LSCM Strategies

COMPLEXITY AT GLOBAL LEVEL

February 2011

Logistics Planning & Strategy Discussion with Siddhartha Mathur

International SC Issues
Introduction Types of International Operations Forces that drive globalization Risk and Advantages of ISC Key Success Factors in ISC Issues in ISC Regional differences in logistics
February 2011
Logistics Planning & Strategy Discussion with Siddhartha Mathur

Types of International Operations

International distribution operations International suppliers Off-shore manufacturing operations Fully-integrated global supply chains

February 2011

Logistics Planning & Strategy Discussion with Siddhartha Mathur

Types of International SC
Type of International SC

Inbound Logistics
Domestic International International Domestic/ international

Process
Domestic Domestic International Domestic/ international

Outbound Logistics
International Domestic/ international Domestic Domestic/ international
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International DS International Suppliers Offshore Manufacturing

Fully Integrated GSC

February 2011

Logistics Planning & Strategy Discussion with Siddhartha Mathur

Drivers of Globalization
Global market forces Technological forces Global cost forces Global political / economic forces

February 2011

Logistics Planning & Strategy Discussion with Siddhartha Mathur

Global Market Forces

Foreign competition and opportunities Offence is the best defense strategy Saturation of domestic (U.S.) market while huge potential in international markets (mainly due to growth of IT)

February 2011

Logistics Planning & Strategy Discussion with Siddhartha Mathur

Technological Forces
Related to product and process Need to locate R&D, technology Advantages of having R&D close to the manufacturing facilities (shortened life cycle)

February 2011

Logistics Planning & Strategy Discussion with Siddhartha Mathur

Global Cost Forces

Shift from inexpensive unskilled labor to inexpensive skilled labor Taxes and other incentives provided by foreign governments Tight integration of SC may necessitate closeness of links

February 2011

Logistics Planning & Strategy Discussion with Siddhartha Mathur

Political & Economic Forces

Exchange rate issues Tariffs and quotas Other international and local requirements and agreements (Environment, political, etc.)

February 2011

Logistics Planning & Strategy Discussion with Siddhartha Mathur

Risks and Advantages of ISC

Importance of flexibility Must understand demand characteristics and cost advantages Operating Exposure and exchange rate Exchange rates does not necessarily reflect relative inflation rates.
February 2011
Logistics Planning & Strategy Discussion with Siddhartha Mathur

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Factors Affecting Operating Exposure

Customer reaction Competitive reaction Supplier reaction Government reaction

February 2011

Logistics Planning & Strategy Discussion with Siddhartha Mathur

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Responses to Global Risk

Speculative strategy Hedging strategy Flexible strategy

Supplier capacity Manufacturing capabilities

Production shifting Information sharing

Global coordination
Political leverage
Logistics Planning & Strategy Discussion with Siddhartha Mathur

February 2011

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Key Success Factors in IS

Product development Flexible, modular design Purchasing Production (excess capacity, IT, Centralized management) Solid demand management and forecasting (solid and reliable information systems) Rapid order fulfillment capability
February 2011
Logistics Planning & Strategy Discussion with Siddhartha Mathur

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Issues in ISCM
International versus regional products:

Region-specific products True global products

Centralized versus local control

February 2011

Logistics Planning & Strategy Discussion with Siddhartha Mathur

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Regional Differences in Logistics

Categories of region:

First World (Triad): U.S., Japan, Western Europe Emerging Nations: Thailand, Taiwan, Brazil, Argentina Third-World: Middle-East, African Countries

Cultural differences (language, beliefs, customs) Infrastructure Performance expectation and evaluation Information Technology Skilled and managerial human resources
Logistics Planning & Strategy Discussion with Siddhartha Mathur

February 2011

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