The Establishment of Global Supply Chain November 9 , 2010
APEC e-Trade and Supply Chain Management Training Course (Phase III: Logistic Management for SMEs) The Establishment of Global Supply Chain November 9th, 2010 Hong Kong China Eric Futin Agenda Prologue: The International Context A. Roadmap to Global Supply Chains B. Objectives of Global Supply Chains C. Characteristics of Global Supply Chains D. Benchmarking the Global Supply Chains E. Global Supply Chains Management and the Role of Logistics F. Global Supply Chain Management in the future G. Beyond Global Supply Chains: Global Value Chains 1 Agenda Prologue: The International Context A. Roadmap to Global Supply Chains B. Objectives of Global Supply Chains C. Characteristics of Global Supply Chains D. Benchmarking the Global Supply Chains E. Global Supply Chains Management and the Role of Logistics F. Global Supply Chain Management in the future G. Beyond Global Supply Chains: Global Value Chains 2 Supply Chains become more Internationally linked 3 Source: OECD (2007) Trade has grown faster than GDP Average of exports and imports as a percentage of GDP, 1980 and 2008 4 Source: OECD (2010) Intermediate trade has become more important? Share of intermediate trade in total trade, OECD Intermediate to total trade - Goods Intermediate to total trade - Services 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 5 Source: OECD (2010) Intermediate trade has become more global (1) Intra- and inter-regional imports of intermediate goods (Billion USD, 2005) 6 Source: OECD (2010) Intermediate trade has become more global (2) Intra- and inter-regional imports of intermediate services (Billion USD, 2005) 7 Source: OECD (2010) Trade within industries… Index of intra-industry trade in manufactures, average 1997-2008 8 Source: OECD (2010) … and within firms Share of intra-firm exports in total exports of affiliates under foreign control, 1997-2007 % 90 Sweden 80 70 60 Israel Netherlands United States Italy 50 40 Poland 30 Japan 20 10 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 9 Source: OECD (2010) … and increasing international sourcing of Intermediates Imported intermediates/domestic intermediates % 1995 2005 30 25 20 15 10 5 0 10 Source: OECD (2010) How imports can distort competitiveness figures (1) Contribution to the manufacturing trade balance, 2008 11 Source: OECD (2010) How imports can distort competitiveness figures (2) Import content of exports 1995 2005 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 12 Source: OECD (2010) How imports can distort competitiveness figures (3) Import content of exports with partner countries From Europe From NAFTA From East Asia From Other Asia From RoW 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 13 Source: OECD (2010) Agenda Prologue: The International Context Roadmap to Global Supply Chains Objectives of Global Supply Chains Characteristics of Global Supply Chains Benchmarking the Global Supply Chains Global Supply Chains Management and the Role of Logistics Global Supply Chain Management in the future Beyond Global Supply Chains: Global Value Chains 14 What are Global Supply Chains Global Supply Chains (GSCs) are worldwide networks of suppliers, manufactures, warehouses, distribution centers and retailers through which raw materials are acquired, transformed and delivered to customers (OECD, Supply Chains and the OECD Guidelines for Multinational Enterprises, 2002) 15 Globalization has changed the way firms do business… Since the end of WWII, the importance of trade and international investment has grown steadily. Large multinational firms have become the main players in all major sectors. Through FDI and international mergers and acquisitions, they were able to jump tariff barriers and tap into natural resources, labour, and technology, around the world. Production chains were traditionally vertically integrated, i.e. multinational firms owned an entire production process. But recent phenomena are fundamentally changing the way global firms operate. 16 … driven by key factors Rapid technical progress 12 Low and falling telecommunication costs Technological advances Cost of 3 min. call to U.S. ($U.S.) 10 Africa Amer-South Asia&Pacific Europe World 8 6 Falling transportation costs 4 2 The adoption by a large number of countries of more open economic policies 0 1996 1997 1998 1999 2000 2001 2002 2003 Source: IFS V5.28, WDI CD 05. (e.g. lower tariffs, lower FDI restrictions) Average Tariffs The emergence of developing, low wages economies Goods and services can be delivered globally at lower cost. 17 Source: Yi (2003) GSCs are becoming increasingly important GSCs have existed as long as trade in intermediate products has taken place, but they are now increasingly important. World exports and FDI outward stock has been growing faster than global GDP Foreign affiliates (FA) no longer only engage in serving local markets in host countries but often export more than host country domestic firms 18 …while technology is changing the way firms do business… Technological advances, particularly in ICTs, have enabled a better coordination of activities between different links in the chain through logistics. Technologies are used to undertake joint design, to coordinate shipping in just-in-time systems, and to manage inventories in real-time. There is rapid growth in Supply Chains and Logistics Services. 19 … giving rise to GSCs as a more established way of doing business. In recent years, we have seen a change in how firms organize their production into global supply chains: Firms are increasingly outsourcing some of their activities to third-parties. They are locating parts of their supply chain outside their home country (offshoring) They are increasingly partnering with other firms through strategic alliances and joint ventures. Smaller firms and suppliers are now becoming global These new business strategies have allowed firms to specialize on “core” competencies (vertical specialization) to sustain their competitive advantage. 20 Offshoring is gaining importance… Companies now offshore more activities, both in terms of size and scope Business process outsourcing (BPO) and information technology (IT) services are supplied from a large number of locations Some firms also offshore other high-knowledge activities such as R&D. 21 … strategic alliance are on the rise… Worldwide, the number of new strategic alliances (both domestic and international) have significantly increased in recent decades. Alliances are seen as crucial in GSCs to facilitate entry in new markets, commercialize products, share risk and costs, including for R&D. The top four industries for alliances are: Business services, financial services, retail trade and software. 22 … and ownership is evolving. Production chains used to be almost exclusively owned by a single multinational. Today, the trend is toward multiple ownership of complex supply chains, where several business partners are located in different countries. This trend is prevalent when: Products or activities can easily be defined or standardized The technology can be protected or is difficult to copy It is possible for business partners to write and enforce legal contracts. It is possible to monitor (to a certain extent) the activities of business partners New technologies such as ICTs, modern transportation and communication infrastructures, and establishment of international (e.g. WTO) have facilitated the emergence of global supply chains. 23 Key enablers of Global Supply Chains Globalization, falling transportation and telecom costs, low tariffs, and technological improvements have changed global supply chains. Firms are increasingly: Outsourcing / offshoring some of their activities. Relying on alliances and joint ventures for global competitiveness. Using logistics to improve supply chain efficiency. Firms are increasingly part of global supply chains, mostly through trade and investment relationships with the foreign countries. In order to thrive, firms need: Smart Borders and world-class transportation infrastructure. Leading edge communication infrastructure. Free trade and investment. Smart Regulations. 24 Agenda Prologue: The International Context Roadmap to Global Supply Chains Objectives of Global Supply Chains Characteristics of Global Supply Chains Benchmarking the Global Supply Chains Global Supply Chains Management and the Role of Logistics Global Supply Chain Management in the future Beyond Global Supply Chains: Global Value Chains 25 The objectives of Global Supply Chains Two main objectives could be identified: Prompt and reliable delivery of high-quality products and services at the least cost. To effectively meet rising customer expectations. 26 Top 3 challenges for North American Exporters Greatest Facing North American Exporters (2003) Customs Compliance Top 3 challenges are SCM based Duties and Tariffs Management Supply Chain Collaboration Finding New Buyers Expanding to New Locales Transportation management Financial Payment and Settlement Freight Forwarding 0% 10% 20% 30% 40% 50% 27 Why integrating a GSC: practicality and usefulness Help companies compete all over the world Expand business operations Offer new services and applications to meet global customers needs Give company a competitive advantage Falling international trade barriers mean rising profits 28 Recent changes affecting Global Supply Chains Internet and technological change Proliferation of trade agreements Falling Trade Barriers Increase in international trade groups New Markets 29 Advantages of Global Supply Chains Reduced total costs Inventory reduction Increase intellectual asset Delivery improvement Improved fulfilment cycle time Diversified business and trading Reduce cycle time Competitive advantage Increased forecast accuracy Productivity increase Improve capacity Untapped markets Enhance speed and efficiency Expand international connexion 30 Potential obstacles to Global Supply Chains Member nations VS. Non member nations Trade imbalances Inefficient transportation and distribution Export surges and recessions systems Market instability Different languages Differences in currencies Differences in measurement systems (metric versus decimal) Greater distance Tax policies Operational threats Strategic challenges Technological capabilities Different customs, beliefs and cultures Political turmoil 31 Combating these obstacles Duty specialists and trade specialists Be innovative & Be flexible Join nation groups Research Banding together New technology Form consortiums Infrastructure improvements Vertically integrate Reduce the number of “stops” in the chain 32 APEC Supply-Chain Connectivity Framework APEC is addressing issues by identifying 8 chokepoints Chokepoint 1 Lack of transparency/awareness of the full scope of regulatory issues affecting logistics; Lack of awareness and coordination among government agencies on policies affecting logistics sector; Absence of single contact point or champion agency on logistics matters. Chokepoint 2 Inefficient or inadequate transport infrastructure; Lack of cross border physical linkages (e.g. roads, bridges). Chokepoint 3 Lack of capacity of local/regional logistics sub-providers. Chokepoint 4 Inefficient clearance of goods at Customs; Lack of coordination among border agencies, especially relating to clearance of regulated goods ‘at the border. 33 APEC Supply-Chain Connectivity Framework Chokepoint 5 Chokepoint 6 Underdeveloped multi-modal transport capabilities; Inefficient air, land, and multimodal connectivity. Chokepoint 7 Burdensome customs documentation and other procedures (including for preferential trade). Variations in cross-border standards and regulations for movement of goods, services and business travelers. Chokepoint 8 Lack of regional cross-border customs-transit arrangements 34 Some other impediments to GSCs Increased border security and customs requirements Port and border congestion, and the increased security measures, require better shipment planning and coordination Impact of natural disasters and pandemics Regional disruptions in key component supplies Reduced productivity Capacity re-directed to emergency causes Reduced manpower availability Need for robust contingency plans Need for infrastructure investment 35 GSCs entail additional considerations ● Security ● Port issues ● Tax and tariff issues ● Partnerships with local experts ● Cultural differences ● Technology abilities and capabilities ● Risk management 36 Some reasons for extending businesses globally Cost, Access to raw-material Increase sales, New Markets Satisfy shareholders Falling tariffs Increase in International Trade, Multi-Point Communication Increase in internet use throughout the world. 37 Agenda Prologue: The International Context Roadmap to Global Supply Chains Objectives of Global Supply Chains Characteristics of Global Supply Chains Benchmarking the Global Supply Chains Global Supply Chains Management and the Role of Logistics Global Supply Chain Management in the future Beyond Global Supply Chains: Global Value Chains 38 Globalization is a driver for GSCs 39 So, GSC means making operations globally Global operations Suppliers Global sourcing - Dealing with foreign suppliers - Managing international logistics - Managing risks Operations Global manufacturing - Facility location - Coordinating networks of plants - Coordinating networks of R&D facilities - Operations in other countries Markets Global distribution - Local content regulations - Managing global distribution - Managing risk 40 A GSC as its simplest expression Simple Supply Chain Materials and components Design and Product Development Production Marketing Distribution Consumption/ recycling 41 Major entities in a GSC Capacity, inventory levels, delivery schedule, payment terms Supplier Manufacturer Distributor Retail Outlets Customer Orders, return requests, repair and service requests, payments 42 Supply chain fundamental 43 A PBMMS model… Plan Demand & Supply Planning Buy Sourcing & Supplier Management Make Move Manufacturing Storage & Transportation Sell Customer & Order Management 44 … would look like this. Plan Source Suppliers Make Manufacturers Deliver Warehouses & Distribution Centers Buy Customers Transportation Transportation Costs Costs Material Costs Transportation Manufacturing Inventory Costs Costs Costs 45 Application of a GSC Source: Chuck Poirier (CSC Consulting), Frank Quinn (Supply Chain Management Review), “Survey of Supply Chain Progress– Best Practices and More,” U-Connect 2007. 46 Traditional domestic supply chain • Limited border crossings • Coordinated customs processes • Regional plant locations • Integrated logistics centers and cross-docks Plants Supplier Locations • Stable distances • Static supplier base • Established logistics networks • Established carrier base • Existing infrastructure • Effective regulatory agencies • National distribution capacity • Specialized equipment 47 Source: AutoDiversity Management inc. (ADMi) (2009) Extended Global supply chain Supplier Locations • Multiple International border crossings • Complicated customs regulations • Various data requirements • Multiple mode requirements • Dynamic supplier base • Broad and diverse carrier base • Increased number of • Multiple language requirements supplier options • Regional customs • Multiple source • High level of coordination countries Source: AutoDiversity Management inc. (ADMi) (2009) • Multiple plant locations • Flexible manufacturing • Parts commonization Plants • Increased mileage • International dealership network 48 A more detailed GSCs: Aerospace supply chain Upstream supply chain Downstream supply chain 49 Source: KPMG, 2009. A more detailed GSCs (Oil & gas supply chain ) Upstream supply chain Downstream supply chain 50 Source: KPMG, 2009. Business activities that could be relocated… Distribution and logistics e.g. transportation activities, warehousing and order processing Call centers and help desks e.g. after sales services and customers support services Marketing, sales and sales services e.g. advertising, telemarketing, exhibitions, fairs Operations e.g. provisions of services or production of goods Software development Data processing 51 … and also… Other information and communication technologies services e.g. hardware and software consultancy, database services, maintenance and repair, web-hosting and other related technology services Legal services Accounting, book-keeping and auditing Human resources management e.g. training and education, staff recruitment, provision of temporary personnel, payroll management, health and medical services Financial and management functions Engineering and related technical services e.g. technical consultancy, technical testing, analysis and certification, design services Research and development 52 … but companies could face some issues. Legal and administrative barriers Physical infrastructure in the country or at the border Taxation issues Tariffs and trade barriers Border security issues Problems with the distance to customers Uncertainty of international standards Linguistic or cultural barriers Access to financing Customer requirement to use specific technologies/systems Concern of violation of patents and/or intellectual property rights Foreign tariffs or trade barriers Meeting cost requirmenent Meeting quality requirement 53 Different types of Global supply chains models ● Own and manage your own infrastructure ● Use strategic alliances ● Partner with an asset-based third-party ● Partnership with a global integrator of logistics services 54 1. Own and manage your own infrastructure Pro ● Con Maximum control Heavy cost 55 2. Use strategic alliances Pro Con Convenience Large area covered Unreliable allianceprone 56 3. Partner With An Asset-Based Third-Party Pro Con Operational standards Ignorance of complex customs regulations Uniform identity and marketing strength Lack of connections Local economic downturns Dedicated mgmt structure 57 4. Partnership With a Global Integrator of Logistics Pro Con Customer friendly In-country knowledge True information systems integration Uniform standards Limited use Less control 58 Enabling SMEs to enter in GSCs mode Development of a supportive business environment for SMEs. Build-up of human, technical, and financial capacity of these SMEs so they can understand the policies and operations of global supply chains and profitably respond to those requirements. Research have found that retail and wholesale distribution services are a key channel to exports and global supply chains for manufacturers, especially SMEs. Retail and wholesale distribution services are a key channel to exports and global supply chains for manufacturers, especially SMEs. 59 Barriers for SMEs to integrate GSCs Lack of entrepreneurial, managerial and marketing skills Bureaucracy and red tape Lack of accessibility to information and knowledge Difficulties accessing financial resources/Lack of capital Lack of accessibility to investment (technology equipment and know-how) Non-conformity of standardization, lack of quality awareness and lack of mutual recognition schemes Product and service range and usage differences 60 Barriers for SMEs to integrate GSCs Language barriers and cultural differences Risks in selling abroad Competition of indigenous SMEs in foreign markets Inadequate behaviors of multinational companies against domestic SMEs/Lack of government supply-supporting programs Complexity of trade documentation including packaging and labeling Lack of government incentives for internationalization of SMEs Inadequate intellectual property protection 61 Key technology, process and SCM mandate play a key role in GSC Key technology and processes developed and mandated by service providers to manufacturers: EDI: Electronic Data Interchange; exchange of formatted data between the different applications of the partner’s computer systems (computer to computer). ECR: Efficient Consumer Response; cooperative approach between manufacturing companies and distributors with the objective of increasing customer satisfaction while improving economics performance of the participating companies. CPFR: Collaborative Planning and Forecasting Replenishment; an approach of collaboration and integration of forecasting and planning processes between customers and suppliers. Partner companies exchange information on product sales and forecasts in order to synchronize their operational plans. 62 Enablers of innovation and productivity in GSCs Distribution Services (retail, wholesale and supply chain/logistics services) are key to diffusion of innovative technology and processes to manufacturers active in global supply chains. Wal-Mart: Introduced Radio Frequency Identification (RFID) to the industry and expects $8.35B of internal annual cost savings and $10B for it’s manufacturer suppliers involved in their global supply chains Due to the introduction of global supply chain collaboration models by the distribution services, U.S. firms across all sectors decreased their logistics costs as percentage of GDP by 41% from 1982 to 2003. Manufacturers that will deploy the global supply chain collaboration model applications, mandated by the distribution services,are expected to enjoy a 5% to 25% decrease in supply chain/logistics cost and a 15% to 40% increase in quality and timeto-market over competitors. 63 Agenda Prologue: The International Context Roadmap to Global Supply Chains Objectives of Global Supply Chains Characteristics of Global Supply Chains Benchmarking the Global Supply Chains Global Supply Chains Management and the Role of Logistics Global Supply Chain Management in the future Beyond Global Supply Chains: Global Value Chains 64 Drivers of supply chains performance Facilities places where inventory is stored, assembled, or fabricated production sites and storage sites Inventory raw materials, WIP, finished goods within a supply chain inventory policies Transportation moving inventory from point to point in a supply chain combinations of transportation modes and routes Information data and analysis regarding inventory, transportation, facilities throughout the supply chain potentially the biggest driver of supply chain performance Sourcing functions a firm performs and functions that are outsourced Pricing Price associated with goods and services provided by a firm to the supply chain 65 Importance of metrics for GSCs Metrics are important to firms for the following reasons: Tracking metrics allows firms to track performance over time and guides you on how to optimize your Supply Chain. Allows management to identify problem areas. It also allows for comparison to other companies through like industry benchmarking. Certain metrics, such as Inventory Turns, have a widely accepted definition. Other metrics, such as Backorders, may need to be customized for particular industry or logistics business model. Measurements should have dedicated departments or management that are responsible for achieving an agreed upon target on the metric. Supply Chain Management needs to encourage and support the process changes to achieve the desired targets. A supply chain is only as strong as its weakest link 66 Metrics are also useful for policy making Existing data resources are inadequate to support policy responses to global integration. Increasing need for more firm levels data and surveys for policy makers and researchers. 67 KPI for GSCs Key Performance Indicators (KPI): A measure which is of strategic importance to a company or department. For example, a supply chain flexibility metric is Supplier-On-time Delivery Performance which indicates the percentage of orders that are fulfilled on or before the original requested date. 68 Finding solutions using metrics and KPIs Measurements alone are not the solution to all problems The solution lies in the corrective actions that are taken to improve the measure. Businesses thrive or fail based on their ability to identify, define, track, and act upon Key Performance Indicators (KPIs). Executives and line of business management are increasingly feeling the pressure to establish the right KPIs to enable more timely and more accurate decisions. The faster and more accurately KPIs can be accessed, reviewed, analyzed, and acted upon, the better the chance an organization has for success. 69 KPIs and Best in Class companies (BiC) According to Aberdeen Group, surveyed companies can be categorized in three groups: Best-in-Class, Average Laggards Aberdeen,s main research findings show that most companies focus on financial and customer KPIs, and less so on process, organizational, and product KPIs. Best-in-Class companies have taken a more well-rounded approach to KPI initiatives, and have identified metrics that encompass key performance measures beyond the typical KPIs focused on profitability and cost. Additionally, Best-in-Class companies are also stressing the importance of KPI visibility throughout the organization. Performance is greatly affected when more people have access to KPI information and have the ability to act on it. Best in Class companies want agility and responsiveness 70 Source: Aberdeen Research, « Smart Decisions: The role of Key Performance Indicators », 2007 What Best-In-Class companies do better than others? Best-in-Class companies are far more likely to establish an ongoing review of KPIs as part of their overall strategy. Industry Average and Laggard companies that neglect this step are at risk of measuring KPIs that are based on metrics that do not reflect the current business climate. KPIs are an integral part of a company’s performance management strategy. The correct definition, use, and (most importantly) continual adaptation of KPIs directly impacts performance. Best-in-Class companies have adopted a set of capabilities that deliver positive results across a diverse set of performance metrics. To achieve Best-in-Class performance, organizations must: Institutionalize a KPI strategy – Best-in-Class companies are instituting a KPI culture for alignment of business strategy and company goals Continuously revise KPI definitions – business changes and so are the KPIs Provide access to KPI information to all decision makers – dashboards, scorecards and auto-alert reporting are being used by Best-in-Class companies 71 Source: Aberdeen Research, “Smart Decisions: The role of Key Performance Indicators” (2007) Innovation is moving from a firm-to-firm level to a supply chain versus supply chain ● Lean manufacturing principles have revolutionized the way leading firms deliver products to their customers and manage their global supplier relationships. ● As competition becomes more global, many firms must develop supply chain agility in a Just-In-Time (JIT) and mass customisation mode. ● Logistics and supply chain management (SCM) are key components of any Lean manufacturing initiative. ● The two most preferred key performance indicators (KPI) measured by North American lean manufacturers are logistics and SCM JIT related (on-time delivery and inventory turns). ● While inventory turns is the main KPI for evaluating lean supply chain agility, logistics cost KPI allow firms to evaluate the efficiency of their logistics and SCM operations in their global Lean initiatives. The combination of supply chain agility and efficient SCM practices is key to the long term competitiveness and prosperity of firms in a GSC context. 72 Survey results findings Survey results are useful to assess the importance of participation of firms in GSC Statistics Canada study showed that : In 2004, more than half of all manufacturing plants participated in a global supply chain Large plants were more likely than both small and medium-sized plants to participate in a global supply chain Innovative plants were more likely to participate in a global supply chain than non- innovative plants Innovative plants were four times more likely to contract out to a global supplier than non-innovative plants. Innovative plants that were part of a global supply chain more likely to have world- first innovations than those that were not. 73 Source: Statistics Canada, Innovation and global supply chains: Findings from the Survey of Innovation (2005) (2007) Benchmarking: challenges and tactical requirements Dynamic ever-growing supplier base Multiple countries, languages, and customs Diverse transportation modes and infrastructure Complex data coordination requirements Disaster recovery planning Improve volume forecasting and data transparency Develop coordinated supply chain contingency plans Promote collaborative supply chain networks (OEM’s and suppliers) Support industry best- practice communization and productivity improvement initiatives Expanding mileage factors Incorporating benchmarking activities into the strategic planning process will enable effective best practice development and adoption 74 Source: AutoDiversity Management inc. (ADMi) (2009) Performance measurement and benchmarking Investors Financial analysis comparison with other targets to assess overall competitiveness and productivity Financial Comparison of peer or target companies market performance in considering corporate investment alternatives Product Process of designing new products or upgrades to current ones, including reverse engineering of competitive products Strategic Process of observing common or uncommon groups’ competitive advantages or disadvantages Process Identifies and observes specific business processes with a goal of identifying best practices Functional Focuses on a single function in order to improve the operation of that particular function. Performance Helps companies assess their competitive position by comparing specific performance dimensions Metrics Used to develop yardstick comparisons, allowing outsiders to evaluate the performance of operators in an industry Supply chain benchmarking generally revolves around Strategic, Process, Function, and Performance benchmarking… thus promoting more effective performance metrics 75 Source: AutoDiversity Management inc. (ADMi) (2009) Integrating Benchmarking Activities Logistics scorecard Leading Lagging 1 Outsource all logistics functions Some internal logistics capabilities Retain critical strategy logistics resources and capabilities Fully decentralized Specific functions / groups are centralized Centralized and integrated Network design and operation Rigid network; defined by third party Flexible Flexible, optimal network Cost management Lack of control of cost drivers; Significant cost disadvantage Internal / external costs managed moderately well External affairs Lack of awareness of key issues Limited involvement in key issues Full control of cost drivers; significant competitive advantage Strategic involvement in key issues Systems Externally developed and managed Internally managed, but primarily tactical Internally managed and strategic integration Strategy 2 Organization 3 4 5 6 Supply chain benchmarking contains 6 performance and structural elements. 76 Source: AutoDiversity Management inc. (ADMi) (2009) Current metrics for supply chain management On-time delivery; production throughput; forecast accuracy; fill rate; overtime labour; supplier performance; freight and delivery costs; lead time performance; stock-outs and backorders; inventory turns; obsolescence 77 Agenda Prologue: The International Context Roadmap to Global Supply Chains Objectives of Global Supply Chains Characteristics of Global Supply Chains Benchmarking the Global Supply Chains Global Supply Chains Management and the Role of Logistics Global Supply Chain Management in the future Beyond Global Supply Chains: Global Value Chains 78 What is Global Supply Chain Management? Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers. (Harland, 1996) 79 History of Supply Chain Management 1960’s Inventory Management Focus, Cost Control 1970’s MRP & BOM - Operations Planning 1980’s MRPII, JIT - Materials Management, Logistics 1990’s SCM - ERP - “Integrated” Purchasing, Financials, Manufacturing, Order Entry 2000’s Optimized “Value Network” with Real-Time Decision Support; Synchronized & Collaborative Extended Network 80 Activities in Supply Chain Management Supply chain management is a cross-functional approach to manage the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and then the movement of finished goods out of the organization toward the end-consumer. Whereas Purpose of SCM: The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and improving inventory velocity. 81 Supply Chain Management and Uncertainty ● Inventory and back-order levels fluctuate considerably across the supply chain even when customer demand doesn’t vary ● The variability worsens as we travel “up” the supply chain Wholesale Distributors Time Sales Sales Time Consumers Retailers Sales Manufacturer Sales Multi-tier Suppliers Time Time Bullwhip Effect 82 Role of logistics in GSCM The success of supply chain management rests with logistics. Five Key Issues of Logistics Effectiveness which are core to Supply Chain Management: Movement of Product Movement of Information Time / Service Cost Integration, both internal and external, both organizations and systems Supply chain management requires a logistics model based on quick order to delivery response. A model which focuses from vendors' doors through to delivery to customers' doors. The model must meet the customers' demanding and specific requirements. It requires organizational flexibility and responsiveness, internal and external teamwork and demands the use of processes and technology. 83 Drivers that affect could logistics and SCM The impact of global commerce Security within supply chains Increasing energy costs Sustainable development practices Technology and innovation Reasons for using metrics in logistics: to help supply chain managers and decision-makers better understand: Current and future trends Competitive position in relation to leading firms within their own sector Steps that can be taken to become more competitive. 84 Canadian findings on the role of logistics Logistics and supply chain services are the enablers of integrated global supply chains Descartes Systems Group, a Canadian service provider of supply chain and logistics technology, provide a system that synchronize and connects more than 1000 manufacturers with 2000 logistics service providers in 180 countries. The results is the access to global synchronized virtual supply chain to Canadian firms from all industrial sectors by service providers. Source: Logistics / Supply Chain Management, Industry Overview and Statistical Profile (2005) 85 The Canadian experience: the logistics sector is restructuring to remain competitive Consolidations, mergers, and acquisitions have been extremely common in the Canadian logistics sector in the last few years Increased number of large firms in all sub sectors Decreased number of medium firms in transportation based sub sectors 86 Manufacturing sector is the most innovative and agile in logistics and SCM processes Possible factors: Infrastructure Head Quarters Supply chain mandates Technology and process adoption Size of firms Inventory Turns : How many times a year the average inventory for a firm changes or is sold e.g. 1 = 365 days of inventory; 12 = 1 month of inventory; 365 = 1 day of inventory 87 Supply chain collaboration is more important than costs in terms of innovation drivers Users (manufacturers, wholesalers, and retailers) are prioritising better co-ordination with suppliers and/or customers over lower costs The users perceive more benefits from these practices both in terms of costs and coordination than do logistics service providers 88 Collaborative Planning, Forecasting and Replenishment (CPFR) Model 89 The role of innovation in GSCM As competition becomes more global, innovation is moving from a firm-to- firm level to a supply chain-to-supply chain perspective The adoption of logistics and SCM technology across supply chains is a key component for developing efficient collaboration networks 90 Integration of e-SCM applications e-SCM applications are not fully integrated across supply chain partners Most e-SCM applications are not linked internally (mainly large firms) Very few firms across all sizes have integrated supply chain enetworks 91 Source: Electronic Commerce Survey, Statistics Canada, 2007 Leveraging logistics technology by linking to retailers’ suppliers via their CPFR initiatives Retailers are leveraging their logistics technology by linking to their suppliers via their CPFR initiatives while wholesalers are not fully embracing the integrated supply chain concept Logistics service providers are linking their e-SCM applications with other transportation & logistics service providers in order to provide global supply chain visibility Manufacturing sector is the least e-SCM integrated sector 92 Source: Electronic Commerce Survey, Statistics Canada, 2007 Outsourcing of e-SCM innovation is mainly conducted by large firms Very few firms using e-SCM applications outsource this activity Connecting multiple supply chain partners together though application service providers (ASP) is the main focus of eSCM outsourcing Small (1-19 employees) Medium (20-99 – services, 20-499 – manufacturing) Large (100+ – services, 500+ -manufacturing) 93 Source: Electronic Commerce Survey, Statistics Canada, 2007 Best-in-Class Analysis It is estimated that North American (NA) Small and Medium Sized Enterprises (SMEs) that will deploy logistics and SCM e-collaboration applications will enjoy: 5 to 25 percent decrease in logistics and SCM costs 15 to 40 percent increase in distribution service quality and time-to-market over competitors that fail to make these investments 90 percent of NA companies that embrace leading edge logistics and SCM collaboration applications achieved an increase of at least 15 percent of order fill rate accuracy Only 40 percent of low technology adopters are achieving similar results High technology adopters in SCM collaboration are also achieving comparative advantage in logistics and SCM KPI such as total delivered cost, lead time reduction, increase in perfect orders and increase compliance to customer mandates such as RFID and JIT1 94 Source: SMBs Embrace SRM Solutions via Service Providers, Gartner, 2008 and Extending Warehouse Management Beyond the Four Walls, Aberdeen Group, 2008 Sectors that have embraced Lean, Just-In-Time and Six Sigma concepts… Certification of suppliers focuses on purchasing from suppliers whose production processes meet standards setting organisations … are leading in the certification of suppliers processes 95 Source: Advanced Technology Survey, Statistics Canada, 2007 Agenda Prologue: The International Context Roadmap to Global Supply Chains Objectives of Global Supply Chains Characteristics of Global Supply Chains Benchmarking the Global Supply Chains Global Supply Chains Management and the Role of Logistics Global Supply Chain Management in the future Beyond Global Supply Chains: Global Value Chains 96 Trends surrounding the future of GSCs… Declining economy Social structures Cost and availability of raw materials Awareness of sustainability Consumers and technology Business models change Availability of information in the supply chain Product safety 97 Forces and trends that will impact the Future Supply Chain New markets and a new economic balance Sustainability and the scarcity of natural resources Ecological Economic Consumer Behaviour Driving the value chain Regulatory Redesigning supply chain Product Flow Information Flow Demographic Graying and urbanisation New rules, new compliancy New technologies Explosion of information Managing complexity through transparency 98 … more specifically Globalization is accelerating, leading to large structural shifts for supply chain organizations Despite 17% average cost reduction from globalization, many companies do not save on management costs Product quality, safety, and supply chain delivery and security are critical concerns Limited flexibility and the lack of internal competency to manage partners are major barriers to globalization Environmental sustainability is driven by the need for regulatory compliance and satisfaction of customer demands Supply chain maturity, enabled by advanced supply chain practices, appears to have reached a plateau Pressures to reduce cost and penetrate local markets are the two key drivers of accelerated globalization By 2010, the need for higher supply chain flexibility will be the major driver of supply chain strategy China and India are primary targets for globalization, while Eastern Europe is catching up The COO agenda is converging on improving supply chain flexibility and delivery performance 99 Source: PRTM (2008) Globalization is accelerating Globalization, the level of value creation outside the home country, is gaining momentum and leads to Supply Chain Organization Shifts More and more manufacturing activities and final assembly have already been globalized The primary shift of manufacturing and assembly operations has been to lowcost locations like China, India, and Eastern Europe The trend of outsourcing IT and other shared services such as HR and finance is decreasing, as most of the surveyed companies have already achieved anticipated benefits from offshoring these functions As a result of manufacturing and assembly globalization, support functions such as warehousing and procurement have also been globalized in support of international locations Rapid increasing globalization of product and technology development by offshoring R&D and technology development activities. 100 Summary of Key Industry-specific trends Automotive & Industrial Consumer Goods Local market presence is major Product innovation is a major driver driver Outsourcing trends will continue Product development outsourcing will help drive local market access and presence Brand focus leads to higher product safety and sustainability concerns than in other industries Mass customization a challenge as companies seek emerging market growth Life Sciences Electronics, Telecoms, Services Product cost emerging as major driver Overall SC maturity has declined as and concern Globalization has been forcing function for better internal collaboration External partner capabilities are seen as a major barrier electronics supply chains have become more complex Highest level of physical globalization of all industries Flexibility is the major concern 101 Source: PRTM (2008) New ways of working together to eliminate supply chain disruptions and enable growth Industry Track (Collaborate) Best Practices/ Standards Documentation, Education, Communication Guiding Principles and Frameworks Share Results Focus on Consumer Connected Business Information Prepare People for New World Share Our Supply Chain Strategy Alignment Common Goals & Measures Knowledge, Skills & Capabilities Sustainability Jointly Agreed Growth (JAG) Framework Information Sharing* Electronic Product Code (EPC) Cross-Industry Integration Incentives & Rewards Organization Design Integrated Supply Chain Specific Measures & Priorities Other Data-Sharing Opportunities Consumer/ Shopper Satisfaction Data Synch Strategic Issues Between Trading Partners Common Goals, Common Measures Trading Partner Track (Competitive Advantage) Source: Global Commerce Initiative, Capgemini (2008) 102 New Model for the Future Supply Chain Highlights Sustainability Benefits 103 Source: Global Commerce Initiative, Capgemini (2008) Starting Point to build the future supply chain In-store logistics Collaborative physical logistics Reverse logistics Demand fluctuation management Identification and labeling Efficient assets Joint scorecard and business plan 104 New parameters for GSCs Collaborative city replenishment Collaborative warehouse and distribution Neighborhood delivery Lead-time reduction 105 Is your supply-chain “sustainable”? 106 Addressing sustainability issues in GSCs Recent events and regulations are driving the necessity to address sustainability issues in GSCs Kyoto Protocol, December 1997. United Nations Climate Meeting, Bali, December 2007. Carbon Disclosure Project (CDP). EU Directive on Renewable Energy, January 2008. 107 GSCs could rise environmental concerns 0.25 The carbon exposure of many Canadian industries is not insignificant. Electricity Generation Increase in costs associated with a 0.20 CO2 e price $100/tonne applied on all emissions 0.15 Iron and Steel Agriculture Carbon Exposure 0.10 Industrial Minerals Government Services Petroleum Refining 0.05 Gas Oil . Chemical Products o Coal Freight Construction Other Mineral Mining Wholesale, Retail Trade Other Manufacturing (autos, etc.) Pulp and Paper 0.00 Services 0.0 0.2 0.4 0.6 0.8 The area of each circle corresponds to the relative size of sectoral output Percentage of Industry Output that is Exported 108 Source: National Roundtable on the Environment and the Economy (2009) Evolving Global Value Chains Company Cultural and Behavioural changes •Shared services •Shared information/collaboration Information Sharing •Open platforms for distributed data-sharing models Shopper Dialogue •A new interface with the consumer Integrated Logistics/ Home Fulfilment Synchronised Production •Working from one demand signal •Integrated upstream suppliers Sustainability •Economic development •Environmental protection 109 New KPIs for the Future Supply Chain Current KPIs Availability to consumer (percent in-stock) Cost reduction Financial KPIs Return on investment (ROI) Gross Margin Return on “X”(GMROX) Return on brand equity Inventory Traceability Sustainability KPIs Energy consumption CO2 emissions (greenhouse gases) Traffic congestion Water consumption Security compliance Infrastructure simplification 110 Impact of Supply Chain Redesign 111 Moving from GSCM to “G”SCM… Global Supply Chain Management (GSCM) “Green” Supply Chain Management (“G”SCM) 112 … with a “sustainability” angle to GSCM “Green Supply Management is integrating environment thinking into supply chain management, including product design, material sourcing and selection, manufacturing process, delivery of the final product to the consumers, and end-of-life management of the product after its useful life.” (Srivastara, 2007) 113 Objectives of “G”SCM “G”SCM mainly focuses on making the business orientation eco-friendly To achieve competitive advantage and high performance through “G”SCM practices To integrate the green supply chain into the corporate policies and strategies for smooth operation To make difference in its approach To show how important it is to conserve environment and sustain our natural resources and show to what extent is our business activities dependant on environment 114 Advantages of being “Green” Wal-Mart anticipates its goal of a 5 percent reduction in packaging by 2013 will produce $3.4 billion in direct savings and roughly $11 billion in savings across the supply chain. Johnson & Johnson’s energy efficiency program resulted in an estimated $30 million in annualized savings over the 10 years prior to the company’s 2006 sustainability report. Nestlé, through a combination of packaging source reduction, re-use, recycling, and energy recovery, saved $510 million, worldwide, between 1991 and 2006. 115 Mathematics of “G”SCM Green Procurement + Green Manufacturing/Materials Management + Green Distribution/Marketing + Reverse Logistics ---------------------------------------------Green Supply Chain Management 116 Scope and relevancy of “G”SCM Scope: Companies effort to incorporate GSCM leads to reduction of wastage. Reduction of pollution Sustainability of natural resources. Better environment and world to live in. Opportunity to slowly orient to “Green” SCM should be the focus of the companies to world class standards. Relevancy: Eliminate wastes. Optimum utilization of resources. Sustaining environment. Competitive advantage. Impress customers. To make difference. Reverse logistics. Create social responsibility. 117 Approaches to “G”SCM Reactive approach by complying with domestic legislation Proactive approach by pre-empting new legislation Value-seeking approach 118 “Green” Supply Chains practices 119 Addressing “G”SCM: a Canadian perspective Objectives of the Canadian Green SCMs project: Provide industry with the latest key performance indicators (KPI), Productivity and competitiveness analysis, Best practices and future trends on “G”SC in distribution activities. Expected outcomes of the Canadian “G”SCMs project: Provide policy makers with industry perspectives for developing policies that better respond to current and future industry needs. 120 Source: Industry Canada Concepts: “G”SCM in Distribution Activities “G”SCM practices involve integrating environmental thinking into distribution practices “G”SCM practices include: Energy efficiency Reduction of GHG air emissions Water conservation or processing Waste reduction Reduced packaging/increased use of bio-degradable packaging Product and packaging recycling/re-use Green procurement practices 121 Source: Industry Canada “G”SCM drivers across supply chains Costs coupled with the need for competitiveness advantages are the main “G”SCM drivers across supply chains Energy costs can amount to 55% of air transportation costs and 29% of truck transportation costs Logistics and transportation firms value GSCM as a service differentiator in a highly commoditized market 122 Source: Industry Canada Leading sectors on the use of “G”SCM practices Logistics and transportation (L&T) companies are leading the use of GSCM practices compared with manufacturing and retail firms Logistics and transportation service providers own more transportation assets than manufacturing and retail firms Retail chains GSCM opportunities are more complex due to multiple store locations and franchise business models 123 Source: Industry Canada Some facts about the use of “G”SCM practices Firm size may no longer impact whether “G”SCM activities are pursued Retail chains “G”SCM mandates encourage suppliers to become greener Initial retail chains “G”SCM practices are within organizations Second generation “G”SCM practices include “G”SCM mandates with suppliers at both services (transportation and logistics) and manufacturers “G”SCM practices translate into reduced energy consumption and waste in distribution, decreased GHG emissions, and less packaging Retail chains have an opportunity to have access to carbon credits and decrease harmful air emissions and waste Transportation services have an opportunity to reduce their global industry carbon emission footprint. Emissions differ widely by transportation mode The emission ratio of: Marine to rail is 1.5 Truck to marine is 1.4 Air to truck is 2.7 124 Source: Industry Canada Overall Key Findings of “G”SCM Main “G”SCM business drivers include the high cost of energy and a desire to have a competitive advantage over other firms. Since many “G”SCM practices require limited investment, are low-risk, and offer short-term return-on-investment periods, businesses of all sizes are able to engage in these activities. Despite the large number of businesses that understand the importance of “G”SCM, the number of firms that actually engage in such practices is significantly lower. Retail chain “G”SCM mandates bring business and environmental benefits to the entire consumer products supply chain. Most Best-in-Class (BiC) businesses are able to better differentiate their distribution services, improve risk management, increase sales, and increase access to foreign markets, all while reducing distribution costs. 125 Source: Industry Canada Publications related to “G”SCM 126 Agenda Prologue: The International Context Roadmap to Global Supply Chains Objectives of Global Supply Chains Characteristics of Global Supply Chains Benchmarking the Global Supply Chains Global Supply Chains Management and the Role of Logistics Global Supply Chain Management in the future Beyond Global Supply Chains: Global Value Chains 127 The World is changing… Fragmentation of the production process Manufacturing and Services sectors have changed Technical advances: lower costs and globalisation Key role of trade liberalization Increasing outsourcing Increasing partnering Increasing participation of emerging countries Increasing participation of smaller firms ... giving rise to a new business model: Global Value Chains 128 What are Global Value Chains? Global Value Chains (GVCs) include the full range of activities that are required to bring a product from its conception to its end use and beyond (e.g. design, production, distribution). Value chain activities can be contained within a single firm or divided among different firms, and can be contained within a single geographical location or spread over wider areas. (Gereffi, Humphrey, Sturgeon, Global Value Chains Initiative, www.globalvaluechains.org/concepts/index.html, 2006) 129 Global Value Chains: A New Paradigm for all Firms Globalization trends are placing particular pressure on industries offering both opportunities and challenges Fast growing emerging markets Increasingly global competition for talent and innovation Rise of intermediate trade reinforces the need for global connection Firms are increasingly fragmenting their production processes and spreading them around the world GVCs are about a lot more than developing foreign markets Foreign affiliates no longer only serve local markets Global transactions and partnerships seen as key to access skills, inputs, technology and other opportunities Challenge is to be involved in high value-added, high impact sectors... 130 GVCs VS. GSCs Supply chains require… Value chains require… Trade infrastructure Markets Trade finance Firms Trade intermediaries Innovation Logistics providers Technology Transport services Rule of law Information flow (ICTs) Finance 131 Value chains and supply chains End users Competition Lead firm A Lead firm B Value Chain Co-evolution First tier Supply Chain Supply base A Supply base B Second tier Materials 132 Do you speak GVC? GVC actors Lead firms, suppliers, global suppliers, and platform leaders GVC Linkages Five kinds: market, modular, relational, captive, and integrated GVC processes Outsourcing and offshoring Co-evolution and industrial upgrading GVC features Industry value chains and supply bases Specialized industrial clusters 133 Five kinds of value chain linkages Governance type Market Key variables Complexity of transactions Ability to codify transactions Low High Capability in the supply-base Degree of explicit coordination and power asymmetry High Low Modular High High High Relational High Low High Captive High High Low High Hierarchy High Low Low 134 Source: Gereffi, Humphrey and Sturgeon (2005) Key questions raised by Global Value Chains What business functions are establishments doing internally and externally (outsourcing)? What business functions are establishments doing domestically and abroad (offshoring)? What types of jobs go with various business functions, including employment by occupation, wages, tenure, and number and type of new hires in past 12months? What educational and training requirements are associated with various business function combinations? How do the business functions that an establishment engages in relate to the goods and services bought and sold (inputs and outputs)? How do the business functions that an establishment engages in relate to its economic performance (market share, profitability, employment, share of value added, market share) How do the mix of business functions in firms compare to establishments in other countries? 135 GVC strategies are motivated by numerous factors Changing business models allow firms to seize opportunities by: - Tapping into new growth markets - Accessing lower cost resources and best in world capabilities - Specializing in “core” competencies to sustain competitive advantage - Achieving economies of scale and scope Growing competition in domestic and international markets force firms to increase efficiency and to move into higher value-added activities. A fragmentation of the production process increases competition. Firms can be easily replaced and must therefore constantly innovate and seek to develop a global reach. Industries are finding innovative ways to adapt. Today, many firms in diverse sectors view operating globally, and serving and utilizing GVCs as essential to growth and competitiveness. 136 An Example of a Partially Integrated Firm Germany: •Eight Manufacturing Facilities •Corporate Headquarters Canada: •Marketing Subsidiaries Russia: •Kaliningrad Assembly Plant United States: •R&D Center •Manufacturing Plant United Kingdom: •Four Manufacturing Plants China: •Shenyang Joint venture with Brilliance China Automotive Switzerland: •Manufacturing Plant •R&D Center Egypt: •Kairo Assembly Plant Mexico: Marketing Subsidiaries Thailand: •Rayong Assembly Plant Malaysia: •Kuala Lumpur Assembly Plant Indonesia: •Jakarta Assembly Plant Brazil: •Curitiba (Tritec Motors) South Africa: •Rosslyn Manufacturing Plant BMW 137 Activities can be located anywhere… … and have major implications for competitiveness that have not been well explored. Bombardier C-Series Final assembly Aircraft interior Avionics Development, manufacturing of wings CDIA Advanced order from Lufthansa Supplier FDI Financing (UK) Cockpit, tail assembly and other sections of fuselage Headquarters, R&D Air management systems Potential customers 1 138 Global Value Chains: an example Design: California, USA Moulds, paint pigments: USA Nylon hair: Japan Body material: Taiwan Assembly: Indonesia and Malaysia Clothing: China Marketing: USA Quality testing: USA Global Process for Producing Marketing: USAa Barbie doll 139 Source: Grossman and Rossi-Hansberg (2006) The business model has changed dramatically… Issue Old Economy New Economy Boundary of the firm: Established Less clear Production: Mass production Specialized Product cycles: Long Shortened Integration of industries: Vertically integrated Horizontally integrated Innovation model: Proprietary and closed model Open and collaborative model Foreign investment: Capture local markets Serve all components of firms activities Firm size: Giant vertically integrated leadfirms Smaller highlyspecialized lead-firms Capacity utilization: Volatile Volatility managed through outsourcing Note: this doesn’t apply to all sectors or all firms of the economy. 140 …and can have significant impacts on economic performance The organization of production into GVCs can affect: Productivity growth and competitiveness by encouraging firms to specialise and focus on their core competencies by creating an incentive for firms to move into activities where they have a clear competitive advantage by increasing competitive pressures on firms, and thus promote innovation and efficiency gains by putting pressure to attract and retain high-value activities (skills and FDI) Employment and wages if certain activities are moved offshore or decline in importance if domestic firms focus on new activities if foreign affiliates expand/decrease their activities in the country Consumers and prices by reducing prices of some goods (e.g. Wal-Mart effect) and increasing product variety, for both business and individual consumers by maintaining inflation low which creates an appropriate environment for investment These impacts may vary across activities, industries, regions, and countries 141 Opportunities, Challenges and Policy Implications Implications of GVCs for industry: Increased specialization causes shifting comparative advantages Firms must respond by moving-up the value chain and perform in knowledge intensive segments Emerging economies are competing in both traditional and knowledge intensive segments (e.g. China in electronic equipment and India in ICT) Firms must develop specialized markets, product branding, and specialized knowledge-assets Industries and firms must seize global opportunities Firms must take advantage of greater modularity of production and more collaborative innovation policies 142 Guiding principles for policy framework Policies must encourage economic openness Competition is a cornerstone of industrial policy and a key driver of innovation and productivity growth Policies must enable firms to seize the opportunities of globalization and GVCs Comparative advantage must be fully leveraged globally using appropriate business models and strategies Policies must also facilitate the adjustment of the economy to global competitiveness pressures Must adapt to changing global environment while minimizing hardship on affected communities 143 Upcoming policy opportunities in Canada Potential opportunities to pursue GVC policy options include: Global Commerce Strategy Expand role of missions abroad to promote R&D partnerships, licensing, joint ventures opportunities. National Gateway and Trade Corridor Strategy Provide world-class border, transportation, communication, and logistic infrastructures. Smart Regulations Provide harmonized regulations to facilitate Canadian firms global integration. North American Leaders Summit (former Security Partnership and Prosperity) Enhance prosperity among the United States, Canada and Mexico through greater integration of the North American economy as a strong base to compete globally. 144 One example of Canada’s initiative to help SMEs integrating GVCs Publication of a guide for SMEs The Government of Canada published a guide entitled: Linking In to Global Value Chains: A Guide for Small and Medium-Sized Enterprises This guide was created for Canada’s small and medium sized enterprises (SMEs) who are interested in expanding internationally. Its intent is to present the global value chain business model as a means for boosting firms’ global competitiveness, profitability and long term sustainability. How The Guide Works First section Presents the global value chain business model and its relevance for Canadian SMEs. Second section Help the firm to evaluate firm’s operational capabilities and determine whether or not it has the capacity for doing business internationally and determine whether or not it is ready to take advantage of this business model. Third section Presents various opportunities for how to optimize your own global value chain. Whether it be selling, outsourcing, investing abroad or entering into a joint venture. 145 Thank you for your attention For further information, please contact Eric Futin at [email protected] 146
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