Intro to Supply Chain

1. Intro to Supply Chain Ms. Biba S. Kavass

2. THINK ABOUT THIS • How did the shoes that you are wearing get from the shoe manufacturer to your feet? • How do you order something online right now knowing that it will get delivered to your home tomorrow? • How many different types of soda are available for purchase?

3. Essential Questions • What is a supply chain? • What is logistics? What is its’ role in the supply chain? • How are consumers affected by the supply chain of products? • How does globalization impact supply chains in the US?

4. WHAT IS SUPPLY CHAIN? • https://wetheeconomy.com/films/supply-chain-reaction/?autoplay=yes Assignment Directions: After watching the video “Supply Chain Reaction” (https://wetheeconomy.com/films/supply-chain-reaction/), answer the assigned questions. Each question is worth 5 points for a total of 50 points.

5. What am I going to study? • Careers • Distribution • Inventory • Logistics • Marketing • Management • Material Handling • Regulations • Safety • Teamwork • Transportation • Warehousing • Workplace Communication

6. Marketing Program at Cordova High School – Supply Chain Management • Foundations of Supply Chain Management • Certification – Microsoft Office Specialist - Excel • Supply Chain Management I • Certification – Certified Logistics Associate (CLA) • Supply Chain Management II • Certification – Certified Logistics Technician (CLT)

7. Industry Certifications

8. Exit Ticket - Supply Chain • Write your own definition of supply chain. • Determine what role you play in the supply chain.

9. Business Background Check Write out the definition and provide an example for the following terms: • Capital • Operations • Goods • Output • Input • Productivity • Labor • Services • Management • Transportation Use www.businessdictionary.com to find your definitions

10. Business Background Check Take the Goods and Transportation Assessment in your Intro to Supply Chain Unit Packet

11. Functions of an Organization To create goods and services, all organizations perform 3 functions: Marketing—generates demand - nothing happens until there is a sale Production/Operations—creates, produces, and delivers the product Finance/Accounting—tracks how well the organization is doing, pays the bills, and collects the money

12. What is the Difference? Operations Management Set of activities that creates value in the form of goods and services by transforming inputs into outputs Example: Scheduling crews for an airline Designing a new I-Phone Supply Chain Management Network of manufacturers, retailers, distributors, transporters, storage facilities, and suppliers that participate in the production, delivery, and sale of a product to the consumer Example: Supplying beet sugar from the farmer to the syrup producer to the bottler to the distributor to the store to the consumer Logistics Planning, execution, and control of the procurement, movement, and stationing of personnel, material, and other resources Example: Transporting a shipment of tomatoes from California to a Kroger in Memphis

13. Video Case Study: Frito-Lay: Operations Management in Manufacturing Frito-Lay, the Dallas-based subsidiary of PepsiCo, operates 30+ manufacturing facilities across the U.S. and Canada, more than 200 distribution centers, and has approximately 55,000 employees. With over 15,000 routes they make over 500,000 weekly service calls on approximately 290,000 customers. Sales exceeded $15 billion in 2016. Operations is the focus of the firm—from designing products for new markets, to meeting changing consumer preferences, to adjusting to rising commodity costs, to subtle issues involving flavors and preservatives—OM is under constant cost, time, quality, and market pressure. Directions: After watching the video, work with a partner and answer the following questions: • What are some examples of operations management discussed in the video? • What are some examples of supply chain management discussed in the video? • What are some examples of logistics discussed in the video? https://www.youtube.com/watch?v=vEtT4WbFfUI

14. Supply Chain Nodes Nodes – locations within the supply chain network (ex. factory, distribution center, retail store) Links – connect the nodes through a form of transportation (air, sea, truck, or train)

15. Supply Chain Flows Material/Product Flow – movement of goods from a supplier to the customer Funds/Demand Flow – monies paid to all the supply chain partners that provide goods/services Information Flow - customers place orders and suppliers provide information about the products and when they will be delivered

16. Simple Supply Chain What would be your nodes in this supply chain?

17. Basics of a Supply Chain • In this diagram the arrows represent the movement of products (unfinished and finished) from one stage or place to the next which usually involves some form of transportation as well as storage or warehousing.

18. Relationship between the Supply Chain Links Each link in the supply chain is both a Customer of the preceding link AND a Supplier to the succeeding link Suppliers Manufacturer Customers Last Mile First Mile Last Mile First Mile Customer Supplier Customer Supplier Customer Supplier Inbound Transportation Outbound Transportation EXAMPLE: If you are a Manufacturer, you are also a Customer of your Suppliers, and a Supplier to your Customers.

19. Speed in a Supply Chain • Discussion Questions: • How does this clip address the need of speed in a supply chain?

20. Supply Chain Components • Raw Materials – basic material used to produce goods • Supplier – procures raw materials • Manufacturer – converts raw materials into finished products • Distributor – moves/stores products to retailers or direct to consumers (Wholesaler – resells to retailers) • Retailer – sells final products for consumer use • Consumer – buys final products for consumption - 3 types of Consumers – Individual, Business, and Government • Service Providers - designers, advertisers, market researchers, transport providers, etc.

21. Word Splash • COMPLETE: • ACTIVITY: Define Components of the Supply Chain • ACTIVITY: Supply Chain Matching

22. How does coffee get from a farm to your cup? Coffee grows best in countries near the equator - Central/South America, Africa, and the Pacific. Coffee grows on trees—and is usually harvested once per year. Coffee farms can range from very-small to very-large, often influenced by the history of land ownership in the country of origin. Smaller farms often use family or community-based labor, while larger farms hire a combination of permanent and seasonal workers. When coffee is picked, it looks like a bright red berry and is what we call a coffee “cherry.” The part of this we actually brew is the seed inside the coffee cherry, so the next step after picking is getting those seeds separated out. We call this “processing,” and it can take a few different forms. The majority of the coffee we sell uses a washed process, which separates seeds—often referred to as beans—from coffee cherries using water in a wet mill. Sometimes this washing step happens on the farm itself. In other cases, farmers deliver their coffee cherries to a cooperative or buying station for processing. https://www.youtube.com/watch?time_continue=2&v=xD-pLgLgZGo

23. How does coffee get from a farm to your cup? Con’t Once washed coffee beans are dry, they’re still not 100 percent separated from the coffee cherry material. Washed coffee beans still have a papery parchment layer and naturally processed coffees have the entire cherry still surrounding the bean. The dry mill completes the separation process, removing any remaining layers from the coffee bean. The dry mill then sorts coffee into different grades based upon the physical attributes of the beans, like density and color. Dry mills are often owned and managed by exporters. Once incoming coffee clears customs, it is stored in a warehouse near the port until we need it. This helps us maintain a smaller on-site inventory and helps us make sure all of the unroasted, called “green” coffee, is stored in optimal conditions. We evaluate our roastery inventory weekly and typically request 1–2 shipments from the port warehouse every week. Most of our coffee comes in and is warehoused in Charleston, SC, with a smaller portion coming in through Oakland, CA. Except in extremely rare cases of air shipment, all of our coffee comes to the U.S. via container ship. In countries that border the ocean, coffee generally goes directly from the dry mill to the port. In the case of landlocked coffee-producing countries, the coffee has a bit more of a journey before it hits the water—like in the case of Rwandan coffee shipped out of Kenya. The amount of time the coffee spends on the water ranges widely, from a few weeks in the case of coffee from Central America to a few months for coffees from Papua New Guinea.

24. How does coffee get from a farm to your cup? Con’t Pulling from our roastery supply which we get from the ports, we roast coffee every weekday based on the orders we receive the day before. Coffee orders are roasted, bagged, and shipped all on the same day. CONSUMER

25. Practice: Draw Coffee Supply Chain Directions: • Draw the supply chain for coffee – from the farm to your cup • Make sure to label all 6 components

26. Activity: Draw a Supply Chain Directions: • Select a specific product • List the raw materials (main ingredients) used to produce the product • Draw the supply chain for the product – labeling all 6 components

27. Functional Areas of Supply Chain

28. Functional Areas Defined Purchasing: activity of acquiring goods or services to accomplish the goals of an organization Manufacturing: production of merchandise for use or sale using labor and machines, tools, chemical and biological processing, or formulation Inventory Management: Activities employed in maintaining the optimum number or amount of each inventory item Demand Planning: process of forecasting customer demand to drive execution of such demand by corporate supply chain and business management Warehousing: Performance of administrative and physical functions associated with storage of goods and materials Transportation: movement of people, animals and goods from one location to another – costliest activity Customer Service: process of ensuring customer satisfaction with a product or service

29. Reading: Uncle Bill, Inc. Directions: Take turns reading this story aloud with your partner. As you read through the story, think about how Uncle Bill’s growing business relates to the supply chain. Questions: • What were the businesses that Uncle Bill started? • How did Uncle Bill engage with the supply chain as an entrepreneur? • Draw the supply chain for Uncle Bill’s businesses.

30. Supply Chain Operations Reference (SCOR) Model The SCOR model is a framework, developed and supported by the Supply Chain Council, that seeks to provide standard descriptions of the processes, relationships, and metrics that define supply chain management. • Plan - seeks to balance demand requirements against resources and communicate these plans to the various participants • Source - includes identifying, developing, and contracting with suppliers and scheduling the delivery of incoming goods and services • Make - covers the actual production of a good or service • Deliver - includes everything from entering customer orders and determining delivery dates to storing and moving goods to their final destination – COSTLIEST PART OF LOGISTIC • Return – includes activities necessary to return and process defective or excess products or materials. COMPLETE ACTIVITY: SCOR MODEL MATCHING

31. Block Chain Block chain, a digital ledger, offers transparency as every transaction is recorded on a block and across multiple copies of the ledger that are distributed over many nodes. • Examples of Block Chain: • Walmart uses blockchain to keep track of its pork it sources from China and the blockchain records where each piece of meat came from, processed, stored and its sell-by-date • Diamond-giant De Beers uses blockchain technology to track stones from the point they are mined right up to the point when they are sold to consumers. This ensures the company avoids ‘conflict’ or ‘blood diamonds’ and assures the consumers that they are buying the genuine article.

32. Value-Added Services • Better ways to deliver customer service and retention Ex. Amazon Prime - Same day or 1-day shipping

33. Reading: Uber Technologies, Inc. Directions: Read the article and answer the questions at the end of the article. Assignment is worth 40 points.

34. Global Supply Chain Reasons Domestic Businesses Change to an International Operation: • Improve the supply chain • Reduce costs and exchange rate risk • Improve operations • Understand markets • Improve products • Attract and retain global talent The supply chain can often be improved by locating facilities in countries where unique resources are available. These resources may be human resource expertise, low-cost labor, or raw material. For example, auto-styling studios from throughout the world have migrated to the auto mecca of southern California to ensure the necessary expertise in contemporary auto design. Similarly, world athletic shoe production has migrated from South Korea to Guangzhou, China; this location takes advantage of the low-cost labor and production competence in a city where 40,000 people work making athletic shoes for the world. And a perfume manufacturer wants a presence in Grasse, France, where much of the world’s perfume essences are prepared from the flowers of the Mediterranean.

35. Theory of Comparative Advantage Comparative Advantage: A theory which states that countries benefit from specializing in (and exporting) goods and services in which they have relative advantage, and they benefit from importing goods and services in which they have a relative disadvantage Examples: Soybeans, corn, industrial machines Question: What are some other products that the U.S. has a comparative advantage in? Question: How can supply chain management add to a product’s comparative advantage?

36. U.S. Cartoon Production Fred Flintstone is not from Bedrock. He is actually from Manila, capital of the Philippines. So are Tom and Jerry, Aladdin, and Donald Duck. More than 90% of American television cartoons are produced in Asia and India, with the Philippines leading the way. With their natural advantage of English as an official language and a strong familiarity with U.S. culture, animation companies in Manila now employ more than 1,700 people. Filipinos understand Western culture, and “you need to have a group of artists that can understand the humor that goes with it,” says Bill Dennis, a Hanna-Barbera executive. Major studios like Disney, Marvel, Warner Brothers, and Hanna-Barbera send storyboards—cartoon action outlines—and voice tracks to the Philippines. Artists draw, paint, and film about 20,000 sketches for a 30-minute episode. The cost of $130,000 to produce an episode in the Philippines compares with $160,000 in Korea and $500,000 in the U.S. Sources: Animation Insider (March 30, 2011); The New York Times (February 26, 2004); and The Wall Street Journal (August 9, 2005).

37. Slicing an Apple Essential Question: Who makes the Apple I-Phone? The iPhone, while designed by Apple in California, is not “made in the USA.”  Instead, the iPhone’s production exemplifies the complexity of a globally fragmented supply chain.  The iPhone’s components, including the flash memory, the DRAM, and the applications processor, are sourced from various suppliers like Samsung of Korea and AKM Semiconductor of Japan, and the phone itself is assembled by a Taiwanese firm called Foxconn in a plant in Shenzhen, China, before it is exported from China to the rest of the world Anyone who understands the iPhone supply chain, however, can tell you that China has a comparative advantage in the assembly of iPhones.  Just because a country is the final exporter of a good does not mean that it is responsible for the majority of that good’s production.  Global supply chains change our understanding of comparative advantage because we can no longer look at official gross export statistics to see who produces goods for whom.  Because of the global fragmentation of supply chains, we must isolate how much value-added a nation contributes to the production of a good in order to illuminate the true comparative advantage of nations. Source: Slicing an Apple, The Economist

38. Case Study: Darden’s Global Supply Chain Background Darden Restaurants, Inc., is one of the largest publicly traded casual dining restaurant companies in the world with $6.3 billion in annual sales. It serves over 320 million meals annually from more than 1,500 restaurants in North America. Its’ well-known flagship brand—Olive Garden—generates sales of $3.6 billion annually. http://mediaplayer.pearsoncmg.com/_ph_bp2_cc_set.title.Darden's_Global_Supply_Chains__/bp_mylabs/akamai/2012/om/heizer/Darden_Global_Supply.m4v

39. Activity: Fresh Fruit for All If you have ever tried to start a garden, you know that each type of fruit or vegetable has a certain season. You may be able to get strawberries from your own yard all summer long, but once winter sets in those strawberries will not grow. Historically, the fruits and vegetables in the local stores were limited to what was in season nearby. In the global market place we can get fruits and vegetables year-round as many foods are imported from the southern hemisphere, where summer has just begun when our winter sets in. https://www.youtube.com/watch?v=_l7sak6Vlq8

40. Activity: Our Food’s Journey Food often travels thousands of miles from where it is produced to where it is sold and eaten. • Why is food transported long distances? • What are the pros and cons of local, regional, national, and global food distribution systems? • Which scale of distribution has the greatest net benefit for your community? For society?

41. Supply Chain Risks and Disruptions • Supplier Failure to Deliver • Supplier Quality Failures • Logistic Delays or Damages • Political • Natural Catastrophes • Theft, Vandalism, and Terrorism Discussion – Work with a Partner Choose 3 of the risks above and determine how a company can mitigate those risks.

42. Ethics in Supply Chain Personal Ethics Institute for Supply Management has developed the following principles and standards to be used as guidelines for ethical behavior: • Promote and uphold responsibilities to one’s employer; positive supplier and customer relationships; sustainability and social responsibility; protection of confidential and proprietary information; applicable laws, regulations, and trade agreements; and development of professional competence. • Avoid perceived impropriety; conflicts of interest; behaviors that negatively influence supply chain decisions; and improper reciprocal agreements. • Ethics Within the Supply Chain • Firms must establish ethical standards for their suppliers • Ex. California Transparency in Supply Chain Act - to ensure that large retailers and manufacturers provide consumers with information regarding their efforts to eradicate slavery and human trafficking from their supply chains, educate consumers on how to purchase goods produced by companies that responsibly manage their supply chains, and, thereby, improve the lives of victims of slavery and human trafficking. Ethical Behavior Regarding the Environment Good ethics extends to doing business in a way that supports conservation and renewal of resources. This requires evaluation of the entire environmental impact, from raw material, to manufacture, through use and final disposal.

43. Activity: Ethical Dilemma

44. The Hershey Company

47. How Do They Do It? https://www.youtube.com/watch?v=uZAxZgdp_hs

48. Hershey’s Memphis Our manufacturing plant here produces Hershey’s gum, mints and licorice and is home of the Ice Breakers brand. 

49. PROJECT: Mapping the Supply Chain of a Hershey Chocolate Bar Objective(s): Students will analyze elements in a supply chain and map the global, national and local supply chains which exist to create a bar of Hershey Chocolate with Almonds. TN State Standard(s): Supply Chain Functions #4 Aspects of Industry: Management

50. Hershey Supply Chain