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Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
Eye forTransport atlanta 2011
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Eye forTransport atlanta 2011

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  • 1. Chief Supply Chain Officer ForumAtlanta — June 22, 2011Supply Chain Finance: Controlling Costs & Working with CFOOwen MitchellGlobal Head of ProcurementPearson
  • 2. Overview 1 • Digital & Physical Products 2 • Cash Velocity 3 • Engaging Suppliers 4 • Focus on Value DriversChief Supply Chain Officer Forum - June 22, 2011
  • 3. FPOChief Supply Chain Officer Forum - June 22, 2011
  • 4. The “New Consumer” and Demand Realities • Unrelenting growth of mobile devices • Emergence of “Screenagers”…of all ages • Never-ending drive for convenience shopping • Uneven adoption of technology across markets • Drive from uniform to personal: for print & digitalChief Supply Chain Officer Forum - June 22, 2011
  • 5. Personalization and the Printed Book Implications for Publisher: • Authors and Professors select their own content • No forecast of demand • One-shot delivery direct to consumers • No second chance to sellChief Supply Chain Officer Forum - June 22, 2011
  • 6. Personalization and the Printed Book Implications for Printer: • Fast track order management • Exponential increase in SKUs • Real-time scheduling • Same-day assembly of components • Direct shipping to last-minute destinations • Rethink – equipment, process flow, shopfloor management, systems, performance metricsChief Supply Chain Officer Forum - June 22, 2011
  • 7. Chief Supply Chain Officer Forum - June 22, 2011
  • 8. Cash Velocity: Printed Books les In ab ve y Pa nt $ o ry Takes Months Rec eivablesChief Supply Chain Officer Forum - June 22, 2011
  • 9. Cash Velocity: e-Books $ Takes SecondsChief Supply Chain Officer Forum - June 22, 2011
  • 10. Engage Suppliers Vs.Chief Supply Chain Officer Forum - June 22, 2011
  • 11. Traditional Relationship: Suppliers’ Viewpoint Customer DEMANDS Sales lower prices Raw Materials Labor Gross Margin Threatened Physical costs Unilateral Overhead problem-solving Net Income by the supplier to protect profit, ROA, and cash Receivables flow Inventory Equipment Deteriorating Operating Assets ROA and CASH FLOWChief Supply Chain Officer Forum - June 22, 2011
  • 12. With Meaningful Collaboration Customer GETS Sales lower prices Raw Materials Joint teams attack Labor costs Gross Margin Opportunity Physical costs Joint teams simplify Overhead processes Net Income Receivables Joint planning Inventory teams improve Equipment utilization Improving Operating Assets ROA and CASH FLOWChief Supply Chain Officer Forum - June 22, 2011
  • 13. Focus on value driversHeads of Procurement need to go beyond price: DemandManagement, Asset Utilization, and Time Value of MoneyCFO’s should partner with ProcurementChief Supply Chain Officer Forum - June 22, 2011
  • 14. Focus on Value Drivers 1. Create competition for aggregated volume: • Utilize price scales to drive down costs • Encourage use of lowest cost option • Mandate use of preferred or contracted suppliers 2. Take a more holistic view of sourcing: • Rethink cost of holding inventory versus chasing lowest unit rate • Focus on forecasting and cutting lead-times • Mitigate obsolescence risk; make little and often 3. Engage suppliers: • Automatic replenishment programs • Fewer touches; error-free transaction processing • Capacity planning: separate largely predictable from hopelessly unpredictable 4. Strip processes bare: • Efficiency – doing things right • Effectiveness – doing the right things • Eliminate – Simplify – then Automate or OutsourceChief Supply Chain Officer Forum - June 22, 2011

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