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SupplyChainManagement

0WELCOME!Today’smeetingwillfocusontheresultsoftheSupplyChainManagementAssessment,completedby22automotivesupplierexecutivesand3vehiclemanufacturerexecutives.Introduction1TableofContentsIntroduction 4-13SupplyChainManagement 14-21DefinitionsandStrategy 22-32UnderstandingExpectations 33-38SupplyChainManagement 39-47PerformanceMeasurement 48-55TechnologySolutions 56-60SCMOpportunities 61-72PageNumber2IndustryForcesandIssuesIntroductionTheautomotivesupplychainisgoingthroughaperiodofunprecedentedchangeinordertomeetincreasingconsumerexpectationswithregardtoprice,delivery,andproductcustomization.Themanagingofthesupplychainpipelineisthereforefacedwithanumberofkeyissuesincluding;ElevatingsupplychainmanagementasacriticalsuccessfactortoachievingcompetitiveadvantageAligningtheorganizationalstructuretosupportglobalsupplychainmanagementEstablishingaprocessoriented,functionallyintegratedsupplychainForecastingtheimpactofchangingglobalmarketsonsupplychaincostsandcapabilitiesDefiningkeyperformanceindicatorsandmeasuringsupplychainperformanceUnderstanding,selectingandintegratingsupplychainmanagementenablingtechnologyAnticipatingandrespondingtotheimpactofsupplierconsolidationsAnticipatingandrespondingtotheimpactofOEMconsolidationsDefiningandtrackingtotalsupplychaincosts

3IntroductionDefinesupplychainmanagementanditscomponentsUnderstandtheelementsofasupplychainstrategyPositiontheroleofasupplychainexecutiveIdentifytheelementsofsupplychainmanagementUnderstandtheroleofinformationtechnologyapplicationsIdentifyhowtoutilizeperformancemeasuresinthesupplychainprocessUnderstandhowtousebestpracticesandbenchmarkinginsupportofsupplychainmanagementUnderstandroleofcustomers,suppliers,andthirdpartiesforcollaborativesupport.Today’sObjectives4Theintegratedsupplychainconcepthasgonethroughthreedistinctphases...“Push”erafocusedondistributionoffinishedgoodsManagedWIP,rawmaterials,andfinishedgoodsasseparatefunctionsMgmtrequiredproductiontobebalancedwithcustomerrequirementsPhaseI1960-1975ImportancerealizedinintegratingoperationswithintheenterpriseComputerhorsepowerappliedtomanagematerialflowCompaniesbegantomigratefrom“inventorypush”toa“customerpull”channelPhaseII1975-1990Significantproductivityincreasescouldonlyberealizedthroughmanagingrelationships,informationandmaterialflowacrossenterprisebordersRecognizedthe“deliveryofenhancedcustomersandeconomicvaluethroughthesynchronizedmanagementoftheflowofphysicalgoodsandassociatedinformationfromsourcingtoconsumption”PhaseIIIlate80’s-presentSource:BernardLaLonde,professoremeritusoflogisticsatOhioStateUniversityHistoryofSCMSCMOverview5ThefollowingrepresentsomeoftheotherinitiativeswhichhaveeitherhelpeddeveloporhavebeenspawnedfromtheSCMmovementAgileManufacturingEfficientConsumerResponseTotalQualityManagementDirectivesChannelManagementSharedServicesConstraintBasedSchedulingChannelIntegrationValueChain(extended)FlowReplenishment/FluidDistributionDistributionResourcePlanningVendorManagedInventoryTheoryofConstraintsChangeBasedStrategyVendorManagedInventory(VMI)FlexibleManufacturingTimebasedmfg./logisticsContinuousReplenishmentPlanning(CRP)QuickResponse(QR)ReverseFlowLogisticsTheoryofConstraintsSynchronousManufacturingJust-in-time(JIT)ThirdPartyLogistics(3PL)FlexibleDistributionCategoryManagement

ContinuousReplenishmentPlanningSCMRelatedConceptsSCMOverviewJust-in-time(JIT)TotalQualityManagementSynchronousManufacturingTheoryofConstraints6ValueComplexityFunctional“Silos”VirtualExtendedChainsIntegratedInternalSupplyChainIntegratedExternalSupplyChainSelectVendor/CustomerCollaborationSelectedCross-functionalTeamingInternallyFocusedOptimization

COLLABORATIONPULLPUSHSCMContinuumSupplyChainContinuumSCMOverview7Asurveyconductedonsupplychainessentialsresultedinamanagementresponsefrom451companiesin25countriesAlmostone-third(29%)ofthecompaniessurveyeddonotinvolvetheirsuppliersininventorymanagementNearlyone-quarterofthecompanies(22%)donotinvolvetheircustomersinplanningmanufacturingrequirementsOnly13%ratedtheirabilitytocommunicatewithcustomersonforecastingasstrong1.Planninganddeployinginventoryeffectively2.Providingpredictabledeliveryperformance3.Creatingnewproductsandservices4.Reducingorderfulfillmentcycletime5.Havingproductsinstock6.Decreasingmanufacturingcycletime7.Reducingtransportationcosts8.Reducingcustomerreturns9.CommunicatingelectronicallywithcustomersandsuppliersTopSupplyChainEssentialsSource:1997KPMG/NorthwesternSupplyChainStudyCurrentStateof

SCMMovementSCMOverview8DegreeofCompletionThemajorityofcompaniesareimplementingsupplychaininitiatives.Thisfigurehasincreaseddramaticallyfrom10%reportedin1996.Question35%35%60%0%0%0%0%10%20%30%40%50%60%70%80%90%100%ImprovementinitiativesarecompletePlantobeginaddressinginitiativesbeyond2000NoinitiativesoropportunitiesplannedPlantobeginaddressinginitiativesduring1999CurrentlyevaluatingimprovementopportunitiesCurrentlyimplementinganimprovementinitiative(s)%ofRespondentsSCMOverview9Therearemanyapproaches,concepts,models,andideologiesdevelopedtodescribeSCMPlanSourceMakeDeliverBuysfromManufacturer/WholesalerStoresinwarehousesMovesittoRetailersStoresitonshelvesSellsittoCustomersSupplierW’houseW’houseRetailRetailCustomerTrucksSCMApproachesSCMOverview10SourceThisportionofthemodelpertainstoprocurementofgoods(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.SupplyChainModelSCMOverview11PlanDisciplinedplanningisneededtomaximizethecoordinationofsupplychainfunctions.Inaddition,itisimportantthatanoverallstrategicplanandgoalsexistinordertoprovideacommonanduniformdirectiontothedifferentoperatingfunctions.Thisinformationmustbeaccurate,timely,andfreelyshared.Forecastingispartoftheplanningprocess,inadditiontotheintegrationandcollaborationofprocessesandpractices.TransportThissectioncoversthemovementofgoodsfromthesuppliertotheproductionfacilityand/ordistributioncenterandfromthedistributioncentertothecustomer.Regulations,litigation,technology,relationships,customerexpectations,anddeliveryalternativesareallimportantcomponents.Therightstrategy,includingpartneringrelationships,candifferdramaticallyfromonemarkettothenext.SellAttracting,managing,andretainingcustomersisthemainfocusoftheSellingsectionofthemodel.Abetterunderstandingofcustomers’’needs,goalsandbehaviorcanimproveproductdevelopmentanddelivery.Policies,procedures,processes,andsystemsaresignificantfactorswhichmustbeexaminedinordertoimproveserviceandincreasecustomersatisfaction.SupplyChainModelSCMOverview12FosterALeadershipDrivenSupplyChainStrategyDevelopITStrategyandInfrastructureAssessCustomerNeeds&SegmentsDevelopSupplyChainStructureAlign&

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KeyPerformanceIndicatorsThefollowingmodelhasbeendevelopedasaguidefordiscussinganeffectivesupplychainmanagementsolutionGuidingPrinciplesofSCMDefinitionandStrategies13DevelopITStrategyandInfrastructureAssessCustomerNeeds&SegmentsDevelopSupplyChainStructureAlign&

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KeyPerformanceIndicatorsFosterALeadershipDrivenSupplyChainStrategyDevelopastrategicvisionalignedwithcustomersFocusonoptimizingtheentiresupplychainIdentifygoalsanddevelopprioritizationproceduresMaintainfocuson“big-bang”goalsbutimplementinstagesLeadfromthetopFosterALeadershipDrivenSCStrategyDefinitionandStrategies14SUPPLIERDISTRIBUTIONCONSUMERMANUFACTURINGCUSTOMERWhatistheSupplyChain?Thesupplychainisacompilationofactivities,functions,andprocedureswhichenablerawmaterialstobeconvertedintoproducts,deliveredandconsumedbyendusers...SupplyChainDefinitionDefinitionandStrategies...includingfunctionalactivitiesInformationTechnologySourcingOrderProcessingProductionSchedulingProcurementCustomer

ServiceInventoryManagementTransportationWarehousing15WhatisSupplyChainManagement(SCM)?Itisthecoordinationandintegrationofalltheseactivities...1.TheSupplyChainCouncil2.SupplyChainManagement“Fromyoursupplier’ssuppliertoyourcustomer’scustomer”1“Theartofmanagingtheflowofmaterialsandproductsfromsourcetouser””2SUPPLIERDISTRIBUTIONCONSUMERMANUFACTURINGCUSTOMER...intoaseamlessprocessSupplyChainManagementDefinedDefinitionandStrategies16SupplyChainManagementrefersto…Managingtheentiresupplychainflowfromrawmaterialprocurement,distributiontomanufacturingfacilities,processingfinishedgoods,distributiontowarehousesworldwideandtoendcustomer.Successfulperformancebyallorganizationsandresourcesintheproductionanddeliveryofproductsandservicestocustomers.Extendingcompanyboundariestosuppliernetworkthroughinformationsharingfromconcepttolifeofproduct--makingsuppliersanintegralpartofthecompany.Useofpro-activematerial,acquisitionplanningsupportedbyatailoredandbenchmarkedsupplybase.Logisticsincludestheprocessesandactivitiesof……Materialsmanagementsuchasforecasting,sourcingandpurchasing,warehousingdistributionandtransportation.Movinggoodsfromsupplypointsthroughthemanufacturingprocessandtothecustomer.Planning,obtaining,producing,anddistributingmaterialandproductsinthecorrectquantities.Theentireprocurementdistribution,inventoryandwarehousesystem.Gettingproductsorservicesfromthesuppliertoyourdoor.SupplyChainManagementDefinedDefinitionandStrategiesSuppliershavemanydefinitionsofsupplychainmanagement.Thekeyistodefineitintermsoftheactivitiesthatarecrucialtothesuccessofthesupplychainprocess.Questions117MyCompanyhasawelldocumentedsupplychainstrategy3.1Thesupplychainstrategyisdirectlylinkedtothecorporatestrategy3.3SupplyChainStrategyIngeneralmostcompanieshavehighlevelgoalsandmeasuresbutlackimplementationcontentsuchasbudgetandsystemsintegrationplans.Questions4&514%18%27%36%36%36%36%36%41%41%45%59%64%68%68%0%10%20%30%40%50%60%70%80%90%100%FacilityNetworkEvaluationandDesignThirdPartyRelationshipManagementPlansWarehousingManagementPlanMissionStatementManufacturingRequirementsInformationSystemsIntegrationBudgetandInvestmentRequirementsCompetitiveEnvironmentTransportationManagementRequirementsOrganizationalResponsibilitiesInventoryManagementRequirementsCustomerRequirementsandRelationshipsSourcing/ProcurementRequirementsPerformanceMeasuresPerformanceGoalsandObjectives*LevelofAgreement*Where1=Disagree,2=SomewhatDisagree,3=Neutral,4=SomewhatAgree,5=Agree%ofRespondentsDefinitionandStrategies18Title:DirectororVicePresidentDepartment:PurchasingorSupplyChainManagementResponsibilities:SupplyChainExecutiveProfileOrganizationalResponsibilitiesIngeneral,SupplyChainexecutivesarenotresponsibleforcustomerfacingsalesactivitiesormanufacturing,butrathertraditionalpurchasingandlogisticaloperations.MostCommon:1.SourcingandPurchasing(68%)2.SupplyChainPlanningandNetworkDesign(64%)3.InventoryManagement(50%)4.WarehouseOperationsPlanning&Management(50%)Transportation(50%)LeastCommon1.Manufacturing(14%)2.LinkageswithSales,PromotionsandMarketing(14%)3.PackagingDesign(18%)4.SalesOrderManagement(18%)Questions11&1219Managementofthe

SupplyChain*Where1=Disagree,2=SomewhatDisagree,3=Neutral,4=SomewhatAgree,5=AgreeSeniorexecutivesareawareoftheimportanceofSupplyChainManagementbutlackfinancialresourcesforimplementationQuestion13Seniorexecutivesareforwardthinkingandkeepupwiththelatestmanagementtechniquesforoptimizingthesupplychainandenhancingshareholdervalue.12345Seniorexecutivesunderstandthecomplexitiesofoptimizingsupplychainperformanceandarewillingtomaketherequiredinvestments.Seniorexecutivesarededicatedtotakingsupplychainmanagementfromtheorytopractice.Supplychainmanagementisatopprioritywithseniorexecutives.Seniorexecutivesarekeenlyawareofthecompetitiveadvantagethatcanbegainedthrougheffectivemanagementofthesupplychainprocess.Supplychainmanagementhaselevatedinimportanceandvisibilityduetoincreasinggrowthandprofitabilitypressures.OrganizationalResponsibilitiesLevelofagreementwithregardstosupplychainmanagement:20Developbusinessunitstrategiestosupportachievementofcompanyobjectives.Appointasupplychainexecutivetoserveasanaturalfacilitatorandintegratorbetweenthedivergentneedsofsalesandmanufacturing,qualityandprice,costandservice,andfinancialandqualitativemeasures.Clearlydefinesupplychainfunctions,processes,andactivitiesandarticulatethroughouttheorganization.Translatebusinessunitstrategiesintosupplychainstrategieswithquantifiablegoalsandobjectives.Identifycriticalprocessesessentialtotheachievementofthebusinessstrategyandgoals.Establishactionplansdetailingthestepsrequiredtoachievethegoalsandobjectives.BestPracticesDefinitionsandStrategies21Automotivesuppliersdefinesupplychainmanagementdifferently.Theactivitiescomprisingautomotivesuppliers’supplychainsalsodifferdramatically.Themajorityofrespondentswereunsurewhethersupplychainstrategiesarealignedwithbusinessunitandcorporatestrategies.Companieswithsupplychainstrategiesplaceemphasisonperformancemeasurementandsupplierandcustomerfacingissues,butlittleemphasisondefiningactionplans,budgets,investmentrequirements,andresourcesrequiredtoimplementthoseplans.Companiesassessedthattheywerebestpreparedtorespondtoglobalsupplychainissues,butlesscapableofcapturingsupplychaincosts,measuringperformance,andselectingandintegratingsoftwaresolutions.KeyFindingsDefinitionsandStrategies22Supplierssupplychainexecutivesrolesandresponsibilitiesvary,asdoesthelevelanddepartmentwithintheorganization.Suppliersfeelthatseniorexecutivesmayonlypartiallyunderstandthecomplexitiesofoptimizingsupplychainperformanceandarewillingtomaketherequiredinvestmentsnecessarytoachieveoptimalperformance.KeyFindingsOrganizationalResponsibilities23UnderstandcustomersandsegmentbaseduponneedsandpreferencesAnalyzecostofservicebycustomerDevelopachannelstrategytotargetandservedifferentsegmentsFosterALeadershipDrivenSupplyChainStrategyDevelopITStrategyandInfrastructureDevelopSupplyChainStructureAlign&

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KeyPerformanceIndicatorsAssessCustomerNeeds&SegmentsAssessCustomerNeeds&SegmentsUnderstandingExpectations24Company’sExpectationsofSelfUnderstandingExpectationsQuestion7SuppliersOEMs100%on-timedeliveryCostimprovementsDefine,Track,andReduceSupplyChaincostsReducepurchasedproduct/suppliercostsReducepartscosteverymodelyearReduceInventoryandobsolescenceReducepremiumfreightanddistributioncostsQualityImprovementsIntegrate/leveragesuppliercapabilitiesandtechnologiesforcompetitiveadvantageImprovePPMperformanceTechnologyImplement/upgradeEDI/ERP/WMScapabilitiesExpectationsXXXXXXXXXXXX25UnderstandingExpectationsQuestions8&9TierOneSupplierOEMCustomerSupplierExpectationsofCustomersExpectationsofSuppliersExpectationsofSuppliersUnderstandingExpectationsExpectationsofOEM26ExpectationsofCustomersQuestions8&9Toberewardedforsuperiorperformance,tobedealtwithasapartner,tobepaidontimeStableorders(subjective),communicationofkeyissuesaffectingsuppliersReducednumberofdesignalterationsduringdesigndevelopment,improvedforecaststabilityandaccuracy,risksharingofrawmaterialscostexposureUnderstandingExpectationsTierOneSupplierOEMCustomerSupplierSupplierExpectationsofCustomersExpectationsofCustomersSchedulestability,recognizeourfullvalue,sharetechnologyexpectationsSharingprogramorcycleplansinformation,fairnessincustomersupplierrelations,providingbusinessopportunitiestosupportLargerorders,limitedcustomization,qualityforecasts,EDIorderingExpectationsofOEM(Supplier)Tomeetorimproveallqualitytargets,tomeetorimproveallcosttargets,tomeetorimprovealldeliverytargets.Stableproductionscheduling,optimalcapacityplanning,integratesupplychainintoourbusinessConsistent,accuratecommunications,sharebenefitsofcontinuousimprovements,respectsuppliertechnologyExpectationsofOEM(OEM)TierOneSupplierExpectationsofOEM27ExpectationsofSuppliersQuestions8&9TobeEDIcapable-staycurrent,tomanagetheirsupplierstoourrequirements,toimplementleanacrosstheirsupplybaseSmalllotdelivery,on-timedelivery,lowppmCostreduction,improvedperformance,technologicalsupportManagethesupplychaintotheirbenefit,investintechnologytotheirbenefit,reduceourtotalacquisitioncost100%on-timedelivery,costcompetitive,shortlead-timesOngoingpricereductionsat3-5%peryearrate,flawlessdeliveryandqualityperformanceCompetitivequoting,blackboxengineeringdesignwork,supplychainagreementsExpectationsofSuppliersExpectationsofSuppliers(Supplier)ExpectationsofSuppliers(OEM)Improvingnewproductdevelopmenttiming,tocontinueproductivityimprovementactivities,toexpandregressivereplicationofsupplychainoptimizationphilosophy.Bemoreintegratedinourbusinessprocess-leanproductionpractices,reduceleadtimes-fasttomarket,inventorymanagementBeawareofpositioninsupplychainandcommunicate,managesupplychain,notjustsupplier,continuouslyimprovequality,cost,cycletime,humanresourceefficiencyUnderstandingExpectationsTierOneSupplierOEMCustomerSupplierTierOneSupplierExpectationsofSuppliersOEMCustomerExpectationsofSuppliers28Ensurethatthemanagementcontrolstructurefacilitatescross-functionalsupportandcommunicationwithintheorganization.Activelysolicitinputfrominternalstakeholdersattactical,operational,andstrategiclevelswithintheorganization.Establishmechanismsorforumsforexchangingsupplychaininformationwithsuppliersandcustomers.Refinemanagementstyletoensurestrongtrustandcommunicationwithsupplychainpartners.BestPracticesUnderstandingExpectations29KeyPracticesSuppliersCustomersIntegrationofKeyPracticesintoSupplierandCustomersSupplyChainsSupplyChainManagementWhere1=NotIntegrated,2=SlightlyIntegrated,3=FairlyIntegrated,4=HighlyIntegrated,5=ExtensivelyIntegratedOEMsaredrivingintegrationonthecustomersidewithTier1Suppliers,however,therelationshipsbetweentieredsuppliershavelimitedintegrationsuccess.Question2030CustomizeyoursupplychainstructuretofocusontargetedcustomersegmentsIdentifyconstraintsusingcross-functionalteamsQuantifyleveragepointsinsourcing,manufacturinganddistributionUtilizevendor/customeralliancesacrossthechainFosterALeadershipDrivenSupplyChainStrategyDevelopITStrategyandInfrastructureAssessCustomerNeeds&SegmentsAlign&

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KPIsDevelopSupplyChainStructureDevelopSupplyChainStructureSupplyChainManagement31ActivitiesinSupplyChainSupplyChainManagementThereisconsensusamongallregardingactivitiesinthesupplychainandevidencethatimprovementopportunitiesareplentiful.Performance(1=None,2=Poor,3=Fair,4=Good,5=Excellent)SuppliersOEMsQuestion20%10%20%30%40%50%60%70%80%90%100%CapacityPlanningSourcingandPurchasingInventoryManagementTransportationForecasting/DemandPlanningCustomerServiceProductionSchedulingMaterialsPlanningWarehouseManagementSupplyChainPlanning/NetworkDesign123450%10%20%30%40%50%60%70%80%90%100%IncludedinSCM(%ofRespondents)12345ScopeofSupplyChainActivities32OrganizationalResponsibilitiesManufacturingSales,PromotionsandMarketingPackagingDesignSalesOrderManagementCustomerServiceFleetManagementCapacityPlanningReverseLogisticsandReturnsProductionSchedulingInformationTechnologySolutionsForecasting/DemandPlanningDistributionMaterialsPlanningInventoryManagementTransportationWarehouseOperationsPlanning&MgtSupplyChainPlanningandNetworkDesignSourcingandPurchasing9%14%14%18%18%23%23%27%27%32%32%36%36%41%50%50%50%64%68%0%10%20%30%40%50%60%70%80%Other:PercentofRespondentsSupplyChainExecutiveResponsibilitiesQuestion12Theresponsibilitiesofthesupplychainexecutivedonotencompassallsupplychainactivities,thusreducingtheabilitytoinfluenceoverallsupplychainperformance.33ActivitiesversusResponsibilitiesThereisasignificantdisconnectbetweenwhatcompaniesdefineasactivitiesofsupplychainandwhatcompaniesvalueasprincipalactivitiesofsupplychainexecutives.Question2&12CapacityPlanningSourcingandPurchasingInventoryManagementTransportationForecasting/DemandPlanningCustomerServiceProductionSchedulingMaterialsPlanningWarehouseManagementSupplyChainPlanning/NetworkDesignInformationTechnologySolutionsPackagingDesignSalesOrderManagementManufacturingDistributionLinkw/Sales,Promotions,andMarketingReverseLogisticsandReturnsFleetManagementActivitiesofSupplyChainResponsibilitiesofSupplyChainExecutive%ofRespondents77%77%77%77%73%68%68%68%64%64%64%64%59%55%55%50%50%41%0%10%20%30%40%50%60%70%80%90%100%SupplyChainManagement34OutsourcingActivitiesThirdpartyrelationshipsareexpectedtogrowascompaniesoutsourceSupplyChainresponsibilities.Question14CustomsClearanceBondedWarehousingPackageEngineeringandDesignWarehouseManagementFleetManagementKittingandSequencingBillingandCollectionsOverseasDistributionReverseLogisticsandReturnsOther:After-MarketPartsDistributionSupplyChainInformationSystemsTransportationManagementCallCenterOperations/OrderEntryCustomerServiceInventoryManagement64%32%27%27%18%18%14%9%9%9%5%5%5%0%0%0%0%10%20%30%40%50%60%70%80%90%100%12345OutsourcingPotential(1=NoPotential,2=SlightPotential3=ModeratePotential,4=GoodPotential,5=HighPotential)CurrentlyOutsourcedSupplyChainManagement%ofRespondentsOutsourcingPotential35CurrentlyPlannedImportanceUsedSuppliers68%23%4.6Consultants45%0%3.8Customers41%23% 4.3ThirdPartyServiceProviders32%14% 3.6SoftwareVendors32%18%3.7Distributors18%18%3.1ProfessionalAssociations9%5%3.2TradeAssociations5%5%3.5SupplyChainManagementPartnersSupplyChainManagementOnalimitedbasis,suppliersarelookingtotheirownsuppliers,customersandotherthirdpartiestohelpfillresourceandskillsdeficienciesQuestion19Where1=NotatallImportant,2=SlightlyImportant,3=FairlyImportant,4=VeryImportant,5=Essential36BestPracticesSupplyChainManagementUtilizeexternalresourcesonanas-neededbasistofulfillsupplychainresourceandskilldeficiencies.Establishcriteriaforselectingandmeasuringsupplychainpartnerperformance.Retainthosefunctionsorprocessesthatgivethecompanyacompetitiveadvantage;outsourceprocesseswherethecompanylagsinexpertiseofefficiency.Developanoutsourcingstrategythatreflectsthecorporatevision.Workwithtrustedoutsourcers,yetclearlycommunicateexpectationsinoriginalcontracts.Definerequirementsandexpectationsintermsofoutcomes,nottasksoractivities.Linkoutsourcercompensationtooutsourcerperformance.Integratethird-partyoutsourcinggoals,objectivesandresourcerequirementsintothesupplychainstrategicplan.37Thelistofactivitiesincludedinthedefinitionsofsupplychainarebroaderthanthescopeofthesupplychainexecutive’sresponsibilities.Supplychainresponsibilitiesaresharedinmostorganizations.Mostnotably,supplychainexecutivesarenotresponsibleformanufacturingandcustomer-facingsalesactivities.Companieswithsharedresponsibilitiesforsupplychainmanagementrequireflexibleorganizationalstructurestofacilitatecommunicationamongsupplychainexecutivestofosteroptimizationofthetotalsupplychain.Onalimitedbasis,suppliersarelookingtotheirownsuppliers,customersandotherthirdpartiestohelpfillresourceandskilldeficiencies.Thirdpartyrelationshipsareexpectedtogrowastheoutsourcingtrendincreases.KeyFindingsSupplyChainManagement38Developkeyperformancemeasurerswhichspantheentiresupplychain(includingvendors&customers)UsebalancedmeasuresUtilizeexceptionreportingtomonitorresultsMeasure&rewardchangebehaviorsFosterALeadershipDrivenSupplyChainStrategyDevelopITStrategyandInfrastructureAssessCustomerNeeds&SegmentsDevelopSupplyChainStructureAlign&MonitorKeyPerformanceIndicatorsAlign&MonitorKeyPerformanceIndicatorsPerformanceMeasurement39PoorQualityLowFillRatesHighInventory/LowTurnsPoorDemandForecastingPerformanceDecreasingMarginsLongCycleTimesSymptomsofa“Strained”SCPerformanceMeasurement40AssessmentofPerformanceMeasurementActivityPerformancetargetsareestablishedandperformanceisroutinelyreviewedPerformancemeasuresareintegratedandencompassquality,costandtimeExecutivelevelmeasuresareusedtoprovideindicationsofwhetherthesupplychainisperformingaccordingtoitsstrategicintentMeasuresarealignedtosupplychainperformanceobjectivesManageriallevelmeasuresareusedtoevaluatewhethertacticalandoperationaltypesofactivitiesareworkingefficientlyInternal,externaland/ornon-competitivebenchmarkingisusedtohelpsetperformancetargetsMeasuresarefocusedondevelopingenterprise-wideexcellenceincross-functionalprocessesratherthanwithinindividualfunctionaldepartmentsAwell-balanced,limitedsetoffunction,process,andcross-enterprisebasedmeasuresareusedQuestion3.13.0Performance*PerformanceMeasu