1. How the green agenda will influence your supply chains. 2. A proposed systematic way to decide when to source Global or Local considering the carbon foot print of your supply chains.

1. Glocalisation
Raffaele Muscetta

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
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Enabler
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4. The World is Flat 3.0
In the book, Friedman recounts a journey to THE WORLD IS
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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
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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
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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
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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.
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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.
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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?
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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?
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10. Carbon Footprint
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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.
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11. The Transition Phase to Green
Business Review
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Wal-Mart to seek greener supply chain FLAT
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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.
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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
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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
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14. Factors in shaping your Supply Chains
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• Time to
deliver
This three
dimensional
balance for Velocity
vendor
selection
Working
Lean & Capital
Green and TCO
•Carbon • Cost to
impact of deliver
delivery
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15. Some tools…
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Enabler
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16. What to Source Global?
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Glocalisation
in Practice?
R.Muscetta
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17. All we know already…
Internationalisation
of Business
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Global Increased
Sourcing Competitiveness
Strategic
Sourcing
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18. Different Map of Transforming World?
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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
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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
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22. Product Technology
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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
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23. Quality and Process Technology
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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
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24. Availability and Volatility
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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
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25. Criticality and Volatility
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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
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26. Cost
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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
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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
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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
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29. Carbon Footprint
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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
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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
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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
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more sustainable system. FLAT
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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…
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33. Thanks… Q&A?