GSCM 310 Midterm to Final Fall 2020

Global ethics issues

"war on terror", rogue states, child labor, torture, scarce resources, human trafficking, migration, climate change, global trade, medical tourism, global pandemics, humanitarian intervention, etc.

(PEST) - Technological Factors

1. Maturity of mnfg and info systems, technology platforms and consumer access to technology 2. Led to an increase in service sector jobs and a decrease in mnfg jobs. 3. Companies are turning to increasingly sophisticated machinery = fewer workers to same amount of product 3. Makes work easier and less specific to countries. Ex: Bangladesh - moving to high tech equipment even though country is a typical low wage low cost producer Ex: Advancements in tech have increased the rate of global technology adoption Ex: Guru.com allows individuals to complete with large corps

Physical operations considerations

1. New physical location (Greenfield development) 2. Choose to lease or rent? 3. Choose to outsource operations completely? Ex: UPS manages distribution of products for Nike and Toshiba

Sand Cone model takeaways

1. Quality first 2. then improve the Dependability of the production system. 3. then improve production Speed 4. Then direct attention to cost Efficiency

(PEST) - Social-Cultural Factors

1. Refer to nat'l culture and values, religion, language, education, human rights and population demographics 2. Can be radically different country to country. Ex: Chinese open information sharing = product piracy Ex: Night shift taboo Ex: India cash bonuses for employees getting marries Ex: Demographics trend can indicate needs of employees. Ex: Thailand potential car market due to size, but trends show people prefer motorcycles due to pop density

Benefits of PEST analysis

1. Spot opportunities with advanced warning of potential threats 2. Implement appropriate practices for local cultures and avoid problematic practices 3. Break free of old assumptions about how managers should run orgs Ex: Rolls Royce opening up in Vietnam - Corp seen as bribable and not going to invest in local economy. Chose to invest in building skills in workers and sustaining the local natural environment

(PEST) Economic Factors

1. Wide fluctuations may create a period of contraction or expansion of labor pools. 2. Market and trace cycles, currency fluctuations, specific industry changes, customer preferences and country economic growth forecast Ex: China's dramatic economic growth in recent years has led to new market opprtnts and today more cars are sold in China than in Europe

Fraud triangle: Rationalization fix

1. develop a strong personal code of ethics and morality 2. make decisions IN ADVANCE about how we will act in potentially compromising situations 3. It is the SUDS (seemingly unimportant daily decisions) that define who we are 4. rationalizations weaken our character and cause us to lose self-respect

(PEST) Political Factors

1. laws, property rights, patens, political stability Ex: recent laws re: certain percentage of electricity coming from renewable resources Ex: Property rights - those with political power can seize property rights with few repercussions Ex: Govts may be unwilling to enforce patent law, etc

Fraud triangle: Motive-pressure fix (Steve Albrecht-Wheatley Inst)

1. minimize the three elements of compromise 2. limit our perceived pressures by living within our means, care about others and view relationships as long term rather than short term. Love neighbors as ourselves.

PEST analysis

1. political, economic, social, and technological 2. Scanning long term trends and outside influences in a country to determine if appropriate to expand global ops to that area 3. Need to understand the environmental factors so you can take advantage of the opps and steer clear of the threats

Deloitte 2016 Global Manufacturing Competitiveness Index

1. rank countries that are most competitive 2. low cost economies rank high, BUT higher cost, higher quality mnfg countries are in many cases more competitive overall than their lower cost counter parts. 3. Supports the Sand Cone model that a foundation of quality and dependability can keep countries like USA, Germany and Japan competitive with low cost mfrg like China and India. 4. Measures: regulation, finance, educational infrastructure, cost, productivity and other factors. - these gains will offset their higher costs and keep mfrg competitive on a global scale.

Fraud triangle: Opportunity fix

1. stay away from temptations and be in the middle of the ethics road. 2. live within the bounds of our personal integrity and not view circumstances as opps to break our moral code but as opps to develop true character 3. opps to compromise are slippery slope

Globalization

Actions or processes that involve the entire world and result in making something worldwide in scope. American manufacturing has potential competition from all of the world. Must become more efficent.

Manufacturing competitive priorities/trade offs

Cost, speed, dependability and quality Rare to find a single manufacturer that can deliver on all four.

Operation Underground Railroad (OUR)

Founded by Timothy Ballard - BYU alum Mission to Chile, fluent Spanish Have rescued thousands of children Assisted in arrest of over 750 traffickers Worked as a special agent for Dept of Homeland Sec for over 10 years 2013 left and started non-profit to privately help end human and child trafficking

LPI article takeaways

Global trade depends on global logistics and how efficiently countries import and export goods defines how they grow and compete in the global economy. There is no trade without logistics and poor logistics often means poor trade. Logistics matters to all countries, regardless of income level. Logistics are increasingly complex as they incorporate more areas such as green logistics, jobs or city distribution

Ted Talk Olivier Scalabre - Next Mnfg Revolution - AI

Growth is fading away, has been on the decline Time for the next big disruptor in mfrg - 4th revolution AI and Automation Scale and customization are now possible for something that was only able to be mass produced. Scale will not matter any more, but flexibility East to West trade flows will be replaced by regional. The new growth model will be to produce right next to demand. Cleaner, efficient, simpler and possible due to technology disruptions in mfrg.

Ted Talk: Esther Ndichu of UPS - Global hunger/supply chains

HUNGER is a logistics problem. 800 million hungry people in the world. 18 million live in N America, Europe and Australia There is ENOUGH food in the world to feed the entire world populations. The issue of hunger is getting the available food to the people. 1/3 of all the food produced in the world is WASTED. It rots at every stop/breakdown in the supply chain.

GSCM hold the keys to serious issues

Hunger and medical resources preventing sickness through the effective efficient purchasing, mfrg, and distribution of food and medicine to those struck by disease or disaster.

Fraud Triangle

MOR: motive-pressure, opportunity, rationalization

Global trade humanitarian ethics questions

Often ambiguous areas with very different cultural contexts of right and wrong. 1. Is it ok for me to accept bribes? 2. Is it ok for someone working for me to accept bribes? 3. Is the giving of gifts a normal part of doing business in a culture? 4. Can I give or receive gifts?

UPS proprietary software helps by

Relief Link - distributes aid in the refugee camp of 40,000 people in Mali. Digital smart card, facial recognition software. Allows for faster and more accurate distribution of food. UPS expertise in warehouse mgmt to bar and QR code optimization has taken their competitive edge and given back to help those in need.

Future of Air Cargo 2025 - How is the air cargo sector prepping itself ?

Scenario 1 - booming emerging regions, driven by low cost of crude oil, Airfreight is in great demand and sector takes advantage of this. East and SouthEast countries. Europe is stagnating at high levels. New routes of int'l competition. Scenario 2 - e-commerce economy - freights biggest customer, positive effect for air freight, efficiency advantage of integrators. 3D printing disruptor, increasing disruption in point to point connectors Scenario 3 - paralyzing regional conflicts, increasing protectionism, and concerns about safety of aviation. Recovery of crude oil price, OPEC countries flourishing, meanwhile established air freight has to cut costs and specialize in local markets Scenario 4 - Globalization in retreat - value of air freight is falling, high price of crude, return of Cold War. Customers prefer to buy local products, resurgence of local trade. Air cargo takes over passenger planes.

Sand cone model

Suggests that although in the short term it is possible to trade off capabilities one against the other, there is actually a hierarchy amongst the four capabilities.

illicit trade

The buying and selling of goods illegally, outside of the traditional market. Knock off purses, sunglasses, etc. are sold on the streets in the U.S.

last mile problem

The challenge of completing delivery of a good or a service, especially if the destination is remote or disrupted by disaster. Use technology to solve this. Traditional granaries vs plastic or metal containers - durable silos Small scale farmers use cargo bikes to get their goods to market sooner, allows them to go further to trade - able to break the poverty cycle.

Global Ethics

The field of study examining questions of morality at the level of the world, such as international justice, distribution of wealth among nations or among peoples of different nations, global trade, and humanitarian activity.

World poverty

The idea that the majority of the world's population live in conditions of extreme need or hardship. World poverty line - $1.25/day 1.1 billion of earth's 7 billion population subsist below the extreme poverty line. By contrast, America's poverty line is $63/day for family of four. In the richer parts of the emerging world, $4 is the poverty barrier.

Foreign Corrupt Practices Act (1977)

U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions. Amended by the International Anti-Dumping and Fair Competition Act (1998), that makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country. Also requires companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation And devise and maintain an adequate system of internal accounting controls.

Ted Talk Augie Picado Real Reason Mfrg Jobs are disappearing

US is losing jobs - due to technology. 87% lost to tech. Only 1 in 10 due to offshoring. Automation is spreading to every product line in every mfrg job in the world. Protectionism is not the answer. Ex: Tarrif increase between US and Mexico - Drives up the prices 40% on every component of the finished product. Specialization and efficiency are the keys Focus on what you do best and trade for everything else. We are now so interconnected it's impossible to separate and produce products in one country only.

Self-governance challenges

Unknown externalities of service ops in int'l market Sales techniques may not cross cultural divide Costs may increase Ability to react to market forces may not be as fast/fluid

Dean Kamen's clean water to millions

WHO - 1/8th of world population lacks safe drinking water Kamen partnered with Coca-Cola to change distribution. He developed a dialysis technique to solve the issue of clean drinking water, but needed help getting it distributed. Partnered with Coke to get it out there. Ekocenter - Slingshot device "We'd empty half the hospital beds in the world if we just gave people clean water. "

Companies can

develop advanced sustainability practices and use as leverage/competitive weapon by lobbying govt's to enact regulations that will force industry competitors to do the same Perk: force them to invest heavily in tech that your company created or else force them to pay heavy fines

Malcom McLean

father of containerization

LPI (Logistics Performance Index)

helps policy makers visualize how their country is performing in comparison to its peers in terms of moving goods between countries, connecting with global supply chains. Informs policy makers about areas that need improvement and emphasizes the importance of creating seamless supply chains.

Supply chains can make a difference with practices

in business, ethics, sustainability, social responsibility like preventing: - hiring children - abusing employees - depleting the natural resources of the earth - pollution - dangerous mfrg environments - negotiation or unfair deals with small companies/communities

Biggest poverty reduction measure is

liberalizing markets to let poor people get richer. = free trade between countries. Africa still cruelly punished by tariffs. China's great leap forward was because it allowed a free market in the 1990s. Both India and Africa are crowded with monopolies and restrictive practices that need to end.

Companies can

motivate supply chain partners to change willing to redesign products/services that may require advanced materials, modern mfrg tech and packaging strategies. Perk: Makes everything better, less costly to produce overall

Companies can

produce better products with fewer materials and less energy to more consumers Perk: avoid bothersome environmental regulators

Logistics

the planning, storage and movement of inventory The methods and procedures a country or company uses to move goods across borders.

joint venture

when a domestic firm buys part of a foreign company or joins with a foreign company to create a new entity

Future of Manufacturing

•Increased Internationalism (up from 50% in 2010 to 80% in 2020) •Increased Collaboration •Increased Complexity and Risk

Illicit trade ramifications

Consumer and business everywhere is touched by illegal products and services. This market has tripled in size to approx 1/3 of all global trade since 2008.

Key Factors to PEST Analysis

1. Determine the relevant environmental factors to assess - business law and IP protection there - IFRS accounting standards in France? 2. Evaluate how the relevant factors affect your int'l operations. 3. Develop the appropriate strategies and mgmt practices in the appropriate locations for the appropriate employees

Service operations considerations

1. Do we hire and manage employees int'lly? 2. Do we contract with a 3rd party provider to offer our services? 3. Something in between?

Walmart sustainability goals at 10

1. supplied by renewable energy 2. create zero waste 3. products sustain people and the environment 10 years after goals set, they have had a real impact both on its operations and those of the companies in its supply chain. They have have done well in: deployed more on site installed solar capacity than any other US company in 2014. Working to innovate the technology and forcing solar costs down for the entire industry. Zero waste - pushing suppliers to utilize an increasing amount of recycled content, putting forth specific targets. Need to keep working on food waste goals. Greener products: launched a Sustainability Index for the industry to establish metrics and mechanisms for assessing products sustainability. Includes a rating system for consumers. Has had pros and cons. "Sustainability Leaders". Heat map for suppliers that helps set priorities by category across the major issue areas. First of it's kind supply chain carbon reduction goal. (20 million metric tons of greenhouse gas emissions reduced by 2015) Fertilizer reductions for it's farmers. Fleet of new trucks - optimize trailer loads, reduce miles and emissions

Int'l entrance strategies must consider

1. the physical facilities 2. the service operations 3. the ownership questions associate with operating int'lly

LPI Key findings

1. top performing countries have remained relatively consistent since 2010 2. "Logistics gap" between more and less developed countries persists. 3. Supply chain reliability continues to be a major concern for traders and logistics providers alike. 4. Income alone does not explain performance. Willingness to reform and implement good practices and policies can have a direct impact on fluidity of cross border shipments. 5. Infrastructure continues to play a big role in assuring basic connectivity and access to gateways for most developing countries. 6. Border management reforms are a serious concern. Countries at the bottom of the rankings continue to struggle with paperwork and long delays.

Global ethics considerations

1.Seeks solutions to the most pressing contemporary ethical issues in global trade 2. How we resolve or fail to resolve the dilemmas of global ethics will determine the framework of future global governance. 3. Decisions made now will affect future generations. Ex: What is acceptable and permissible to do to human beings? torture, buy body parts - then we are making judgements about what human beings are - can limit and shape what is possible or permissible for future human beings

African Free Trade Zone - African Continental Free Trade Agreement

2018 creation of new digital free trade processing for the East African region. Seeking to Create a single African market of 1.2 billion people and combined GDP of more than $3 trillion, could increase inter-African trade by 50%. Challenges: Africa not a connected continent. Poor infrastructure. Impacts time and cost to do business. Fear of loss of revenue for local govt's. Customs/duties/taxes reduced locally.

Five main drivers of food waste

Awareness Supply chain infrastructure Supply chain efficiency Collaboration Policy environment

World poverty rates

Between 1990 and 2010, numbers fell by half as a share of the total population in developing countries. From 43%-21% - reduction of almost 1 billion people.

Self-governance pros

Can control quality and outcomes more tightly Costs may also be lower

Global Car supply chain

Cars are now put together using parts from all over the world. OEM - original equiment manufacturer - Chrysler 1st tier - Modene radiator manufacturer in Tennessee 2nd Tier - Sundram in India supplier for radiator cap 3rd Tier - Berck in England supplier for cap parts 4th Tier - Thyssenkrup in Germany - supplier of metals

Ownership options

Direct ownership - Fully owned subsidiary Some variation of a license or franchise model Joint venture - 2 or more companies work together

Capitalism contributions to decreased global poverty

Enables economies to grow and that growth has eased poverty rates and destitution as global trade has increased. Around two-thirds of poverty reduction within a country comes from growth. Poverty rates started to collapse towards the end of the 20th century largely because developing-country growth accelerated.

2016 Logistics Performance Index scored company logistics of 160 countries

Factors: include infrastructure, regulations, policies, geography and political economy Germany #1 Syria is last Top performing countries tend to be high-income, countries with lowest scores tend to be low-income **Among the top 30 performers in the LPI, 10% of shipments fail to meet the quality criteria set by those companies.

Ted Talk: Alastair Gray How fake handbags fund terrorism/org crime

Fake handbag stitched together by child sold into trafficking. Fake brake pads sold by org crime syndicate that also traffics in humans and drugs = 36,000 deaths due to faulty car parts/year You can only make 100-200% profit selling drugs on street You can make 2000% selling fakes online with little risk or penalties $2.3 trillion underground economy AlQuaeda training manual recommends selling fakes to fund terrorism. STOP - check the website url - they use expired domain names to keep up the Google page ranking Check the marketing - if it looks too good to be true, it is Check the padlock on the url - SECURE Hunt for the contact info - need a physical location

Ted Talk: Ashifi Gogo Combatting the Counterfeit Drug Trade

Fake pharmaceuticals made in counterfeit operations. Contain all kinds of harmful substances. Money goes into the packaging to dupe the consumer. Most widely available on the internet (50% of all online meds are fake from pharmacies that do not take rx) They are incredibly harmful. Empower the consumer to beat the odds. Use tech packaging - scratch, text pin, verify fake or genuine. Barcode tracking. Datapoints will tell law enforcement where the problem is.

Hunger is a logistics problem

Issues of: Storage Transportation Packaging International Shipping Customs Road networks/infrastructure Tracking and visibility

Clothing industry

Italy vs Bangladesh/China Threat of emergents - in 10 years maturing trend means that they will be able to really start competing with Italian clothing mfrs in the higher cost, higher quality market

Suit quality indicators as discussed per tailor in video

Labels may not indicate quality Construction and fabrics Floating interior front side panel Drape Aeration

Ted Talk: Misha Glenny investigates global crime network

Last 20 years has experienced unprecedented growth. Now accounts for 15% of the world's GDP After collapse of communism, so did the state. The result is the rise of Mafia - in 1989 14,000 former Bulgarian law enforcement officials joined the Bulgarian mafia Balkins - turned into a vast network for drugs, sex-trafficking and precious metals Organized crime operates same way: produce, distribute and consume zones Zones of production and distribution tend to be the developing world, but consumption is the developed world. Need new legislation and effective regulation Creates instability and violence. We need to take it seriously. Illegal goods are incredibly costly to govts and people (no taxes) Western consumerism is the primary driver of organized crime. Affects our banks, our food, our medicine, our goods.

Transportation - the linchpin of the global economy

Least visible but one of the most critical components of the global economy. Supports a wide array of movements of passengers and freight between nations. Global economy depends much on the capacity to transport goods.

Bill O'Rourke video takeaways

President of Alcoa Russia - worlds largest aluminum mfr Seek true north Be honest Listen Be compassionate Have humility Build trust - trust gets you speed Practice excellent habits Bless the lives of those you touch Treat everybody with dignity and respect Lift society as a whole Get the most out of life. IT'S ALWAYS TIME TO DO THE RIGHT THING

Licensing and Franchising

One organization giving another organization the right to use its brand name, technology, or product in return for a lump sum payment or fee based on sales.

Direct ownership/foreign direct investment

Owning a company or investing on a company in which you have complete control of.

China's Economic Belt and Road Initiative connects Asia and Europe by land and sea.

Plans to become the world's next superpower. 2013 Kazakstan network of overland trade routes (old Silk Road) Maritime Silk Road through Indonesia 60% of the world's population affected. 60 countries have signed up. China builds the infrastructure. China demands they do the work. No regulatory requirements in those countries. New roads, railways, bridges, ports $4.8 trillion dollar initiative - Belt Road Initiative Pakistan - China built a brand new part in Gwadar - $62 billion dollar commerce. Where the overland meets the maritime. String of Pearls theory - they own the ports across the South East.

Containerization

The transporting of goods in standard-sized shipping containers.

Sand Cone model expanded

There is an alternative to disturbing the balance and that is to raise the fulcrum balance point, simultaneously reducing cost and increasing speed.