BA 339

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BA 339

• Strategy and Strategic Planning

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Strategic Planning

• Mission Statement
• Vision Statement
• Strategies
• Long-Term Action Plan
• Commits Organizational Resources
• Creates Competitive Advantage
• Performance Measures

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Development of Strategy

• How Do We Create Competitive Advantage?
• What are Mission and Vision for the Organization
  and the Function?
• What are Strategies to Reach Goals?
• What are Performance Measures We Will Use to
  Track Progress and Performance?

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Purchasing Strategies An Example

• A Strategy for Each Commodity
• A Strategy for Each Supplier
• Current Situation
• Future Situation
• Methodology to Achieve

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Development of Commodity and Supplier Strategies

• Identify Critical Elements
• Cost Drivers
• Critical Materials
• Key Technologies
• Determine How to Manage
• The Commodity
• Each Supplier Within the Commodity

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Purchasing Commodity Strategy

• Industry Standard or Custom
• Criticality
• Market Study / Commodity Study
• Global
• Domestic

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Purchasing Commodity Strategy

• Sourcing Strategy
• Single or Multiple Sources
• Price/Cost Analysis
• Contract Type
• Automation
• Logistics
• Inventory
• Transportation
• Supplier Evaluations

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Purchasing Supplier Strategy

• Formal Analysis
• Capability, Capacity, etc.
• Present Status, Desired Status, Methodology
• Where Is Relationship Going?
• Performance Improvements
• Additional Services
• Administrative Improvements
• Consignments
• What Must WE Do?

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Strategy Development Example Nuts and Bolts

• Critical Elements
• Quality (Counterfeit)
• Availability
• Minimize Administrative Cost
• Single Source
• Local Supplier
• Or Consigned Inventory
• Known Manufacturer
• VMI

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Strategy Development Example

• Decide How to Manage Specific Supplier
• Goals / Objectives for That Supplier
• Develop Specific Performance Measures to Track
  Supplier Improvement
• Invoice Accuracy
• Prompt Backorder Clearance
• On Time Delivery
• Supplier Forecasting

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Goals of Operations and Supply Chain Management

• Quality
• Time
• Flexibility
• Cost

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Operations and Supply Chain Trends

• Electronic Commerce
• Global Competition
• Relationship Management
• Risk Management
• Technology Utilization
• Outsourcing
• Sustainability

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Risk Management Some Types of Operations,
Supply and Logistics Risk

• Origin Risk Analysis
• Natural Disasters
• Labor Issues
• Political Issues
• Logistics Risk
• Capacity
• In-transit Loss or Damage
• Labor Issues
• Clearance Delays
• Infrastructure Constraints

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Risk Management Some Types of Operations,
Supply and Logistics Risk

• Inventory Risk
• Loss or Damage
• Obsolescence
• Shrinkage
• Technology Risk
• Bad Selection Process
• Lack of Training
• Late Adoptor

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Risk Mitigation Strategies

• Forecasting Look for Causes of Change
• Technology
• Law, Politics
• Nature
• Labor Issues
• War
• Mergers, Acquisitions LBOs
• Environmental Concerns
• Global Economic Conditions

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Risk Mitigation Strategies

• Intense Market Study
• Superior Supplier and Carrier Communication
• Problem Prevention Plans

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Technology Utilization

• Productivity Increases
• RFID and Voice Pick
• Routing Software
• WMS, FMS Systems
• Management Improvement from More and Better
  Information
• Supply Chain Communication
• Reduced Lead Times
• More Reliable Supply
• Lower Costs Throughout Supply Chain

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Outsourcing

• Defining Core Competencies
• The China Price vs the Real Price
• Managing Outsourced Activities
• Increased Logistical Importance
• Increased Demand on Capacity
• Supplier
• Carrier

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Global Supply and Logistics Issues

• Eastbound Pacific Container Capacity
• New Container Vessels
• Additional Air Freight Capacity
• Infrastructure Improvements
• Ports
• Air and Sea
• Road Access
• Inter-modal Capacity Compounding

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Sustainability

• Environmental Concerns
• National Sustainability
• Industry Sustainability
• Organizational Sustainability
• Individual Sustainability

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Global Sustainability Changes

• Population
• 6.5 Billion
• Over 4.5 Billion in Less Developed Countries
• Environmental
• Global Warming
• Air and Water Quality
• Natural Resources
• Amazon Forests
• Non-Renewable Resource Depletion

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Environmental Sustainability Index, 2005 Rankings

• Index by Yale and Columbia Universities
• Air Quality
• Water Quality
• Climate Change (Greenhouse Gasses)
• Land Change (Protection Conservation)

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Environmental Sustainability Index, 2005
Rankings Top Ten

• 1. Finland 75.1
• 2. Norway 73.4
• 3. Uruguay 71.8
• 4. Sweden 71.7
• 5. Iceland 70.8
• 6. Canada 64.4
• 7. Switzerland 63.7

• 8. Guyana 62.9
• 9. Argrentina 62.7
• 10. Austria 62.7
• 45. United States 52.9

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Environmental Sustainability Index, 2005
Rankings Trading Partners

• 13. Australia 61.0
• 30. Japan 57.3
• 31. Germany 56.9
• 33. Russia 56.1
• 65. U.K. 50.2
• 69. Italy 50.1
• 82. Venezuela 48.1
• 95. Mexico 46.2

• 98. Nigeria 45.4
• 101. India 45.2
• 110. UAE 44.6
• 122. S. Korea 43.0
• 133. China 38.6
• 136. S. Arabia 37.8
• 145. Taiwan 32.7
• Last N. Korea 29.2

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National Sustainablilty Issues

• World Economic Forum Report
• Budget Deficit
• Balance of Trade Deficit
• Climate Concerns

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National Sustainability Issues

• Population Changes
• Natural Resource Dependence
• Corporate Responsibility
• Beyond Compliance
• Continuous Improvement
• Energy
• Job Exporting

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National Sustainability

• How Do We Promote National Sustainability?
• Invest in Basic Research
• Invest in Infrastructure
• Energy
• Transportation
• Invest in Technology to Increase Productivity
• Invest in Education
• Amar Bose

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Why Invest in Education?

• World Economic Forum 2002-2003 Report
• Public Spending on Education 28
• Quality of Math and Science Education 39
• Availability of Scientists and Engineers 10
• NY Times, Feb 11, 2004
• 8th Grade Math and Science Scores 19
• Just Behind Latvia
• Singapore, South Korea, Taiwan, Hong Kong, Japan,
  Belgium, Netherlands Top Scores

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Why Invest in Education?

• Northern European Nations Making Huge Investments
  in Education and RD
• Sweden, 3.7 of GDP
• Finland, 3.3 of GDP
• U.S.A., 2.6 of GDP, or 25.15B
• If we invest 3.3, it would cost 31.7B
• If we invest 3.7, it would cost 35.5B
• 10B more, ie 40 more

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Organizational Sustainability

• Environmentally Friendly Purchasing
• Use of Renewable Resources
• Minimize Energy Requirements
• Recycling, and Buying Recycled Material
• Minimize Waste
• Minimize Complexity
• ISO 14000

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What Must We Do Personally?

• Technical Expertise
• Use of Technology
• Industry Expertise
• Process Improvement
• Managerial Expertise
• Strategy
• Managerial Techniques

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Personal Sustainability

• Maximize Use of Technology to Increase Personal
  Productivity
• Use Every Educational Opportunity
• Read Everything