question

USE REFERENCE:

Blanchard, D. (2021). 
Supply chain management best practices (3rd ed.). Wiley.

Homework 1: 3 page with 2 references

Read the text and read the material provided by the MEFC characters.   This material will also provide considerable guidance for answering the homework questions.  

1.
Reverse logistics is outsourced to a 3PL worldwide 33% of the time.  What are the other most frequently outsourced services to a 3PL worldwide and their percentage?

2.
Most companies today expect considerable value-added from their outsourced partners, however 30% of companies indicate that utilizing 3PL services has a negative impact on supply chain integration.  How can this be prevented?

3.
Best-in-class companies have identified ways to calculate the impacts of outsourcing.  If companies are the make 3PL decisions based on operational, financial, and risk factors, what items should be included?

4.
How are Walmart, Home Depot, and Lowes specifically able to react so quickly and positively following a hurricane?

5.
Since we are always looking at Lean practices, why is it also important to build in redundancies to handle risk?

In this interactive scenario Carmen (Operations), Zara (Supply Chain), Desmond (IT), Alex (Purchasing), and Rashid (QA) will be discussing outsourcing to a 3PL and the benefits and risks inherent to such a venture.  They will also look at other risks especially trucking and global operations. 

Carmen – We have been discussing some ambitious ideas.  If we are going to do all this, we need help.  We can hire a third-party logistics (3PL) provider, but we need to make sure we still have full visibility throughout our supply chain.  A familiar name, UPS, operates a 3PL titled UPS Supply Chain Solutions and provides not only logistics solutions but also high-tech diagnostics and repair, critical parts deployment, returns management, cross-dock facilities, product configuration and testing, and quality assurance. 

Rashid – Before we undertake a 3PL relationship, we need to evaluate our own company.  We have to know our strengths and weaknesses.  We won’t be able to identify if the 3PL is improving our logistics if we don’t first measure our own performance.  We first have to determine what are our core competencies, our defining skills and services that differentiate us from our competition, then keep those in-house.  We can then look at the other things we do and determine if we want to keep doing them ourselves.

Zara – Many best-in-class companies use 3PLs, in fact major companies like GM, Nestle, Pepsi, Proctor & Gamble, Unilever, Volkswagen, and Walmart each use 40 or more 3PLs.  More than 90% of the domestic Fortune 500 companies use a 3PL.  In fact, the top 10 global 3PL companies control roughly 80% of the world’s total logistics volume.  So, it’s not a new or untested practice.  We would want a 3PL that is proactive and suggests creative solutions to supply chain issues.  Hopefully our business will be attractive enough for a good 3PL to take us to the next level. 

Alex – We need to establish six best practice procedures like we have with our suppliers.  These are establish clear communication, set key performance indicators, emphasize collaboration, leverage technology, invest in training and education, and focusing on continuous improvement. 

Rashid – Companies work with a 3PL for an average of 6 years and it takes managing similar to a purchasing or sourcing relationship, which may not be typical for an operations person.  We want our 3PL to feel confident enough in their abilities that they freely share best-practices it has learned in working with other customers.

Desmond – We need to do three things to limit our risks which are employ hazard recognition, know our level of competence, and realize when things are going wrong.  Adding a 3PL means we add more risk and we need to recognize those risks, make sure we stay competent and have visibility on what they are doing, and we are willing to recognize when things are not going well.  We also need to make sure we include them in our contingency planning.  We may want to consider a layered approach to risk management and security rather than opting for a single defensive mechanism.  Far too many businesses, hospitals, schools, and other organizations have been subjected to cyber-attacks and use of ransomware. 

Zara – Our risks are not only electronic, they are also physical.  Cargo thieves hijack trucks or break into the when parked, stealing the cargo.  The US is included among those most severely impacted by this practice.  More than 1/3 of all cargo thefts occur at truck stops and highway rest areas.  Another 25% occur at motels, restaurants, and mall parking lots.  We have to be sure our 3PL securely screens its prospective employees and has practices in place for securing products in transit.  We need to be willing to ask them questions like “who attaches the cargo security seals?” and “what happens when a seal is broken?”

Homework 2: 2 pages with at least 2 references

Read the text and read the material provided by the MEFC characters.   This material will also provide considerable guidance for answering the homework questions.  

1. RFID is described as the enabler of supply chain visibility.  Describe Walmart’s struggle to get suppliers to adopt RFID technology.

2. The Internet of Things (IoT) is a machine-to-machine communication network.  How is the Port of Rotterdam using it to improve its operations? 

3. What are the top 2-3 consumer sustainability issues and why do companies fail to score well on the Corporate Human Rights Benchmark (CHRB)? 

4. How has Ryder Systems responded to the call for more sustainable logistics?  Describe their recommended strategies for transportation, warehousing and distribution improvements.

In this interactive scenario Carmen (Operations), Zara (Supply Chain), Desmond (IT), Alex (Purchasing), and Rashid (QA) will be discussing changes in technology and the need for ethical sustainability practices.  

Carmen – With the increased focus no climate change, disappearing rainforests, natural disasters, forced and slave labor, and other crisis, I am so glad that in recent years we have pledged to transform our supply chain and work only with suppliers that adhere to social and environmental standards.  As with other challenges we don’t always have complete control.  We hope that our suppliers will in turn ask for compliance from their suppliers, and so on, creating a cascade of sustainable practices that flows smoothly throughout our supply chain. 

Zara – 87% of consumers expect companies to hold the interests of society on an equal footing as their business interests.  Social interests, in particular the eradication of child and forced labor, are seen as the most important sustainability issues.  It’s an admirable idea, but it’s hard to realize in practice. Many other companies, though committed to sustainable practices, have faced scandals brought about by suppliers that, despite being aware of sustainability standards, have nevertheless gone on to violate them by requiring employees to work in hazardous conditions and dumping toxins into rivers.

Alex – We need to consider that some the problems may begin with us.  If we place orders that exceed our suppliers’ capacity or impose unrealistic deadlines, this can lead our supplier’s factories to demand heavy overtime from their workers.  They don’t want to tell us that they can’t produce our products on time, because they may think we will try to find someone else that can. We have to give them enough notice to hire enough skilled workers to do the job.

Zara – Our suppliers rarely concern themselves with their supplier’s sustainability practices because they’re struggling with sustainability issues themselves. It’s difficult for them to enforce a 60-hour workweek limit on their suppliers when they can’t comply themselves.  Unfortunately, we do not have a direct contractual relationship with their suppliers and our requests don’t really mean that much to them. 

Carmen – I know we want to become Best-in-Class concerning this initiative but honestly, I don’t think we know who our 2nd or 3rd tier suppliers are, where they are, or their sustainability knowledge or capabilities. 

Alex – They may be the least equipped to handle sustainability requirements. They often do not have sustainability expertise or resources, and they may be unaware of accepted social and environmental practices and regulations.  They are also frequently located in countries where such regulations are nonexistent, lax, or not enforced at all. And typically, they don’t know much about sustainability requirements and have little incentive to comply with them.

Zara – This may explain why most of our lower-tier suppliers lack programs to dispose of toxic waste and in fact have no environmental management program whatsoever.  Because they are small to medium size private firms, they provide little information to the public which makes them almost invisible. Therefore, we don’t have control over the ones that pose the highest risks to our initiatives.

Carmen – To be Best-in-Class with this initiative we have to have a clear supply chain strategy, be adaptable and quick, transparent, focused on continuous improvement, know our strengths and weaknesses, have an end-to-end perspective, and a global focus.  We do well in many of those areas but this has already shown us some areas for improvement. 

Zara – Knowing this about ourselves and our supplier’s suppliers may explain why most of our lower-tier suppliers lack programs to dispose of toxic waste and in fact have no environmental management program whatsoever.  Because they are small to medium size private firms, they provide little information to the public which makes them almost invisible. Therefore, we don’t have control over the ones that pose the highest risks to our initiatives.

Carmen – Considering industry best practices, we need a plan.  First, let’s commit to developing and complying with industrywide sustainability standards, and help suppliers become full members of industry organizations. Let’s share sustainability expertise with our suppliers to help them achieve sustainability goals.  We need to also encourage first-and lower-tier suppliers to take advantage of sustainability training programs offered by industry organizations. 

Alex – Building a best-in-class supply chain requires money, time, talent, energy, focus, commitment, and guts.  So, I think we should also use a more direct approach and evaluate our first-tier suppliers by using sustainability performance indicators that capture their requirements for lower-tier suppliers.  We can survey our suppliers on their environmental, health, safety, and labor practices and on their procurement practices.  And we can work with our suppliers to map out our firm’s supply network to the 2nd and 3rd tiers. 

Zara – We can also provide training and foster peer learning among our suppliers to help them improve their procurement practices with lower-tier suppliers.  We can select high-performing suppliers to pilot new sustainability initiatives.  Then reward suppliers for cascading sustainability requirements to lower-tier suppliers.

Desmond – We have adopted many new ventures here at MEFC, but I would suggest we be a bit less ambitious in trying to stay on the leading edge of technology implementation.  Digitalization is disrupting the supply chain and there are some rather sexy technologies being developed.  However, the ones that will probably do us the most good in our company are solutions specifically addressing problems that we are facing.

Zara – We have seen how technology advancements have helped with supply chain planning and predictive analytics, forecasting accuracy, product lifecycle management solutions, warehouse management systems, and many others.  We have seen the rise of optical scanners, automated storage and retrieval systems, programmable logic controllers, conveyor systems, sensors, robotics, database management systems, inventory control systems, and the list just keeps on growing.

Desmond – Though older technology and not nearly as flashy, Radio Frequency Identification (RFID) devices can be either active or passive and the cost per device has dropped considerably, down to about 5 cents per RFID tag.  RFID is very practical and is considered an enabler of supply chain visibility. 

Zara – RFID can allow for automated receiving making deployment of  our merchandise more rapidly, accurately, and with less labor.  It also allows rapid inventory counting and enables full inventory count daily.  This can also help provide a reduction in stolen products (shrinkage).  RFID will help reduce out-of-stock situations, improve our inventory accuracy, increase sales margins, and help expedite returns. 

Rashid – One of the chief benefits of RFID is that it offers a more efficient means of facilitating product recalls.  Consider a situation like the Mad Cow Disease scenario.  Now cattle can be tagged on their ears and scanned as they move in to be processed.  They can then track back every cut of meat, back to the ranch where that cattle was raised. 

Alex – Pharmaceutical companies are using it, in conjunction with the blockchain, to allow for track and trace and verification that its products are authentic.

Desmond – the Internet of Things (IoT) is a machine-to-machine communications network connecting many devices, hardware, and software together in a meaningful way.  It is an entire network of smart devices that can communicate with each other.  It allows for increased visibility and transparency through track and trace and constant communication. 

Homework 3: 3 pages with at least 2 references

Read the text and read the material provided by the MEFC characters.   This material will also provide considerable guidance for answering the homework questions.  

1. Describe the efforts Unilever took several years ago to support hundreds of small to medium sized suppliers in Indonesia when that country’s economy was in turmoil.

2. What is zero-based budgeting?  Can a zero-based mindset help the supply chain?

3. Unilever abandoned its annual budgeting process in favor of an “eight quarter rolling forecast”.  Why is a rolling forecast better than a traditional budget?

4. Since many supply chain employers lack a plan for organizing their recruiting efforts, what should be included in such a plan?

5. Research and describe how a well-performing organization is developing top supply chain talent.

In this interactive scenario Carmen (Operations), Zara (Supply Chain), Desmond (IT), Alex (Purchasing), and Rashid (QA) will be discussing the financial aspects of the supply chain to include cash-to-cash cycle time, rolling forecasts vs annual budgets, and improved working relationship with the finance department.  Then they will discuss the need for a new generation of workers in the supply chain and the very high expectations.  

Carmen – Our Supply Chain operations and the Finance department seem to have always been at odds with each other.  We need to consider ways to make them work more closely together and as partners.

Zara – We need to consider ways to handle cash flow.  There have been many times when we have sent out furniture to retailers and wait a long time to get paid.  This ties up our resources and lengthens our cash-to-cash cycle time.  The finance department is always unhappy about this saying that “we are cash strapped and almost needing to take out loans to pay suppliers, creditors, and salaries.” Instead of turning to banks for loans to keep us operating, we need to make liquidity and cash-flow a priority. 

Alex – Unfortunately, we tend to do the same thing to our suppliers.  They send us supplies and we wait to the last possible time to pay them.   One of the most important things we can do is to improve the management of our cash flow.  Half of the company’s costs are in the supply chain, primarily through cost of good sold (COGS).  Costs also keep rising especially for e-commerce fulfillment and new product development.

Zara – In the supply chain, we need to expand our view and knowledge of finance and get more comfortable speaking the language of the finance department.  I know one of the practices they would recommend is the old practice of zero-based budgeting, where we start brand new budgets every year rather than basing them on the previous years budget.  I can somewhat agree with the idea since we have all heard where people say “we have to spend our budget this year or we won’t get it next year.”  That doesn’t help the overall company and causes inefficiency.  Instead, we need to be constantly focused on uncovering inefficiencies in costs that can be captured and redirected towards new growth and bottom-line impact.

Rashid – Unilever abandoned its annual budget in favor of an eight-quarter rolling forecast.  Rather than trying to hold one annual forecast, even though the key assumptions upon which it is based are no longer valid, it utilizes more agile forecasts.  This is similar to making budget adjustments throughout the year but without the restriction of trying to make the original budget fit into a changed environment.  This allows them less time to spend on developing budgets and more time planning, and provides a level of resilience from the inevitable supply chain disruption. 

Alex – When we think of the supply chain we often think of moving products and even information, why do we struggle with also including the need to move finance?  We have always used our bank line of credit to ensure we have cash available.  We may want to consider the option of providing Supply Chain Finance which focuses strategically on payment terms with suppliers.  Supply chain finance facilitates transactions between trading partners by providing financing and payment options that are negotiated to improve each trading partner’s financial position.  It would provide a way for our suppliers to get paid earlier than usual for a nominal fee, by a third party financial institution, which means they won’t need to borrow from traditional banks at a much more expensive rate.  Utilizing technology, this also allows our suppliers visibility into when invoices are approved and when payments are processed.  We also need to consider how the blockchain can assist in automatic billing and funds transfer upon receipt once agreements are established.

Desmond – I like the idea of instead of turning to banks and greatly increasing our debt, we begin making liquidity and cash flow a top priority.  We can provide incentive to our customers to encourage their prompt payment and offer support as needed to ensure the continued viability of our key suppliers.  We can also incentivize our employees in sales, procurement, and commercial teams to optimize for cash.

Carmen – Have you noticed that the Baby-boomers in this industry are starting to retire?  They hold many positions even in our organization and are going to be very difficult to replace.  We have done a few things to attract talent but we need to start developing the next generation of supply chain talent. 

Zara – Fortunately, there is a solid sense of fraternity within the supply chain community based on a shared need to learn from each other.  Each year when I attend the APICS conference, it is like a homecoming with everyone sharing new ideas.  They have been talking for quite a while about the huge shortage of supply chain talent.  We will have to develop a plan for how to recruit and train top-performing supply chain talent.

Alex – We need to find well educated individuals who have leadership skills, business skills, are tech savvy, and have a global orientation.   They need to have an understanding of robotics, inventory management, software/hardware, international customs, currency exchange, border treaties, security, and many other things.  I know we are asking a lot.  They need to have an understanding of site selection, distribution, warehousing, logistics, trade regulations, SRM, CRM, and LSS.  They also need to be willing to travel.

Zara – ASCM, CSCMP, and ISM are all well-respected supply chain industry organizations.  Colleges will sometimes have links to these professional organizations on campus through student organizations.    We will be looking for individuals with good communication skills, strong work ethic, good organizational skills, being socially savvy, good time management skills, good at critical thinking, having a team orientation, while also being flexible and adaptable.   We need to investigate Saint Leo’s ASCM Student Forum to see if we can make connections.  Possibly we can do a Lunch and Learn to tell them about our company and begin to develop interest and a potential pipeline for top talent from there.