GLOBAL SUPPLY CHAIN MANAGEMENT [GSM712S ]

1. GLOBAL SUPPLY CHAIN MANAGEMENT [GSM712S] Vetiraije Tjipombo Marker –Tutor Cell no:. +264 81 657 7648 E-mail:. vtjipombo@gmail.com

2. Introduction Logistics Management INCOTERMS Retail Logistics Conclusion Supply Chain Management Transport Management Globalisation and International Trade Tips: Assignment Test 1 Q & A

3. The Course: Global Supply Chain Management • Aims: • to develop the conceptual understanding &application of GSCM as a tool for competitive advantage in the 21st century. • It provides an in-depth look at GL & SCM. • The focus is to equip students with knowledge on GL systems, global supply chains and retail logistics up to a level of application and analysis.

4. Supply Chain Management

5. The Supply Chain Definition A supply chain is the 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.

6. The Supply Chain The Supply Chain • Black arrow: flow of material, information and finances • Grey arrow: flow of informations, finances and backhauls • a) initial supplier • b) supplier • c) manufacturer • d) customer • e) final customer

7. The Supply Chain • Supply chains encompasses three key flows: • Physical flows of materials • Flows of information that inform the supply chain • Resources (especially finance, people, equipment)

8. The Supply Chain • Supply Chain Management (SCM): • Term SCM developed in the 1980‘s • Need to integrate key business processes, from end user through original suppliers • Added Value / Value Chain • Idea: Involvement of companies and corporations in a supply chain by exchanging information • Optimization of the entire supply chain rather than sub-optimizing based on local interests • Primary Objectives: • Fulfil customer demand through optimizing the entire supply chain, meaning the most efficient use of knowledge and ressources. Typical Examples: • Liaising with suppliers / strategically sourcing • Just In Time concepts • Maintaining the „right mix“ of factories and warehouses • Traditional logistics optimization

9. A Farmer The Simplest Supply Chain? A Customer A Carrot Introduction to Logistics & Marketing ~ SFT 1002

10. Example of a More Complex Supply Chain: Germany Carrier France In-House Transport UK Manufacturing Plant 3PL Transport Distribution Centres Customers Suppliers

11. Germany By sea Carrier France In-House Transport UK Manufacturing Plant(s): Far East Africa Europe Etc. 3PL Transport Customers Distribution Centres Suppliers: Far East Latvia Morocco Etc. Example of a Simple “Global” Supply Chain By air

12. reverse logistics Marketing & Sales (Customer) R + D Product design (Customer) Customer services Customer delivery Information Technology People Communications Demand forecasting Order fulfillment Material planning Outbound Inbound Supplier management Inventory control Ware- housing Transport Manufacturing (Customer) Supply Chain Flows

13. The Supply Chain Work Task • Statement • Increased competitions leads to optimization of the supply chain What methods do you know to optimize a supply chain ? • Specialisation (concentration on core business) • Analyzing activities and costs, value addition for the final product • Eleminating of inhouse production • Reduction of participants within the supply chain • Transfer of responsibilities for quality and for just in time deliveries • Involvement of supplier in product development (product innovation) • Increase of information exchange with participants • Performance Measurement

14. Logistics Management

15. Logistics Management The process of planning, implementingand controllingthe efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of meeting customer requirements. Source: Canadian Association of Logistics Management

16. Logistics Management • Logistics is not everything. But without logistics, everything is nothing! • Especially today, logistics is increasingly becoming an integral part of the entire supply chain • Competition is increasing. Companies are concentrating on their key areas of competence: • (I only do things I am capable doing! ) • > Subcontracting logistic activities increased between 1950 and 1990 from 9% to 45 %!

17. The Steps of Global Logistics Customs Clearance for Export 3 4 2 Handling Outbound Loading Preliminary Transportation 1 5 Packing 6 Insurance Main International Transportation Customs Clearance Duties 7 9 10 8 11 Final Transportation Handling Inbound Unloading

18. Transport Management

19. Transport Management Transport Management in the Supply Chain • Transport Management • The management of transportation operations of all types, including tracking and managing every aspect of vehicle maintenance, fuel costing, routing and mapping, warehousing, communications, EDI implementations, cargo handling, carrier selection and management, accounting • Integral element of the supply chain, adds value and meets customers requirements • Transport Management also includes information, transportation, warehousing, material handling and packaging

20. Transport Management • Typical activities / Decision Making: • Inbound and Outbound Transportation • Contracting (Carrier – Shipper / 3PL / 4PL) • Strategic Alliances • Own account carriage • Transport Mode & Carrier Selection Process • Routing and Scheduling • Service Levels • Maintenance of vehicles, equipment • Integration of Information Systems (EDI)

21. Contractual Relationship between Forwarders, Carriers, Buyers and Sellers

22. Transport Modes • Ocean - / Sea Freight • Bulk / heavy cargo / volume cargo • Different types of vessels • Intermodal • Non urgent goods • Economies of Scale • Rail Freight • Bulk / heavy cargo • Domestic / Regional Transports • Secure Transport • Intermodal • Economies of Scale • Road Freight • Limited Capacities • Domestic / Regional Transports • Urgent Goods • Flexible, Door to Door • Intermodal • Air Freight • Time critical and sensitive goods • International Frequency / Fastest Transit Times • Costs are high compared to other transport modes • Different types of aircrafts • Limited Capacities

23. Container Types (Sea Freight) • ISO Containers • Standard Sizes: 20‘ /40‘ / 40‘HC • Different types of containers such as DRY / REEFER / FLATRACKS / OPEN TOPS / TANKS • Intermodality • Majority of standard global trade is shipped in DRY Containers

24. Type of Shipments • Type of Shipments • LCL – Less than a Container Load / Consolidation • Origin Forwarder provides an empty container at their facility (consolidation hub) • Shippers deliver goods to the consolidation hub • Once enough cargo is available, forwarder will pack goods into the container • De-Consolidation required at forwarders receiving hub at destination • A consolidation consists of several shipment, meaning various shippers and consignee • Buyer’s Consolidation also very common • Advantage for shipper’s and consignee’s: Freight is being paid only for the space they actually use • Advantage for Forwarder: Fixed Sea Freight rate per container • FCL – Full Container Load • Most common for bulk orders • Container will be placed empty for loading at shipper’s premises and placed full for off-loading at consignee’s premises (door to door) • Secure, as container is sealed after loading and only opened at destination • Loose / Break Bulk • Cargo is with or without packaging • Cargo will be transported loose • Bulk • Liquid or Dry • Cargo unpackaged and transported in mass quantities • Typically grain, soil, petroleum, .. • Requires special transport & handling equipment

25. INCOTERMS

26. INCOTERMS : International Commercial TERMS “INCOTERMS define the mutual obligations of seller and buyer arising from the movement of goods under an international contract from the standpoint of risks, costs and documents” UNCTAD, 1990

27. What are they? Set of international rules for the interpretation of the most commonly used foreign trade terms.

28. Why are they Important? • Reduce the uncertainty caused by trade practices in different countries. • Simplify the negotiations involved in international commerce. • Ensure common understanding of obligations

29. Incoterms

30. GLOBALISATION AND INTERNATIONAL TRADE

31. Globalisation • .... is defined as an umbrella term for a complex series of economic, social, technological, cultural and political changes, which continue to take place throughout the world. It allows people and companies throughout the world to be connected.

32. INTRODUCTION • International business - engages in cross-border transactions • Multinational Corporation - has extensive involvement in international business, owning or controlling facilities in more than one country • Global company - integrates operations from different countries, and views world as a single marketplace • Transnational company - seeks to combine the benefits of global-scale efficiencies with the benefits of local responsiveness

33. Some Global Strategies: • International Strategy: uses exports and licenses to penetrate the global area • Multidomestic Strategy: uses decentralized authority with substantial autonomy at each business • Global Strategy: Uses a high degree of centralization, with headquarters coordinating to seek standardization and learning between plants • Transnational Strategy: Exploits economies of scale and learning, as well as pressure for responsiveness, by recognizing that core competencies reside everywhere in the organization

34. Global Trade • This is exchange of capital, goods, and services across international borders or territories. • In most countries, it represents a significant share of gross domestic product (GDP). • While international trade has been present throughout much of history, economic, social, and political importance has been on the rise in recent times. • Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the global trade system. • Without global trade, nations would be limited to the goods and services produced within their own borders

35. Case Study - KMart • Major US retailer – filed for bankruptcy protection Jan 2002 • Supply Chain problems led to company collapse • The cause – the bullwhip effect • Competed with Wal-Mart through price promotions • Fluctuations of orders upstream – inability to fill them • Alternating excessive inventory - Kmart’s shelves only full 86% of the time How could it have been avoided?

36. How could it have been avoided? • A more responsive supply chain • Effective information systems which transmit sales information instantly upstream • Smoothing out sales – through maintaining low prices • Integration of Supply Chain processes • Use of simulation for analysis for decision making Dr Mohan Sodhi – Institute for Operations & Management Sciences (FOCUS Vol 6 No 6)

37. REATAIL LOGISTICS

38. Retail Logistics • Evolution of retail logistics: • Retailers increasing their control over secondary distribution • QR techniques to reduce lead times through the implementation of IT, EDI, EPOS and etc. • Retionalisation of primary distribution (factory to warehouse) and integrating it with secondary distribution into a single network system. • SCM and ECR. • Intrducing supply management and ECR. • Increasing return in flow of packaging material and handling equipment for recycle or reuse.

39. Centralisation • Centralisation • ... Prominent feature is the construction of large purpose-built regional distribution centres (RDCs) to consolidate prducts from suppliers for onward delivery to stores. • Advantages: • Reduced inventories • Reduced lead times • Back-room areas released for selling space • Greater product availability • Bulk discounts from suppliers • Fewer invoices and lower administrative costs • Better utilisation of staff in stores • Disadvantages: • High capital investment in RDCs, equipment and human resources • Store managers lose autonomy to headquarters

40. Conclusions “Existing Supply Chains have been designed in a different paradigm. Supply Chains in the past have focussed on efficiency. Efficiency is still an issue, but effectiveness is now more important.” Professor Martin Christopher, Supply Chain Agility, Transport & Logistics Focus Vol 5 No 2

41. May god blessq & a