple Bottom Line  Environmental Sustainability  Social Responsibility  Organizational Sustainability

19. Environmental Sustainability  Non-Renewable Resource Use  Energy Consumption  Effluent Discharge  Atmospheric Emissions  Hazardous Material Use

20. Social Responsibility  Ethics  Gender Equity  Living Wage  Appropriate Labor  Labor Relations

21. Organizational Sustainability  Profitability  Customer Perception  Customer Satisfaction  Long-Term Viability

22. Past Research  Sustainability and Risk Studied in Isolation  Usually Interact  Actions in One Area Create Outcomes in Others

23. Risk and Sustainability Interactions

24. Risk and Sustainability Interaction Examples  Policy: Buy from Low Price Supplier  Distant Location  Risks of Lengthy Supply Chains  Social Responsibility  Refuses to Pay Minimum Wage Reflects Badly Onto Buying Organization Undermines Reputation With Customers  Governmental Intervention  Environmental Questions  Organizational Sustainability

25. Risk and Sustainability Supply Chain Risk  External  Governmental  Infrastructure  Supplier  Logistical  Terrorism  Natural Disasters  Accidents  Internal  Policies  Administrative  Operational  Organizational  Ethics Sustainability  Environmental  Non-Renewable Resource  Energy Consumption  Emissions  Hazardous Materials  Social Responsibility  Ethics  Gender Equity  Living Wage  Labor and Relationships  Organizational  Profitability, LT Viability  Customer Perceptions  Customer Relationships

26. Risk and Sustainability Interaction Examples  Ethics  Resonates From Supplier to Internal Risks to Social Responsibility  Bribes Paid to Influence Buying Decisions  Supplier Reputation  Buying Organization Reputation  Governmental Intervention  Organizational Sustainability Marketing Financial

27. Risk and Sustainability Interaction Examples  Logistical Risks  Internal Operations – Continuity  Slow Steaming  Emissions – Governmental Restrictions  200 Mile Limit – Low Sulfur Diesel  Energy Consumption  Profitability  Steamship Lines  Buying Organizations

28. Risk Prevention/Remediation  Safety Stock  Safety Lead Time  Additional Suppliers  Geographic Dispersion  Ts and Cs  Business Continuity  Ours  Suppliers  Training  ISO 31000 2009  Supply Chain Mapping  Review Supplier Selection Process  Supplier Visits  Daily Diligence  Forecasting  Project Management

29. Key Risk Management Activity  How Suppliers Are Chosen  Supplier Visits  Supplier Mapping  Forecasting  Daily Diligence

30. Food For Thought

31. Natural Disasters  Earthquake  Major Storm  Fire  Lightening Strike  Tornado

32. East Asia Supply Locations

33. Earthquakes and Volcanos

34. Frequency of Occurrence of Earthquakes, 2012  8 Plus 2 7 - 7.9 12  6 - 6.9 108 5 - 5.9 1401  4 - 4.9 9,534 3 - 3.9 2,453  2 - 2.9 3,111 Total Earthquakes 2012 = 16,667 Total Earthquakes 2004 = 31,194 Source: USGS

35. 2013 Earthquakes  9.0 Magnitude+ 0  8.0−8.9 Magnitude 2  7.0−7.9 Magnitude 15  6.0−6.9 Magnitude 114  5.0−5.9 Magnitude 1.064  Totals 1,195  Total fatalities 1,463

36. Typhoon Patterns

37. Questions  Supply Chain Risks?  Sustainability Concerns?  Not Just Asia

38. Supply Chain Concerns  Europe  Severe Storms  Political Instability  Economic Instability  U.S.A.  Severe Storms  Drought  Infrastructure  Mexico  Corruption  Drug Wars  Infrastructure  India  Corruption  Infrastructure  Quality

39. Supplier Selection Criteria Supply Chain Risk  External  Governmental  Infrastructure  Supplier  Logistical  Terrorism  Natural Disasters  Accidents  Internal  Policies  Administrative  Operational  Organizational  Ethics Sustainability  Environmental  Non-Renewable Resource  Energy Consumption  Emissions  Hazardous Materials  Social Responsibility  Ethics  Gender Equity  Living Wage  Labor and Relationships  Organizational  Profitability, LT Viability  Customer Perceptions  Customer Relationships

40. Conclusions  Re-evaluate How We Select Suppliers  Not Just The Supplier  The Supplier’s Environment  Recognize Internal Supply Chain Risk Creation  Recognizing Interactions  Supply Chain Risk  Supply Chain Sustainability  Strategies to Consider Collectively

41. Questions, Comments, Observations, Conclusions, Arguments?