Supply Chain Management

Dr Croom's blog...

2011-08-09T18:40:30Z

For regular news, commentary and links to Dr Croom's activities here is his blog:

http://simoncroom.wordpress.com/

SCMI Research News

2010-07-14T15:13:31Z

As SCMI moves forward on its research developments we are pleased to have Dr Natalia Vidal working with us on our sustainability in supply chain research agenda, and Dr Mihalis Giannakis of Warwick Business School, UK here for a month as a visiting professor.
The intention over the coming 12 months is to continue our research in two key thematic areas:

Sustainable and Responsible Supply Chains
World Class Journey to operations and supply chain excellence

Both of these themes have been an integral part of my research for the last few years, but the opportunity afforded by our expansion is to expand the scale and depth of the studies. In addition, we shall be workign hadn in hadn with USD's Center for Peace and Commerce on both research and our forthcoming Annual Forum.

Who could have foreseen volcanic disruption?

2010-04-18T06:21:57Z

With very personal stake in the saga of the Icelandic eruption (I am currently in Malta, unable to return my daughter to the UK) a central question in my mind is: "how can we make effective plans to cover such unpredictable risks?"
Clearly, SCM risk management is not about covering EVERY feasible event, but it is concerned with contingecy strategies to keep business flowing. One example gaing attention is the massive dependence of the Kenyan flower and produce sector on European markets. Aalsmeer in Netherlands is the worlds largest flower auction house and depends on air freighted deliveries for it's upstream supply - with no deliveries, there is essentially only local (<1000km) sourcing available.

Posted via LiveJournal.app.

Who could have foreseen volcanic disruption?

2010-04-18T06:21:57Z

With a very personal stake in the saga of the Icelandic eruption (I am currently in Malta, unable to return with my daughter to the UK) a central question in my mind is: "How can we make effective plans to cover such unpredictable risks?"
Clearly, SCM risk management is not about covering EVERY feasible event, but it is concerned with contingency strategies to keep business flowing. One example gaining attention is the massive dependence of the Kenyan flower and produce sector on European markets. Aalsmeer in Netherlands (http://www.aalsmeer.nl/00004.asp) is the worlds largest flower auction house and depends on air freighted deliveries for it's upstream supply - with no deliveries, there is essentially only local (<1000km) sourcing available to maintain the operation and keep their customers supplied. This excludes Kenya (Israel, and other key sources, for the Dutch flower auction house) from supplying. Many of Aalsmeer's customers similarly air freight supplies from Netherlands around the world and are thus precluded from the supply chain whilst disruption continues. What is left is a relatively localized (primarily Northern European) supply chain and logistics operation. A key concern is whether such a shrinkage of their supply chain is economically sustainable. Commentators appear to believe that any extension of this major air traffic disruption beyond a week will have a pronounced effect on economic growth across Europe for sure, but of course will impact every other globally engaged economy on the planet. Military logisticians have clearly considered the impact of major disruption - for example a major European Theatre conflict could impact the main transit and transportation route for the US military, and planners have long had alternative strategies available to draw on at short notice - not just re routing air flights, but transferring mode from air to sea/land and rail. But think of the capacity and asset investments necessary to have this flexibility! Can Apple seriously be able to reconfigure their supply chains to continue operations in Europe? Well, the answer is clearly "yes, to a large extent". Simply by the expediencies of outsourced logistics and manufacturing, Apple can spread their risks, access alternate channels and modes and maintain some form of business continuity. OK, so Apply are shipping predominantly high value, low volume products (and iPod weights just 5 ounces and costs $249 - thats $50 an ounce. By comparison a Toyota Camry weighs 56,000 ounces and costs $19,600 - $0.35 an ounce!) which means logistics costs are a much smaller percentage of the total cost of an iPod cf to a Camry - the benefits being it is relatively easy to tranship, the down size - small, high value items are really prone to security risks if trans shipped!) The challenge for Apple in changing their logistics network is one of security of product. For Toyota the main challenge is cost of transportation of the finished product. Thus, under current conditions Toyota may be better placed than Apple to respond (assuming they have secure long term arrangements to avoid short term price hikes and capacity shortages in sea, road and rail. Pricing will certainly be a key mechanism in managing the supply-demand balance in many sectors. Kumquats have risen over 160% in price in 5 days, the Toyota Camry costs the same but delivery lead times are starting to push out marginally. iTunes however is pretty happy one would think! Or are they? Iceland is aiming to become an even more important location for server farms -'due to the low cost of keeping servers cool'. Not on the Eyjafjallajoekull glacier at present though!

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Welcome to live updates

2010-03-21T23:05:02Z

Having just installed this app to enable live and regular updates.

Posted via LiveJournal.app.

Sony to cut suppliers by Half - a sound strategy in a downturn?

2009-05-22T03:28:41Z

In an economic downturn the screws are tightening on suppliers - but is this short sighted? What happens as suppliers fold, inventories deplete and monopolies emerge in previously competitive supply markets?

Reflect on Sony's strategy:

From http://news.bbc.co.uk/2/hi/business/8060761.stm

Japanese electronics firm Sony plans to halve the number of its suppliers and reduce purchasing costs by 20% over two years, as part of restructuring plans.

Cutting procurement costs is aimed at saving 500bn yen ($5.3bn; £3.3bn).

The move comes on top of huge job losses and previously announced measures to trim 300bn yen of costs.

The firm posted its first annual loss in 14 years during the 12 months to March - a sign that consumers were tightening their belts.

As well as the economic downturn denting consumer spending, the fall in electronics prices has also hit firms such as Sony.

Falling prices

Until now suppliers have had separate contracts with Sony outlets.

But the firm aims to move to a centralised procurement system, to enable it to negotiate cheaper prices from suppliers.

The number of suppliers will fall from around 2,500 to 1,200 as part of the move.

"The prices of digital home appliances have been declining by 15% to 20% every year lately," said the firm's spokesperson Mami Imada.

"Unless we cut costs we cannot hope to survive the price competition."

How much are YOU paying for poor supply chain management?

2009-05-13T18:02:14Z

The auto industry has lost $50bn since 2005 because of the poor supplier relationships - reflecting on poor, short sighted and misguided supplier management. Proctor & Gamble on the other hand are looking to generate 50% of their new product innovation from their suppliers.
How, with so many similar and compelling examples of the value of value network management, has US (and indeed global) industry imploded? Simple really - by screwing down prices paid to suppliers, extending payment terms and resourcing away from competent suppliers, there is such a lack of awareness that you need to understand your customers and drive value from the source of your supply chain onwards.

Where now for the US Auto Makers?

2009-03-30T03:55:33Z

As GM CEO Rick Wagoner is asked to stand down by President Obama, where does this leave the auto giant?
Sadly, there has been compelling evidence for over a decade that the global auto industry is over capacity. Compounded by the fact that GM, Ford and Chrysler failed to reflect the trends in the industry for economic, beautiful and high tech vehicles, there seems to be very little that can be done without some very tough decisions:

1. Three auto makers is one too many. It looks like the President is slowly coming to the view that consolidation has to be achieved if the US is to retain an auto industry.

2. Expansion of early supplier involvement in design and innovation is critical to the success of the remaining OEMS

3. The impact of world class manufacturing and supply chain practices needs to be increased a pace - Korean and Japanese companies are demonstrating a passion for continuous improvement which really has not been grasped fully by American (and European) manufacturers.

Time to get in touch with our feminine side- lessons from the Financial crisis

2009-02-16T14:14:52Z

The recent investigations by the British House of Commons into the Banking Sector crash has exposed the sheer greed and arrogance of the key players in the scandals - not least amongst them Fred Goodwin, of RBS. As the Observer newspaper reported, Goodwin's style of leadership was straight out of the classic 'Great Man' theory school of thought. His passion for instilling fear in some of the most experienced executives in the banking world and his joy at using ridicule to admonish any opposing views was legendary throughout the organization. Here's a recent quote that has been repeated widely in the business press about good ol' Sir Fred:

"a megalomaniac who cares more about size than shareholder value."

The unraveling of the economy is in large part due to the hubris of the Old Boys Club of 'inbreds' who have long dominated the financial world, yet this is what clearly brought ruin upon the International Banking Fraternity. So now maybe it's to take a leaf out of the Icelandic book:

"Iceland has turned to two women to rebuild its financial system after the banking empire built by its young, male business-schooled elite collapsed.
Elín Sigfúsdóttir and Birna Einarsdóttir are set to become chief executives of New Landsbanki and New Glitnir respectively, the nationalised banks created by the Icelandic government in the wake of the crisis.
One government minister said their appointments were an attempt to signal a new culture within the banking system."

This should be a lesson for all organizations - Bill George has written about the pervasive desire to maintain the macho culture in the Boardroom, one which in the US still sees the typical CEO as white, male and over 6'2" - it is time to look to alternative role models for leadership.

Barack Obama - what's he got to do with Supply Chain?

2009-01-20T22:31:11Z

A good question, one would think. After all, surely the President of the USA has far more important issues to deal with than managing supply chains? Well, not surprisingly, the answer to the question above is - a heck of a lot!

The US Government spends around $450 bn a year (2008 estimate) and their expenditure is not without a share of errors, exploitation and fraud. Obama has promised to save at least 10% through better procurement. This, remember, is 11 years after Tony Blair became British Prime Minister with a similar promise and managed to lead radical change in the UK's public procurement (about which much has been written, some of it by me!!).

Obama is also aiming to hire and train more 'contract managers', improve the use of technology, limit the use of cost-plus deals, strengthen whistleblower laws and stop contractors with unpaid bills form bidding on Government contracts.

We have discussed here before the impact of public expenditure on the economy, both financially and socially. Obama seems determined to hail in a new era by putting Supply center stage.

Not a day too soon!!

The problems of collusion

2008-11-12T20:44:24Z

"The European Commission has fined four car glass firms a total of more than 1.3bn euros ($1.6bn; £1bn) for running a cartel - its largest such fine.

The four companies are France's Saint-Gobain, the UK's Pilkington, Japan's Asahi, and Belgium's Soliver." (http://news.bbc.co.uk/1/hi/business/7725675.stm).

Dave Nelson on the Japanese pattern of supply chain

2008-10-27T21:19:45Z

SCMI Advisory Board Member Dave Nelson shares his immense knowledge and wisdom of supply chain practices

How will financial crisis hit supply chains?

2008-10-13T17:36:32Z

What does the financial crisis mean for the real economy? Consider the source of money for a supply chain - many commentators state that' the only new money to enter the supply chain comes from the end customer'. This is patently untrue! Repeatedly we have been highlighting the importance of capital investment for supply chains. Investment in new plant, equipment, materials, research & development, suppliers, education etc. This is a critical factor in many supply chains. After all, how do new suppliers acquire the resources to be able to compete for business? How to manufacturers develop new products and invest in new facilities? How can any organization deal with the negative cash flow in the early stages of new product development?
What about managing negative cash cycles - ie shorter payment time to suppliers than payment from customers, high inventory rates?

All of these factors need to be considered in terms of organizations financing requirements. As the Washington Post pointed out only today, new vehicle development requires significant inflows of capital across the supply chain - particularly if the development includes new technologies like hybrid, hydrogen, electric and other fuel vehicles.

So the upshot of all this is that the 'real economy' - ie the creation of wealth rather than the manipulation and horsetrading of wealth - places a heavy reliance on the finance sector sustaining its ability to loan money and achieve realistic returns. Maybe its time to get 'real', face the fact that the economy does not grow at a compound double digit rate (despite the dreams of speculators and capitalists) and learn to live with realistic, reasonable normal profits.

Economic meltdown?

2008-10-09T15:24:42Z

Stunned. I guess that's the best word to describe reactions to the current financial crises unfurling across the globe. In the midst of all of the discussions about causes, prognoses and consequences it is surprising how little discussion is taking place about value creation. The strength of an economy is fundamentally founded on its wealth creation - of which financial investment is of course a major part - and supply chain managers are typically immersed directly in the activities of wealth creation:
Procurement accounts for anywhere from 20% - 90% of costs. How well that procurement is managed and most significantly where we chose to source have major ramifications. China and India have been the star children of the sourcing and outsourcing world for less than a decade and its becoming apparent that moves are afoot to rethink this. Mexico and South America are becoming far more desirable options due to proximity and capability. How long will it be before we see a swing in the China sourcing phenomenon? Is China another 'sub prime' bomb waiting to explode in the supply chain world? Should we be thinking more about the role of supply chains as instruments of economic (and social) policy? What are the stress points that are starting to show in our sourcing rampages eastwards?

Where's the money?

2008-09-29T21:09:33Z

An intriguing map of the global distribution of wealth across the years showing how significant various regions have been at various times in the last two millenia
http://www.bbc.co.uk/blogs/thereporters/markeaston/

World Class Benchmarking

2008-09-18T22:55:51Z

SCMI is launching its benchmarking program into World Class supply and procurement. To find out more watch this interview with SCMI's visiting professor, Andrew Cox PhD:

http://streamer.sandiego.edu/Streamer/StreamPlayer.aspx?Id=511a04xavPq

scmi_san_diego @ 2008-09-17T08:45:00

2008-09-17T15:50:15Z

The move to environmentally friendly cars continues - or at least a zero emmission car.

http://news.bbc.co.uk/1/hi/technology/7617972.stm

It is still not clear what the total environmental impact of electric cars will be - for example the carbon footprint of production and the impact of end of life recycling (http://greenliving.lovetoknow.com/Hybrid_Vehicles_Negative_Environmental_Impact and http://www.newcarpark.com/blog/?p=68)

This is why students love applying their learning

2008-09-11T18:17:07Z

During our courses in supply chain management we make every effort to 'bring alive' the importance and value of applying learning to real life. This is one piece of feedback from an MBA student:

"The materials that were presented during our GSBA 506 (Operations & Global Supply Chain Management) course in supply chain management, as well as the skills that we nurtured during the 4 months of your attention, have really begun to bear fruit. We are in the process of a healthcare system-wide electronic medical record (EMR) reformat and our hospital is the beta site. The alpha site discovered several unexpected challenges during their EMR launch, many due to inadequate attention to the processes by which an order goes from the physicians, thru clerks and nursing, to execution at the patient, lab, or other service level.

During our site information technology (IT) orientation and planning sessions, I took the liberty of sharing the process mapping case study that I did in 506 with the team here, demonstrating how one could identify all of the steps involved in what most would think is a fairly straightforward process of discharging a normal, uncomplicated Mom and her baby. It’s not that simple, as we found out. The IT were quite impressed with the Visio diagram and decided to use it as a template for the other process mapping that needed to be accomplished before we could load the EMR and begin to use it effectively. It should improve the EMR load and launch by reducing design errors up front, rather than having to address the consequences of errors in a madhouse fashion during the initial hours of the EMR launch.

Although I’ve said 506 was a great class, it’s always a lagniappe when a great learning experience is not only academically interesting but ALSO useful…!"

Allan T. Bombard, MD
Chief Medical Officer
Sharp Mary Birch Hospital

Latest Journal article from SCMI

2008-09-08T17:50:12Z

Latest journal publication from SCMI:
(by John Ramsay & Simon Croom)
http://dx.doi.org/10.1016/j.pursup.2008.04.001

UN position on global warming - what can you do?

2008-09-07T06:16:20Z

Continuing the recognition that meat supply chains are the single largest contribution to global warming...

http://news.bbc.co.uk/1/hi/sci/tech/7600005.stm

Latest News on the US economy - ISM survey

2008-09-04T15:09:19Z

http://news.bbc.co.uk/1/hi/business/7598306.stm

The Journey to World Class - FREE workshop September 15

2008-09-02T15:05:30Z

Where is your organization in its journey to world class performance? How good are your sourcing and procurement processes? Professor Andrew Cox, SCMI's distinguished visiting professor, will be holding a practitioner workshop on September 15th at USD with the express intent of guiding you on your journey.
You will have an opportunity to engage in a free benchmarking analysis based on Professor Cox's detailed study of global sourcing.

Click on the following link for more information:
http://www.sandiego.edu/business/centers/supply_chain_management/SCMI_practitioner_workshop_series.php

Toxic Chemicals in Products: Financial Risks & Opportunities

2008-08-23T22:38:54Z

Managing potential hazards from toxigens in product supply chains

Product Toxicity and China: Insights for Investors

2008-08-23T22:37:04Z

Discussion of some of the challenges in identifying and containing toxins in the supply chain from China

China - where from and where next?

2008-06-15T16:22:36Z

An interesting analysis by Dr Christian Hess (Warwick)
http://www2.warwick.ac.uk/newsandevents/icast/archive/s2week24/chinahess