Introduction to Global Supply Chain ManagementModule Two:

An Overview of InternationalSupply Chain Management

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Class Agenda

• Supply Chain Management & Logistics defined

• Review of different types of supply chains• Functional activities within a global supply

chain (Who does what?)• An introduction to process design• The role of logistics management in

import/export trade

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Supply Chain Management

"Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology."

-Council of Supply Chain Management Professionals

A Basic Global Supply Chain

Origin: Somewhere Overseas

Destination: Somewhere in the U.S.A.

Supplier Origin Trucker Origin Forwarder International Transportation

CHB U.S. transport W&D Order Fulfillment Last Mile Client

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Global Supply Chain Management:Who are the players?

• Buyers & Sellers• Manufacturers• Tier I, II & III suppliers• Banks• Insurance firms• Freight forwarders• Customs entities• Customs brokers• Other Government

Agencies (OGA’s)

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Global Supply Chain Management:Who are the players?

• Truckers• Airlines• Steamship lines• Rail companies• Warehouse companies• National mail systems • Small parcel (UPS &

FedEx)• Fulfillment houses• Test & Repair shops

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Global Supply Chain Management:Different Functional Areas & Processes

• Finance• Research & Development• Product design• Forecasting• Sourcing• Materials Requirements

Planning• Purchasing• Sales & Marketing

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• Production Planning• Inbound/Outbound logistics• Information Technology• Customer service• Risk Management & Legal• Human Resources• Accounting

Global Supply Chain Management:Different Functional Areas & Processes

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Supply Chain Management (The short, tactical version)

• A time-phased approach to forecasting and meeting the demand for raw materials, work in process and/or finished goods

• The four cornerstones of supply chain management are:

• Product sales• Landed cost• Lead time rationalization• Inventory management

• Technology & cloud-based visibility across the entire supply chain are key to success

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Supply Chain Management:Key Definitions

• Landed Costs: The unit price for a product plus all other costs associated with shipping the product from origin to destination

• Example: The purchase of women’s handbags from a factory in Vietnam– Price per handbag (unit cost)– Trucking from the factory to the freight

forwarder’s warehouse– Air or ocean transportation plus all

documentation costs– Customs clearance in the U.S.– Customs duties– U.S. warehousing & trucking to final

destination

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Supply Chain Management:Key Definitions

• Cumulative Lead Times: The time that transpires between the moment a need is recognized and when that need is fulfilled

• Example: The purchase of women’s handbags from a factory in Vietnam – Send purchase order to the vendor– Vendor’s production time– International shipping– Customs clearance– U.S. domestic distribution– Local delivery

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Supply Chain Management:Key Definitions

• Inventory Management: All activities associated with the valuation, acquisition, shipment, location, storage, sale, distribution, disposition, recovery and disposal of merchandise related to the operation of a firm’s business

• Goal is to meet the customer service requirements of the company– Product availability

Different Industries & Business Models Determine How Supply Chains Are Designed

• Retailer (brick & mortar)• E-Commerce• Wholesaler/Distributor• Manufacturer (OEM)• Tier I, II or III supplier• Agricultural importer/exporter• Marketer/Merchandiser

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Diferente Types of Inventory & Operating ModelsAlso Influence How Supply Chains Are Designed

Operating Model• Raw materials• Components/sub-assemblies• Work In Process• Finished goods• Distribution inventory• Accessories• Spare parts• MRO

Types of Inventory• Build to stock• Build to order• Assemble to Order• Engineer to Order• Just In Time• Vendor Managed Inventories

The Role of Logistics InGlobal Supply Chain Management

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Logistics Management

"Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods,

services, and related information between the point of origin and the point of consumption in order to meet customers' requirements. Logistics management activities typically include inbound and outbound transportation management, fleet management,

warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning, and management of third party logistics services providers. To varying

degrees, the logistics function also includes sourcing and procurement, production planning and scheduling, packaging and assembly, and customer service. It is involved

in all levels of planning and execution-strategic, operational, and tactical. Logistics management is an integrating function which coordinates

and optimizes all logistics activities, as well as integrates logistics activities with other functions, including marketing, sales, manufacturing, finance, and information

technology."-Council of Supply Chain Management Professionals

Logistics Activities & Services

• Local domestic trucking• Long haul domestic trucking• Drayage• Domestic air freight• Rail service• International air/ocean freight• Documentation service• Multi-modal services• Customs clearance • Domestic W&D• Inventory management

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Logistics Activities & Services

• JIT/Line side feeding• Kitting & Packaging• Order Management• Fulfillment/Reverse, T&R• Cold chain• Bonded warehousing• Foreign Trade Zone • Vendor management

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Global Logistics Management:Who are the players?

• Truckers• Freight forwarders• Customs brokers• Airlines• Steamship lines• Rail companies• Public warehousemen

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Global Logistics Management:Who are the players?

• Bonded warehousemen• Foreign Trade Zone

Operators • National mail systems• Integrators (UPS & FedEx)• Fulfillment houses• Test & Repair shops• Consulting companies

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Supply Chain Management & Logistics:Process Design & Execution

Origin: Somewhere Overseas

Destination: Somewhere in the U.S.A.

Supplier Origin Trucker Origin Forwarder International Transportation

CHB U.S. transport W&D Order Fulfillment Last Mile Client

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Supply Chain & Logistics Processes

A business process is a structured, measurable set of activities and tasks designed to produce a specified output for a particular

customer or market. The sum of several inputs (products, manpower, physical plant, technology, etc.), processes are

designed to satisfy the needs of both internal and external clients.

The result of a process has two characteristics; the primary output and service requirements. Primary output is the direct result of the

process inputs (a finished product or service), while the service requirements are the value added elements that surround the

primary output (communications, follow up, technical support, correct billing, customer service, etc.)

The combination of the primary output and service requirements are what we refer to as “The Customer Experience.”

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Business Process Characteristics• Should be a reflection of “The Voice of

The Client”• Must create value

– An activity that people are willing to pay for

• Are measurable, with a beginning and end

• Are intended to be reproduced consistently– Not linear, but circular

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Business Process Characteristics

• Typically involve several internal & external deparments and/or entities

• They are never perfect and can continuously be improved

• Are based on cause & effect relationships

• In a business environment, one person´s output automatically becomes another person´s input

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Processes: Cause & Effectx = inputs, y= outputs

Y = f(x)

Process Output (y)

Manpower (x)

Methodology (x)

Products (x)

Physical Plant (x)

Environment (x)

The Customer Experience

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Logistics Process Design:Introduction to Flowcharts

Process Step

Yes

No

Start

Decision Pt

Process Step

End

Process step

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The Importance of FlowchartsTo Process Design

• The first principle of Total Quality Management (TQM) is, “A process cannot be improved upon until the existing process is mapped out”

• A flowchart provides a visual overview of a process

• Defines steps in a process along with ownership (for execution)

• Helps to expose inter-dependencies between people, departments and functions (resonance)

• A communications & planning tool• Facilitates troubleshooting

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Fundamentals of Flowchart Design• A flowchart is a graphic representation

of the tasks, decisions and activities that take place during the execution of a process

• Flowcharts are drawn from the top of a page to the bottom, and from left to right

• The definition of the process should be clearly articulated on the flowchart

• The beginning and end of the process should be clearly noted

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Fundamentals of Flowchart Design• Individual steps in the process should be described using “one-verb”

phrases (place purchase order, begin production, etc)• Each step in the process must be kept in its proper sequence• The scope of the process must be carefully observed• Use standard flowcharting symbols (American National Standards

Institute, Inc)

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Basic Flowchart Symbols

The symbol that depictsthe beginning or end ofa process is an oval

The symbol used to demonstrate a processoperation is a rectangle

The diamond is used to denote a decision point in the process

An arrowhead with a lineis used to show the direction of flow in a process

A tapered rectangle represents the use of adocument in a process

Multiple tapered rectanglesrepresents the presence ofmore than one document ina process step

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Sample Flowchart-Getting Ready For Work:Target time of 30 minutes

Begin

Get up?

Alarm clock sounds at6:00 a..m

Take shower

Yes

No Hit snoozebutton

10 minutes

ClothesReady?

Yes

Get dressed

No Prepareclothes

Eat breakfast

Leave forwork

End

End of Module Two

Congratulations!!!

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