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Risk Management In the International Value Chain (Network)
Lecture 1 - The Value Chain/Network & BCP
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How would you define value chain management?
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Video on Supply Chain Riskhttp://www.business2community.com/strategy/bringing-balance-to-supply-chain-risk-mitigation-0568924
Relating logistics management and supply chain management to supplier networks and marketing channels
Source: Dr. Sweta Thota Or Business (B2B)McGraw-Hill/Irwin - Copyright 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Global DistributionValue Chain Management
Channel ManagementDistribution Channels
Global Business Management
4
Learning Objectives of the Class
#1 - Learn the importance or risk management by creating a BCP (Business Continuity Plan) for a company.
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#2 - Understand value chain terminology and what can go wrong in the value chain through hands-on a simulation from HBR (Global Supply Chain Management).
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#3 - Know the metrics for tracking risk and what systems are needed to track risk.
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#4 - Create a risk management playbook with assigned project teams and present the playbook to the class.
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Supply Chain Risk: Understanding Emerging Threats to Global Supply Chains By John Manners-BellInformation from MC: 2011 Oxford University. All Rights Reserved
10
HBR Simulation-
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Students will come away from the course understanding what risk management is and how to proactively prevent risk in the value chain. In addition, students will be able to apply the tools to address actions when disasters strike.
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Aligning a Supply Chain with Marketing Strategyis Key
Value Chain ManagementSuppliersCustomers
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FIGURE 13-9 Supply chain managers balance total logistics cost factors against customer service factors
Source: Dr. Sweta Thota McGraw-Hill/Irwin - Copyright 2008 by the McGraw-Hill Companies, Inc. All rights reserved.
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Doordarshan use to be the sole provider of television entertainment in India
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Indian TV Brands were only allowed: Weston, Texla, Kingston, Solidare, Ondia, BBL, Uptron
These companies had first mover advantage into color TV in 1982 (during the time of the Asian Games)foreign companies were not allowed into the country
Information from MC: 2011 Oxford University. All Rights Reserved
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Supply Chain of Components were Foreign
Assembled in India
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Revolution Happened in TV BroadcastingStar TV (Satellite Television Asian Region)
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Private TV Channels Start to Emerge & in 1995 the airwaves were opened
Information from MC: 2011 Oxford University. All Rights Reserved
19
Today Market is dominated by Foreign Brands & a Few Domestic Brands
Information from MC: 2011 Oxford University. All Rights Reserved
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Competitive AdvantageA distribution channel is the path along which goods move from manufacture to customer
Key Points: Distribution Channels reach every customer in every localityCaters to customers where they areDistribution is critical to marketing
Competitive Advantage
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Companies Must Alter the DNA
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Consumption of ValueBullet points on 216-217
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The marketing Channel?
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Relating logistics management and supply chain management to supplier networks and marketing channels
Source: Dr. Sweta Thota Or Business (B2B)McGraw-Hill/Irwin - Copyright 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Global DistributionValue Chain Management
Channel ManagementDistribution Channels
25
Choice of the Channel is Important
It affects the time and costs of distribution
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2 - It affects the volume of sales
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3. It influences pricing and promotional efforts
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4. It influences the brand or company image.
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RememberBalance Growth vs. Healthy Margins.Cash Flow growth is ALWAYS King..
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But dont forget sustainability!
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Ethics
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Business Sustainabilityhttps://www.youtube.com/watch?v=bXC-pML8USw
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Social ResponsibilityJust the Tip of the Iceberg
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Collaborative vs. Compliance Approach is Needed
ComplianceCollaboration on Share ValueVs.
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The critical barrier to doing business in rural regions is distribution access, not lack of buying power.
Prahlad and Hammond (2002)
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Sales and Operations Planning
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Social Media Influence
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UPS Videohttp://thenewlogistics.ups.com/sustainable-business/carbon-neutral/
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Relating logistics management and supply chain management to supplier networks and marketing channels
Source: Dr. Sweta Thota Or Business (B2B)McGraw-Hill/Irwin - Copyright 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Global DistributionValue Chain Management
Channel ManagementDistribution Channels
45
Logistics Functions
Procurement or purchasing
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Inward and Outward transport
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Receiving & warehousing
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Stock Control
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Materials Handling
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Order Processing
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Physical Distribution Management
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Recycling, returns, and waste disposal functions
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Get rid of the Bricks & Mortar?
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Keep an eye out for disruptive trends
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The Cloud is All About Services
every corporate function will need to be rethought in the age of the cloudGo Change the World
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An Silicon Valley ExampleMarket InformationRisk TakingPromotion ActivitiesNegotiationBull breakingFinancing
A New Marketing Channel Being CreatedThe Public Face of the Company
58
C2C Digital & Physical
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Four phases of channel design
Information from MC: 2011 Oxford University. All Rights Reserved
Buy Decision
THE VALUE CHAIN PLAN
CHANNEL #1
CHANNEL #2CSR/SUSTAINABILITY = CREATING VALUE FOR THE CUSTOMERRISK MITIGATIONS&OP + CLOUD DATA LAYER Dealer CHANNELDIGITAL B2B CHANNEL
CHANNEL #3SUPPLIER RISKSOCIAL CHANNELINFLUENCE CUSTOMERINTELLIGENCE ON IMPROVEMENTS4 PSOPPORTUNITY (HYPE CYCLES) & THREATS
CHANNEL #4BOP CHANNELNEXT GEN Solar Charging Electrical CarCONSUMOPTION ECONOMICSBOP ProductDirect Shipment to CustomersEmerging Country Dealers
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THE VALUE CHAIN MATTERS TO YOUR SMALL, MEDIUM, or LARGE BUSINESS 12 Essentials of Value Chain Management
By Payson Johnston
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Understand your customer
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The supply chain matters
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Understand your product, service, or technology
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Get out of the office
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You need to negotiate
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It is not just about cost savings
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It is about the People
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Value the relationships for the long-term
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Use the data to make decisions, not your emotions
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Limit the risk
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Keep an eye out for disruptive trends
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Embedded Sustainability is the Key
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And Other StuffOver the lastyear the below additional key value chain points have come up from colleagues and blog readers:
Importance of understandingdifferent cultures in international relationshipsUnderstand the entire business process end to end and how the valuechain affects this processMonitor the multiple tiers in your valuechainWatch capacity and constraints so you can handle upsides in customer demands without concernA positive attitude is keyHard skills and soft skills such as leadership are importantGet involved and be hands on in solving problems as part of the value chain teamEnsure your value chain is tied into your communication channel
http://paysonj.com/2015/06/22/the-value-chain-matters-to-your-small-or-medium-business/
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Problems occur in the global world which affect the value chain
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Remember the Hype!!!!
https://www.gartner.com/doc/3100227?ref=unauthreader
http://www.economist.com/blogs/graphicdetail/2014/08/daily-chart-17
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Status KeyImpact KeyNo ImpactMedium ImpactHigh Impact(>50% capacity loss)
1 = 24x7 Power Risk2 = EQ Supplier Damage 3 = In Nuclear Zone Part Site Mapping to Assess Sub-Tier Impact
100 Mile Nuclear Zone50 Mile Nuclear Zone
Raw Material1Direct SupplierDirect SupplierDirect SupplierDirect SupplierDirect SupplierDirect SupplierDirect SupplierDirect SupplierAssemblyAssemblyAssemblyAssemblySub-ComponentSub-ComponentSub-ComponentSub-ComponentSub-Component
Supplier KeyDirect SupplierTier 1AssemblyTier 2
Sub-ComponentTier 3Raw MaterialTier NEarthquakeEpicenter
1
23
2
33
3
Channels cannot run on auto mode: CadburyWorm Infestation: In 2003 there were reports of worm infestation in chocolates
Trade channels ignored: For years the distribution ran on auto mode without concern of how chocolates were stored or sold
Corrective action: Retail monitoring and education program undertaken by the company
Improved storage: The company introduced small refrigerated units for chocolatesInformation from MC: 2011 Oxford University. All Rights Reserved
Shift #4: Big changes will come to the channel ecosystem.
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The Value Chain Matters
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Relating logistics management and supply chain management to supplier networks and marketing channels
Source: Dr. Sweta Thota Or Business (B2B)McGraw-Hill/Irwin - Copyright 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Global DistributionValue Chain Management
Channel ManagementDistribution Channels
Global Business Management
84
Payson Johnston has invited you to become a contributor to the Flipboard magazine Risk Management.
To accept this invitation, please click on the following link: http://flip.it/CsQVc
You can view and learn more about this magazine at https://flipboard.com/@paysonj/risk-management-38usdc6ky
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A Flexible, Agile, Resilient, and Profitable Value ChainCompanies whose supply chains became more efficient and cost effective didnt gain a sustainable advantage over their rivals. In fact, the performance of those supply chains steadily deteriorated (Lee, 2004)
Rather than efficiency, distribution channels need to be measured on: Agility, that is, how quickly they can react to sudden changes in demand and supply.
Channels must adapt to different market requirements.Channels must align the interests of all parties in the supply chain
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