Risk Management - UC Berkeley Ext.

PowerPoint Presentation

Risk Management In the International Value Chain (Network)

Lecture 1 - The Value Chain/Network & BCP

Global Business Management

How would you define value chain management?


Video on Supply Chain Riskhttp://www.business2community.com/strategy/bringing-balance-to-supply-chain-risk-mitigation-0568924

Relating logistics management and supply chain management to supplier networks and marketing channels

Source: Dr. Sweta Thota Or Business (B2B)McGraw-Hill/Irwin - Copyright 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Global DistributionValue Chain Management

Channel ManagementDistribution Channels


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Learning Objectives of the Class

#1 - Learn the importance or risk management by creating a BCP (Business Continuity Plan) for a company.


#2 - Understand value chain terminology and what can go wrong in the value chain through hands-on a simulation from HBR (Global Supply Chain Management).


#3 - Know the metrics for tracking risk and what systems are needed to track risk.


#4 - Create a risk management playbook with assigned project teams and present the playbook to the class.


Supply Chain Risk: Understanding Emerging Threats to Global Supply Chains By John Manners-BellInformation from MC: 2011 Oxford University. All Rights Reserved

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HBR Simulation-


Students will come away from the course understanding what risk management is and how to proactively prevent risk in the value chain. In addition, students will be able to apply the tools to address actions when disasters strike.


Aligning a Supply Chain with Marketing Strategyis Key

Value Chain ManagementSuppliersCustomers


FIGURE 13-9 Supply chain managers balance total logistics cost factors against customer service factors

Source: Dr. Sweta Thota McGraw-Hill/Irwin - Copyright 2008 by the McGraw-Hill Companies, Inc. All rights reserved.


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Doordarshan use to be the sole provider of television entertainment in India


Indian TV Brands were only allowed: Weston, Texla, Kingston, Solidare, Ondia, BBL, Uptron

These companies had first mover advantage into color TV in 1982 (during the time of the Asian Games)foreign companies were not allowed into the country

Information from MC: 2011 Oxford University. All Rights Reserved


Supply Chain of Components were Foreign

Assembled in India


Revolution Happened in TV BroadcastingStar TV (Satellite Television Asian Region)


Private TV Channels Start to Emerge & in 1995 the airwaves were opened


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Today Market is dominated by Foreign Brands & a Few Domestic Brands



Competitive AdvantageA distribution channel is the path along which goods move from manufacture to customer

Key Points: Distribution Channels reach every customer in every localityCaters to customers where they areDistribution is critical to marketing

Competitive Advantage

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Companies Must Alter the DNA


Consumption of ValueBullet points on 216-217


The marketing Channel?





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Choice of the Channel is Important

It affects the time and costs of distribution


2 - It affects the volume of sales


3. It influences pricing and promotional efforts


4. It influences the brand or company image.


RememberBalance Growth vs. Healthy Margins.Cash Flow growth is ALWAYS King..


But dont forget sustainability!



Ethics


Business Sustainabilityhttps://www.youtube.com/watch?v=bXC-pML8USw


Social ResponsibilityJust the Tip of the Iceberg


Collaborative vs. Compliance Approach is Needed

ComplianceCollaboration on Share ValueVs.


The critical barrier to doing business in rural regions is distribution access, not lack of buying power.

Prahlad and Hammond (2002)




Sales and Operations Planning


Social Media Influence


UPS Videohttp://thenewlogistics.ups.com/sustainable-business/carbon-neutral/


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Logistics Functions

Procurement or purchasing


Inward and Outward transport


Receiving & warehousing


Stock Control


Materials Handling


Order Processing


Physical Distribution Management


Recycling, returns, and waste disposal functions


Get rid of the Bricks & Mortar?


Keep an eye out for disruptive trends


The Cloud is All About Services

every corporate function will need to be rethought in the age of the cloudGo Change the World


An Silicon Valley ExampleMarket InformationRisk TakingPromotion ActivitiesNegotiationBull breakingFinancing

A New Marketing Channel Being CreatedThe Public Face of the Company

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C2C Digital & Physical



Four phases of channel design


Buy Decision

THE VALUE CHAIN PLAN

CHANNEL #1

CHANNEL #2CSR/SUSTAINABILITY = CREATING VALUE FOR THE CUSTOMERRISK MITIGATIONS&OP + CLOUD DATA LAYER Dealer CHANNELDIGITAL B2B CHANNEL

CHANNEL #3SUPPLIER RISKSOCIAL CHANNELINFLUENCE CUSTOMERINTELLIGENCE ON IMPROVEMENTS4 PSOPPORTUNITY (HYPE CYCLES) & THREATS

CHANNEL #4BOP CHANNELNEXT GEN Solar Charging Electrical CarCONSUMOPTION ECONOMICSBOP ProductDirect Shipment to CustomersEmerging Country Dealers


THE VALUE CHAIN MATTERS TO YOUR SMALL, MEDIUM, or LARGE BUSINESS 12 Essentials of Value Chain Management

By Payson Johnston


Understand your customer


The supply chain matters


Understand your product, service, or technology


Get out of the office


You need to negotiate


It is not just about cost savings


It is about the People


Value the relationships for the long-term


Use the data to make decisions, not your emotions


Limit the risk


Keep an eye out for disruptive trends


Embedded Sustainability is the Key


And Other StuffOver the lastyear the below additional key value chain points have come up from colleagues and blog readers:

Importance of understandingdifferent cultures in international relationshipsUnderstand the entire business process end to end and how the valuechain affects this processMonitor the multiple tiers in your valuechainWatch capacity and constraints so you can handle upsides in customer demands without concernA positive attitude is keyHard skills and soft skills such as leadership are importantGet involved and be hands on in solving problems as part of the value chain teamEnsure your value chain is tied into your communication channel

http://paysonj.com/2015/06/22/the-value-chain-matters-to-your-small-or-medium-business/


Problems occur in the global world which affect the value chain


Remember the Hype!!!!

https://www.gartner.com/doc/3100227?ref=unauthreader

http://www.economist.com/blogs/graphicdetail/2014/08/daily-chart-17


Status KeyImpact KeyNo ImpactMedium ImpactHigh Impact(>50% capacity loss)

1 = 24x7 Power Risk2 = EQ Supplier Damage 3 = In Nuclear Zone Part Site Mapping to Assess Sub-Tier Impact

100 Mile Nuclear Zone50 Mile Nuclear Zone

Raw Material1Direct SupplierDirect SupplierDirect SupplierDirect SupplierDirect SupplierDirect SupplierDirect SupplierDirect SupplierAssemblyAssemblyAssemblyAssemblySub-ComponentSub-ComponentSub-ComponentSub-ComponentSub-Component

Supplier KeyDirect SupplierTier 1AssemblyTier 2

Sub-ComponentTier 3Raw MaterialTier NEarthquakeEpicenter

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2

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Channels cannot run on auto mode: CadburyWorm Infestation: In 2003 there were reports of worm infestation in chocolates

Trade channels ignored: For years the distribution ran on auto mode without concern of how chocolates were stored or sold

Corrective action: Retail monitoring and education program undertaken by the company

Improved storage: The company introduced small refrigerated units for chocolatesInformation from MC: 2011 Oxford University. All Rights Reserved

Shift #4: Big changes will come to the channel ecosystem.


The Value Chain Matters






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Payson Johnston has invited you to become a contributor to the Flipboard magazine Risk Management.

To accept this invitation, please click on the following link: http://flip.it/CsQVc

You can view and learn more about this magazine at https://flipboard.com/@paysonj/risk-management-38usdc6ky


A Flexible, Agile, Resilient, and Profitable Value ChainCompanies whose supply chains became more efficient and cost effective didnt gain a sustainable advantage over their rivals. In fact, the performance of those supply chains steadily deteriorated (Lee, 2004)

Rather than efficiency, distribution channels need to be measured on: Agility, that is, how quickly they can react to sudden changes in demand and supply.

Channels must adapt to different market requirements.Channels must align the interests of all parties in the supply chain


Risk Management - UC Berkeley Ext.

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