The Executive Master in Global Supply Chains Shanghai residential period took place over the last two weeks. The two-week program included the teaching of three courses, three visits to companies, conferences from local experts, and several cultural and leisure activities. All in all it has been a mind-boggling experience, and I will be writing several posts about it.

For most of us the top ranked activity was the visit to the Lingang New City (www.shlingang.com) and the Yangshang International Deepwater Harbor.

In Lingang we were received by Amanda Bai, who is Senior Marketing Manager. She explained the project in detail. Briefly, the Lingang New City is a spectacular development with a total surface area of 296km2. This includes Harbor New City and the Lingang Industrial Zone, where industrial parks, logistics parks, universities, residential areas, and ecological environments are all seamlessly integrated to ensure a real new city for the future. The implementation of this project will span 18 years, having started in 2002 and being due to finish in 2020. The long-term planning approach of China brought us a fascinating insight into the Chinese way of achieving a more competitive country.

Lingang New City is adjacent to Yangshan International Deepwater Port. A bridge of 32 km connects the port to Lingang. We had the opportunity to go across the bridge to the port, an opportunity that is open only to a lucky few. This visit was possible thanks to the MAERSK�??s logistic company in Lingang logistic park: Ocean Blue International Logistics Co. Thomas Knudsen. One of our students and managing director of MAERSK for France helped us organize the visit.

In the offices of Ocean Blue International Logistics, Martin Home gave us an excellent presentation on the logistics challenges in China and the company�??s experience. Martin is Warehousing and Distribution Director for the Greater China Area. He also took us on a fantastic tour of the company�??s warehouses.

Above are some photos of our Chinese experience.

Today, twenty five experts from Europe, China, Japan and the United States met at IE Business School for the 10th Supply Chain Thought Leaders Round Table. The academics came to Madrid to discuss how Supply Chain Management impacts our global economy. Over the course of the two day summit it emerged that it is no longer enough for supply chains to be efficient and responsive and to help create a competitive edge for companies, they must also be socially and environmentally responsible.

Angel Diaz and Luis Solis of IE Business School will present the logistics challenges in Latin America. Charles Corbett of the University ofCalifornia and Patrick Crawford of the Carbon Disclosure Project will discuss current trends and opened questions on how to calculate and interpret carbon footprint information. Prashant Yadav of ZLC and Luk Wassenhove of INSEAD will explain how to create sustainable health supply chains in developing countries.

According to Hau Lee of Stanford University: �??Over the last ten years we have seen a shift in focus of supply chain management. While initially it was about improving on time, cost and quality, we now see strong interest in responsible supply chain management.�?�

We are currently seeing diesel prices soar over and above what is acceptable for society and supply chains. Society is reacting faster than I personally expected (see, for example, �??Readers back planned fuel protests�?� at http://news.sky.com/skynews/article/0,,30400-1316728,00.html). Protests are quickly spreading throughout Europe - here in Spain a truck strike has been announced for June 8^th, 2008. The situation demands the re-analysis and re-design of supply chain strategies for a number of companies. A friend of mine, SC manager of a multinational company, told me that almost all companies are very concerned about the impact this energy crisis could have on SC strategies.

Many are talking about how some mature practices, such as Just-in-time, could now be considered inefficient practices for the new business environment. The practice of more frequent shipments to meet customers�?? demands (which implies trucks are not full) is now seen as non-viable. Keeping more inventories seems to be cheaper than transportation costs and less risky (see, for example, �??Diesel weasels its way into costs, supply-chain strategy�?�, http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080414/REG/233262334). The same is happening for offshoring strategies. Global transportation costs have tripled since 2000 and according to some experts may double again if the cost of a barrel reaches $200. This trend may give rise to the reverse of offshoring strategies. The cheap labor in Asia is now more expensive if you take into account the transportation costs. Western jobs could eventually be coming home in the close future(see, for example, �??Spike in energy costs might reverse offshoring trend�?�: http://www.canada.com/montrealgazette/news/business/story.html?id=ab6ed85f-9059-442d-81fa-f8a9044060db).

The search for new practices that help to control costs is a challenge. Initially, the immediate answer has been to pass on part of these costs to customers. For example, Dow Chemical announced last May 29^th the decision to raise its prices by up to 20%. Iberia and Continental airlines did the same a few days ago. They also said that downsizing is imperative for airlines over the next months because airlines are closing some routes. (Continental is to cut 3,000 jobs and ground 67 airplanes according to CNN). This is a vicious cycle: high costs-high prices-fewer clients-losses-closing routes-downsizing.

Hard times lie ahead for society and supply chains. New ideas and practices must be found.

IE business School to prepare a practical case on Iberia as a study in corporate success

Madrid. May 12, 2008. IE Business School and Iberia have signed an agreement to prepare a case study on the Iberia group for inclusion in IE management programs as a study of a company that has managed to forecast and adapt to major changes in its sector.

The airline industry recognizes the successful way in which Iberia managed its transformation from a company in a protected, public sector and monopolistic environment to a firm operating in a private, liberalized and fiercely competitive market. Moreover, said transformation took place in one of the most difficult periods in the sector�??s history. Thanks to its flexibility and ability to forecast trends, Iberia was the only network company that managed to overcome obstacles and make a profit over the last twelve years.

The Iberia case study is the first to be written about the company in Spain. It takes a multidisciplinary approach, and although it will centre on Iberia�??s corporate strategy, it will also cover areas like sales policy, maintenance, human resources, operations or CSR.

In addition to the preparation of the case study, the agreement also includes the joint development of training, research and knowledge dissemination programs. Fernando Conte, President of Iberia, and Diego del Alcázar, president of IE, both participated in the event that marked the signing of the agreement.

The agreement is in line with IE Business School�??s commitment to senior management programs, and is also set to involve joint studies and training programs that serve the strategic interests of both parties. Planned joint activities also include forums, seminars and conferences designed to foster R&D in IE�??s research Centers and its Executive Education Unit.

The project is the result of an interest shared by both organizations in promoting activities in the field of management training and development. �??The fact that a prestigious institution like IE is to write a business case study on Iberia is a sure sign that a whole team of people have done a good job, and it is a big incentive to strive to remain among leading companies in the sector�?� says Fernando Conte.

Diego Alcazar, President of IE also sees the agreement as highly positive. �??This particular collaboration agreement with Iberia will serve to strengthen the leading position of both institutions, and it opens a new phase of relation that will increase the synergies that already exist between our organizations in the global context in which they operate�?�.

A group of my students who are doing the SCM course as part of the Master in Digital Businesses carried out an interesting analysis of the best environment-oriented practices that Dell has introduced into its SC processes.

The slides are attached in the following link: Environmental issues in SCM

Apparently Dell has been applying these best practices on five specific processes: a) product design, b) waste management, c) manufacturing and operations, d) transportation, and e) facilities. For example, with respect to waste management, the company has been continuously working to reduce the waste and packaging generated by its SC. In order to do this the company managers are always thinking of fewer components, less volume, fewer shipments, less fuel consumption, and fewer emissions.  Dell also implemented the R3 initiative: Reduce, Reuse, and Recycle. For example, to reduce environmental impact of transportation, the company focuses on locating manufacturing facilities as close as possible to its customers.

The students also talked about five specific environment-oriented programs implemented by Dell throughout its SC: a) SCM and compliance process, b) global citizen program, c) business process improvement, d) greenhouse gas emissions, e) social and environmental responsibility.  

Below you can read some of the social and environmental principles applied by Dell:

I recommend you take a look at this interesting and descriptive presentation. 

My thanks to Carlos, Itzel, Carla, Tyler, and Luis. Oswaldo 

My colleague Ehsan Ehsani (Accenture) and I wrote an article for the May issue of the professional journal Supply Chain Management Review (www.scmr.com). We argue that companies need a governance system whereby all stakeholders in the supply chain, including the Board, customers, suppliers and related areas such as finance and IT departments, can contribute to the IT decision-making process. Such a system could effectively address the three most common problems related to IT decision-making process in the field of Supply Chains: a) lack of communication among the stakeholders, b) low involvement of customers, partners, and suppliers, and c) lack of strategic role of IT in supply chains.

Our research shows that such a system should have the following objectives: a) assure alignment of SC applications and the SC strategy, b) assure the generation of value as a result of investment in IT, and c) mitigate risks related to IT investments.  

You can find this article at: www.scmr.com

Last week we held a two-day executive seminar about Business Process Management (BPM). It was attended by 21 people who discussed the latest trends in BPM. One of the most interesting issues that emerged was that of process governance. In other words, how should the company organize itself in order to monitor a process-based model? Given that a process crosses different business units, departments or areas, who should be responsible for the process? Several answers emerged.

First, we argued that the role of process owner is one of the most widely used options. The process owner is a role and as such is responsible for the design, monitoring, and analysis of his/her process. This means, however, that he/she is not responsible for the execution of the set of activities performed in the process. Someone else is responsible for each of the activities, as always, and the role of the process owner is to manage the overall process and to align the objectives of all activities in order to meet customer needs. He/she is also in charge of monitoring the process performance and activities, and, when required, teamwork for performance analysis and (re)design of the process. As a process manager he/she should be in permanent contact with the final customer requirements.

Second, we showed some examples of processes that have been transformed into a business area and as a consequence the process owner is also in charge of the execution of the process. In this case, the process owner is responsible for the people performing each activity that comprises the process. One example of this is the well-known process called purchase-to-pay (p2p), which includes the end-to-end cycle of activities from the issue of a purchase order to payment of the purchase to the provider. Finally, we recognized that process governance is a new area of knowledge in the field of management and as a consequence we all are creating new paradigms behind this approach.

Your feedback and experience on this topic are very welcome.