Supply Chain Transformation


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Supply Chain Transformation

  1. 1. Supply Chain Transformation Using e-Business to Reduce Costs and Achieve Competitive Advantage Kirk Williams
  2. 2. CEO’s and Shareholder are Rightly Demanding ! Improved Performance Return on Capital Employed Merger Tax Credits Revenue FLEXIBILITY Divestments Net Cash Flow SENSE OF Operating Costs URGENCY Personnel Reductions Net Income
  3. 3. Effective Management of the Supply Chain is Critical • Ensures business success by; • Increasing margin capture • Improving customer service levels • Reducing working capital requirements • Reducing cost of manufacturing and logistics operations • However the supply chains in chemicals and petroleum are complex and difficult to manage
  4. 4. Supply Chain Management Success is about Vision and Visibility • Ineffectual management of the supply chain is like driving your car by only looking in the rear view mirror, you can only see where you have been, but you don't know where you are going and are likely to crash (into customers, suppliers and competitors whom you can't see) • Success is about vision and visibility • Vision: Knowing how to best utilise your assets to maximise added value in response to demands from customers and the constraints of your suppliers and assets. • Visibility: Being able to see the entire landscape of your supply chain from the customer back to the raw material suppliers.
  5. 5. How do You Achieve Your Supply Chain Goals? Given that: • Investment budgets are being cut • Industry over capacity • All investment projects need to demonstrate short term cost benefits….. • ….. As well as long term strategic benefits • Any solution will be ‘constrained’ by legacy organisational and technological systems • Implementation should cause minimal disruption to the organisation (ie not another ERP implementation)
  6. 6. As Any Consultant Will Tell You the Solution is EASY! You Need: • Consistent and common business processes • Consistent and common view of operational information • Operational integration along the extended supply chain, i.e. including key suppliers and customers • Supported by the 'right' organizational and technological infrastructure Starting Point How Does Your Supply Chain Determine Your Business Strategy?
  7. 7. Linking the Supply Chain to Business Strategy Horizontally Value chain optimisation End to end visibility Integrated Global inventory management Value driven Integrated Trader/ Market Contract Customer focus Supplier Manufacturer Demand Supply Maximised utilisation Portfolio optimisation Vendor managed Inventory Pull Push Commodity margin driven No customer recognition Dynamic pricing Not Low Cost Structural pricing models Feasible Producer BU cost minimisation Fragmented Discrete inventory management BU visibility Silo Structure BU optimisation
  8. 8. If You are a Low Cost Commodity Producer Horizontally Integrated Integrated Trader/ Market Contract Supplier Manufacturer Demand Supply Pull Push Not Low Cost Feasible Producer Low Cost Commodity Producer Fragmented • Lean, low overhead business processes Silo Structure • Strong focus of business unit costs • Lean manufacturing model • Good local cost control systems • Rapid and rigorous order to cash systems • High quality manufacturing execution systems • Close integration with commodity markets • Efficient and lean distribution network • Strong focus on MRO costs, inc. procurement processes and supplier relationship management
  9. 9. If You are A Trader / Contract Manufacturer Trader/Contact Manufacturer • Highly responsive/agile, integrated business processes • Close integration with commodity markets • Rigorous management of suppliers Horizontally Integrated • Close collaboration with suppliers • Strong APS and decision support tools • Margin management focus Integrated Trader/ Market Contract Supplier Manufacturer Demand Supply Pull Push Not Low Cost Feasible Producer Fragmented Silo Structure
  10. 10. If You are an Integrated Market Supplier Integrated Market Supplier • Strong customer focused organisation • Well integrated business processes from supplier to customer and order to cash • End to end integration of information flows • Good CRM, Demand Management and Sales & Operational planning systems • Integrated Capable-to-Promise and order Capable-to- processing systems Horizontally • Visibility of global asset & product portfolio Integrated • Integrated management of manufacturing and distribution Integrated Trader/ Market Contract Supplier Manufacturer Demand Supply Pull Push Not Low Cost Feasible Producer Fragmented Silo Structure
  11. 11. So What Do You Need to Do To Succeed in Each Quadrant ? Trader Low Cost Provider Market Supplier Internally integrated Cost focused Customer focused Org. Collaboration with external Lean manufacturing organisations Efficient distribution Responsive End-to- End-to- end integration Integrated with commodity Lean efficient processes Supplier to customer Process markets Asset and Portfolio Rigorous supplier visibility Good cost control management CRM Demand Management APS Order to cash Sales and Operations Tools Decision Support Manufacturing execution Planning Margin Management Cost control Capable to Promise
  12. 12. Making This a Reality Requires Appropriate Infrastructure BUSINESS STRATEGY O R P G R A T N O O I C O S E L A S S T S I E O N S INFRASTRUCTURE INFRASTRUCTURE
  13. 13. To Meet the Needs of Each Quadrant the Infrastructure Requirements are Very Similar Shared attributes of the infrastructure are: • To be flexible, extensible and scalable • Supporting hybrid operating systems and software vendor solutions • Facilitating easy integration of ERP and other enterprise systems, including flexible transaction data transformation • Supporting a single user view and consistent security policies • Supporting extended B2B integration • To be secure, both from a data integrity and from a assured/timely data delivery perspective
  14. 14. The Infrastructure must be extensible to support a Common Integrated Business Process Architecture Start small and grow to meet your business needs
  15. 15. Understanding Infrastructure Challenges eBusiness eLogistic eSCM ePROC eCRM eHR Portfolio s Lack of a enterprise integration strategy Lack of a consistent development environment Limited capability to extent beyond enterprise boundaries Poor solution delivery record Bricks and ERP CRM APS MES Misc. mortar systems
  16. 16. Bridging the Gap - eArchitecture eBusiness eLogistic eSCM ePROC eCRM eHR Portfolio s Governance/Funding Deal Negotiation Evergreen eArch 1 eBusiness Application Accelerators 2 Integration Hub eBusiness Enablers 3 Externalised Group Infrastructure 4 eSolutions Delivery Model Bricks A B C and ERP CRM DES MES MIS Misc. mortar systems
  17. 17. eArchitecture Component Model eBusiness eLogistic Portfolio eSCM ePROC eCRM eHR s Portal Publisher App. Dev. Content & Search & eBusiness Governance/Funding & Manager Toolkit Catalogues Navigation 1 Application Evergreen eArch Deal Negotiation Accelerators Data Analysis Personalisation Business & Response & Profiling Process/Rules Best Practices Integration Applications Integration Master Data External eBusiness 2 Hub & Connectors Reference Connectors Externalised De- De- bottlenecked Multi- Multi- Channel Service & 3 Group Infrastructure eDirectory Single Sign- on Sign- eSecurity Intranet Support System Mgnt eSolution Delivery 4 Model Strategy Demand Requirements Development Deployment Operations A B C Business Critical ERP DES MIS CRM MES Misc. Backbone 3/11/2002
  18. 18. Should I Use Best of Breed or an Enterprise Application Suite ?
  19. 19. How do You Achieve Your Supply Chain Goals? Given that: • Investment budgets are being cut • Industry over capacity • Establish a flexible infrastructure foundation • All investment projects need to demonstrate short term • Incrementally deploy best of breed solutions cost benefits….. targeted at quick wins • ….. As well as long term strategic benefits • Integrate business processes to the • Any solution will be appropriate level…. ‘constrained’ by legacy organisational and • …for your business strategy, which quadrant technological systems ? • Implementation should cause minimal disruption to the organisation (ie not another ERP implementation)
  20. 20. Things to consider Integrated Market Trader: Low Cost Supplier: Supplier: • Integration with • How visible is the • Focus on customer commodity markets manufacturing execution collaboration • Straight through performance? • Active demand processing, trader to • How visible is the supply management actualisation. chain inventory? • Deploy ATP/CTP • Do you have consistent technologies pricing/margin tracking? Infrastructure Issues: • Is your infrastructure appropriate to you business strategy? • Is the infrastructure an inhibitor to change? • Does you infrastructure deliver the flexibility required?
  21. 21. Things to Do if You are Just Starting Out You Need to… You Can… • Ensure that your Supply • Build the right technology Chain Strategy is aligned platform to meet business needs with your Business Strategy • Candidly assess user interface – Which quadrant should you requirements in the physical be in? supply chain • Visibility and Agility – • Business processes should be understand what is important addressed first and what is nice to have • What are the realistic quick • Clearly outline short and long wins and what are the long term business objectives. term benefits Remember simple ROI models • Legacy Systems - work: Size of potential benefit, Understand what tools / Execution risk, Time to benefit solutions and systems • Dust off and re-instate your Y2K support current Supply Chain audits to uncover e-business / Activity supply chain apps
  22. 22. Things to Do if You are Planning or Executing You Need to… You Can… • Consider the options of phased • Determine the number of touch approach vs. Grand Slam points associated with the • Understand where are the integration of systems and organisational enablers and processes blockers (both inside and • Plan to manage the change external to your company) • Build pools of expertise (not • Align the right skills to implement islands of know-how) new technologies • Review best of breed vs • Remember that no one vendor Integrated solution – short term offers the complete solution gains vs. longer term benefits • Determine • Understand that data quality is • Application re-use and complexity usually the biggest problem • Current developer skills • Ensure that you have a scalable • Degree of interaction between / flexible infrastructure that will people meet both current and future • Integration with legacy systems business needs
  23. 23. Words of Wisdom • The key to transforming any major process is to identify all of the sub-processes that are part of it.This sounds obvious until you consider that most business processes span multiple-operating environments and customers. • It pays to look at what business is happening rather than at the systems designed to serve the pieces of the business.
  24. 24. Questions CIO’s and Executives Commonly Ask • What’s the ROI and when do I get it? • Where do I start with all of this? • What will it cost? • How do I get……….. • These new systems accepted by employees • Suppliers to participate • Which Strategy is Best? • Best of breed vs. Fully integrated solution • Incremental vs. Grand Slam approach Your Questions……
  25. 25. Thank You Kirk Williams