JIAOTONG UNIVERSITY 196 Supply Chain Management Lecture 6 Designing Global Supply Chain and Supply Chain Decision Under Uncertainty Instructor(s) Prof.Jianjun Gao Department of Automation School of Electronic Information and Electrical Engineering SEIEE AU406
Supply Chain Management Instructor(s) SEIEE AU406 + - Designing Global Supply Chain and Supply Chain Decision Under Uncertainty Prof. Jianjun Gao Department of Automation School of Electronic Information and Electrical Engineering Lecture 6
Outline The Impact of Globalization On SCM Risk Management in Global Supply Chain Discounted Cash Flow Analysis Representations of Uncertainty Evaluating Network Design Decisions Supply Chain Networks Using Decision Trees Designing under Making Supply Chain Decisions Under uncertainty Uncertainty in Practice SEIEE AU406 6-2
+ - SEIEE AU406 Outline The Impact of Globalization On SCM Risk Management in Global Supply Chain Discounted Cash Flow Analysis Representations of Uncertainty Evaluating Network Design Decisions Using Decision Trees Making Supply Chain Decisions Under Uncertainty in Practice 6-2 Supply Chain Networks Designing under uncertainty
The Impact of Globalization On SCM Globalization offers companies opportunities to simultaneously grow revenues and decrease costs P&G >1/3 profit from developing market Apparel and consumer electronics are two areas in which globalization has offered significant cost reduction opportunities. Globalization are often accompanied by significant additional risk. Dole's global banana production Crude oil spot price and exchange rate fluctuations in 2008 ■ Uncertainty of demand and price drives the value of building flexible production capacity at a plant SEIEE AU406 6-3
+ - SEIEE AU406 The Impact of Globalization On SCM Globalization offers companies opportunities to simultaneously grow revenues and decrease costs P&G >1/3 profit from developing market Apparel and consumer electronics are two areas in which globalization has offered significant cost reduction opportunities. Globalization are often accompanied by significant additional risk. Dole’s global banana production Crude oil spot price and exchange rate fluctuations in 2008 Uncertainty of demand and price drives the value of building flexible production capacity at a plant 6-3
The Impact of Globalization On SCM Results of Accenture Survey on Sources of Risk That Impact Global Supply Chain Performance Risk Factors Percentage of Supply Chains Impacted Natural disasters 35 Shortage of skilled resources 24 Geopolitical uncertainty 20 Terrorist infiltration of cargo 13 Volatility of fuel prices 37 Currency fluctuation 29 Port operations/custom delays 23 Customer/consumer preference shifts 23 Performance of supply chain partners 38 Logistics capacity/complexity 33 Forecasting/planning accuracy 30 Supplier planning/communication issues 27 Inflexible supply chain technology 21 Source:Adapted from"Integration:The Key to Global Success."Jaume Ferre,Johann Karlberg,and Jamie Hintlian,Supply Chain Management Review (March 2007):24-30. SEIEE AU406 6-4
+ - SEIEE AU406 The Impact of Globalization On SCM 6-4
The Offshoring Decision:Total Cost "If a foreign country can supply us with a commodity cheaper than we ourselves can make it,better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage." --Adam Smith,"The Wealth of Nations" ▣ Offshoring is the relocation,by a company,of a business process from one country to another-typically an operational process,such as manufacturing,or supporting processes,such as accounting. SEIEE AU406 6-5
+ - SEIEE AU406 The Offshoring Decision: Total Cost 6-5 “If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.” --Adam Smith ,“The Wealth of Nations” Offshoring is the relocation, by a company, of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting