Glocalisation. When Local or Global and The Green Agenda
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Glocalization refers to the ability to think globally while acting locally, impacting individuals and organizations in the context of globalization. The document discusses various phases of globalization, including the shift from multinational companies to individual agents driving global integration, and emphasizes the importance of sustainable sourcing and the carbon footprint in supply chains. It highlights initiatives by corporations like Wal-Mart to pursue greener supply chains and reduce environmental impact through collaboration with suppliers.
Glocalisation. When Local or Global and The Green Agenda
- 2. Glocalisation • Glocalisation (or glocalization) is a portmanteau word of globalization and localization. By definition, the term “glocal” refers to the individual, group, division, unit, organisation, and community which is willing and able to “think globally and act locally.” The term has been used to show the human capacity to bridge scales (local and global) and to help overcome meso-scale, bounded, "little-box" thinking. 'Glocals' is a term often used to describe a new social class: expat managers who travel often and switch homes often, and are therefore both global and local.
- 3. Background THE WORLD IS SUSTAINABILITY FLAT Enabler 3
- 4. The World is Flat 3.0 In the book, Friedman recounts a journey to THE WORLD IS SUSTAINABILITY Bangalore, India, when he realized globalization has changed FLAT core economic concepts. He suggests the world is "flat" in the sense that globalization has leveled the competitive playing fields between industrial and emerging market countries. Globalization 1.0, which ran from 1492 until 1800 and was driven by countries … Globalization 2.0, in which "the key agent of change, the dynamic force driving global integration, was multinational companies" driven to look abroad for markets and labor, spurred by industrial-age "breakthroughs in hardware" such as steamships, trains, phones and computers. That epoch ended around 2000, replaced by one in which individuals are the main agents doing the globalizing, pushed by "not horsepower, and not hardware, but software" and a "global fiber-optic network that has made us all next-door neighbors." Globalization 3.0 4
- 5. Driving Value with Global Sourcing Global sourcing is unavoidable in today's flat world, but it's a highly complex undertaking. THE WORLD IS SUSTAINABILITY FLAT Strategic sourcing demands that companies align what the customer wants, what's best for the business, and what's needed to get the supply. And they need to do this while dealing with the inherent intricacy of navigating global suppliers, inventory, cultural differences, currency, time zones, connectivity, language, and supply chain requirements. Many companies with successful global sourcing objectives have not only lowered their overall supply costs, but also pioneered innovative supply partnerships enabling value-driven transformation 5
- 6. Global Sourcing • Many companies have either made or are in the process of making the transition from a: • Build and Sell: Global local Business • Sell-Anywhere, Model • Build-Anywhere • Source- Anywhere Local • The transition includes both new global sources of supply and new global sources of demand. 6
- 7. Reaping the Benefits • Outsourcing has allowed companies to split service and manufacturing activities into components which can be subcontracted and performed Outsourcing in the most efficient, cost-effective way. • The internal relocation of a company's manufacturing or other processes to Offshoring & a foreign land in order to take advantage of less costly operations there. China's entrance in the WTO allowed for greater competition in the playing BCS/LCC field. More entrants: Malaysia, Thailand, Vietnam, Brazil, etc • Companies using technology to streamline item Supply- sales, distribution, and shipping. chaining • UPS as a prime example for insourcing, in which the company's employees perform services--beyond shipping--for another company. Insourcing For example, UPS repairs Toshiba computers on behalf of Toshiba. The work is done at the UPS hub, by UPS employees. 7
- 8. The Transition Phase to Green Political Review April 22 2009. The world’s first “carbon budget” formed the centerpiece of the government’s much-vaunted “green jobs” strategy, as Alistair Darling committed the UK to the most ambitious climate change prevention targets of any developed country. Under the carbon budget, the UK will have to cut greenhouse gas emissions by 34 per cent by 2020, compared with 1990 levels. This legally-binding target goes well beyond the European Union’s pledge to cut emissions by 20 per cent and the US commitment to return to 1990 levels by 2020. Financial Times March 6, 2009. French President Nicolas Sarkozy proposes one of the most aggressive environmental policies ever. This includes reduction of energy consumption, creation of dedicated rail corridors for freight and passengers, and especially the possible taxation of excess carbon consumption. The European Union has already determined a Greenhouse Gas Protocol based on the UK model. Use of that protocol to measure consumption of fuels yields a carbon consumption factor. Look for carbon credits to be part of the barter for transport services and to influence supply chains in very unexpected ways. One such way might be the investment in wind energy by a shipping company. DHL already buys wind energy in the UK. Its efficient and can lead to other possible models like creation of hydrogen for use in trucks by using wind generated energy to crack hydrogen atoms off of pure water. Carbon Trading system to be introduced in Australia next July 2010. “A common mistake business owners make is to think that if they aren’t one of the 1,000 biggest emitters, the CPRS won’t affect them" "If you have a customer that is included in the CPRS you will be directly affected. The carbon emissions generated by your product or service form part of the supply chain, and therefore you’ll be expected to account for them." Carbon Reduction & Trading Expo and Conference FT May 8. 2009. Markit launches carbon indices. A new range of carbon indices should speed the development of financial markets for the environmental sector. Index provider Markit has joined forces with BlueNext, the Paris-based environmental exchange, to launch a family of indices covering European and global carbon markets. “It’s quite clear that politically it’s top of the agenda,” said Niall Cameron, who looks after commodities and indices at Markit. “There’s a lot of money in subsidies going into these products.” Although he ultimately envisages a broad range of products, the initial offering consists of just two spot price indices, covering European Allowance Units and Certified Emissions Reductions. Once these are off the ground, Markit and Blue Next will consult with a governance panel drawn from the industry to work out what exactly will be most useful. “You have to take account of the types of index the clients want,” said Mr Cameron. Markit expects the indices to be used as a basis for products such as exchange traded funds. 8
- 9. Triggering Factors? THE WORLD IS SUSTAINABILITY FLAT Trade Balance US-China (USD) 300,000,000 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 0 2001 2002 2003 2004 2005 2006 2007 2008 THE MOST IMPACTING VARIABLES? 9
- 10. Carbon Footprint THE WORLD IS SUSTAINABILITY A carbon footprint is a "measure FLAT of the impact human activities have on the environment in terms of the amount of green house gases produced, measured in units of carbon dioxide" It is meant to be useful for individuals and organizations to conceptualize their personal (or organizational) impact in contributing to global warming. 10
- 11. The Transition Phase to Green Business Review THE WORLD IS Wal-Mart to seek greener supply chain FLAT SUSTAINABILITY By Jonathan Birchall. Published: October 22 2008. Financial Times In the Darwinian struggle for global manufacturing orders, the "Wal-Mart price" has generally been short-hand for shaving production costs to the bare minimum. But today in Beijing, Lee Scott, Wal-Mart's chief executive, will tell hundreds of the company's top Chinese suppliers that the retailer intends to use its market power to get more than just low prices - at a "sustainability summit" devoted to raising standards in its vast supply chain. Attending the gathering will be AG Lafley, chief executive of Procter & Gamble, Fred Smith, head of FedEx, and Yuanqing Yang, chairman of Lenovo, who are keen to adopt a similar approach. Executives from Kimberly-Clark, Coca-Cola and Newell Rubbermaid will also be on hand for the most ambitious private sector drive yet to reduce waste and pollution in China's export-focused manufacturing industries. Mr Scott will set out a range of objectives for the company's supply chain and for its Chinese retail operations, which will include targets for the reduction of water and energy usage, reductions in packaging, and commitments to develop more sustainable products. "Our environmental footprint is primarily through our supply chain as a company," says Matt Kistler, head of Wal-Mart's global sustainability efforts. "So we have the ability to really build a world-class, better quality, better value supply chain." In the US alone, Wal-Mart is estimated to sell about $30bn of goods annually that are made by about 30,000 factories in China, or about 10 per cent of all US imports. In categories such as clothing, footwear and toys - worth $64bn last year - Wal-Mart's share is far higher. The retailer will also be promoting a new "Green Supply Chain Initiative" being led by the Environmental Defense Fund (EDF), a non-profit group that has worked with Wal-Mart on sustainability issues in the US. The project is aimed at working with individual suppliers on energy saving and other issues, and is expected to extend to other US and European retailers, covering another 20,000 factories. "We will leverage the market clout of global retailers to help create a green playing field for China's exporters," says EDF. In the US the retailer has embraced a series of environmental initiatives over the past three years, including developing solar power systems and promoting more sustainable products such as low-enegy light bulbs. This year, it introduced a packaging scorecard that evaluates the efforts of suppliers to reduce packaging waste, which is now being translated into Mandarin. 11
- 12. Wind Farms Powers Nappy Plant R.Muscetta
- 13. Requirements When a major manufacturer has to account for how much energy they use in delivering goods as well as creating them, the manufacturer THE WORLD IS SUSTAINABILITY FLAT must account for their vendors as well. Chain Reaction… RFQ's and RFP's are increasingly asking this question. Logistics companies green footprint and carbon offset position will be a very real factor in vendor selection This includes reduction of energy consumption, creation of dedicated rail corridors for freight and passengers, and especially the possible taxation of excess carbon consumption "Carbon offset strategy is the next big thing in supply chain. Major carriers and 3PL's will have dedicated engineering groups that specialize in it. Carbon credits will mean as much to logistics providers as they will to their customers. Without too much exaggeration, I think that carbon credits could become a supply chain currency.” CPOagenda.com 13
- 14. Factors in shaping your Supply Chains THE WORLD IS SUSTAINABILITY FLAT • Time to deliver This three dimensional balance for Velocity vendor selection Working Lean & Capital Green and TCO •Carbon • Cost to impact of deliver delivery 14
- 15. Some tools… THE WORLD IS SUSTAINABILITY FLAT Enabler 15
- 16. What to Source Global? THE WORLD IS SUSTAINABILITY FLAT Glocalisation in Practice? R.Muscetta 16
- 17. All we know already… Internationalisation of Business THE WORLD IS SUSTAINABILITY FLAT Global Increased Sourcing Competitiveness Strategic Sourcing 17
- 18. Different Map of Transforming World? THE WORLD IS SUSTAINABILITY FLAT 18
- 19. Buying and Sourcing International Trade Block (Region) 1 X Purchased items supplied and sourced locally (50km or 60 min) 2 X JIT Purchased items supplied and sourced nationally Local National 3 X 4 Purchased items supplied and sourced from same region or trade block (EMEA or EU etc.) 4 X X 1 Purchased items supplied and sourced 2 internationally 4 3 X 3 Purchased foreign sourced items but supplied from supplier’s regional production or distributor 4 2 X Purchased foreign sourced items but supplied from supplier’s national production or distributor 4 1 X Purchased foreign sourced items but supplied from supplier’s local/JIT production or distributor or VMI/Consignment 19
- 20. How to Define the Best Approach One way to reach a systematic and structural (multidimensional) approach, while reducing the subjectivities to the maximum extent… Product Specification Quality and Process Technology Logistics and availability Criticality and Volatility Cost LCC And CO2…
- 21. Product Specification Commodity THE WORLD IS SUSTAINABILITY FLAT Universally accepted specification Standard product available from many suppliers Specification Specification defined by Supplier Supplier specification Steel Pipes modified to meet Glue Buyers requirement Production Equipment Adhesive PVC Specification Revets Auxiliary defined absolutely Kit Core by Buyer Shipping Equipment High Low Casting Safety Flange Rate of Change of Specification Vacuum Material Lightning Component Gelcoat 21
- 22. Product Technology THE WORLD IS SUSTAINABILITY High FLAT Level of Product Technology Steel Pipes Glue Production Equipment Adhesive PVC Revets Auxiliary Low Kit Core High Shipping Equipment Low Casting Safety Flange Rate of Change of Technology Vacuum Material Lightning Component Gelcoat 22
- 23. Quality and Process Technology THE WORLD IS SUSTAINABILITY Low FLAT Risk of Failure Steel Pipes Glue Production Equipment Adhesive PVC Revets Auxiliary High Kit Core Low Shipping Equipment High Casting Safety Flange Ease of Correction / Tolerance Vacuum Material Lightning Component Gelcoat 23
- 24. Availability and Volatility THE WORLD IS SUSTAINABILITY Specific Locations FLAT Only Product Availability Steel Pipes Glue Production Equipment Adhesive PVC Revets Auxiliary Widely Available Kit Core High Shipping Equipment Low Casting Safety Volatility of Demand Flange Vacuum Material Lightning Component Gelcoat 24
- 25. Criticality and Volatility THE WORLD IS SUSTAINABILITY Low FLAT Criticality Steel Pipes Glue Production Equipment Adhesive PVC Revets Auxiliary High Kit Core High Shipping Equipment Low Casting Safety Volatility of Demand Flange Vacuum Material Lightning Component Gelcoat 25
- 26. Cost THE WORLD IS SUSTAINABILITY High FLAT Intrinsic Product Cost Steel Pipes Glue Production Equipment Adhesive PVC Revets Auxiliary Low Kit Core High Shipping Equipment Low Casting Safety Cost of Delivery Flange Vacuum Material Lightning Component Gelcoat 26
- 27. Generalized Decision Matrix Source from further Source but buy locally Internationally (Distribution, VMI) Steel Pipes Glue Production Equipment Adhesive PVC Revets Auxiliary Kit Core Source Source and buy Shipping Equipment Locally from further Casting (Nationally/Regionally) Safety Flange Vacuum Material Lightning Component Gelcoat 27
- 28. i.e: LCC Decision Matrix 2nd Priorities High 1st Priorities Manufacturing Complexity • Technology • High skilled labor • Capital intensive Steel Pipes Glue Production Equipment Adhesive PVC Revets Low Auxiliary Kit Core Shipping Equipment Non‐Critical Critical Casting Safety Importance Flange • Quality highly sensitive Vacuum Material Lightning Component • Lead‐time on critical path Gelcoat • Highly customized 28
- 29. Carbon Footprint THE WORLD IS SUSTAINABILITY High FLAT Volumetric Weight cbm/kg Steel Pipes Glue Production Equipment Adhesive PVC Revets Auxiliary Low Kit Core Low Shipping Equipment High Casting Safety Carbon Footprint kg/1000 km Flange Vacuum Material Lightning Component Gelcoat 29
- 30. Sustainable Sourcing Source from further Source but buy locally Internationally (Distribution, VMI) Carbon Footprint Steel Pipes Glue Production Equipment Adhesive PVC Revets Auxiliary Kit Core Source Shipping Equipment Source and buy Locally Casting from further Safety (Nationally/Regionally) Flange Vacuum Material Lightning Component Gelcoat 30
- 31. Carbon Footprint Mitigation Map your value and supply chain. Prioritize the value and SC chains that you wish to “attack” first. A risk reduction/mitigation plan is created for each of these value chains based on the red footprint. Some common strategies include: Joint Operational Excellence & Strategic activities with suppliers.. Glocal? Material substitution Energy source substitution Logistics optimization A mid to long term continuous improvement plan is then set in place with footprint reduction targets built into procurement scorecards. Suppliers are provided footprint reduction targets as well.
- 32. Conclusion There are political and economical intentions to move to a THE WORLD IS more sustainable system. FLAT SUSTAINABILITY It is crucial to look at the footprint of your entire value chain. Glocal approach will be “a step” for a faster integration of a green SCM. Supply Chain and Strategic Sourcing Managers should expect impacts on the way the selection, development and management of suppliers and supplier’s suppliers is done. Capable green suppliers will be as sought after as capable diverse suppliers Early movers will lock up available capacity “The preparation and anticipation will set the stage for the winners”… use of analytical tools for decision making process… 32
- 33. Thanks… Q&A?