Strategic Sourcing & Risk Management

8/4/2019 Strategic Sourcing & Risk Management

1/26

Click to edit Master subtitle style

4/15/12

Program Leader: Lew Roberts

By: Rahul Chauhan

Sr.Engineer VDD(R&D)

Think LinkSUPPLY CHAIN SERVICES

Strategic Sourcing & RiskManagement


2/26

4/15/12

About ThinkLink SCS

ThinkLink Supply Chain Services (ThinkLink)is an India based firm.

They offer Turnkey Project Management,Advisory, Systems Implementation, and

Talent development services to theirclients.

They have expertise across Distribution

Centres, Warehouses, Logistics Parks, ColdChain, ICDs, Food Processing Zones,Distribution Channels, and Transportprojects.


3/26

4/15/12

Program Leader LewRobertsLew is President and founder of L. Roberts

& Associated Inc., which is a USA basedfirm that provides a wide range ofprofessional Consulting & Management

Development Services aimed at improvingBusiness Performance, with an emphasis inthe field of Supply Chain Management.

His consulting & Management Development

Career over the past 20 years has includedworking with Ryder, UPS, Menlo, Exel,Owens Corning, Coca Cola, Georgia Pacific,SAPPI, Baxter, De Beers, Mercedes Benz,

Nissan and many other major firms


4/26

4/15/12

qGlobal Supply Management& International Business


5/26

4/15/12

Important issues to consider:

To gain a competitive advantage, globalsourcing is given for companies engagingin global marketing strategies.

The longer the supply chain, the morecooperation and coordination is requiredbetween production, marketing, purchasingand the logistics management group.


6/26

4/15/12

Global Competitive Strategy

To effectively serve global markets, firmsshould consider adopting integratedworldwide strategies.

These firms are more likely to search forglobal sourcing for materials andcomponents, depots, assembly, distributioncenters, and logistics.

Global firms typically design synchronousstrategies around technology, marketing,manufacturing, and logistics.


7/26

4/15/12

Customer Service Strategiesfor Global Markets: Four

Characteristics1. Marketing becomes standardized yetcustomized.

2. Product life cycles shorten, sometimes toless than one year.

3. Outsourcing and offshore manufacturingare becoming more prevalent.

4. Marketing and manufacturing activities

and strategies tend to converge and bebetter coordinated in firms operatingglobally.

d


8/26

4/15/12

Critical Factors and KeyTrends: Changes in Logistics

& TransportationDeregulation of the U.S. Ocean LinerIndustry.

Intermodalism

Shipment ControlFree Trade Agreements


9/26

4/15/12

Strategic ChannelIntermediariesForeign Freight Forwarders

Non-Vessel-Operating Common Carriers

Export Management Companies

Export Trading Companies

Customs House Brokers

Ship Brokers

Ship Agents

Export Packers

Ports


10/26

4/15/12

Global SCM: Key Areas ofGreatest NeedManaging the Geographic Evolution of

Supply Chain Activities.

Transformation or Redesign of Best orProven Practices to Global Supply ChainSetting.

Leverage Global Supply Chain Strategies toSignificantly Impact Overall Business

Strategies.


11/26

4/15/12

Key Challenges

To gain a competitive advantage, globalsupply chain management & sourcing is agiven for companies engaging in globalmarketing strategies.

The longer the supply chain, the morecooperation and coordination is requiredbetween the various groups in the supplychain.


12/26

4/15/12

qGlobal Sourcing


13/26

4/15/12

Global Sourcing Overview

Supply is becoming global.

Since the end of World War II, manydifferent events and forces have relaxedbarriers to world trade.

Geopolitical events of the past decade,have created major opportunities for theglobal economy.

Changes to the global political landscapeare continuing at a rapid pace.


14/26

4/15/12

The Importance of GlobalSupplyFor supply managers, globalization

represents the opportunity to deliverimproved value to end customers.

Global supply for many companies is acompetitive necessity.


15/26


16/26

4/15/12

Global Sourcing SuccessFactorsDefined global sourcing process

Centrally-coordinated/centrally-led decisionmaking

Site-based control of operational sourcingactivities

Formal improvement processes andinformation sharing with suppliers

Real time communication tools

Availability of critical resources, includinghuman resources

Sourcing & contracting systems


17/26

4/15/12

qUnderstanding Global Risk


18/26

4/15/12

Understanding Global Risk

Companies participating in global sourcinginitiatives do so mainly to reduce overallcost.

Significant savings can be made in thecosts of goods and/or services with lowercosts arising from lower labor costs, lowercosts of capital equipment and lower costof material by outsourcing to foreign

countries.

However working with companies indeveloping markets entails risk and firmsthat do not factor in these risks anddevelop strategies to assess, mitigate and


19/26

4/15/12

.Costs of additional inventory levels, potentiallysubstandard products, increased transportationand transaction costs, etc., can potentially

outweigh the savings achieved.

It is a major lesson learned by firms, who areand have been engaged in global sourcing, thatthey need to understand the sources of risk anddevelop appropriate risk mitigation strategiesin order to position them for success.


20/26

4/15/12

Managing Supply Risk

Supply Chain Risk Management is astructured process throughout the supplychain, which seeks to optimize the totalityof strategy, processes, human resources,

technology and knowledge.The aim is to evaluate control and monitor

supply chain risk in order to safeguardcontinuity and maximize profitability.


21/26

4/15/12

Categories of Global Risk

Changing geo-political climates

Secure supply chains

Currency fluctuations

Local and regional economics

Logistics infrastructure

Language & cultural differences

Legal Issues

Documentation requirements & customsclearance

Quality & Traceability


22/26

4/15/12

q

Identifying, Preventing &Managing Global Risk


23/26

4/15/12

Identifying, Preventing &Managing Global RiskCompanies which embark on global

sourcing efforts need to ensure that theyhave the necessary risk managementprocesses and procedures in place which

will help them to effectively identify variouspotential risk elements, prevent these riskfrom occurring and manage and mitigaterisks when they do occur.

Enterprise risk management is the processof planning, organizing, leading, andcontrolling the activities of an organizationin order to minimize the effects of risk on

an organizations capital and earnings.

Approaches & Best Practices


24/26

4/15/12

Approaches & Best Practicesfor Managing & Preventing

RiskProbability and severity mappingRisk contingency planning

Commodity and currency hedging

Rigorous supplier evaluation and selectionprocess

Supplier development

International purchasing offices

Total cost perspective

Qualified backup sources

Possession of tooling


25/26

4/15/12

Risk Contingency Planning

Contingency planning can be defined asthe development of a management planthat identifies alternative strategies to beused to ensure success if specified risk

events occur.Effective contingency planning is of critical

importance to businesses that use globalsupply sources.


26/26

4/15/12

Thanks!

Strategic Sourcing & Risk Management

Documents

Transcript of Strategic Sourcing & Risk Management