Bill Stankiewicz Scope 2010 Supply Chains For The 21st Century

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Scope conference 2010 in Florida, Bill Stankiewicz attended.
www.shipperswarehouse.com

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Bill Stankiewicz Scope 2010 Supply Chains For The 21st Century

  1. 1. Market Centric Industrial Supply Chains for the 21st Century Scope Conference Presentation April 2010 0
  2. 2. Scott Mason 1  Exec. Vice President – Global Supply Chain; Stepan Co.  Sr. Vice President- Global Supply Chain and SHE; Nalco Co.  President – Institutional Division ; Nalco Co.  Exec. VP & President ; Graftech International Ltd.  Vice President Global Supply Chain; Union Carbide Corp. 29 years leading industrial businesses and supply chains e-mail : scmason@ameritech.net
  3. 3. 2 Presentation Topics 1. GENERAL INTRODUCTION 2. MARKET CENTRIC SUPPLY CHAINS 3. INTIMACY 4. OPERATIONAL EXCELLENCE 5. INNOVATION 6. CLOSING 7. Q&A
  4. 4. 3 Market Centric Industrial Supply Chains for the 21st Century The development of internally supplied and externally sourced solutions to manage industrial supply chains accelerated in the last decade. This presentation will focus on the use of these advancements and the interconnectivity of strategy, systemic analysis, lean, external service company capabilities, and IT technology in solving several real-world industrial supply chain challenges. We will look at the critical factors that led to the selection and implementation of these solutions.
  5. 5. WHAT DOES IT MEAN TO BE MARKET CENTRIC ? 4 Market Innovation Needs Complexity Business Low cost Strategy producer Business Policy’s Cost Supply Chain Design Starts with Understanding the Business Strategy Customer Intimacy
  6. 6. Supply Chain Challenges for the 5 Coming Decade Globalization Growth Changing Volatility in Regulations key inputs Companies are Environmental searching for a Product coherent strategy to sustainability integrate the critical quality elements Logistics Collaboration Disruptions with External Partners Pressures to Personnel Reduce costs Skills and Turnover
  7. 7. Supply Chain Strategy and Function Excellence have become Synonymous Industry Response on Strategic Focus of Industrial Supply Chains All Plants U.S. Canada Sample 927 787 140 Continuous Improvement Program 73.0% 72.9% 73.6% Quality Certifications 52.5% 50.6% 63.6% Customer Satisfaction Surveys 45.3% 45.9% 42.1% Benchmarking 34.8% 35.2% 32.9% Environmental Management 31.8% 32.4% 28.6% Total Productive Maintenance 24.8% 24.5% 26.4% Energy Management 23.2% 23.2% 22.1% None of These 10.0% 10.3% 9.3% Industry Week/MPI 2007 Census of Manufactures Supply Chain Executives Reflect a Strong Internal Focus Yet Business Leaders See Growth and Customer Interaction as the Key Demands for the New Decade
  8. 8. Why Incorporate a Market Centric Approach in Your Supply Chain Strategy? INSIDE-OUT VIEW OUTSIDE-IN VIEW What are our deficiencies? What are our customers/market needs? What are the priorities? What value impact do they have? What are the resource constraints? What solutions are possible? What should our goals be? What should our goals be? Resets priorities around the customer Opens new needs and novel ways to create value
  9. 9. Do you know what demands your system must serve ? Understanding the requirements of the system is a necessary first step to aligning the system to meet the business needs
  10. 10. Common Challenge: Cultural Change to 9 External Centricity Experienced Planned Predictive Managed React to Material Dynamic Creating Incoming Resource Patterns Demand Orders Planning From First Patterns System Principals Desired Petrochemicals Water Treatment & Oil Field Graphite Electrodes Reaction to External focus Receiving Orders Planning on demand To Taking Orders determinants
  11. 11. 10 Presentation Topics 1. GENERAL INTRODUCTION 2. MARKET CENTRIC SUPPLY CHAINS 3. CUSTOMER INTIMACY 4. OPERATIONAL EXCELLENCE 5. INNOVATION 6. CLOSING 7. Q&A
  12. 12. 11 Customer Intimacy Back Ground Market Needs Business Strategy Business Requirements • Discreet demand • Unique solutions for • Service levels > 97% each customer and for many • High demand customers 99% volatility (+300)% • High component of service in offering incl. • Numerous container • Typically VMI VMI & CPU types to serve many • Wide variety of demand levels and • Limited consumption rates unique customer needs standardization either • High relative cost by product or market • Ability to “rush” to ship segment delivery in under 3 days • Numerous line • Have customer “out items in an order source” this need to • Large multi-sized supplier returnable container fleet management • Strong sustainability elements, i.e. recyclable • Many unique delivery containers, etc. requirements
  13. 13. 12 Step 1- Implement Demand Sensing Demand volatility and complexity is increasing. By becoming closely linked to our customers supply needs and rate of change, we can ensure a response capability to support the business strategy and satisfy customers needs. Concept Critical Factors Selected Solutions • Internally developed sonic Acquire and • Capable of acquiring level sensors integrated aggregate Point 10’s of thousands of with existing field process of Use (POU) data points controllers demand • Multiple materials and information for • Industry available container types integration equipment for throughout the • Intelligent system to telecommunications supply chain analyze & predict • Web-based data hub demand patterns • World Telemetry • Connect into order monitoring intelligence entry & production software management systems • Integrate with 6.0 SAP ERP backbone
  14. 14. 13 Step 1- Implement Demand Sensing Demand volatility and complexity is increasing, by becoming closely linked to our customers supply needs and rate of change we can ensure a response capability to support the business strategy and satisfy customers needs. Concept Critical Factors Selected Solutions Acquire and • Capable of acquiring • Internally developed sonic level sensors integrated aggregate Point Use of thousands of 10’s Information andwith existing field process Speed of Use (POU) data points demand To Combat Complexity controllers • Multiple materials and information for • Industry available container types integration equipment for throughout the • Intelligent system to telecommunications supply chain analyze & predict demand patterns • Web based data hub • Connect into order • World Telemetry entry & production monitoring intelligence management systems software • Integrated with 6.0 SAP ERP backbone
  15. 15. 14 Demand Sensing Insitu cell transmitters Production Planning Cheap data bandwidth Order Management Tracking, predicting, SAP - ERP and alarming smart systems Liquid level and solid Wt. Sensors Technology has reached the point of cost- effective solutions for point of use “demand “ sensing in Industrial Supply Chains
  16. 16. Step 2 - Integrate Material Management Process to 15 Achieve Real Time Connectivity Coupling real time demand data with predictive capability and communicating this information automatically through the entire supply chain enabled a cost-effective, time-effective response Concept Critical Factors Selected Solutions • Intense multi-year focus on Recognition that • Capable of acquiring automation numerous supply 10’s of thousands of chains existed data points • Integrated order entry with SAP ERP Manual hand-offs • Demand analysis to were slowing the establish MTO products • Detailed analysis of demand flow of critical vs. MTS products patterns for supply strategy – information hybrid MRP & production • Intelligent system to through the planning analyze changing different supply demand patterns • Upgraded internal warehouse chain elements • Connect into system production and logistics • Integrated supplier order systems and partners exchange – Ariba • Integrated logistics carrier management - Odyssey
  17. 17. 16 Step 2 – Extended Connectivity Logistics Optimization Insitu cell Software transmitters Production Planning & Cheap data Warehouse mgt. bandwidth Transportation Tracking, predicting, Consolidation and alarming smart systems Liquid level and solid Wt. Private Fleet Mgt Sensors e-Procurement Export Order Mgt Extending the Technology Solutions across virtually all supply chain interfaces
  18. 18. Odyssey Overview and Capability Transport Supply Chain Business Process Services Large Transport Network •$42 Billion cargo value moving •Greater than 1000 transport providers •Over $1 Billion in transportation spend Single Point of Contact • All Modes of Transportation – Marine (Parcel, Container, Barge), Rail (Tank, Box, Intermodal) and Truck (Pack, Bulk, Hopper) • Warehouse & Terminal Management • All Logistics Services Technology •Automate “low cost” decisions •Execution, monitoring performance •Data driving continuous improvement •Lower costs & enhanced capability
  19. 19. 18 Benefits Achieved  High service levels achieved with very high response to short lead time orders  Better manufacturing capacity utilization  Reduced company finished goods inventory  Largely eliminated sales time in on site inventory management  Improved route optimization and delivery load maximization  Eliminated “tank too full” returns – Reduced transportation costs and restocking work  Eliminated “tank run dry” events – Additional Sales
  20. 20. 19 Presentation Topics 1. GENERAL INTRODUCTION 2. MARKET CENTRIC SUPPLY CHAINS 3. CUSTOMER INTIMACY 4. OPERATIONAL EXCELLENCE 5. INNOVATION 6. CLOSING 7. Q&A
  21. 21. 20 Operational Excellence Back Ground Market Needs Business Strategy Business Requirements • Customers have • Global one stop supplier • Global supply global networks capability with • High quality, standardized flexibility to react to • Consolidation in & consistent product currency fluctuations supplier base has supplied to all locations created stronger • Raw material supply competitors • Low cost producer critical in maintaining strategy consistency & • Business bid in competitiveness period increments • High structural • Required product overhead leads to high interchangeability facility utilization from all suppliers necessary for cost dilution
  22. 22. Maximizing Asset Utilization 21 Customer needs and high asset utilization are often not aligned. By focusing on supply chain reliability and managing demand through customer-centric policies, significant opportunity exists to maximize profits. Concept Critical Factors Selected Solutions Extending the supply • Long manufacturing • Decision Tool: Multi-node chain through the cycles +45 days integrated supply chain sales and marketing • Requires highly optimization model processes. predictable supply system Establishing policies • Commercial and supply and decisions to • Operational scale and chain goals aligned - Free support combined turn-down limitations Cash Flow outcomes. • Global commercial market • Play Book: S&OP interactive process • System to balance designed to drive demand multiple segment demand management decisions vs supply capability • Annual commercial • Redesigned assets to bidding process single constraint system
  23. 23. Maximizing Asset utilization 22 Customer needs and high asset utilization are often not aligned. By focusing on supply chain reliability and managing demand through customer centric policy’s, significant opportunity exits to maximize profits. Concept Critical Factors Selected Solutions Extending the supply • Long manufacturing • Decision chain through the Optimization technology Tool: Multi-node Using cycles +45 days integrated supply chain sales and marketing coupled with Lean process • Requires highly optimization model processes. designs and supply system • Commercial and supply Establishing policy’s predictable sales strategies and decisions to • achieve enhanced chain goals aligned - Free toOperational scale and support combined turn down limitations outcomes. system efficiencies Cash Flow • Global commercial market • Play Book: S&OP interactive process • System to balance designed to drive demand multiple segment demand management decisions vs supply capability • Annual commercial • Redesigned assets to bidding process single constraint system
  24. 24. Optimization Model The process of constructing an optimization model forces a full and frank assessment of the systems real capabilities and economic trade-offs WH Plant WH Plant Plant Plant Plant Plant WH Plant WH
  25. 25. Improvement Methods and Best Practices Industry Week/MPI 2007 Census of Manufactures
  26. 26. Demand Management Integrated System 25 Demand Management Planning Scope Customer • Spot sales to Traditional Planning Scope transactional customer or market segment • Commercial contracts with Sales Production Logistics specific times • 100% contracts A single constraint or bottle neck • Segment pricing strategies tied to throughput RM Forming Bake Graph Output Machining
  27. 27. 26 Benefits  High Asset Utilization & Operating rates + 95%  End-to-End Cycle Times Reduced >20% with Corresponding Capacity Increase  Reduced Inventory Required for Demand Levels – finished product inventory virtually eliminated  Total Free Cash Flow $ Maximized
  28. 28. 27 Presentation Topics 1. GENERAL INTRODUCTION 2. MARKET CENTRIC SUPPLY CHAINS 3. CUSTOMER INTIMACY 4. OPERATIONAL EXCELLENCE 5. INNOVATION 6. CLOSING 7. Q&A
  29. 29. 28 Innovation - Delivery Back Ground Market Needs Business Strategy Business Requirements Customers • Deep understanding • Delivery system constantly look for of customer issues performance that meets additional value and changing needs Department of Home Land from suppliers Security requirements • Flexibility and adaptability to allow • Delivery system that for unique solutions manages low customer for each customer impact in complex multi- stop deliveries • Leverage the elements of • Ability to “rush” or technology & service respond with product in offering delivery on short notice • Compete on value • Many unique delivery creation beyond requirements targeted offering scope
  30. 30. Delivery “Not an exciting area, Think again !” 29 Federal mandated DHS rules changed the standards for entering many industrial sites. Customers struggled with these changes while at the same time delivery driver quality dramatic changed with new regulations on driving hours and increasing transport demand. Concept Critical Factors Selected Solutions A delivery program which • Business strategy • Site audit and reduced error rate of all supported customer compliance team to aspects in complicated segment establish delivery deliveries requirements • Meet DHS requirements Goal: “100/100” standard • New delivery process • Meet individual site requirements aligned with carrier or a Zero Defect Delivery partner • Reproducible in multiple sites and industry settings • Redundant verification pre-delivery • Limited increase in total cost • Dedicated carrier driver for last mile
  31. 31. Delivery “Not an exciting area, Think again !” 30 Federal mandated DHS rules changed the standards for entering many industrial sites. Customers struggled with these changes while at the same time delivery driver quality dramatic changed with new regulations on driving hours and increasing transport demand. Concept Critical Factors Selected Solutions A delivery program which • Business strategy Using external changes • Site audit and to reduced error rate of all supported customer compliance team aspects in complicated changing customer needs or segment establish each delivery deliveries requirements as opportunities for innovation • Meet DHS requirements Goal: “100/100” standard • New delivery process • Meet individual site requirements aligned with carrier or a Zero Defect Delivery partner • Re-producible in multiple sites and industry settings • Redundant verification pre-delivery • Limited increase in total cost • Dedicated carrier driver for last mile
  32. 32. 31 Zero Defect Delivery Process Flow Surveys, Audits Logistics Field & Training Auditor 3.Create shipment & release for dispatch 4. Plant schedules w/ 1. Create delivery carrier 3 days prior to p/u Customer Bulk Dedicated Service Planning Driver 2.Advise availability Logistics Coordinator Logistics Carrier Coordinator Operations • Review all • Proactive call to carrier open orders • Dispatch dedicated to confirm requirements driver program • Proactive call to field • 100% check call sales if delivery is delayed Reduced delivery events to nearly zero. Capability integrated into offering with significant market share improvements
  33. 33. 32 Benefits  Eliminated carrier failed deliveries Customer risk, time and resources  Eliminated delivery complaints  Created new “premium” service offering; logistics leaders became part of selling team  Open new access point to customer through logistics audits  Significantly increased market share in high security end market segments  Significantly increased service image
  34. 34. 33 Innovation - Supplier Collaboration Background Market Needs Business Strategy Business Requirements • Customers have • Global one stop supplier • Global supply global networks capability with • High quality, standardized flexibility to react to • Consolidation in & consistent product currency fluctuations supplier base has supplied to all locations created stronger • Raw material supply competitors • Low cost producer critical in maintaining strategy consistency & • Business bid in competitiveness period increments • High structural • Required product overhead leads to high interchangeability facility utilization from all suppliers necessary for cost dilution
  35. 35. 34 Supplier Collaboration Raw material attributes directly impact the cost, performance, and effectiveness of the end product. Concept Critical Factors Selected Solutions • Selecting a supplier • Margin sharing Customers and designing the agreement with coke constantly look for relationship to align for supplier based on end additional value cost and value sharing product selling price from suppliers through combined optimization • Combining supply Looking across chain productivity longer elements of • Elements of the supply programs to select the supply chain chain where throughput high return provides additional or cost impact of current opportunities optimization standards is high, i.e. opportunities “specifications” • Utilization of material science impact on end • Exclusive technology product with process sharing arrangement technology to optimize combined supply chain
  36. 36. Significant Capacity Increase Achieved by 35 Changing Processing Conditions In Multiple Steps of the Combined Process Lights After Before Petroleum Heavy Feed Quality Liquids Processing Time Raw Material Processing Time Solid Coke was Driven by Market Specification on Impurities Modified Impregnation and Baking Step Bake. Solid Coke Forming Bake Graph Impregnation Machining Electrodes
  37. 37. 36 Benefits  Productivity reduced total cost by >12%  Additional capacity increased throughput of assets at time when demand peaked Supply reliability  Combined processing knowledge and reduced cost opened path to new cost effective at peak customer operating periods material technology for high performance products that reduced customer consumption rates by 15%  Unique supplier relationship expanded into other value creating opportunities
  38. 38. 37 Presentation Topics 1. GENERAL INTRODUCTION 2. MARKET CENTRIC SUPPLY CHAINS 3. CUSTOMER INTIMACY 4. OPERATIONAL EXCELLENCE 5. INNOVATION 6. CLOSING 7. Q&A
  39. 39. Summary Businesses need more than functional excellence from supply chains in the next decade; they need a market-centric approach to support their growth objectives and to ensure the finite resources available are employed to create maximum value.
  40. 40. Summary Businesses need more then functional excellence from supply chains in the next decade; they need a market centric approach to support their growth objectives and to ensure the finite resources available are employed to create maximum value. A market-centric supply chain’s priorities will be defined by the business strategy and will focus externally to ensure business alignment and to identify partners and solutions to meet the business requirements.
  41. 41. Summary Businesses need more then functional excellence from supply chains in the next decade; they need a market centric approach to support their growth objectives and to ensure the finite resources available are employed to create maximum value. A market centric supply chain priorities will be defined by the business strategy and will focus externally to ensure business alignment and to identify partners and solutions to meet the business requirements. Supply Chain leaders that: - understand and engage in development of the Business Strategy - communicate the choices that align the supply chain with the strategy and market needs - deliver the necessary capability - and look for unique ways to meet customer needs Will find success no matter what industry !

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