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Industry Studies: Consumer Goods Industry 
Topic: Leveraging a Global 
Supply Chain 
Topic Number: 5
Overview 
Organisations operating within the consumer goods 
industry are required to source and make products 
globally in order to take advantage of efficiencies 
around the world. Despite, the many advantages of 
global sourcing in can be a complex task for 
organisations to coordinate and ensure the smooth 
running of an operation. 
In today’s lecture we will explore the dynamics of a 
global supply chain and how organisations are able to 
efficiently move materials and products around the 
world. 
We will also explore the latest trends and techniques 
in this area that enable organisations to get a 
competitive edge. 
2
Learning Outcomes 
• Determine and be able to discuss the dynamics of 
3 
a global supply chain 
• Critically evaluate the issues relating to vertical 
integration of a supply chain 
• Evaluate and articulate the changing nature of 
distribution approaches due to technological 
advancements 
• Identify and describe the advantages and 
disadvantages of the different distribution 
methods
Importance of Supply Chains 
Supply chains cannot 
tolerate even 24 hours of 
disruption. So if you lose 
your place in the supply 
chain because of wild 
behavior you could lose a 
lot. It would be like pouring 
cement down one of your 
oil wells. 
Thomas Friedman
A complex…
What is a global supply chain? 
International logistics is the 
management of the flow of 
materials, parts, supplies and 
other resources from suppliers 
to the firm; the flow of 
materials, parts, supplies and 
other resources within and 
between units of the firm 
itself; and the flow of finished 
products, services, and goods 
from the firm to customers.
Domestic vs International Logistics 
Distance 
involved in 
shipping 
Number of 
transport 
modes 
involved 
Regulatory 
context
International Logistics and Materials 
Management 
Finished 
Products, 
Services, and 
Goods 
Suppliers 
Firm 
Customers 
Materials, 
Parts, 
Supplies, and 
Other 
Resources 
Materials Management 
Physical Distribution
Do you know where an aeroplane is made?
Elements of a global supply chain? 
With the supply chain typically accounting for 80 per cent 
of total business costs and driving working capital 
performance, it is a common goal to create a more 
efficient supply chain to improve profitability. 
Source: Deloitte, 
2014
Interactive Excerise 
Go to the Deloitte website: 
http://www.deloitte.com/assets/Dcom- 
UnitedKingdom/Local%20Assets/Multimedia/Real%20Estate/31570apSupplyChain.swf 
Go through each section to understand the elements of 
the global supply chain 
Source: Deloitte, 
2014
Supply Chain Survey: Key Findings 
Source: PWC, 
2014
Strategic Context for International Supply 
Chains 
Superior Value Business Strategy 
Production Processes Production Technologies
What is a global supply chain strategy? 
Activity of 
strategic 
importance 
? 
Yes Yes 
Source: Slack & 
Lewis, 2011 
Does 
company 
No No No No 
have 
special 
knowledge 
? 
Is company’s 
performance 
superior? 
Is operations 
performance 
improvement 
likely? 
Explore 
outsourcing 
Yes Yes 
Explore keeping this activity in-house
Generic Sourcing Strategies 
Not 
critical Critical 
Contribution to Competitive 
Advantage 
Invest to perform 
internally 
(if high potential for 
opportunism) 
Outsource 
(if possible to mitigate risk of 
opportunism) 
Outsource 
(if possible to mitigate risk of 
opportunism) 
Weaker Relative Capability Position Stronger 
Source: Slack & Lewis, 2011 
Perform internally to 
develop 
(if high potential for 
opportunism) 
Outsource 
(if possible to mitigate risk of 
opportunism) 
Outsource 
(if possible to mitigate risk of 
opportunism) 
Keep internal 
(if lack of capable 
suppliers and spin-off 
not feasible)
A re-cap: Complexities of International 
Operations 
Resources Location Logistics 
Managers must decide 
where and how to 
obtain the resources 
the firm needs to 
produce its products. 
Managers must 
decide where to build 
admin facilities, sales 
offices and plants; 
how to design them; 
and so on 
Managers must 
decide on modes of 
transportation and 
methods of inventory 
control.
Benefits of Global Supply Chain 
Consider the comparative advantage theory
Benefits of Global Supply Chain 
Gain the best supplies at: 
Best Prices 
Excellent 
Standards 
Quickly & 
Efficiently
Benefits of Global Supply Chain 
Significant cost saves 
Where would you produce?
Benefits of Global Supply Chain 
Extremely efficient: Always on
Benefits of Global Supply Chain 
Competitive advantage 
Ability to source more unique 
products/offerings: consider VRIN framework
Costs of Global Supply Chain 
Significant Investment 
Time Money Resources
Costs of Global Supply Chain 
Bottle-necks & Inefficiencies: Bull Whip Effect
Costs of Global Supply Chain 
Market Instability
Issues with 3rd party suppliers 
Lack of control 
Lack of 
accountability 
Lack of 
oversight 
Price 
increases 
Reputational 
consequences 
Consumer 
backlash
Issues with 3rd party suppliers
Reputation Damage
End of presentation 
© Pearson College 2013

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Lecture 5 industry studies student

  • 1. Industry Studies: Consumer Goods Industry Topic: Leveraging a Global Supply Chain Topic Number: 5
  • 2. Overview Organisations operating within the consumer goods industry are required to source and make products globally in order to take advantage of efficiencies around the world. Despite, the many advantages of global sourcing in can be a complex task for organisations to coordinate and ensure the smooth running of an operation. In today’s lecture we will explore the dynamics of a global supply chain and how organisations are able to efficiently move materials and products around the world. We will also explore the latest trends and techniques in this area that enable organisations to get a competitive edge. 2
  • 3. Learning Outcomes • Determine and be able to discuss the dynamics of 3 a global supply chain • Critically evaluate the issues relating to vertical integration of a supply chain • Evaluate and articulate the changing nature of distribution approaches due to technological advancements • Identify and describe the advantages and disadvantages of the different distribution methods
  • 4. Importance of Supply Chains Supply chains cannot tolerate even 24 hours of disruption. So if you lose your place in the supply chain because of wild behavior you could lose a lot. It would be like pouring cement down one of your oil wells. Thomas Friedman
  • 6. What is a global supply chain? International logistics is the management of the flow of materials, parts, supplies and other resources from suppliers to the firm; the flow of materials, parts, supplies and other resources within and between units of the firm itself; and the flow of finished products, services, and goods from the firm to customers.
  • 7. Domestic vs International Logistics Distance involved in shipping Number of transport modes involved Regulatory context
  • 8. International Logistics and Materials Management Finished Products, Services, and Goods Suppliers Firm Customers Materials, Parts, Supplies, and Other Resources Materials Management Physical Distribution
  • 9. Do you know where an aeroplane is made?
  • 10. Elements of a global supply chain? With the supply chain typically accounting for 80 per cent of total business costs and driving working capital performance, it is a common goal to create a more efficient supply chain to improve profitability. Source: Deloitte, 2014
  • 11. Interactive Excerise Go to the Deloitte website: http://www.deloitte.com/assets/Dcom- UnitedKingdom/Local%20Assets/Multimedia/Real%20Estate/31570apSupplyChain.swf Go through each section to understand the elements of the global supply chain Source: Deloitte, 2014
  • 12. Supply Chain Survey: Key Findings Source: PWC, 2014
  • 13. Strategic Context for International Supply Chains Superior Value Business Strategy Production Processes Production Technologies
  • 14. What is a global supply chain strategy? Activity of strategic importance ? Yes Yes Source: Slack & Lewis, 2011 Does company No No No No have special knowledge ? Is company’s performance superior? Is operations performance improvement likely? Explore outsourcing Yes Yes Explore keeping this activity in-house
  • 15. Generic Sourcing Strategies Not critical Critical Contribution to Competitive Advantage Invest to perform internally (if high potential for opportunism) Outsource (if possible to mitigate risk of opportunism) Outsource (if possible to mitigate risk of opportunism) Weaker Relative Capability Position Stronger Source: Slack & Lewis, 2011 Perform internally to develop (if high potential for opportunism) Outsource (if possible to mitigate risk of opportunism) Outsource (if possible to mitigate risk of opportunism) Keep internal (if lack of capable suppliers and spin-off not feasible)
  • 16. A re-cap: Complexities of International Operations Resources Location Logistics Managers must decide where and how to obtain the resources the firm needs to produce its products. Managers must decide where to build admin facilities, sales offices and plants; how to design them; and so on Managers must decide on modes of transportation and methods of inventory control.
  • 17. Benefits of Global Supply Chain Consider the comparative advantage theory
  • 18. Benefits of Global Supply Chain Gain the best supplies at: Best Prices Excellent Standards Quickly & Efficiently
  • 19. Benefits of Global Supply Chain Significant cost saves Where would you produce?
  • 20. Benefits of Global Supply Chain Extremely efficient: Always on
  • 21. Benefits of Global Supply Chain Competitive advantage Ability to source more unique products/offerings: consider VRIN framework
  • 22. Costs of Global Supply Chain Significant Investment Time Money Resources
  • 23. Costs of Global Supply Chain Bottle-necks & Inefficiencies: Bull Whip Effect
  • 24. Costs of Global Supply Chain Market Instability
  • 25. Issues with 3rd party suppliers Lack of control Lack of accountability Lack of oversight Price increases Reputational consequences Consumer backlash
  • 26. Issues with 3rd party suppliers
  • 28. End of presentation © Pearson College 2013