Supply Chain RiskAnd What About Ethics?

Lee Buddress, Ph.D., C.P.M.

Robert G. Gleason Professor and Director

Supply and Logistics Program

Portland State University

Supply Chain RiskEvents or actions that result in a

transaction or project differing from budget or plan

Events or actions that prevent delivery to customers as promised

Order Winning Characteristics Design Lead Time Cost Quality/Durability Service

What Risks Most Impact Ability to Serve Customers Profitability

Supply Management Objectives

Continuity of SupplyLeast Total Cost of OwnershipCreate Competitive AdvantageSustainable

What Risks Interfere With These Objectives

Supply Chain RisksBig, Expensive Risks with Low

ProbabilityMedium Risks with Medium ProbabilitySmaller Risks with High Probability

External Risks

Supply Chain Risk Classification

External Risks Governmental Infrastructure Supplier Logistical Price Terrorism Natural Disasters Accidents

External Risks: GovernmentalExport Policies Intellectual Property ProtectionProtective Tariffs and DutiesRegulatory ChangesTaxesCurrency FluctuationsPolitical Unrest

External Risks: InfrastructureRoadsRailroadsPorts

River Sea

AirportsCongestionDomestic Infrastructure

External Risks: Suppliers Operational

Equipment Facilities

Management Financial Cultural/Language Labor Scalability

Quality Lead Times Monopoly/Oligopoly Technology

Communication Operational

Sustainability Social Responsibility

External Risks: LogisticsSupplier SelectionTransportation EquipmentOn TimeFreight DamageLeakage/Shrinkage

External Risks: PriceTrendsVolatility

External RisksTerrorism

Physical Harm Personnel Cyber Attacks/Hacking

Natural Disasters Earthquakes, Tsunamis Weather Related

Lightening Strikes

Accidents

Key External RisksLabor IssuesQualityTimingSupplier Selection Process

Total Cost Analysis

Things to WatchEast & Gulf Coast Longshore ContractWest Coast Longshore Grain ContractOngoing Row Over Refer Plug-ins

Port Subsidizes Shipping Firms Carriers Add $150 per Container

UPS/Teamsters Contract NegotiationsNew Panama Canal EU/ Airline Row Over Carbon EmissionsCarrier Capacity Constraints

Internal Risks

Supply Chain Risk Classification

Internal Risks Policies Resources Operational

Internal Risks: Policies Outsourcing Low Bid Freight Terms Managing

Reverse Logistics Excess Inventory Repairs Sustainability/Social

Responsibility

No Standardization Equipment Procedures

No Formal Strategies Not Having Policies

Internal Risks: ResourcesLaborFinancesEquipmentTechnology

Automation Communication Enterprise

Internal Risks: OperationalPersonnel

Numbers, ExpertiseDemand Management

Customer Supplier

ForecastingProject ManagementSpecifications

Order Winning Characteristics Design Lead Time Cost Quality/Durability Service

What Risks Most Impact Ability to Serve Customers Profitability

Risk Prevention/Remediation Safety Stock Safety Lead Time Additional Suppliers Geographic

Dispersion Ts and Cs Business Continuity

Ours Suppliers Training

ISO 31000 2009 Supply Chain

Mapping Forecasting Project

Management Review Supplier

Selection Process Supplier Visits Daily Diligence

Key Risk Management ActivityHow Suppliers Are ChosenSupplier VisitsSupplier MappingForecastingDaily Diligence

Risk and Ethics

EthicsMore than Gifts and Gratuities

Cialdini’s Influence Appearances

Unethical Sales Practices Commercial Bribery False Shortages False Price Breaks Market Allocation False Delivery Promises Quotation vs. Invoice False Representation Counterfeit Back Door Selling

Unethical Purchasing Practices

Shopping Bids Shopping Ideas Samples Favoritism Payment Terms Contract Quantities Conflict of InterestInternational Ethics Issues

Cultural Issues Reciprocity

Foreign Corrupt Practices Act Illegal to Make Payments Influencing

Purchase DecisionsExempts “Processing Payments”Accounting Requirements

Applies to ALL Publicly Traded Companies

Risk and EthicsRisks to the Organization

Customer Loss Reputation

Personal Risks Job Reputation Personal Liability

Columbia River Bar

http://www.youtube.com/embed/ByGSMmenPDM?rel=0

Questions, Comments, Observations, Conclusions,

Arguments?