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0,AutomotiveBestPracticesForumSupplyChainManagement,1,WELCOME!TodaysmeetingwillfocusontheresultsoftheSupplyChainManagementAssessment,completedby22automotivesupplierexecutivesand3vehiclemanufacturerexecutives.,Introduction,2,TableofContents,Introduction4-13SupplyChainManagement14-21DefinitionsandStrategy22-32UnderstandingExpectations33-38SupplyChainManagement39-47PerformanceMeasurement48-55TechnologySolutions56-60SCMOpportunities61-72,PageNumber,3,IndustryForcesandIssues,Introduction,Theautomotivesupplychainisgoingthroughaperiodofunprecedentedchangeinordertomeetincreasingconsumerexpectationswithregardtoprice,delivery,andproductcustomization.Themanagingofthesupplychainpipelineisthereforefacedwithanumberofkeyissuesincluding;,ElevatingsupplychainmanagementasacriticalsuccessfactortoachievingcompetitiveadvantageAligningtheorganizationalstructuretosupportglobalsupplychainmanagementEstablishingaprocessoriented,functionallyintegratedsupplychainForecastingtheimpactofchangingglobalmarketsonsupplychaincostsandcapabilitiesDefiningkeyperformanceindicatorsandmeasuringsupplychainperformanceUnderstanding,selectingandintegratingsupplychainmanagementenablingtechnologyAnticipatingandrespondingtotheimpactofsupplierconsolidationsAnticipatingandrespondingtotheimpactofOEMconsolidationsDefiningandtrackingtotalsupplychaincosts,4,Introduction,DefinesupplychainmanagementanditscomponentsUnderstandtheelementsofasupplychainstrategyPositiontheroleofasupplychainexecutiveIdentifytheelementsofsupplychainmanagementUnderstandtheroleofinformationtechnologyapplicationsIdentifyhowtoutilizeperformancemeasuresinthesupplychainprocessUnderstandhowtousebestpracticesandbenchmarkinginsupportofsupplychainmanagementUnderstandroleofcustomers,suppliers,andthirdpartiesforcollaborativesupport.,TodaysObjectives,5,Theintegratedsupplychainconcepthasgonethroughthreedistinctphases.,Source:BernardLaLonde,professoremeritusoflogisticsatOhioStateUniversity,HistoryofSCM,SCMOverview,6,ThefollowingrepresentsomeoftheotherinitiativeswhichhaveeitherhelpeddeveloporhavebeenspawnedfromtheSCMmovement,SCMRelatedConcepts,SCMOverview,7,Value,Complexity,Functional“Silos”,VirtualExtendedChains,IntegratedInternalSupplyChain,IntegratedExternalSupplyChain,SelectVendor/CustomerCollaboration,SelectedCross-functionalTeaming,InternallyFocusedOptimization,COLLABORATION,PULL,PUSH,SCMContinuum,SupplyChainContinuum,SCMOverview,8,Asurveyconductedonsupplychainessentialsresultedinamanagementresponsefrom451companiesin25countriesAlmostone-third(29%)ofthecompaniessurveyeddonotinvolvetheirsuppliersininventorymanagementNearlyone-quarterofthecompanies(22%)donotinvolvetheircustomersinplanningmanufacturingrequirementsOnly13%ratedtheirabilitytocommunicatewithcustomersonforecastingasstrong,1.Planninganddeployinginventoryeffectively2.Providingpredictabledeliveryperformance3.Creatingnewproductsandservices4.Reducingorderfulfillmentcycletime,5.Havingproductsinstock6.Decreasingmanufacturingcycletime7.Reducingtransportationcosts8.Reducingcustomerreturns9.Communicatingelectronicallywithcustomersandsuppliers,TopSupplyChainEssentials,Source:1997KPMG/NorthwesternSupplyChainStudy,CurrentStateofSCMMovement,SCMOverview,9,DegreeofCompletion,Themajorityofcompaniesareimplementingsupplychaininitiatives.Thisfigurehasincreaseddramaticallyfrom10%reportedin1996.,Question3,5%,35%,60%,0%,0%,0%,0%,10%,20%,30%,40%,50%,60%,70%,80%,90%,100,%,Improvementinitiativesarecomplete,Plantobeginaddressinginitiativesbeyond2000,Noinitiativesoropportunitiesplanned,Plantobeginaddressinginitiativesduring1999,Currentlyevaluatingimprovementopportunities,Currentlyimplementinganimprovementinitiative(s),%ofRespondents,SCMOverview,10,Therearemanyapproaches,concepts,models,andideologiesdevelopedtodescribeSCM,BuysfromManufacturer/Wholesaler,Storesinwarehouses,MovesittoRetailers,Storesitonshelves,SellsittoCustomers,Supplier,Whouse,Whouse,Retail,Retail,Customer,Trucks,SCMApproaches,SCMOverview,11,SourceThisportionofthemodelpertainstoprocurementofgoods(rawmaterials,semi-finished,orfinished)andservices.Partnershipbuilding,strategicsourcing,organizationcompatibility,technologicalcapabilities,andcommitmentstocontinuousimprovementareallimportantelements.ProduceThissectionofthemodeladdressesthephysicalmanufacturingprocessandanycorrespondingconstraints,ifapplicable.Productionscheduling,laborscheduling,andminimizingdowntimeandsetupcostsareallkeyfactorsintheproductionprocessandsupplychainmanagement.Moreimportantly,thecoordinationoftheseeffortswithotherfunctionalareasofacompanymustbeevaluatedtoensurethegreatestsupplychainefficiency.,StoreTheStoresegmentofthemodelreferstoreceivingandshippingpractices,inventorymanagement,warehousemanagement,andselectionofproductsfordistribution.Internalvs.outsourcingalternatives,processflows,layouts,andstorage-densitypracticesmustbeevaluatedintermsofcost,quality,andspeed.Theeconomicandcompetitiveconsequencesofvariouswarehousingstrategiesmustbeanalyzedtoensureabetterreturnonassetsandlong-term,bottom-lineimpact.,SupplyChainModel,SCMOverview,12,PlanDisciplinedplanningisneededtomaximizethecoordinationofsupplychainfunctions.Inaddition,itisimportantthatanoverallstrategicplanandgoalsexistinordertoprovideacommonanduniformdirectiontothedifferentoperatingfunctions.Thisinformationmustbeaccurate,timely,andfreelyshared.Forecastingispartoftheplanningprocess,inadditiontotheintegrationandcollaborationofprocessesandpractices.,TransportThissectioncoversthemovementofgoodsfromthesuppliertotheproductionfacilityand/ordistributioncenterandfromthedistributioncentertothecustomer.Regulations,litigation,technology,relationships,customerexpectations,anddeliveryalternativesareallimportantcomponents.Therightstrategy,includingpartneringrelationships,candifferdramaticallyfromonemarkettothenext.SellAttracting,managing,andretainingcustomersisthemainfocusoftheSellingsectionofthemodel.Abetterunderstandingofcustomersneeds,goalsandbehaviorcanimproveproductdevelopmentanddelivery.Policies,procedures,processes,andsystemsaresignificantfactorswhichmustbeexaminedinordertoimproveserviceandincreasecustomersatisfaction.,SupplyChainModel,SCMOverview,13,Thefollowingmodelhasbeendevelopedasaguidefordiscussinganeffectivesupplychainmanagementsolution,GuidingPrinciplesofSCM,DefinitionandStrategies,14,FosterALeadershipDrivenSupplyChainStrategy,DevelopastrategicvisionalignedwithcustomersFocusonoptimizingtheentiresupplychainIdentifygoalsanddevelopprioritizationproceduresMaintainfocuson“big-bang”goalsbutimplementinstagesLeadfromthetop,FosterALeadershipDrivenSCStrategy,DefinitionandStrategies,15,WhatistheSupplyChain?Thesupplychainisacompilationofactivities,functions,andprocedureswhichenablerawmaterialstobeconvertedintoproducts,deliveredandconsumedbyendusers.,SupplyChainDefinition,DefinitionandStrategies,.includingfunctionalactivities,InformationTechnology,Sourcing,OrderProcessing,ProductionScheduling,Procurement,CustomerService,InventoryManagement,Transportation,Warehousing,16,WhatisSupplyChainManagement(SCM)?Itisthecoordinationandintegrationofalltheseactivities.,1.TheSupplyChainCouncil2.SupplyChainManagement,“Fromyoursupplierssuppliertoyourcustomerscustomer”1“Theartofmanagingtheflowofmaterialsandproductsfromsourcetouser”2,.intoaseamlessprocess,SupplyChainManagementDefined,DefinitionandStrategies,17,SupplyChainManagementreferstoManagingtheentiresupplychainflowfromrawmaterialprocurement,distributiontomanufacturingfacilities,processingfinishedgoods,distributiontowarehousesworldwideandtoendcustomer.Successfulperformancebyallorganizationsandresourcesintheproductionanddeliveryofproductsandservicestocustomers.Extendingcompanyboundariestosuppliernetworkthroughinformationsharingfromconcepttolifeofproduct-makingsuppliersanintegralpartofthecompany.Useofpro-activematerial,acquisitionplanningsupportedbyatailoredandbenchmarkedsupplybase.LogisticsincludestheprocessesandactivitiesofMaterialsmanagementsuchasforecasting,sourcingandpurchasing,warehousingdistributionandtransportation.Movinggoodsfromsupplypointsthroughthemanufacturingprocessandtothecustomer.Planning,obtaining,producing,anddistributingmaterialandproductsinthecorrectquantities.Theentireprocurementdistribution,inventoryandwarehousesystem.Gettingproductsorservicesfromthesuppliertoyourdoor.,SupplyChainManagementDefined,DefinitionandStrategies,Suppliershavemanydefinitionsofsupplychainmanagement.Thekeyistodefineitintermsoftheactivitiesthatarecrucialtothesuccessofthesupplychainprocess.,Questions1,18,MyCompanyhasawelldocumentedsupplychainstrategy3.1Thesupplychainstrategyisdirectlylinkedtothecorporatestrategy3.3,SupplyChainStrategy,Ingeneralmostcompanieshavehighlevelgoalsandmeasuresbutlackimplementationcontentsuchasbudgetandsystemsintegrationplans.,Questions4outsourceprocesseswherethecompanylagsinexpertiseofefficiency.Developanoutsourcingstrategythatreflectsthecorporatevision.Workwithtrustedoutsourcers,yetclearlycommunicateexpectationsinoriginalcontracts.Definerequirementsandexpectationsintermsofoutcomes,nottasksoractivities.Linkoutsourcercompensationtooutsourcerperformance.Integratethird-partyoutsourcinggoals,objectivesandresourcerequirementsintothesupplychainstrategicplan.,38,Thelistofactivitiesincludedinthedefinitionsofsupplychainarebroaderthanthescopeofthesupplychainexecutivesresponsibilities.Supplychainresponsibilitiesaresharedinmostorganizations.Mostnotably,supplychainexecutivesarenotresponsibleformanufacturingandcustomer-facingsalesactivities.Companieswithsharedresponsibilitiesforsupplychainmanagementrequireflexibleorganizationalstructurestofacilitatecommunicationamongsupplychainexecutivestofosteroptimizationofthetotalsupplychain.Onalimitedbasis,suppliersarelookingtotheirownsuppliers,customersandotherthirdpartiestohelpfillresourceandskilldeficiencies.Thirdpartyrelationshipsareexpectedtogrowastheoutsourcingtrendincreases.,KeyFindings,SupplyChainManagement,39,Developkeyperformancemeasurerswhichspantheentiresupplychain(includingvendors&customers)UsebalancedmeasuresUtilizeexceptionreportingtomonitorresultsMeasure&rewardchangebehaviors,Align&MonitorKeyPerformanceIndicators,Align&MonitorKeyPerformanceIndicators,PerformanceMeasurement,40,PoorQuality,LowFillRates,HighInventory/LowTurns,PoorDemandForecastingPerformance,DecreasingMargins,LongCycleTimes,Symptomsofa“Strained”SC,PerformanceMeasurement,41,AssessmentofPerformanceMeasurement,ActivityPerformancetargetsareestablishedandperformanceisroutinelyreviewedPerformancemeasuresareintegratedandencompassquality,costandtimeExecutivelevelmeasuresareusedtoprovideindicationsofwhetherthesupplychainisperformingaccordingtoitsstrategicintentMeasuresarealignedtosupplychainperformanceobjectivesManageriallevelmeasuresareusedtoevaluatewhethertacticalandoperationaltypesofactivitiesareworkingefficientlyInternal,externaland/ornon-competitivebenchmarkingisusedtohelpsetperformancetargetsMeasuresarefocusedondevelopingenterprise-wideexcellenceincross-functionalprocessesratherthanwithinindividualfunctionaldepartmentsAwell-balanced,limitedsetoffunction,process,andcross-enterprisebasedmeasuresareused,Question21,3.13.0,Performance*,PerformanceMeasurement,*Where1=Disagree,2=SomewhatDisagree,3=Neutral,4=SomewhatAgree,5=Agree,42,LevelofPerformanceSatisfaction,LevelofSatisfactionwithSupplyChainPerformance,CurrentPerformanceLevel,Tier1compliancewithOEMmandateshaveplacedOEMsaheadofsuppliersontheSupplyChainContinuumandaheadintermsofoverallSupplyChainperformance.,Questions22&23,Suppliers,OEMs,Somewhat,Dissatisfied,32%,Neutral,18%,Somewhat,Satisfied,45%,Completely,Satisfied,5%,Completely,Dissatisfied,0%,Fair,45%,Poor,5%,Uncertain,5%,WorldClass,9%,Excellent,0%,Good,36%,CompletelyDissatisfied,0%,CompletelySatisfied,0%,SomewhatSatisfied,100%,Neutral,0%,SomewhatDissatisfied,0%,Good,67%,Excellent,0%,WorldClass,33%,Uncertain,0%,Poor,0%,Fair,0%,PerformanceMeasurement,43,SupplyChainIssues,DefiningsupplychaincostsisanissuethatplaguesSupplierandOEMalike.,Question6,ImportanceofIssue,CompanyCapability,4.0,InsufficientData,2.5,2.5,2.0,Suppliers,OEMs,77%,3.5,33%,73%,3.4,33%,73%,3.3,67%,68%,3.5,67%,55%,3.1,33%,AligningtheorganizationalstructuretosupportglobalsupplychainmanagementElevatingsupplychainmanagementforcompetitiveadvantageDefiningandtrackingtotalsupplychaincostsDefining&measurekeyperformanceindicatorsSelecting&integratingsupplychainmanagementsoftware,Capability(1=None,2=Poor,3=Fair,4=Good,5=Excellent),ImportanceofIssue,CompanyCapability,PerformanceMeasurement,44,Barriersthatpreventcompaniesfromachievingdesiredlevelofsupplychainperformance:,Barrierstoachievingdesiredperformance,Scarcityofresourcesandintegrationofinformationsystemsarethenumberoneobstaclespreventingcompaniesfromachievingadesiredlevelofsupplychainperformance.,Question10,Competinginitiatives,Supplychaininformationsystems,Availabilityofaccuratedata,Informationsystemsintegration,Resourceavailability,Humanresource/laborpolicies,Supplychainmanagementskills,Informationsystemsintegration,Availabilityofaccuratedata,Supplychaininformationsystems,Suppliers,OEMs,0%,20%,40%,60%,80%,100%,100%,67%,67%,67%,33%,0%,20%,40%,60%,80%,100%,64%,50%,50%,45%,45%,%ofRespondents,%ofRespondents,PerformanceMeasurement,45,BestPractices,PerformanceMeasurement,Adoptenterprise-wideperformancemeasuresthatprovideindicatorsofwhetherthesupplychainisperformingaccordingtoitsstrategicintent.Deriveperformancemeasuresfromthemissionstatement.Establishmeasuresthatbalancequality,costandtimeacrosstheorganization,itsprocessesanditspeople.,46,Previously:Supplychainwasnotelevatedinimportanceandvisibility.Seniorexecutiveswerenotawareoftheadvantagestobegainedbyeffectivesupplychainmanagement.Today:OEMsandsuppliersareidentifyingsimilarbarrierstoachievingadesiredlevelofsupplychainperformance.Theyhaveexecutivesupportandattentionbutarelackingtheresources,skillsandsystemsrequiredtoachievetargetedlevelsofperformance.Suppliershaveimplementedperformancemeasurementprogramsbutgenerallylackconfidenceintheprogramsoveralllevelofperformance.Thelackofintegratedorautomatedsystemstocaptureperformance-relateddataandtheavailabilityofaccurateandtimelydataareprimarycontributors.OEMsaremoresatisfiedwiththeoverallperformanceoftheirsupplychainsthansuppliersandrateoverallsupplychainperformancesignificantlyhigherthansuppliers.,KeyFindings,PerformanceMeasurement,47,DevelopanintegratedITsystemtosupportstrategicobjectivesacrosstheentiresupplychain-atalllevelsRequireeasytounderstandactionablereportsDevelopanITsystemwithmulti-levelcapabilities:Short-term:transactionprocessingMid-term:planninganddecisionsupportLong-term:strategicmodeling&scenarioplanning,DevelopITStrategyandInfrastructure,DevelopITStrategy,TechnologySolutions,48,CurrentlyUsedPlannedProprietaryPackagedElectronicDataInterchange82%14%23%77%BarCodingTechnologies73%14%38%62%WarehouseManagementSystem59%5%37%63%AdvancePlanning&Scheduling50%5%50%50%EnterpriseResourcePlanning41%27%20%80%TransportationMgt.System41%5%60%40%Manufacturing&Distribution32%9%56%44%FacilitiesNetworkModelingKnowledgeManagementSystems23%5%100%0%E-Commerce14%18%33%67%,InformationSystems,Question17,*PercentofRespondents,TechnologySolutions,49,ApplicationsSolutionProvidersEnterpriseResourcePlanningBaaN,Oracle,Glovia,SAP,QAD,JDEdwards,JohnBrownAdvancePlanning&SchedulingCAN,Future3,Numetrix,ASI,QAD,GenzlingerWarehouseManagementSystemCABOSS,McHugh,ROI,Genzlinger,AS/400BarCodingTechnologiesInternedal,UDCCode39,ASI,Symbol,Future3,Genzlinger,JohnBrown,Variety,BCITransportationMgt.SystemUTS,Link,OutsourcedtoCTIElectronicDataInterchangeSterlingCommerce,TransNet,GEIS,Future3,QAD,TradingPartner,ANSIEDIFACTManufacturing&DistributionQAD,AS/400,ProprietaryFacilitiesNetworkModelingKnowledgeManagementSystemsLotusNotes,ONIS,DataWarehouseE-CommerceNetSoftware,SterlingCommerce,InformationTechnologySupportSystems,TechnologySolutions,Question18,50,Developintegratedsystemsandtechnologiesplansonacorporate/enterprisewideleveltodefinecurrentandfutureneeds.Useplanstoplan,prioritize,budgetandallocateresourcesforsoftwarepurchasesandsystemsupgrades.Informationsystemsplans:DefinethefunctionalcapabilitiesofthesoftwareacquisitionorupgradeIdentifycriticalintegrationpointsandcompatibilityissuesIdentifyresourcerequirementsanddeficiencies,BestPractices,TechnologySolutions,51,Thereisnocommoninformationsystemsplatformamongautomotivesuppliers.Noproductemergesastheleaderamongautomotivesuppliers.Falseassumptionsregardingcapabilitiesandfunctionalsupportprovidedbysupplychainapplications.Indicatesclearneedforintegratedsupplychainsystemsstrategiesandplans.Internalandexternalintegrationofsupplychaininformationsystemswillcontinuetobeatopissueunlesse-businesssolutionscanbedevisedtoreducethecost,complexitiesandtimetoimplementintegratedsystemssolutions.,KeyFindings,TechnologySolutions,52,Quality,Time,Cost,ImprovedCustomerServiceLowerCostsQuickerResponsetoMarketChanges,“Servethecustomerbetter,faster,andcheaper”,ENHANCEDPROFIT&REVENUE,BenefitsofSCM,SCMOpportunities,53,CompaniesparticipatinginMITsintegratedsupplychainmanagementprogramhaveaccomplishedthefollowing:,InventoryReduction50%,40%On-timeDeliveries,CumulativeCycleTime27%,BenefitsofSCM,SCMOpportunities,54,SalesforcePromotionOverallSupplyChainPurchasingManufacturingLogisticsSharedServicesStaffFunctions(Finance,HR,MIS)WorkingCapital,Area,Salesforceeffectiveness/automationProductivity/simplificationCyclecompression,cross-functionalintegrationConsolidation,supplierintegrationGlobalcapacityrationalizationTransportation,networkreconfiguration,complexity(SKU)reduction,warehouseredesignCustomersupportcenters,regionaladministrativeservicecentersGlobalsystems,rationalization,centralizeddatacentersInventoriesReceivables,Opportunities,5-30%5-15%20-45%5-15%10-50%10-30%10-40%15-50%20-40%10-30%,TypicalBenefits,IdentifyingLeveragePoints,SCMOpportunities,55,IdentifiedBenefits,Question24,Developmentofaglobalsourcingstrategywhichconsolidatesthesupplybasecanprovidesignificantcostreductions.,SCMOppor

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