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Government Regulations and Supply Chains

Government Regulations and Supply Chains. SCTL Meeting, Los Angeles Discussants Jan Fransoo, Ananth Iyer, Hirofumi Matsuo. Outline of the session. Summary - focus on rules/regulations by authorities and impact on supply chains

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Government Regulations and Supply Chains

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  1. Government Regulations and Supply Chains SCTL Meeting, Los Angeles Discussants Jan Fransoo, Ananth Iyer, Hirofumi Matsuo

  2. Outline of the session • Summary - focus on rules/regulations by authorities and impact on supply chains • Five minute presentations of the US, Japan and European perspectives • 30 minute breakout into three groups (assigned) with each presenter taking notes – assigned topics • Summary of group discussions • Wrap up

  3. Governments as consumers • In fiscal year 2011, $537 billion in federal procurement spending (http://gao.gov/products/GAO-13-408T), other sites suggest $900 billion state level purchases for a total of $1.5 trillion • Product specifications and services contracts impact industry • Environmental Impact – Recycled content, alternate energy, waste reduction • Access to small business, diverse supply base (metrics for MBE, WBE) • Buy American • Power by the hour contracts • Strategic Purchases for stockpiling rare earths, helium reserve (now being eliminated), oil reserves

  4. US Regulations Financial Impact • Annual cost of US regulations estimated to be $1.5 trillion http://www.sba.gov/sites/default/files/The%20Impact%20of%20Regulatory%20Costs%20on%20Small%20Firms%20(Full).pdf) • See discussion in the NY Times (http://boss.blogs.nytimes.com/2013/04/10/questions-on-a-study-of-the-cost-of-federal-regulation/?_r=0) • Some of these costs are environmental – states determine enforcement • What does it suggest ? Why doe these regulations exist ?

  5. Regulations to comply with Global commitments • Commitments to a goal – cut greenhouse gas emissions (Kyoto protocol) • Commitments to access (TPP, US-Europe Free Trade, WTO) • CAFÉ standards by 2025 (54 mpg for autos), Aviation Engine standards (Nox, Ozone impact)

  6. Regulations to protect the future • Virgin forests and 100 year forest resources (http://www1.american.edu/TED/OPTION9.HTM) • Acid rain and regulation of emissions from power plants (http://www.epa.gov/carbonpollutionstandards/) • Upgrading equipment vs maintenance for complying with standards • 100% Incoming inspection of containers to the US http://www.gao.gov/assets/590/588253.pdf • Rules to report counterfeit items (Fastener Quality Act http://www.bis.doc.gov/complianceandenforcement/fastenerqualityact.htm)

  7. Enabling change in other countries • Regulations have political reasons to enable change in other locations or enforce rules in other countries • Conflict Materials trade act to prevent warlords in Congo from getting financing (https://www.opencongress.org/bill/111-h4128/show) • Child labor in Khazakstancotton, preventing child labor use elsewhere (http://www.cottoncampaign.org/frequently-asked-questions/) • Gibson guitar wood use from Madagascar (Lacey Act http://www.npr.org/blogs/therecord/2011/08/31/140090116/why-gibson-guitar-was-raided-by-the-justice-department)

  8. Product Claims and resource use • Regulations ensure that product claims are true • FTC Green Guide ( http://www.ftc.gov/opa/2012/10/greenguides.shtm) • FDA prescription drug labeling (http://www.fda.gov/downloads/Training/ForHealthProfessionals/UCM090796.pdf) • Spectrum allocation and sharing rules (http://bits.blogs.nytimes.com/2012/05/29/how-spectrum-sharing-would-work/?_r=0) • Bans on specific material (asbestos, lead solder, CFCs) ……..

  9. General Questions • Given country level rules, manufacturers claim they need to create specific product versions by country location to comply so it increases product complexity. Should we say something about this ? • The timing window of evaluation of adherence can interact with choices regarding operations – too close a constraint enforcement can worsen intended performance (Benjafaar and Daskin). Is this something we should comment on ? • Traceability of source material in global supply chains may impact compliance and increase costs (conflict materials, Kazakh cotton etc). Do we have something to say here about how to ensure compliance efficiently ? • Can we develop insights to assist regulators about how their decisions impact firm level operations and supply chains ?

  10. Next steps • Three separate breakout groups • Each group gets 30 minutes to discuss some of the issues listed or any other you feel appropriate • The moderator for each group will take notes and report back • In general, tell us how supply chain academics should have our voices heard more frequently in the public discourse regarding regulating supply chains.

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