Sustainable Supply Chain Management Lecturers Radim Lenort David

Sustainable Supply Chain Management Lecturers: Radim Lenort, David Holman, David Staš Summer School 2015 ŠKODA AUTO University Mladá Boleslav Czech Republic 1

Lecture Content Logistics management Supply chain management New trends in supply chain management Sustainable supply chain management 2

Logistics Management In order to understand logistics management, we can use the following minitest: How long does it take (according to the European average) to deliver all materials required for production of a fluorescent lamp from suppliers to the manufacturer, production of semi-products, assembly of the lamp, its packing, delivery to distribution network, sale, unpacking and fitting into a ceiling? a) 50 min b) 22 h c) 5 months and 29 days d) 6 months 3

Logistics Management Definition of the Council of Supply Chain Management Professionals: Logistics management is the process of planning, implementing, and controlling the efficient, effective flow and storage of goods (materials, semi-products, finished products), services, and related information from point of origin to point of consumption for the purpose of satisfying customer requirements. Popular definition “ 7 -Rs”: Logistics deals with the delivery: of the right product in the right quantity at the right time in the right quality at the right place for the right customer at the right cost 4

Logistics Management Basic principles of logistics management make reaching of logistics goals possible: Use of a systems approach: Logistics chain should be optimised as a whole, through integration and coordination its parts; It rejects optimisation of individual parts because optimal decisions obtained in that way are inconsistent. Use of a whole cost concept: Costs arising in logistics chain should be observed as a whole; In the opposite case, decrease of costs in one area can lead to their much greater increase in another area. 5

Supply Chain Management Material Warehouse Semi Products Warehouse Materials from Suppliers Products to Customers Semi Products Manufacturing Material Handling Products Manufacturing Production Planning and Control Integrated Logistics Management 6 Physical Distribution

Supply Chain Management Producer Material Warehouse Semi Products Warehouse Materials from Suppliers Products to Customers Semi Products Manufacturing 7 Products Manufacturing

Supply Chain Management Suppliers Producers Wholesalers Retailers Customers Supply Chain Management Definition of the Council of Supply Chain Management Professionals: Supply chain management encompasses the logistics management activities and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers and customers. 8

New Trends in Supply Chain Management The recent leading trend is lean supply chain management: The main idea of leanness is an elimination of all supply chain activities, which don't bring a value to products = they represent waste: Expensive inventory Unnecessary capacities Duplicate supply chain links Main goal is to achieve highly efficient supply chain = to minimise costs 9

New Trends in Supply Chain Management To achieve leanness a relative business environment stability is necessary Unfortunately, the recent environment is unpredictable and changeable Many crisis situations appear more and more frequently: Tsunami, Japan, March 2011, Toyota Motor company Suppliers and productions shutdown over the world 52% decline of the operational profit in the fourth quarter = about 350 millions EUR 10

New Trends in Supply Chain Management Two new trends appear as a response to this situation: Agile supply chain management – an ability of a supply chain to respond to major and unpredictable changes in the business environment very quickly Resilient supply chain management – an ability of a supply chain to turn back to original performance after a serious disruption 11

New Trends in Supply Chain Management The next recent and very important trends: Green supply chain management – an ability of a supply chain to minimise negative impact of logistics activities on environment Sustainable supply chain management – an integration of the aforementioned approaches 12

Sustainable Supply Chain Management It is an ability of a supply chain to balance its economic, environmental and social performance Good? Environmental Performance Social Performance Sustainability Better Best Economic Performance 13 Better

Sustainable Supply Chain Management Volkswagen sustainability strategy: Strategic goal: By 2018, we aim to be the world’s most successful, fascinating and sustainable automotive manufacturer Key action areas: Economy, People, Environment 14

Sustainable Supply Chain Management Strategic goals of the key action areas by 2018: Economy: Leader in customer satisfaction Group return on sales before tax lower than 8% Annual sales of more then 10 million vehicles People: Top employer in the automotive sector Environment: Reduce energy and water consumption, waste and emissions per unit produced across the Group by 25% 15

Thanks for your attention 16