SupplyChainManagement.ppt

SupplyChainManagement AcceleratingCostEffectiveness SupplyChainManagement Thesupplychainusedtobeasimpleserialprocesswithrawmaterialsslowlymovinginonedirectionthroughmanufacturingproductionandonwardviaadistributionsystemtoretailersandcustomers Today thetalkisof supplynetworks parallelchains enhancedconcurrentactivities and customercentric withnewinformationplatformsandtechnologysettocutbothinventoryandlead timesthroughoutthedeliverypipelinefurther TopIssuesFacingSCMProfessionals Inarecentquantitativesurvey SCMprofessionalswereaskedaopen endedsubjectivequestion Whatarethethreebiggestissuesfacingyoupersonallyindevelopingyourlogisticsstrategy Source AMRResearch2000 Thetopthreeresponseswere Cost 21 SystemsApplications 20 andIntegration 19 SCMBenefits Manufacturer Distributors Wholesalers Customers Suppliers Retailers MaterialsFlowsInformationFlowsCashFlows UScompaniesexpecttoreap 3 400Bofsavingsthroughavarietyofbenefits 3 5 ofrevenues Source PRTM MoveFromPushToPull Makewhatwesell notsellwhatwemake MovetoCross FunctionalBusinessProcesses Purchasing Manufacturing Distribution Install Maintenance Sales Source Make Deliver Install Sell OrderFulfillment Available to Promise Sales OperationsPlanning DepartmentPerformance SupplyChainOptimization Synchronized SequentialPlanning Forecasting DistributionPlanning ManufacturingPlanning ProcurementPlanning SupplyChainOptimization Synchronized ConcurrentPlanning DemandPlanning DistributionPlanning ManufacturingPlanning ProcurementPlanning Purchasing Manufacturing Distribution Install Maintenance Sales Cross FunctionalSupplyChainMetrics ProcessPerformance Source Make Deliver Install Sell PerfectOrderProcess SharingandCollaboration Manufacturer Distributors Wholesalers Suppliers Retailers SynchronizedProductionSchedulingCollaborativeProductDevelopment CollaborativeDemandPlanning CollaborativeLogisticsPlanningTransportationservicesDistributioncenterservices FullValueProcurement Objective LowesttotalcostofownershipQualitymeetingcustomerneedsOn timedeliveryAcceptablesupplyriskProcessefficiencyDemandreduction Underpinnedbyprocurementinfrastructureexcellence PurchasePrice Acquisition Installation Maintenance Disposal StrategicSouring Traditional Progressive TacticalEmphasisAcquisitionCostFocusStaffFunctionCostCenterReactive StrategicEmphasisTotalCostFocusProfitCenterProactive Tactical Strategic Tactical Strategic EvolvingModelofProcurement LogisticandTransportation Logisticsaccountsfor8 12 ofsales In1998 itaccountedforover10 oftheUSGDPLogisticisoneofthegluesthatholdsthesupplychaintogether ThetechniquesthatmostmanufacturersemploytoincreasespeedandreducingcostisoutsourcingAveragecostreductionsfromoutsourcingis32 The3PLmarkethasenjoyedexplosivegrowthoverthepast5years Most3PLshavereportedannualgrowthrateof25 50 Source industryweek Manufacturing ManufacturingmanagersviewefficiencyandflexibilityastwoobjectiveswhichmustbebalancedinordertoarrivethelowesttotalcostWorld classcompaniesadoptstrategiesandtacticssuchaspullsystem JITreplenishment andcycletimereductionsthatenablesacompanytohavelowerlevelsofinventorywhilestilldrivingreductionsinproductionunitcostCompaniesfrequentlyunderestimatethecommitmentrequiredtoachieveaneffectivequalityimprovementwhichresultinoperationcostincreases StrategicBusinessPlanning ForecastingandPlanning hours days weeks months year Operational Tactical Strategic Scheduling RollingForecast DemandPlanning ManufacturingPlanning Scheduling DistributionPlanning OrderPromise SourceMakeMoveStoreSell TopIssuesFacingSCMProfessionals e Businessisarelativelylowpriority cominginsixthofthetopissuesfacingSCMprofessionals However thisdoesnotreflecttheimpactthate BusinesswillhaveonSupplyChainManagement Source AMRResearch2000 e BusinesswillfundamentallychangeSCM ENTERPRISEOPTIMIZATION Procure ProduceProducts ManageLogistics ForecastDemand Optimize NETWORKOPTIMIZATION A F D G C E B Company Company Company Company Company Company e BusinessIsDrivingaFundamentalTransformationinSCM ThelargerthenetworkofcompaniesthegreaterthepowerofthenetworktoreducecostforitsmembersIncreasedleveragewithsuppliersBroadermarketaccessforsuppliersExpandedcommunityandcollaborationopportunitiesGreaterintegrationacrossmarketsupplychains NetworkEffect EconomiesofScale ThelargertheMeta MarketthefasteritcanformandlaunchfacilitatetheoperationalexcellentBroadercommunitiestoallocateR DcostOperationalefficienciesviabackofficesharedservicesDepthofindustryandprocurementknowledgeandresourcesavailabletodevelopsuppliercontracts Company TheImpactofe BusinessonSCM e Businessaffectsfourbroadcategoriesthatdeterminetheproductionandtransactioncostsofafirm ThecostofexecutingasaleThecostsassociatedwithprocuringproductioninputsThecostsassociatedwithmakinganddeliveringaproductorserviceThecostassociatedwithlogistics TheCostofe BusinessSalesAccessibility Ane Businesswebsiteisopen24hoursperday 7daysperweek Abusinessnolongerhastobuildseparatephysicalestablishmentstoattractalargercustomerbase Avirtualstorefrontalsoallowsane businesstomanageonestoreinsteadofmultiplestores thuseliminatingduplicateinventorycosts TheCostofe BusinessSalesOrderRework Anotheraspectofe Businessisthatitenablesmoreefficientorderconfiguration Forexample bothGeneralElectric GE andCiscoSystemsreportednearlyone quarteroftheirpre Web siteordershadtobereworkedbecauseoferrors atotalofmorethan1millionorders inthecaseofGE SinceadoptingaWeb enabledcustomerinterface Ciscoreportsanerrorrateofonly2percent TheCostofe BusinessSalesFundamentalShift Clearly e Businessrepresentsafundamentalshiftinhowthesalesprocessisexecutedbyacompany Asaresult e Businesscompelsexistingbusinessestore examinehowtheyinteractwithcustomers evenasnewentrantsexploite Businessestoreachcustomerbasespreviouslythoughtunreachable Low High CostofSale Off the Rack Customised Value AddedofSale DirectSales Face to facesales 500 salescontact Distributors VARs 2 300 salescontact Telephonesalesandservice 25persalescontact Nohumancontact 1persalescontact Resellers Tele channel ElectronicChannels Source Dr RowlandMoriarty CubexCorp TheCostsAssociatedWithProcuringProductionInputs Web basedprocurementofmaintenance repair andoperations MRO suppliesisexpectedtoreachmorethan 100billionworldwidebytheyear2000 MROcomprisesthosegoodsrequiredtorunacompanythatarenotrawmaterialsusedinthedirectmanufactureofaproductortheprovisionofaservice Profit OtherCosts Purchases 100 100 45 50 45 47 5 5 7 5 5 A5 reductioninpurchasecostcanresultina50 increaseinprofitmargin 50 TheCostsAssociatedWithProcuringProductionInputs LowertransactioncostscoupledwiththeabilitytoenforcepurchasingpolicyacrosstheenterprisehavebeeninstrumentalindrivingWeb basedMROprocurement Twoadditionalfactorshaveacceleratedthetrend Thefirstfactorisadefensivereactionbyfirmsthatnotethecostsavingsbeingenjoyedbyrivalsswitchingtoane businessprocurementmode Thesecond andpossiblymoreimportantfactoristheinsistencebylargefirmssuchasFord thattheirsupplierslinkintotheirWeb basedprocurementsystemsasaconditionofdoingbusinesswiththem Source RBWeber COSTPERPO POTENTIALCOSTPERPO CURRENTCOSTPERPO TheCostofe BusinessSupplyChainManagement EventhescopeofMROprocurementpalesbesidethepossibilitiesforreorganizingsupplychainsarounde business Ratherthanincreasingproductionandinventoryinadvanceofactualcustomerdemand e businessesarelookingtomakeboththeirownsupplychainsandthoseoftheircustomersandsuppliersrespondinrealtimetoactualsales Supplier Manufacturer Distribution Retailer Consumer Information TheCostofe BusinessSupplyChainManagement Visibilityoftheentiresupplychainisnecessarysoabusinesscananalysetheinterplaybetweeninteractionssuchasprocuringmaterials components andsubassembliesfromvarioussuppliers shiftingproductionbetweeninstallationsorbusinesspartners andmovinggoodstothefinalconsumer Understandingrelationshipsbetweenallplayersinaparticularvaluechainallowsane businesstoadjusttonewcontingenciesinrealtime TheTransformationofLogistics e Businesstransformslogisticsfromsimplypackagingandmovinggoodsandturnsitintoaninformationbusiness Introducingonlineparcelorderandtrackingviaaproprietarynetworkin1983 FederalExpresstooknearly12yearstosignup50 000customers In3years between1995 1998 afterFedExofferedessentiallythesameserviceviatheWeb thenumberofcustomersroseto1million FedExestimatesnearly70percentofthe3millionpackagesitprocesseseachdaynowareinitiatedviainteractivenetworks SupplyChainManagement e BusinessDrivingTransparency Whenbuildingvisibilityoftheentiresupplychain thisalsoincludescustomers e Businessgivesthecustomeraccesstothesuppliersproductdata orderinganddeliveryinformation Thisdrivestransparencywithintheorganizationandforcesthesuppliertodevelopbetterdeliveryandsupportsystems Enterprise Connectivity ProductLifecycleManagement CustomerManagement DesignPartners ConsumersandChannels Recommendations Includee businessaspartofyourtopthreesupplychainagendaitems Putinefforttoarticulateavaluepropositionfore businesswithinyourco