Supply Chain Management

(3rd Edition)

Chapter 17
Global Supply Chain Management

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 Global Supply Chain

Covers both logistics and operations

Includes activities such as sourcing,
procurement, order processing,
manufacturing, warehousing, inventory
control, servicing and warranty, customs
clearing, wholesaling and distribution

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 Two main aspects of GSCM

1. Supply chain as a cross-functional entity

2. Supply chain as the integrator and
coordinator of production and logistics
activities

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 Apples Suppliers around the
World

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 World Commodities Map

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 Global Apparel Value Chain
Tracing back the dress you are wearing

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 Transactional Complexity

National Semiconductors:
Production:
Produces chips in six different locations: four in the US, one
in Britain and one in Israel
Chips are shipped to seven assembly locations in Southeast
Asia.
Distribution
The final product is shipped to hundreds of facilities all
over the world
20,000 different routes
12 different airlines are involved
95% of the products are delivered within 45 days
5% are delivered within 90 days.

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 Complexity: The Magnitude
(Logistics)
The grocery industry could save $30 billion (10% of
operating cost) by using effective logistics strategies
Compaq computers loss of $500 million to $1 billion
in sales in one year
Laptops and desktops were not available when and where customers
were ready to buy them

Boeings forced announcement of write-downs of $2.6b

Raw material shortages, internal and supplier parts shortages.

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 Areas to be considered while moving from
domestic to International supply chain

1. Substantial geographical distances

2. Forecasting problems/difficulties in foreign markets
3. Fluctuations in exchange rates for different currencies
4. Demand for great variety of products
5. Inadequate infrastructures such as
labor skills,
availability of supply
Supplier quality
Lack of local process equipments and technologies
Inadequate transportation facilities and
Inadequate telecommunication facilities

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 Uncertainty and Risk Factors
August 2005 Hurricane Katrina
P&G coffee supplies from sites around New
Orleans
Six month impact
2002 West Coast port strike
Losses of $1B/day
Store stock-outs, factory shutdowns
1999 Taiwan earthquake
Supply interruptions of HP, Dell
2001 India (Gujarat state) earthquake
Supply interruptions for apparel
manufacturers

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 Magnitude of Supply Chain Costs
Cost Elements of a Typical Trade Book

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 Magnitude of Supply Chain Costs
Example: The Apparel Industry

Cost per Percent

Shirt Saving

Manufacturer Distributor Retailer Customer $52.72 0%

Manufacturer Distributor Retailer Customer $41.34 28%

Manufacturer Distributor Retailer Customer $20.45 62%

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 Global Supply Chain: The Potential

P&Gs estimated savings to retail customers of $65 million through logistics

gains

Dell Computers outperforming of the competition in terms of shareholder

value growth over more than two decades by over 3,000% using:
Direct business model
Build-to-order strategy

Wal-Mart transformation into the worlds largest retailer by changing its

logistics system:
highest sales per square foot, inventory turnover and operating profit of
any discount retailer

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