Supply Chain Expatriates, Risk or Opportunity?

In last decade, the economic boom in China and its future dominance in key industrial sectors has been a tireless news event and is still an exciting hot business topic. With the rapid business expansion in China, multinational logistics companies are desperately in need of local management personnel to staff new offices and routes.  However, multinational logistic enterprises are experiencing hard times to find qualified candidates recruit them and retain them in China.

The biggest reason that I choose Operations Management (supply Chain Management) as my concentration is that I perceive this as an exciting opportunity to work oversea as an expatriate in China.  I want to develop a broad base of business skills, knowledge of Supply Chain Processes through my MBA courses.  China is evolving and changing everyday; it’s great to be a part of that and witness the improvements that benefit the average Chinese person. I hope that in some way to contribute to the process.

According to the Journal of Logistic Management, the role of the expatriate has never been more important and challenging. The article states supply chain and logistics manager have interviewed Chinese based western expatriates and local professionals on many assignments spanning appointments in operations across the supply chain.  The interviews show that expatriates will be a willing and eager segment within the work force; Chinese people want to learn from best global practices, different management styles and achieve objectives. While expatriates looking for a new challenge will find lots of new learning opportunities and also have the opportunity to shape the future of a business potentially far in excess of their home country business.

Interestingly, expatriates who have completed the foreign assignment successfully are more likely to get promotion when they return.  If this is a win-win situation for both sides, why are more than 30% of expatriates failing to complete their assignment?  What are the major challenges as expatriates in China?

Based on a set of interviews with executives in global logistics companies, it suggests expatriates end their foreign assignments earlier because of the following reasons: cultural difference and languages barrier. These reasons have great impact on expatriates’ performances, motivations and satisfaction.  Most Western business expatriates in China work in unfamiliar surroundings, as they typically do not understand much of the language and the culture. More importantly, these expatriates lack cross-cultural training before they depart to China.

In term of cultural differences, Chinese emphasizes persistence, relationships ordered by status, personal adaptability, leisure time is not emphasized, frugality, and good or evil depends on circumstances.  While Americans emphasizes quick result, status not critical in a relationship, the importance of leisure time, spending, and belief in absolutes about good and evil.

Acknowledging these factors of Supply Chain Expatriates in China it is clear that they face both risk and opportunity prompting companies and individuals to prepare as best they can to improve the success rate of foreign assignments. What are your thoughts?

 

 

References:

Shi, Yanhong and Robert B. HandField, Talent management issues for multinational logistics companies in China: observations from the field.International Journal of Logistics: Research & Applications; Jun2012, Vol. 15 Issue 3, p163-179, 17p

Goffnett, Sean P.; Cook, Robert L.; Williams, Zachary; Gibson, Brian J. Understanding satisfaction with supply chain management careers: an exploratory study. International Journal of Logistics Management. 2012, Vol. 23 Issue 1, p135-158. 24p. DOI: 10.1108/09574091211226966.

Portioil Staudach & Alberto Tantardini (2012), International Journal of Production Research; Jun2012, Vol. 50 Issue 12, p3257-3273, 17p, 2 Diagrams, 5 Charts, 5 Graphs

 

Supply Chain Management degrees a hot commodity

Colleges and Universities throughout the country are scrambling to put together programs that center around Supply Chain Management. The field is growing with the increase in globalization and firms looking to expand beyond their domestic borders. These degrees command large salaries due to the specialization of those that possess the degrees.

As technology continues to make warehousing, manufacturing, and transportation quicker, these degrees will continue to expand in importance. The article below references that firms all around the world are hiring for this type of degree. This centers around industries from the food industry, to the software industry, to retailers like Forever 21.

Popularity is not the only reason for the increase in this specialization, but the complexity of the industry is changing as well. Many firms now outsource many responsibilities of their supply chain, such as the logistics, tracking, etc. because their in-house staff is not qualified to handle the responsibility. The training and resources required to increase a firm’s capability can cost more than outsourcing some of these services. As a result, firms like Chicago’s own Coyote Logistics and Total Quality Logistics have expanded exponentially over their decade of existence, primarily due to the Third Party Logistics (3PL) industry’s growth and their ability to compile resources to help handle freight of companies throughout the world.

I personally have been pursuing a Supply Chain Management MBA for the past three years from the University of Akron, and am closing out my degree by taking my final two classes at DePaul University. Speaking from personal experience, I feel that the pursuit of my degree in this area has opened doors that otherwise would not have been opened just due to the specialization of the degree. On February 4, I started my first day at Nestle in suburban Chicago, and I feel that the Supply Chain specialization has helped me embrace the continuing excellence and Six Sigma culture much faster than some of my colleagues that started around the same time as me.

I feel for the first time in my life that the possibilities of where I can go next professionally are endless. There are many opportunities in Nestle alone that have made the degree worthwhile for me, and should you have interest in helping a firm continue to improve, I would recommend it to you as well if you are considering furthering your education.

http://online.wsj.com/article/SB10001424127887324423904578523591792789054.html

Under Armour looking to be BIGGER and BETTER!

under-armour-mobile-wallpaper

Under Armour is one of the newer brands of athletic apparel and are well known for their “moisture wicking” shirts. They are adjusting their plans and goals to increase their sales. North America has been their major contributor to their sales. Their toughest competitors are Nike and Adidas, which both generate at least 59 percent of their revenue outside of North America. Under Armour’s sales outside of North America is only 6 percent, with a new strategy they will increase their sales internationally.

Under Armour has noticed the need to improve their sales outside of North America and have hired a market manager to focus on their international sales. Analysts suspect that Under Armour will introduce their new products at the 2016 summer Olympics held in Brazil to gain international awareness and support.  Their competitors have also use this strategy in the past with successful results.  The Olympics could be the perfect stage for Under Armour to introduce their products because they are different from their competitors’ products. The Under Armour selection of products are known for their moisture wicking and light weightiness.

The strategic importance of location is definitely being recognized by Under Armour. If their products is on trend, the summer Olympics could have great sales. Location, cost, and innovation will be a major factor in deciding where to place their products at the Olympics. The location is great and well tested. Costs of shipping their products to Brazil will be pricy but has greater sale benefits. Innovation is something Under Armour has in abundance since they are such a young company, they have the ability to be creative.

The Under Armor President said that they have focused on their supply chain to ensure they can deliver their product more widely. They are prepared for the influx in sales internationally. This is a good sign because they are prepared to last, in the long run, and deliver their products across the world.

Expansion of the Under Armour brand will include yoga fans, women, and sports bras.  Designing new products in many different areas will be tough but if they can produce a new trendy design people will notice. Under Armour has the ability to be a major competitor in the athletic apparel industry. Right now, they are only 2.5 percent of the athletic apparel market. Success of gaining new customers at the Olympics will make Under Armour a major contender in the athletic apparel industry. With such a huge number of people taking notice of their product, their sales have the ability to by far surpass, their current number, 6 percent.

Is Under Armour spreading themselves too thin by focusing on growing too many different products? Will the Summer Olympics be a good stage for Under Armour to reintroduce themselves to the international market?

Source: http://online.wsj.com/article/SB10001424127887324866904578515513925827852.html?mod=WSJ_hp_EditorsPicks

 

Hog-wild for Factory Farming: Hot Dogs Made in China

As the Chinese population and economy continue to grow, safer and more efficient industrialization practices are necessary to keep up with the demands of a hot dog hungry China. This is not an exaggeration as China is “the world’s largest consumer of pork.” A recent takeover of Smithfield Foods by Shuanghui Holdings Ltd., “China’s biggest meat processor,” will provide valuable insight into industry practices that are commonplace in the U.S. Current processing methods in China lack quality control as the majority of meat is produced by small farms that process less than 500 hogs per year.

From Hog to HotdogThese “conditions on smaller farms can be squalid, with a lot of physical contact between farmers and animals, which can transmit disease.” This type of environment can become a breeding ground for contamination leading to outbreaks of diseases like swine flu and foot-and-mouth disease, having major health implications on Chinese consumers. Authorities blame irresponsible farming practices and the disjointed meat processing system that is not easy to “regulate and makes it more difficult to avoid bad practices.”

In contrast, the highly sophisticated and streamlined systems of pork production in the U.S. is often viewed negatively by Americans and referred to as “factory farming.” Smithfield’s facilities have the “capacity to slaughter as many as 110,000 hogs a day,” and most U.S. farms are much larger than their Chinese counterparts, raising over 2,000 hogs annually. Ironically, these modern processing techniques are the envy of Chinese authorities who are looking to utilize the “expertise of Smithfield’s management team to enhance its pork-processing facilities.” Skeptics claim that the Shuanghi-Smithfield partnership “will exacerbate such problems as complex supply chains and food-contamination risks.”

Although the trend in U.S. agriculture is to go “back to the start” as expressed in marketing campaigns by environmentally conscious companies like Chipotle Mexican Grill, this is not the reality in China. As health out-breaks are more widespread in this Asian country and regulation lacking, efforts to “control food safety” and create more modernized processing methods are a welcomed site.

In such an industry, operational expertise will prove essential in restructuring the pork processing system in China. They will likely face challenges like determining adequate process and capacity design for farming facilities and distribution channels; forecasting to meet the demands of a growing population; Slaughter Pigs in Chinaand improving inefficient and broken supply chains. Improved product quality will likely be most prominent and follow a manufacturing-based definition as increased standards will ensure a safer finished product.

On a personal note, I am an advocate for more naturally produced food in smaller farming environments, yet I understand that the demands and current conditions in China are quite different from the U.S. All criticism aside, the majority of the U.S. population relies on the safe meat supply provided by corporations like Smithfield to ensure peace-of-mind at the dinner table. How do you think that the new deal between Shuanghi and Smithfield will impact Chinese and U.S. consumers, respectively. Will the Chinese citizens have a similar sentiment toward industrialized farming practices in future decades?

Article Source

 

 

Sustaining The Nike Swoosh

The sports apparel powerhouse Nike, Inc. has recently released big changes in the news by announcing a partnership with Swiss company Bluesign Technologies.  The partnership will accelerate the supply of sustainable materials and chemistries for use in all Nike products.  What does that mean exactly?  Well, it means Nike is going green – they are taking steps to make the production of their textiles more sustainable for their workers, customers, and environment.

Though I bet not many of you have heard of Bluesign Technologies, their company is quite interesting.  They have also partnered with The North Face on a journey to sustainability.  The link provided here (http://www.youtube.com/watch?v=wkOQVQdJ_Lo) is a short video which details great information regarding Bluesign; how they work, the benefit of using their technologies, and how it can better the environment.  Basically, Bluesign is an input management system.  They know everything that thNikeey put into their production and calculate the effect of a chemical used in a textile regarding their air emissions, water emissions, and how it affects the workplace so that they know the outcome a chemical has before even starting production.

Nike is utilizing two of Bluesign Technologies that will provide Nike’s supply chain with access to roll out the tools across Nike’s global supply chain.  With one of the technologies, Bluefinder, a supplier can access pre-screened sustainable textile preparations including dye systems, detergents, and other chemicals used in the manufacturing process.  The benefit of this tool is that it helps suppliers manage restricted substances and increase water/energy efficiency.  The second tool Nike will utilize is Blueguide which gives Nike access to 30,000+ materials produced using chemicals from the Bluefinder at facilities that have undergone rigorous assessment.

Nike is pursuing to enhance their sustainable material strategy.  They are looking to put a set of positive chemistries in the hands of material suppliers by preventing the use of hazardous chemicals.  With Nike using these technologies, they can change production with many manufacturers by having them use technologies in order to produce more sustainable products and increase efficiencies.

I think this is a great partnership for many reasons.  First, as we discussed in class, sustainability is win-win and has a multifold positive impact.  Furthermore, without these technologies Nike’s supply chain had to go through individual factory assessments.  Now, their supply chain will run more efficiently with more innovative products.  With the integration of Bluesign Technologies, materials will be made in a manner which is sustainable between products, the environment, and the manufacturing factory.  The sustainability advantage is not only effective in Nike’s products, but in improving their supply chain by making production more innovative, stable, and of higher quality.  This aspect of their operations management is greatly going to improve Nike to being not only a sports powerhouse, but a sustainable one as well.

 How beneficial do you think the use of Bluesign Technologies will be to Nike?

Do you look more favorably on a company that takes efforts to reduce their carbon footprint and provide more sustainable products- why/not?

Nike

Sources:

http://nikeinc.com/news/nike-partners-with-bluesign-technologies-to-scale-sustainable-textiles

http://www.environmentalleader.com/2013/03/20/nike-supply-chain-to-use-bluesign-sustainability-tools/

Supply Chain Management The Competitive Advantage

In a recent survey  business leaders around the globe stated they are putting a strong focus on their supply chain management. These leaders are trying to come up with a solution to the constant changing technology up-and -down markets to the constraints of natural disasters.  Having a strong supply chain management has become very important with in the business world. Having stronge SCM (supply chain management) helps business stand out from the rest. Not only do business have to deal with big orders they now more then ever have to also work with small customers orders. This survey by PWC stated five key findings to a “more efficient transparent, dexterous and customized supply chain” to what the company needs.

1. “You Can Have It All”  Having a stronge supply chain results other areas of the business benefiting as well. Orders that are on time and correct lead to companies having on average 15 inventory turns a year. Were as companies who lag behind on their have a average of 4 turns a year.

2.”Leaders Focus on Best-in-Class Delivery” Leaders are spending a lot of time focusing on maximizing profit and lower cost while providing superoir delivery. Being able to comunicate and responde to customers requirements while keeping pressure on competitors.

3. “One Size Doesn’t Fit All”  Meeting the needs for specific customer groups has become a significant part of the SPM.  Configuring differences between high end and low end products to different parts of markets. Scheduling different delivery times based on desired time of shipment.

4.”Global Control Of Core Strategic Functions” Even thought some parts of the order might be outsourced the customer interaction is still done with in the company. Keeping a strong connection with company and customer lead to returning customers .

5. “Supply Chain Capabilities Are a Differentiator”  Collaborating with key partneres to maximize delivery performance and creating less supply chain redundancies are important in establishing a best in class delivery. This gives both companies a leading competitive edge.

Companies are changing very quickly just as technology advances at a fast rate. It is hard to keep up at times with new advancements and available new technology.  The article states that 2/3rds the supply chain management will go to automation with in the next two years. This raising standards higher then every before for supply chain management.

What do you think is the most important strategy  for a company to make to stay ahead  with supply chain management standards as they advance?  What do you see in the future with supply chain management?

 

http://blog.apptricity.com/bid/291390/2013-Global-Supply-Chain-Survey-Highlights-Value-of-Speed-Efficiency

Counterfeit Drugs Enter the Pharmaceutical Supply Chain

According to the article “Secure The Pharmaceutical Supply Chain From Risky Counterfeiters,” leading members of the House and Senate have proposed a legislative draft to establish a national ‘track and trace’ program for prescription drugs. The Food and Drug Administration has been dealing with an increasing number of cases involving counterfeit prescription drugs. In 2010, the FDA’s Office of Criminal Investigation opened 72 cases involving fake drugs. This is highly problematic for the pharmaceutical supply and very risky for the health of individuals. Some of these cases have involved counterfeit Adderall, Vicodin, Xanax, flu medicine, and cancer drugs. One reason counterfeit drugs are able to enter the nation’s pharmaceutical supply chain is the contradicting state regulations that are in place. Each state has varying compliance rules. There is not a federal level system in place, and the FDA does not have the authority to implement federal standards that can ensure the authenticity of prescription drugs from the manufacturer into the hands of prescription drug users.

In order to combat the introduction of counterfeit prescription drugs into the nation’s pharmaceutical supply chain, there needs to be compliance standards at the federal level put into place. The ‘track and trace’ program proposed by members of the House and Senate calls to rid of the contradictory state regulations and increase the security of the pharmaceutical supply chain by setting up countrywide standards. Many industry participants, such as manufacturers, chain drug stores, wholesalers, and distributors, have expressed their support for this proposal.

A downside to this national ‘track and trace’ system is that it will be more costly for pharmaceutical companies. The high compliance costs that the pharmaceutical companies may incur could cause these companies to decrease operations, limit distribution, or even shut their doors entirely. More supply disruptions and drug shortages could occur as a result of the higher compliance costs. However, complying with the regulations of each of the individual states can also run costly for this industry as well.

Although the proposal for a unified national system of security for prescription drugs that Congress is putting forward may be costly, it would ensure that patients are receiving legitimate prescription drugs instead of counterfeit ones. This ‘track and trace’ system, when implemented at a national level instead of state-by-state, may be more cost effective in the long run.

A uniform system for the national pharmaceutical supply chain would decrease the ability for counterfeit prescription drugs to enter and be distributed to patients. Even though it could impose higher compliance costs for this industry, the benefits of ensuring safety for prescription drug users cannot be ignored.

Do the costs of implementing a uniform system for the pharmaceutical supply chain outweigh the benefits? Or do the benefits of a uniform system outweigh the costs?

 

Sources:

Article: http://www.forbes.com/sites/gracemarieturner/2013/05/20/secure-the-pharmaceutical-supply-chain-from-risky-counterfeiters/

Image 1: http://www.recyclemorewisconsin.org/wp-content/uploads/2013/01/Medications.jpg

Image 2: http://www.drugsno.com/wp-content/uploads/2011/05/bigstock_Bottles_Of_Medicine_16441621.jpg

Are Corporations Our Personal Shoppers?

The thought of ordering an item online and receiving it the same day, just a few hours later seems unrealistic. With technology becoming more integrated in our world and the demand for instant gratification, this unrealistic idea is now a reality. Major corporations like Wal-Mart, Amazon, and EBay have adopted this new service of same-day delivery. It is really testing the limits of supply chain management, and now a whole new look on logistics is being placed in the hands of these corporations.

walamrt  Wal-Mart , is sitting at an advantage because of its massive fleet of stores across the country. They use their 4,005 locations as inventory holders and distribution centers, so now when you order something before noon you can receive it by that evening. Workers will literally go down the aisle and collect the item you want, which is later delivered to your door. Even though this service is only in the test phase in five major cities, Denver, Philadelphia, Minneapolis, northern Virginia and San Francisco/San Jose, it has proven to be a huge success thus far.

Amazon has a new technology that now sends your order to the closest of its 40 massive and highly efficient distribution centers that has same day service available. From here a robot find your item and places it in a place where a human can package it and ship it to you just in time before the day is over. This is pretty crazy, right? Wait till read this next corporation’s new strategy!

debay   EBay, a dominant online seller has a brand-new beta service that brings same day delivery to an even new level. It currently operates in beta form in New York, San Francisco, and San Jose. This service involves personal shoppers, or “valets, that EBay will send to pick up a good you have just ordered. They will literally drive to the outlet from which you ordered it from through EBay, and deliver it to your doorstep that same day, sometimes even within only few hours! If this doesn’t impress you then this will. EBay now even offers an iOS app that you can use to buy, and track your item for same day delivery. This app tracks your “valets” progress in real time so you know exactly where he/she is, what step of the delivery they are on, and how far away they are from your home. This tracking app will even give you a picture of what the “valet” looks like so you can recognize them when they arrive. Once they have arrived, all you have to do is simply swipe your credit card, or pay with PayPal. The best part about this service is that it costs only $5, yes that’s it!

With this extremely gratifying service from these corporations how do you think it tests the limits of supply chain management and inventory management? Could this be the future for online shopping or delivery? Do you think implementing the service that EBay has in many other corporations could add a lot of jobs to the economy?

 

Sources:

http://www.wired.com/insights/2013/05/once-refined-same-day-delivery-will-be-commonplace/

 

http://blog.apptricity.com/bid/283436/How-Walmart-and-Others-Are-Achieving-Same-Day-Delivery

 

Beef Prices at an All-Time High a Good Thing?

In the recent months, commodity prices have soared to record highs, with the sharpest increase being in the price of beef. The reason for this increase is partially due to last summer’s drought, but it is much higher than most analysts predicted. This has begun to affect the profits of large restaurant chains such as Burger King, Wendys, and most importantly McDonalds.

1C7301038-130509_angus_hmed_1213p.blocks_desktop_smallIn early May, McDonalds announces that it would remove its Angus Third Pounders from their menu. The company said the removal of this burger was done to make room for other food options, but most experts agree that the profit margins are too low for beef items like these to remain profitable.

This has resulted in McDonalds and other restaurant chains to begin to retool their supply chain to put a heavier emphasis on chicken products, which is more profitable than beef. McDonalds has already begun to roll out new items such as the premium chicken wraps. This will definitely be more costly in the short run, but with rising prices, and more health-conscious consumers, it is a good long-term strategy.

With obesity at all time highs, and consumers becoming more health-conscious, this rise in beef prices could not come at a better time. Chicken is much healthier that beef, having significantly less calories and fat. With chicken prices being low, this could benefit both the restaurants and the consumer.

This situation can be compared to gas prices hitting an all time high in 2008.  Once prices hit the high, there was a sudden demand for more fuel-efficient vehicles, planes, trains, etc. They use less fuel, are much more efficient, and produce significantly less emissions that harm our environment. Similar to beef prices, consumers had no reason to switch to the better option until it became cost-effective.

In any industries of this size, change has to be gradual. Switching from beef to chicken is easy for consumers. On the contrary, in order to fulfill demand, restaurants like McDonalds have to completely re-tool their supply-chain. Farms need to change their facilities to accommodate more chickens, processing plants need to change all their machinery, and restaurants need to change how they cook and prepare the final product.

I personally believe that this will benefit both the profit-minded producer, along with the health-conscious consumer. The fast food world is changing, and these companies know that innovation is essential to adapt to the changing taste buds of consumers.

What is your eating preference at these fast food chains? Do you think this rise in commodity prices is a good thing? Have you become more health-conscious?

http://www.nbcnews.com/business/wheres-beef-mcdonalds-dropping-angus-burgers-us-menu-1C9864163

Wal-Mart Just Can’t Keep Products on the Shelves (In a Bad Way)

Wal-Mart Just Can’t Keep Products on the Shelves (In a Bad Way)

Wal-Mart has seemingly had a considerable amount of trouble keeping shelves in its stores adequately stocked since reducing the number of employees on staff at once in stores.  This is odd for a retail location since when products are not on shelves, there is not a large chance of them being purchased.  Especially disconcerting is that Wal-Mart has become the largest retailer in the world on the back of a supposed mastery of its supply chain.

Wal-Mart is now taking measures to ensure that the issue with product stocking is corrected.  The latest effort employed to do so is an external auditing process which entails a detailed process of checking each and every Wal-Mart location to make sure that products (when in stock) are on the shelves for consumption.

Wal-Mart refers to whether or not stores are adequately stocked via a metric known as on-shelf availability or OSA.  Due to the recent issues and the need to involve an external company to help stores ensure that they are stocked properly, shareholders are expected to vote at the next meeting as to whether or not Wal-Mart managers and executives should have their performance reviews and potential compensation tied to OSA.

When visiting a Wal-Mart location, check for neon green stickers next to the price tags on certain products; those are the ones that the auditors are going to be looking for.  Originally, the idea was to have the auditors go into the Wal-Mart stores and check on certain pre-determined items (unknown the store employees) and assign a grade based on how stocked those products were.  However, before the actual auditing process ended up taking place, it was determined that it would be beneficial to the employees at the stores to know the products that were being checked because those would most likely be highly driven items for the time of the year.  This entailed a rather tedious process for store managers as they had to allocate employees to the task of sticking green stickers next to products that needed to be stocked instead of actually just stocking them.

While the idea is good in theory, the actual outcome has been less than stellar since a good portion of the stores now have incredibly well-stocked green dot items with very poorly stocked products immediately next to them.  This should have been expected since the employees could focus purely on the products they would be evaluated on.

This situation is a very direct link to supply chain concept discussed in class.  In this case, the retail stores a sort of bottleneck.  After the products are produced and shipped to retail locations, they are not being put out fast enough to get to the customers.  Managers need to focus on properly allocating their limited employee resources to getting the task completed.

Do you think that this process will work?  How else could Wal-Mart improve its product stocking?