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  • Good morning / afternoon / evening ! My objectives today are:
  • Need for a Welsh supply chain is not as obvious as it sounds. Particularly relevant to inward investment companies not, perhaps, utilising Welsh capabilities. Research outcomes are around Welsh SME awareness of supply chain management, priority accorded to SCM and what needs to be done to develop SCM in Wales. Public & private sector actions are around what can and should be done to develop Welsh SCM capability.
  • PRODUCT - material cost SOURCING - internal v external ORG - operational costs TOTAL COST OF OWNERSHIP - innovation & R&D level LOGS STRATEGIES - supplier communication - delivery reliability COUNTRY - exchange rate - infrastructure As you can see, complexity evolves and this to a large extent explains why inward investment companies tend to stick with their existing supply chains and, why the public sector does not engage in the development of Welsh supply chains, but there are “other” problems like complexity.
  • SOURCING entry - local source, imports, perhaps trading companies, perhaps even international procurement offices. ANALYSIS - profitability, assets, costs, risk SUPPLIER relationship - contractual agreements, alliances, joint ventures, partnerships, perhaps licensing, info systems. WITHDRAWAL - failure to meet purchasing objectives, international sanctions, political instability BUT OFTEN OVERLOOKED ELEMENTS. Complex indeed! Then there’s the drive for competitiveness.
  • Instability examples include oil/fuel price fluctuations, foot & mouth, stock market falls, 11 September 2001. The risk in particular is often pushed down the supply chain (by both private and public sector!) as far as the purchaser can get away with. Global supply chains often result.
  • Realisation NOW that Procurement & Supply Chain strategies have often been an ADD ON to core business strategy. Often there is NO INTEGRATION. Focus has been on EFFICIENCY rather than GROWTH & STRATEGIC advantage. Many global operators have picked up on some operational fads (make to order, supplier managed replenishment for example) and assumed ONE SIZE FITS ALL. SENARIO PLANNING has largely been non existent. Arguably such operators are at best destined for MEDIOCRATY and at worst, doomed. The Stock Markets are beginning to realise this too and share prices are moving in the negative direction. The same mistakes too are made by the public sector particularly when aggregation is preferred to local economic development agendas. Critical factors emerge in both sectors.
  • Strategic approach not simply an operational plan. Resource demands are high and often competing. Specification driven purchasing is returning - tightening the requirement and perhaps stifling innovation. Power relationships are more prevalent than partnerships. Logistics and supply chain management are critical to success - even more so post 11 September 2001. To be (slightly) fair there is an overall business squeeze.
  • All this was happening before 11 September and STILL IS and WILL CONTINUE to happen. Some are perhaps complacent? Some are ignoring reality perhaps blind faith in UK government economic reassurances. The factors affecting SCM are complex but remarkably simple.
  • So where are we in Wales with supply chain management particularly in SMEs. Deploying random stratified sampling, questionnaires were mailed to 480 organisations employing less than 200 people and operational for at least 7 years, to ensure a wide geographical and industrial spread.
  • In addition to the standard administration of the questionnaires, a debriefing telephone interview was conducted with appropriate respondents in which respondents were asked to explain why they gave the answers they did and wrote the comments they wrote.
  • The questionnaire sought responses covering organisation profile, customers, suppliers, supply chain activity and general views on business support services. There was a 60% response rate. The findings, therefore, should be considered as a substantive indication of the current trends.
  • Eighteen issues in total were identified by respondents. Of the five issues attracting the highest priorities at site, these can be directly addressed by effective supply chain management. These are leadership, strategy, waste reduction, team working and procurement.
  • Major surprises here are time to market and financial management not being considered a high priority.
  • These issues are normally associated with innovation. It is perhaps surprising given UK and Welsh government encouragement to trade electronically to see e-commerce in the category of least importance.
  • A possible explanation is seen when considering the respondents perception of their customers priorities.
  • This suggests that customers are pursuing the traditional product issues (quality, price, reliability, support) and not the process issues which may provide supplier innovation (e-commerce, R&D, procurement, time to market, value analysis and value engineering). So what’s needed for longer term success.
  • We need perhaps to capture value. What do I mean by that.
  • Sounds strangely attractive but wonderfully naïve?! It’s that word strategy that many recognise but don’t really understand.
  • It is not simply an operational plan to do things better. It needs to be distinctive.
  • This means within Wales we need a value proposition.
  • Okay, so a value proposition for supply chain management in Wales.
  • One such mechanism is public sector procurement activity.
  • Whilst I welcome the review of Welsh Public sector procurement carried out in 2001 and I agree with some (but not all) of its recommendations, £3 billion is big money. Approx 52% is spent in Wales. There is a strong policy of aggregation to achieve economies of scale perhaps at the expense of the local economic regeneration agenda(s). This procurement expenditure is a huge opportunity to develop the supply chain in Wales. Many claim this is not possible due to EC Procurement Directives, competitive tendering and so on. Piffle and balderdash. Less than 60% of expenditure is subject to Procurement Directives, contracts under the thresholds (circa £150K) do not have to be advertised. Public sector procurement needs to be proactive in its sourcing policy and needs to do more about supplier development. This is something I feel passionate about and have pursued (and will continue to pursue) in various Welsh fora. More generally what can government and business leaders do?
  • This is where backward linkages are created and cemented Capacity is only as strong as the weakest link in the chain! Indeed we are talking here about enterprise management - a popular subject particularly with the Welsh Assembly Government.
  • The enterprise operates in a national and international environment. It is from this environment the enterprise obtains its resource needs to manage its “business.” These resources are information, human resources, financial and physical assets, and networks and relationships. The focus therefore for our strategy makers is:
  • Another BFO if I may.
  • B linding F lash of the O bvious (BFO). Both purchasers and SME’s need to show LEADERSHIP in these complex times. Little example of a lack of COHERENCY. I was to help find potential SME suppliers of a certain category of product. I asked 2 WELSH agencies to help me. One came back with 6 possibilities in Wales. The other came back and said no such suppliers exist in Wales but gave me the phone number of a West Midlands agency that may be able to identify some ENGLISH SME’s who could do the job. Perhaps too we forget so easily what supply chain management is really about.
  • I trust you have found my views interesting and thought provoking. Thank you for your time and attention.
  • PowerPoint Presentation PowerPoint

    1. 1. Current Priorities for Supply Chain Development. <ul><li>Professor Michael Quayle </li></ul><ul><li>Robert Bosch Chair in Purchasing & Supply Chain Management </li></ul><ul><li>and Director of the University of Glamorgan Business School </li></ul>
    2. 2. My objectives today <ul><li>Need for a Welsh supply chain </li></ul><ul><li>Research outcomes </li></ul><ul><li>Public & private sector actions </li></ul>
    3. 3. Supply Chain Strategies Product/Service Organisations Country Sourcing Strategies Logistics Strategies Total Cost of Ownership
    4. 4. Sourcing Entry Strategy Supplier Relationship Strategy Sourcing Decision Strategy International Analysis Withdrawal Strategy International Sourcing Decision Strategy
    5. 5. Drive for competitiveness <ul><li>Instability </li></ul><ul><li>Globalisation </li></ul><ul><li>Product/service improvement </li></ul><ul><li>Cost reduction </li></ul><ul><li>Risk exposure </li></ul>
    6. 6. Global Supply Chains <ul><li>Uncertainty exists at every echelon </li></ul><ul><li>Inherently complex </li></ul><ul><li>Information flows are vital </li></ul><ul><li>Building supplier relationships are vital </li></ul><ul><li>Organisational systems to deal are crucial </li></ul>
    7. 7. CRITICAL FACTORS <ul><li>Strategic approach needed </li></ul><ul><li>Resource demands </li></ul><ul><li>Specification driven </li></ul><ul><li>Power relationships </li></ul><ul><li>Logistics & Supply Chain Management </li></ul>
    8. 8. The Business Squeeze <ul><li>economic disincentives - the customer supply chain cost reduction motive </li></ul><ul><li>desire to become “e”-active </li></ul><ul><li>technology difficulties </li></ul><ul><li>real training/skills needed </li></ul>
    9. 9. Culture Leadership Motivation Infrastructure Technology Planet Public Sector CONTINGENT VARIABLES Globalisation Industry Size Competition Customers SCENARIO PLANNING Supply Chain Strategies Supply Chain Integration Mechanisms FACTORS AFFECTING SUPPLY CHAIN STRATEGY
    10. 10. Survey Scope
    11. 11. RESPONSE RATE <ul><li>Circa 60% response rate </li></ul><ul><li>288 companies </li></ul><ul><li>Statistically significant (the norm 22%) </li></ul><ul><li>Remarkable response rate particularly from SME’s </li></ul>
    12. 12. Importance of Issues - High <ul><li>Leadership 4.5 </li></ul><ul><li>Strategy 4.4 </li></ul><ul><li>Team Working 4.3 </li></ul><ul><li>Waste Reduction 4.1 </li></ul><ul><li>Procurement 4.0 </li></ul>All Marked Out of Five
    13. 13. Importance of Issues - Medium <ul><li>Supply chain management 3.5 </li></ul><ul><li>Time to Market 3.5 </li></ul><ul><li>MRP 3.5 </li></ul><ul><li>Financial management 3.5 </li></ul><ul><li>Supplier development 3.5 </li></ul><ul><li>R & D 3.5 </li></ul><ul><li>JIT 3.5 </li></ul>
    14. 14. Importance of Issues - Low <ul><li>E-Commerce 2.5 </li></ul><ul><li>New technology 2.5 </li></ul><ul><li>Customer management 2.5 </li></ul><ul><li>Kaizan 2.5 </li></ul><ul><li>Benchmarking 2.5 </li></ul><ul><li>IIP 2.5 </li></ul>
    15. 15. Those with the lowest Priority are things to do with INNOVATION!!
    16. 16. SMEs Perceived Priorities of their Customer’s Requirements <ul><li>High </li></ul><ul><li>Quality </li></ul><ul><li>Pricing </li></ul><ul><li>Product Reliability </li></ul><ul><li>Service Reliability </li></ul><ul><li>Capability to Support </li></ul><ul><li>Low </li></ul><ul><li>Time to Market </li></ul><ul><li>E- Commerce </li></ul><ul><li>R&D </li></ul><ul><li>Purchasing Expertise </li></ul><ul><li>Value Analysis </li></ul><ul><li>Value Engineering </li></ul>
    17. 17. Long Term Success <ul><li>The BFO </li></ul><ul><li>Depends on successful suppliers </li></ul><ul><li>Depends on customer satisfaction </li></ul><ul><li>The ENTIRE supply chain must be successful. </li></ul>
    18. 18. Capturing Value A supply chain approach to developing national export development strategies
    19. 19. STRATEGY <ul><li>It’s the creation of a unique and value position involving a different set of activities </li></ul>
    20. 20. DISTINCTIVE VALUE CHAIN Strategic Positioning
    21. 21. THE VALUE PROPOSITION <ul><li>Needs to be different from the competition to create competitive advantage. </li></ul><ul><li>If the value proposition is not different, you are probably simply in the business of doing things better ie. operationally effective and do NOT have a strategy </li></ul>
    22. 22. The value proposition for Wales. <ul><li>Trade strategy-makers are preoccupied with export promotion and market access </li></ul><ul><li>Economic development depends on export delivery performance, fulfilment and supply chain capabilities </li></ul><ul><li>How to convince strategy- makers to pay equal attention to border-in and border-out supply chain support. </li></ul><ul><li>Find a mechanism for devising appropriate policies </li></ul>The Issue :
    23. 24. What can government and business leaders do? <ul><li>Employ a value-chain approach to trade sector trade strategy development </li></ul><ul><li>Support the removal of technical obstacles and alignment of activities for efficient export operations </li></ul><ul><li>Motivate business owners to value professionals and raise skills to international working standards </li></ul><ul><li>Support independent professional knowledge and skills development institutions </li></ul><ul><li>Encourage sharing of information about target markets consumer standards,working, financing and legal practices </li></ul>
    24. 25. <ul><li>Management: </li></ul><ul><li>Planning </li></ul><ul><li>Executing </li></ul><ul><li>Monitoring </li></ul>Enterprise <ul><li>Demand forecasts </li></ul><ul><li>Customer delivery requirements </li></ul><ul><li>Inputs’ supply markets </li></ul><ul><li>Supply chain services </li></ul><ul><li>Securing & developing SCM expertise </li></ul><ul><li>Supplier development programs </li></ul><ul><li>Strategic supply chain alliances </li></ul>Improved information helps enterprises to plan ahead and be more competitive <ul><li>Planning & acquisition of physical assets </li></ul><ul><li>Cash flow impact and financial risks in the supply chain </li></ul>Information Human Resources Networks and Relation- ships Financial and Physical Assets
    25. 26. Strategy makers should focus on delivery performance and the supply chain structure in equal measures to market access and export promotion
    26. 27. A BFO <ul><li>Purchasers will need help to source locally </li></ul><ul><li>SME’s will need help to break into supply chains </li></ul><ul><li>Purchasers & SME’s need to bury their prejudices </li></ul><ul><li>The various agencies in Wales must work together & be coherent in their approach </li></ul>
    27. 28. Supply Chain Management <ul><li>It’s about people, expertise and performance </li></ul><ul><li>Not just about process. </li></ul>
    28. 29. And Finally ……….. There is a need to recognise the reality of relationships within supply chain management-it’s a RISK and a REVENUE Sharing Relationship.