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Global Supply Chain Management
This document provides an introduction to the EPIC framework for evaluating countries for global supply chain management. It discusses the four main components of EPIC: Economy, Politics, Infrastructure, and Competence. For each component, it lists relevant variables that would be assessed, example data sources, and how the analysis could inform decision making. The document also demonstrates how the EPIC framework can be used to evaluate and compare different world regions for their suitability based on the four factors. It emphasizes that EPIC provides a systematic way to evaluate the global landscape for supply chain activities.
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- 1. G L OB AL S U P P L Y C H AI N M AN A G E M E N T Unit 1: Introduction J A N N I C O L A I H E N N E M A N N , M E D I A T O R , J U R I S T , I N D . E N G . – M A N N H E I M | G E R M A N Y | APR 1 8 V 6 . 1
- 2. WHY AM IHERE? SPIRITUAL ROBERT DILTS‘ UNIFIED FIELD OF NLP IDENTITY BELIEF CAPABILITY BEHAVIOR EVIRONMENT 2
- 3. Introduction to EPIC structure START FINISH 2 3 Introduction of EPIC analysisand weighting EPIC in action EPIC – NEXT STEPS EPIC challenge 3
- 4. Start Hungry? Ch. 2 Multiple Transitions through ages 1 Procurement Manufacturing Warehousing Distribution Sales 2 Innovationis key evolutive or disruptive 3 Global economic power keeps moving 4 What‘s next ? 5 GSCM - HISTORY 4
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- 6. • Economic outputof a country • Potential for future growth • Ability to attract foreign direct investment • Ability to generate a steady return on investments made in the country EPIC – ECONOMY (1/4) 6
- 7. • Indicate overallpotential for consumer sales • Determine supply chain activity • Help to craft future investment strategy Economic Output & Growth Rate • Indicate overall potential for consumer sales • Predict existing sales potential • In relation with economic output indicator for market attractiveness Population Size EPIC – ECONOMY (2/4) 7
- 8. • Measure globalmarket‘s belief in single economy • Compare FDI inflow & outflow over time • Indirect Investments Foreign Direct Investment (FDI) • Devaluation: reduces trade deficit • Depreciation: improves export price attractiviness • Comfort level for investment through stability Exchange Rate Stability & Consumer Price Inflation EPIC – ECONOMY (3/4) 8
- 9. • Transportation andlogistics costs tend to be affected • Bottle-necks may occur • Imbalance is difficult to tackle Balance of Trade EPIC – ECONOMY (4/4) 9
- 10. EPIC – POLITICS(1/3) • Ease of doing business • Bureaucracy & corruption • Legal & regulatory framework • Tax & tariff barriers • Risk of political instability • Protection of property rights 10
- 11. • Drives costand time efficiences on various levels • Bureaucracy and corruption hinders smooth flow of goods and services Ease of Doing Business • Governs the level of government oversight and any accompanying restrictions on doing business & supply chain investment • Influences investment decisions Legal & Regulatory Framework EPIC – POLITICS (2/3) 11
- 12. • Affects long-termviability of investment and business model • Measures economic distress and social unrest • Differs from stability of government Political Stability • Safeguards company‘s efforts to innovate • Absence puts brand image at risk Intellectual Property Rights EPIC – POLITICS (3/3) 12
- 13. EPIC – INFRA(1/3) • Physical infrastructure • Energy infrastructure • Telecommunications infrastructure • Information infrastructure • Influences how SCM takes place 13
- 14. • Consists ofroad, rail, air and water • Highly dependent on country specifics Transportation Infrastructure • Relates to generation and transmission of electricity • Measures interruptions of power supply and voltage fluctuations Utility Infrastructure EPIC – INFRA (2/3) 14 • Availability of market intelligence • Existence of databases • Access to information networks Information Infrastructure
- 15. • Measures howwell information is communicated • Measured by number of telephone lines and number of internet subscriptions • Need to be scaled on per capita basis Telecommunication & Conncetivity Infrastructure EPIC – INFRA (3/3) 15
- 16. EPIC – COMPETENCE(1/3) • Labor productivity • Labor relations • Availability of skilled labor / level of education • Influences the speed of SCM 16
- 17. • Determines effectivenessof offshoring • Metrics: productivity, cooperation, skill set Labor Relations • Understanding costs of quality is key • Sustain initiatives • Ability to solve problems Education Levels for Line Staff and Management EPIC – COMPETENCE (2/3)17
- 18. • Measures effectivenessof various logistics functions within a country Logistics Operational Competence • Efficiency of clearance procedures used by customs authorities • Existence of proper security controls to ensure protection of internal market Customs & Security EPIC – COMPETENCE (3/3)18
- 19. Introduction to EPIC structure START FINISH 2 3 Introduction of EPIC analysisand weighting EPIC in action EPIC – NEXT STEPS EPIC challenge 19
- 20. Data Sources Decision Uses Variables EPIC- ASSESSMENT 20
- 21. E P I C EPIC- WEIGHTING 21
- 22. G L OB AL S U P P L Y C H AI N M A N A G E M E N T Unit 2: First Steps J A N N I C O L A I H E N N E M A N N , M E D I A T O R , J U R I S T , I N D . E N G . – M A N N H E I M | G E R M A N Y | Sep | 1 7 V 5 . 1
- 23. WHY AM IHERE? 23
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- 25. Introduction to EPIC structure START FINISH 2 3 Introduction of EPIC analysisand weighting EPIC in action EPIC – NEXT STEPS EPIC challenge 25
- 26. Data Sources Decision Uses Variables EPIC- ASSESSMENT 26
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- 31. ECONOMY - CONNEXA Variables • GDP / GDP Growth • Population Size • Foreign Direct Investment • Exchange Rate Stability & Consumer Price Index • Balance of Trade Data Sources • CIA World Book, WTO • CIA World Book, National Census Bureaus • UNCTAD FDI Attraction Index • CIA World Factbook, National Central Banks, National Chambers 31
- 32. ECONOMY - CONNEXB Variables • GDP / GDP Growth • Population Size • Foreign Direct Investment • Exchange Rate Stability & Consumer Price Index • Balance of Trade Decision Uses • Investments • Investments, Sales Potential • Investment, Manufacturing, Export Business • Investors, Import Business, Trade (int. / ext.) 32
- 33. POLITICS - CONNEXA Variables • Ease of doing business • Legal & regulatory framework • Risk of political stability • Protection of property rights Data Sources • World Bank • Deloitte International Tax Survey, Rule of Law Matrix • Economist Political Instability Index • International Property Rights Index, HK Ordinance 33
- 34. POLITICS - CONNEXB Variables • Ease of doing business • Legal & regulatory framework • Risk of political stability • Protection of property rights Decision Uses • Retail Store Location, Supply Network, Sourcing and Manu Location • R&D Center, Innovation Hubs, Trade & Commerce Pioneers • Banking & Finance 34
- 35. INFRASTRUCTURE - A Variables •Transportation Infrastructure • Utility Infrastructure • Telecommunication & Connectivity Data Sources • World Economic Forum • CIA World Factbook • Eurostat, Regional Statistic Bureaus • World Bank • IMF, OECD Library 35
- 36. INFRASTRUCTURE - B Variables •Transportation Infrastructure • Utility Infrastructure • Telecommunication & Connectivity Decision Uses • Different Regions Preferable For Different Purposes (Producing, Sourcing, Retail, Selling) • Connectivity, Determines Decisions On Outsourcing, Off shoring, In sourcing etc. 36
- 37. COMPETENCE - CONNEXA Variables • Labor Relations • Education Level • Logistics Competence • Customs & Security Data Sources • WEF GCI, National Labor Statistics, Eurostat, OECD • National Bureaus For Education • WTO Performance Index • Defense Offices 37
- 38. COMPETENCE - CONNEXB Variables • Labor Relations • Education Level • Logistics Competence • Customs & Security Decision Uses • Sourcing, Manufacturing, Retail • E-commerce, Logistics • Six Sigma, Total Quality Managament • Just In Time Manufacturing, Express Logistics 38
- 39. E P I C PPOLITICS Ease of Doing Business | Bureaucracy & Corruption | Legal & Regulation | Tax & Tariffs | Stability E ECONOMY Economic Output | Potential Growth | Attract FDI | Steady ROI I INFRASTRUCTURE Physical | Energy | Telecom C COMPETENCE Productivity | Labor Relations | Availabily of Skilled Labor | Level of Training & Education EPIC - WEIGHTING 39
- 40. 45%15% POPULATION SIZE 25% ECONOMIC OUTPUT 35% FDI 20% 5% ECONOMY 30% of totalEPIC score EXCHANGE RATE EPIC - WEIGHTING TRADE 40
- 41. 45%15% POLITICAL STABILITY 25% LEGAL FRAMEWORK 35% POLITICS 20% of totalEPIC score INTELLECTUAL PROPERTY EPIC - WEIGHTING EASE OF DOING BUSINESS 35% 41
- 42. 45%15% ENERGY 25% PHYSICAL 40% INFRASTRUCTURE 30% of totalEPIC score EPIC - WEIGHTING CONNECTIVITY 25% 42 10% INFORMATION
- 43. 45%10% EDUCATION LEVELS 25% LOGISTICS COMPETENCE 40% COMPETENCE 20% of totalEPIC score CUSTOMS AND SECURITY EPIC - WEIGHTING LABOR RELATIONS 25% 43
- 44. A global supplychain requires a sound decision making ground which is composed of interdisciplinary, interdependent and international layers IDEA The EPIC approach provides a systematic and structures way to evaluate the global terrain with respect to an organizations (prospective) supply chain activity RESULT EPIC – REVISED 44
- 45. Introduction to EPIC structure START FINISH 2 3 Introduction of EPIC analysisand weighting EPIC in action EPIC – NEXT STEPS EPIC challenge 45
- 46. Western Europe isthe region comprising the westerly countries of Europe. Western Europe East Asia is a geographic region that encompasses the ancient cultural and economic centres of China, Japan, and the Koreas. East Asia North and Central America stand for the countries USA; Canada and Mexico with its adjacent countries and islands that does not belong to any other region. North & Central America The countries of Central and Eastern Europe are all the countries covered by the former Eastern bloc as any other European country that does not belong to Western Europe. Central & Eastern Europe EPIC - CASES WHAT‘S NEXT ? 46
- 47. G L OB AL S U P P L Y C H AI N M A N A G E M E N T Unit 3: Next Steps J A N N I C O L A I H E N N E M A N N , M E D I A T O R , J U R I S T , I N D . E N G . – M A N N H E I M | G E R M A N Y | Sep | 1 7 V 5 . 1
- 48. WHY AM IHERE? 48
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- 50. Data Sources Decision Uses Variables EPIC- ASSESSMENT 50
- 51. E P I C PPOLITICS Ease of Doing Business | Bureaucracy & Corruption | Legal & Regulation | Tax & Tariffs | Stability E ECONOMY Economic Output | Potential Growth | Attract FDI | Steady ROI I INFRASTRUCTURE Physical | Energy | Telecom C COMPETENCE Productivity | Labor Relations | Availabily of Skilled Labor | Level of Training & Education EPIC - WEIGHTING 51
- 52. Introduction to EPIC structure START FINISH 2 3 Introduction of EPIC analysisand weighting EPIC in action EPIC – NEXT STEPS EPIC challenge 52
- 53. Western Europe isthe region comprising the westerly countries of Europe. Western Europe East Asia is a geographic region that encompasses the ancient cultural and economic centres of China, Japan, and the Koreas. East Asia North and Central America stand for the countries USA; Canada and Mexico with its adjacent countries and islands that does not belong to any other region. North & Central America The countries of Central and Eastern Europe are all the countries covered by the former Eastern bloc as any other European country that does not belong to Western Europe. Central & Eastern Europe EPIC - CASES 53
- 54. From 2000 to2008 IKEA invested 2.5 billion EUR in Russia and became a top 10 investor in Russia Investment Import necessary – but local sourcing could be developed Logistics Service growing middle class with limited financial means Value Proposition IKEA came to Russia when all other international companies decided to leave Russia Background 54C1: IKEA TO RUSSIA
- 55. 55 I | 30% Physical Infrastructure(Air, Rail, Railroad, Waterways) | Energy | Telecom C | 20% Productivity | Labor Relations | Availability of Skilled Labor | Level of Training & Education E | 30% Economic Output | Potential Growth | Attract FDI | Steady ROI P | 20% Ease of Doing Business | Bureaucracy & Corruption | Legal & Regulation | Tax & Tariffs | Stability EPIC Analysis
- 56. May 2008 Foundation Dec2009 Start C919 2018 First delivery / commercial roll-out of C919 Nov 2010 C919 Presentation of C919 prototype on airshow The Commercial Aircraft Corporation of China, Ltd. ("Comac") is a Chinese state- owned aerospace manufacturer established on 11 May 2008 in Shanghai. The company has a registered capital of USD 2.7 billion as of May 2008. This government-owned corporation is designing and will eventually build large passenger aircraft with a capacity of over 150 passengers to reduce the country's dependency on Boeing and Airbus. Therefore, China invests more money than the EU did when Airbus was formed. In June 2011 COMAC and Irish low-cost airline Ryanair signed an agreement to co- operate on the development of the C919, a 200-seat single-aisle aircraft which will compete with the Boeing 727. 56C2: COMAC TO W-EUR
- 57. COUNTRY ORDERS COUNTRYORDERS Thailand 10 China ~ 500 USA 20 India ~ 10 Ireland Cooperation Agreement (COMAC & RYANAIR) Europe ??? USA THAILAND IRELAND CHINA 57EPIC Analysis
- 58. Disruptive understanding of mobilityof the 21st century Technology Nikola Tesla Serbian scientist who created the AC power system and is the „father of radio“, re-invented the dynamo and invented the induction motor. As an old man he lived in poverty Create most compelling car company by driving the world‘s transition to electric vehicles Vision / Mission Integration is key to deliver a system that is greater than sum-of- parts IP & PP Aim is to leverage the unique benefit of electric powertrain Costs Spirit Relentless Innovation 58C3: TESLA TO E-EUR
- 59. TESLA spend several yearsto understand the large market – before they entered. ANALYSE 01 From battery cells to the gear box more than 250 patents were awarded to TESLA delivering a comprehensive, yet proprietary technology EXECUTE 02 A culture of relentless & disruptive product approach mixed with an re-invented customer experience IMPLEMENT 03 TESLA‘s vision: create the most compelling car company of the 21st century by driving the world‘s transition to electric vehicles. “Second place should need a telescope to see us” –Elon Musk 59
- 60. 01 Founded in 1841Sberbank has focused on domestic banking that creates > 95% of revenues 02 With a focused culture of >17.500 branches and 200.000 employees in Russian Federation Sberbank is ready to open up to international cultures 03 A unique position in growing domestic markets and as a link between Europe, Asia and the Middle East. Sberbank faces multiple opportunities 60C4: SBERBANK TO USA
- 61. 61 01 05 02 03 04 The Russian bankingmarket is one of the most attractive among high growth markets in terms of revenues and profitability. The US banking sector provides the largest net revenues world-wide and is yet one of the most regulated one. Growth Meets Attractiveness
- 62. We faced thesituation described above and managed to succeed in a competitive market during tough economic times… We have been running a historic scheduling system for our trains that was designed for hauling coal and grain at low costs. We are a company founded and based in the U.S. For these commodities it didn’t make much difference whether the train showed up on Monday or on Wednesday The new CEO set out a vision for intermodal business to compete with truckers to transport cargo from U.S. ports knowing that the economy will increasingly rely on imports C5: BNSF TO INDIA
- 63. Many people inthe company argued that the initiated change would fail us. However, with the experiences we have made in a harsh U.S. market – we would like to bring our success to markets abroad and expend our global presence. Therefore, the management board asks you to perform an EPIC analysis on BNSF’s opportunities in India.
- 64. Introduction to EPIC structure START FINISH 2 3 Introduction of EPIC analysisand weighting EPIC in action EPIC – NEXT STEPS EPIC challenge 64
- 65. G L OB AL S U P P L Y C H AI N M A N A G E M E N T Unit 4: The Challenge J A N N I C O L A I H E N N E M A N N , M E D I A T O R , J U R I S T , I N D . E N G . – M A N N H E I M | G E R M A N Y | Sep | 1 7 V 5 . 1
- 66. WHY AM IHERE? 66
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- 68. Data Sources Decision Uses Variables EPIC- ASSESSMENT 68
- 69. E P I C PPOLITICS Ease of Doing Business | Bureaucracy & Corruption | Legal & Regulation | Tax & Tariffs | Stability E ECONOMY Economic Output | Potential Growth | Attract FDI | Steady ROI I INFRASTRUCTURE Physical | Energy | Telecom C COMPETENCE Productivity | Labor Relations | Availabily of Skilled Labor | Level of Training & Education EPIC - WEIGHTING 69
- 70. Western Europe isthe region comprising the westerly countries of Europe. Western Europe East Asia is a geographic region that encompasses the ancient cultural and economic centres of China, Japan, and the Koreas. East Asia North and Central America stand for the countries USA; Canada and Mexico with its adjacent countries and islands that does not belong to any other region. North & Central America The countries of Central and Eastern Europe are all the countries covered by the former Eastern bloc as any other European country that does not belong to Western Europe. Central & Eastern Europe EPIC - CASES 70
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- 72. Reflect Your Team Performance/ Your Individual Performance What Will You Use Next Time What Are Your Key Take-Aways What Worked Best And Second Best What Will I Tell Other People EPIC – LESSONS LEARNED72
- 73. Introduction to EPIC structure START FINISH 2 3 Introduction of EPIC analysisand weighting EPIC in action EPIC – NEXT STEPS EPIC challenge 73
- 74. Population (bn.) UrbanizationFlats sold (mln.) ´06 ´13 ´06 ´13 ´06 ´13 1.400 1.300 0 The Chinese government knows that if this bubble is allowed to burst the market for residential and commercial properties will fall into huge losses directly impacting the entire banking sector. Policy Access to better education for a broader population has led to higher living standards. Real per capita disposable household income has doubled over the last 10 years. Competence China‘s fast-developing poses challenges on the construction sector. In the past building investment projects are being financed for the sake of sector / GDP growth rather than to meet real demand. Economy 74 100% 50% 0 10 5 0 Construction Sector in China – An overblown market ?
- 75. ½ billion past 30 years, morethan 500 million Chinese have moved to the cities. Over the the US prices in China are 50% lower than in Consumer 1.2 trillion USD spent $ 1.2 trillion for construction in 2012 China 41% of every dollar spent on construction in the Asia-Pacific were spent in China 41 cents 50% 500 income is in part due to the shortage of blue collar workers which came to the economic forefront in 2010. Employers have been forced to offer higher pay. The rise of 75owners devote 30 - 50% of their money to mortgage repayments Avrg. home
- 76. 76 At T Minus16 Seconds in the launch sequence of NASA‘s space shuttle programme the launch control computers trigger the release of water from a 290-foot-high water tank that stands next to the launchpad at Florida‘s Kennedy Space Center. The water has nothing to do with damping the heat or fire from the shuttle‘s motor. It acts as a sound suppressant. The shuttles rockets are so loud that without the sound-absorbing cushion of water, the roar from the engines would bounce off the metal and concrete base of the pad and seriously harm the spacecraft. In the United States and the developed world, we have spent the last hundred years in a kind of aquatic paradise: our water has been abundant, safe and cheap. The good news is that most of what we know about water insn’t really wrong, because we don’t know that much. The bad news is that the invisibility of water in our lives isn’t good for us, and isn’t good for water Water – you can‘t appreciate what you don‘t understand
- 77. 15Million DIVERSE American Water isengaged in provoding water and wastewater utility services to 15 million people in over 47 states of the US. 500Billion EUR EXPENSIVE Water policies are driven by both member states and the European Union making its provisions costly and timely to comply with 47States COMPLEX American Water divides its business in two segments: regulated business and market-based operations. 77
- 78. In China ebayexperienced severe competition from a local competitor Alibaba Group was founded in 1999 by 18 people led by Jack Ma, a former teacher from Hangzhou, China. Since launching its first website helping small Chinese exporters, manufacturers and entrepreneurs to enter the international market, Alibaba Group has grown into a global leader in online and mobile commerce. 78
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- 80. 80 Gives Access Access topublic transportation provides access to job opportunities for millio Amercans Impacts Your Community More than 1.1 million jobs are created or sustained per year because of public transportation Saves Fuel – Reduces Congestion Americans save 865 million hours in travel time and 450 million gallons of fuel annually in congestion reduction alone Saves Money The average household spends 17.5 cents of every $ on transportation, the largest expenditure after housing
- 81. PUBLIC TRANSPORTATION MATTERS $1 communitiesinvest in public transportation generates $ 4 in economic return 10.7 billion trips on public transportation were taken by Americans in 2013 7,100 organizations provided public transportation in the U.S. 400 k people were employed in public transportation in a $ 58 billion industry 81
- 82. • We arethe hotel in NYC. Our credo serving our guests has become legend in the service sector industry for decades: “The Answer Is “Yes” – What Is The Question?” or “Gentlemen serving Gentlemen” • Recently, we experience harsh competition from international premium hotel brands attracting our customers through excitement, service and lower prices • To secure the future of our company our CEO decided to move into the brand new field of space tourism and therefore asks you to do a “quick & dirty” EPIC analysis for him and the management board • Please be creative and precise in this case considering past, present and future and the history of conflict – crisis – change in the space industry
- 83. From its beginningin 1958 the NASA program stood under high pressure due to its tremendous costs – a burden the taxpayer had to bear CONFLICT 01 The Challenger and Columbia accidents put the space-program of NASA on hold and under review CRISIS 02 New programs and cooperation between public and private stakeholder were set up to transport humans in space again CHANGE 03 NASA’s vision is to reach for new heights and reveal the unknown for the benefit of humankind. 83
- 84. M-Pesa (M formobile, pesa is Swahili for money) is a mobile phone-based money transfer, financing and microfinancing service, launched in 2007 by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania Banking innovation for the developing world The service enables its users to: deposit and withdraw money, transfer money to other users and non-users, pay bills, purchase airtime and transfer money between the service and a bank account. Expansion plans cover banking services like interest-bearing accounts, loans, and insurance. M-Pesa customers can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents. A winning strategy: customer value
- 85. M-Pesa And TheRise Of The Global Mobile Money Market Since then, M-Pesa has undergone explosive growth: in 2013, a staggering 43 percent of Kenya’s GDP flowed through M-Pesa, with over 237 million person-to-person transactions. In the first quarter of 2015, there were over 900 million mobile subscribers in Africa, and 3.7 billion in Asia. 2007 2013 2014 20150 43% 2007 237 MILLION 4.6 BILLION
- 86. Introduction to EPIC structure START FINISH 2 3 Introduction of EPIC analysisand weighting EPIC in action EPIC – NEXT STEPS EPIC challenge 86
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- 88. Class Participation 10% START FINISH Exam 20% (trade) GRADING Presentation 40% (I/ T) 88 „The Challenge“ 30% (I / T) Bonus 5% Dropbox Keeper 5% Dropbox Class
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