Developing a 5 year Supply Chain Strategy: IITA AS A CASE STUDY
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Developing a 5 year Supply Chain Strategy: IITA AS A CASE STUDY

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keypoints in developing a 5 year supply chain strategy,the vision and strategy,IITA in view(Weaknesses, opportunities and threats)

keypoints in developing a 5 year supply chain strategy,the vision and strategy,IITA in view(Weaknesses, opportunities and threats)

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Developing a 5 year Supply Chain Strategy: IITA AS A CASE STUDY Developing a 5 year Supply Chain Strategy: IITA AS A CASE STUDY Presentation Transcript

  • George CooperNovember 2009
  • 3 KEY WORDS In Developing a 5 year Supply Chain StrategyREVIEWDEVELOPMENTCONTROL
  • coles
  • In Developing a 5 year Supply Chain StrategyThere is a need to:• Understand where money is spent• Evaluate strengths and weaknesses within current organisation and its existing strategy• Plan short, mid and long term• Develop strategy based upon evidence and data• Develop KPIs to ensure strategy is on course• Develop systems and staff to maintain the course
  • The Vision and StrategyNeed for vision and strategy must balance:• Financial guidelines and limits• Scientific and organisational objectives and desires / needs• Growth and learning of internal personnel and beneficiaries• Requirements of all stakeholders internal and external
  • IITA Annual Report• Total Funding $US 51.09 million• 94.2% from CGIAR• Expenditure $US 50.747 million• 83.3% for program expense• $US 16.7 million for management and general expense
  • IITA Annual ReportCGIAR priorities:• 33.5% Sustainable management of resources• 31.1% Generic improvement• 15.0% Improving policies• 11.1% Agricultural diversification• 9.4% Sustaining biodiversity
  • IITALikely Financial priorities:• Maintain and improve KPIs and efficiencies to generate continued and increased support and funding.• Help to maximise communication of work and benefits.• Maximise use of funding for scientific resources by optimum efficiency in supply chain
  • IITALikely Stakeholder priorities:• Effective and efficient use of funds• Productive meaningful output from funds• Real cohesive food improvement research• Maximise productivity and communication of results• Viable farming and food production research
  • Opportunities• Scientific Research fully supported• Maximise funds available for research• Minimise waste• Minimise Cost• Improve Efficiency• Improve Bottom Line / Cash availability• Alliances with manufacturers rather than agents• Alliances with Importers• Minimise expenditure on stock and develop fluid supply chain.• Items where needed and on Time• People being fed
  • Threats• Ineffective utilisation of funds resulting in less research and loss of funding confidence• Possibility of extended supply chains leading to delays, shortages and wasted time.• Exposure to excess stock and subsequent obsolescence• More effective use of funds by other organisations leading to greater confidence in their research / operations• Supply / continuity / availability• Items logistically unavailable and late• People starving
  • IITA Weaknesses, opportunities and threats may include:• Price / cost• Quality of goods and services• Reliability of supply (Availability on time)• Service levels• Communication• Impact of loss of funds both to program and future funding
  • The First Steps Towards Solution• Identify Problems• Identify Causes• Effect Solutions• Measure
  • The Process of 5 Year Improvement is therefore to:• Understand causes of problems• Understand research, operations and funding• Agree goals and direction• Devise strategy• Effect solutions and KPIs• Involve, motivate and train staff• Introduce controls• Develop strategy and innovative solutions• Involve suppliers and move forward
  • Developing the Purchasing /Supply Strategy and Team for 5 year plan Requires clear understanding of the role
  • Role of Purchasing and Supply: To help and advise on:• Minimising cost and improving bottom line / research funding• Satisfying customers re service (internal and external)• Increasing efficiency• Mirroring supply to demand• Developing sourcing and supply chain strategies
  • Apply Best Practice Purchasing and Develop Effective 5 Year Supply Chain:• Researching and understanding the internal and external problems and market thoroughly• Developing the best overall supply solution re price, quality and supply reliability• Consolidating spend (maximising opportunity)
  • Apply Best Practice Purchasing and Develop Effective 5 Year Supply Chain:• Rationalisation of suppliers with regard to price, quality of service and reliability• Apply: – Negotiation – Cost reduction – Value Analysis – Vendor Rating
  • Apply Best Practice Purchasing and Develop Effective 5 Year Supply Chain:• Supplier development / relationship building• Determining the total cost of acquisition• Rigid control of pricing, freight and services• Buying team becoming professional enough to warrant being fully involved in long and short term strategic decision making and direction• The value of purchasing to the bottom line being recognised at all levels throughout the entire organisation
  • Likely Timescale• 0 – 3 MonthsReview current situation including systems, controls, staff, problems, suppliers• 3 – 12 MonthsChange and modify problem areas and create competitive market atmosphere supplier review. (Consider supplier days, conference, e auctions etc). Introduce system and administrative controls etc• 12 – 20 MonthsContinue process of change and introduction of new suppliers, staff reviews, training
  • Likely Timescale• 20 - 24 MonthsReview, analyse and modify. Introduce 360 degree feedback• 24 – 48 MonthsConduct further improvements taking account of market changes• 48 – 60 MonthsFurther review and hone ALL
  • Food for Thought
  • “The Future Viability and Funding of IITA may Depend upon Purchasing and the Supply Chain”
  • The Purchasing Pie Profit 6% Overheads 15% Materials 55% Labour 24%The average purchasing department spends over 50% of what the organisation receives as income
  • Purchasing and the Bottom Line Apportionment of Sales Revenue A 5% reduction in bought100% out costs can increase Bought Out Bottom line Cash by 25% Materials & Services50% Overheads Labour Profit
  • Lean Thinking Supply Includes minimising waste in any form including:• Minimal stock solutions• Demand driven supply• Direct to customer supply• Simplified operations• Change• Challenging current practices and suppliers
  • Implementing Lean Thinking in the Supply Chain• Is about accepting the need for change• Planning change• Implementing change• Managing change• Making it work
  • Improving the Productivity of Capital Sales Revenue PROFITPurchasing CostsEfficiency Inventory Return on InvestmentSupply CashChain CapitalEfficiency Employed Fixed Assets Receivables
  • Purchases & Stocks – How they affect Funds and Bottom Line Working Capital Current Assets Year 1 £4,800.0 Year 1 £5,100.0 Total Capital Year 2 £2,600.0 Year 2 £3,800.0 Employed BALANCE Year 1 £9,800.0 Current Liabilities SHEET Year 2 £8,100.0 Year 1 £300.0 Fixed Assets Year 2 £1,200.0 Year 1 £5,000.0 Return on Year 2 £5,500.0 Investment Other Costs Year 1 16.3% Year 1 £16,700.0 Year 2 54.1% Sales Turnover Year 2 £15,400.0 Year 1 £37,100.0 Year 2 £36,100.0 Profit Year 1 £1,600.0PROFIT & LOSS (4.3%) Total Costs Purchases ACCOUNT Year 2 £4,400.0 Year 1 £35,100.0 Year 1 £18,800.0 (50.7%) (12.3%) Year 2 £31,700.0 Year 2 £16,300.0 (45.2%)
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