Scoring High on the Supply Chain Maturity Model Heino Huettner May 10, 2007
Discussion Topics <ul><li>The supply chain is under fundamental pressure </li></ul><ul><li>Reinventing/transforming the su...
Continued pressure on margins through growth & cost containment Changing market boundaries and new channels Aggressive glo...
<ul><li>Synchronizing supply and demand </li></ul><ul><li>Integrating customer forecasts and demand with their suppliers t...
Companies have traditionally focused their supply chain initiatives on increasing internal operations excellence Cost-cutt...
Companies are now placing more focus on the supply chain to transform their businesses… Radically changing the way they th...
... to build a competitive advantage and reach strategic objectives on demand supply chain  Responsive  Variable  Focused ...
Leading firms are progressing toward the vision of an on demand, customer-driven supply chain – one that is integrated end...
Discussion Topics <ul><li>The supply chain is under fundamental pressure </li></ul><ul><li>Reinventing/transforming the su...
In 2005 IBM GBS carried out surveys on value chains in all major developed countries. North America Western Europe Japan A...
Value Chain Study:  Follow the leaders: Scoring high on the supply chain maturity model <ul><li>Synopsis: </li></ul><ul><u...
As political and economic uncertainty led to increased costs and lead times, remaining competitive and correctly identifyi...
To achieve profitability objectives, firms concentrate on best fit to customer requirements, on supplier collaboration and...
Implementation and effectiveness of NPD practices differ by geography. Overall, collaboration with customers is most widel...
While on-budget performance is generally better than on-time performance, both are clearly below target. Performance Metri...
Real-time monitoring and rapid response to marketplace changes are well established in Supply Chain Planning. Around 50% o...
Direct sourcing from low-cost jurisdictions is on the rise, while sourcing from developed countries is stable or decreasin...
The relationship of procurement functions to suppliers is mostly focused on price or total cost. <ul><li>Price and total c...
With the exception of Japan, logistics practices are widely implemented. A formal distribution strategy and differentiated...
Agenda <ul><li>The supply chain is under fundamental pressure </li></ul><ul><li>Reinventing/transforming the supply chain ...
Companies are utilizing new approaches to transform themselves into even more responsive organizations and to connect thei...
As a result, Supply Chain Management is becoming an increasingly critical focus area <ul><li>SCM is increasingly becoming ...
Top supply chains have a common trait in that they respond quickly to shifts in demand with innovative products and servic...
Where are you on the journey to supply chain maturity? S tatic  supply chain Horizontal integration Functional excellence ...
A Collection of Observations, News, Resources & Innovations on the changing nature of Supply (chain) management http://aco...
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Scoring High on the Supply Chain Maturity Model

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This is my presentation from CSCMP Europe 2007 conference. Discover how leading practices are being used to transform supply chain performance by attending this session on the Global Value Chain Study. This study, undertaken by IBM Global Business Services in conjunction with APQC, identifies current practices, captures significant trends and establishes operational performance benchmarks in several key areas of Supply Chain Management: New Product Development, Planning, Procurement, and Logistics. By analyzing responses from
companies across a range of industries, in multiple geographies worldwide, it provides unique insight into challenges and demonstrates how supply chain management is changing from a static and cost-centric function to an evolving, integrated business model.

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  • Transcript of "Scoring High on the Supply Chain Maturity Model"

    1. 1. Scoring High on the Supply Chain Maturity Model Heino Huettner May 10, 2007
    2. 2. Discussion Topics <ul><li>The supply chain is under fundamental pressure </li></ul><ul><li>Reinventing/transforming the supply chain can bring business value </li></ul><ul><li>Many companies are utilizing new approaches </li></ul>
    3. 3. Continued pressure on margins through growth & cost containment Changing market boundaries and new channels Aggressive global competition Shortening product lifecycles <ul><li>Supply </li></ul><ul><li>Chain </li></ul><ul><li>Management </li></ul>Source: Value Chain Study – IBM IBV Industry consolidation and alliances Increased reliance on specialization and partnerships Supply Shocks Demand Shocks The supply chain is under fundamental pressure
    4. 4. <ul><li>Synchronizing supply and demand </li></ul><ul><li>Integrating customer forecasts and demand with their suppliers to plan logistics requirements </li></ul><ul><li>Participation in customer’s Sales & Operations Planning process </li></ul>Today’s global supply chain challenges are driving the need for improved end-to-end performance <ul><li>Monitoring shipment status </li></ul><ul><li>Monitor shipment status throughout pipeline with proactive event notification </li></ul><ul><li>Improved ability to identify short and over shipments </li></ul><ul><li>Multiple channels and customer touch points </li></ul><ul><li>Single source dashboard to view overall performance </li></ul><ul><li>Tracking from order to delivery </li></ul><ul><li>Knowledge of total pipeline customer inventory </li></ul><ul><li>Integration with manufacturer’s systems </li></ul><ul><li>Access to order commitments & delivery schedules </li></ul><ul><li>Visibility into order production status </li></ul><ul><li>Multi-source orders and fulfillment </li></ul><ul><li>Ability to track purchase orders through their entire lifecycle </li></ul><ul><li>Knowledge of total pipeline supplier inventory </li></ul>Global sourcing of supply Move to contract manufacturing Complex logistics networks Capacity constraints Distributed information Excess inventory Long lead times Excess manpower Deteriorated customer service Business performance uncertainty & risk EQUALS Supply Chain Suppliers Manufacturers Plan Source Make Customer Channels Stores Distribution Centers Flows: Product, Process, Information, Cash Sell Deliver
    5. 5. Companies have traditionally focused their supply chain initiatives on increasing internal operations excellence Cost-cutting focused on optimizing internal processes Achieving functional optimization Applying proven technology Increasing outsourcing of non-core functions Increasing customer service levels
    6. 6. Companies are now placing more focus on the supply chain to transform their businesses… Radically changing the way they think, organize and execute Integrating end-to-end from opportunity to cash Looking at the end-to-end processes horizontally vs. in silos Creating high value services Reinvention using breakthrough business models
    7. 7. ... to build a competitive advantage and reach strategic objectives on demand supply chain Responsive Variable Focused Resilient Cost-cutting focused on optimizing internal processes Reinvention using breakthrough business models
    8. 8. Leading firms are progressing toward the vision of an on demand, customer-driven supply chain – one that is integrated end-to-end across the business and with key customers, partners, suppliers & service providers. on demand Traditional S tatic Supply Chain Horizontal Integration Functional Excellence External Collaboration on demand Supply Chain Those companies with high performance supply chains carry less inventory, have shorter cash-to-cash cycle times and are more profitable. Source: “The AMR Research Supply Chain Top 25 and the New Trillion-Dollar Opportunity” AMR Research.
    9. 9. Discussion Topics <ul><li>The supply chain is under fundamental pressure </li></ul><ul><li>Reinventing/transforming the supply chain can bring </li></ul><ul><li>business value </li></ul><ul><li>Many companies are utilizing new approaches </li></ul>
    10. 10. In 2005 IBM GBS carried out surveys on value chains in all major developed countries. North America Western Europe Japan Australia/ New Zealand China India The survey design with benchmarking metrics was a collaborative effort
    11. 11. Value Chain Study: Follow the leaders: Scoring high on the supply chain maturity model <ul><li>Synopsis: </li></ul><ul><ul><li>This Survey identifies current practices, captures significant trends and establishes operational performance benchmarks in six key areas of Supply Chain Management: New Product Development, Supply Chain Planning, Procurement, Logistics, Customer Fulfillment and Manufacturing. </li></ul></ul><ul><ul><ul><li>Americas, </li></ul></ul></ul><ul><ul><ul><li>Europe, </li></ul></ul></ul><ul><ul><ul><li>Japan, </li></ul></ul></ul><ul><ul><ul><li>Australia/New Zealand, </li></ul></ul></ul><ul><ul><ul><li>India, </li></ul></ul></ul><ul><ul><ul><li>China, </li></ul></ul></ul><ul><ul><ul><li>Taiwan </li></ul></ul></ul>
    12. 12. As political and economic uncertainty led to increased costs and lead times, remaining competitive and correctly identifying customer needs are the key challenges for most firms <ul><li>Correct identification of customer needs and remaining competitive are the most significant management challenges </li></ul><ul><li>Reducing time-to-market is important in all regions except Australia/NZ </li></ul>How has political/economic uncertainty impacted your supply chain efforts over the past 5 years? What are the most significant management challenges for your site’s new product development efforts?
    13. 13. To achieve profitability objectives, firms concentrate on best fit to customer requirements, on supplier collaboration and on global sourcing. Strategy and Initiatives What is the primary strategy for your site’s new product development efforts? What are the key factors (initiatives) to achieving your objectives?
    14. 14. Implementation and effectiveness of NPD practices differ by geography. Overall, collaboration with customers is most widely implemented and most effective Practices > New Product Development To what extent have the following new product development practices been implemented at your site? How effective are those practices? 96% 96% 81% 59% 88% 48% 66% 58% 83% 87% 74% 91% 92% 91% 95% 85% 88% 73% 81% 95% 85% 92% 80% 90% 72% 89% 96% 97% Australia/NZ Japan WesternEurope North America
    15. 15. While on-budget performance is generally better than on-time performance, both are clearly below target. Performance Metrics What percentage of new products is launched to market on-time? What percentage of new products is launched to market on-budget?
    16. 16. Real-time monitoring and rapid response to marketplace changes are well established in Supply Chain Planning. Around 50% of firms also share risks across their supply network and aligned variable costs with revenues. Practices > Supply Chain Planning <ul><ul><li>To what extent has each of the following supply chain practices been adopted at your site? </li></ul></ul>
    17. 17. Direct sourcing from low-cost jurisdictions is on the rise, while sourcing from developed countries is stable or decreasing. Practices > Sourcing & Procurement W.Europe North America Japan A/NZ
    18. 18. The relationship of procurement functions to suppliers is mostly focused on price or total cost. <ul><li>Price and total cost are the major focus points of procurement functions in relation to their suppliers </li></ul><ul><li>Australian firms have a more balanced approach. Japanese firms place a high focus on quality.* </li></ul>* see also low cost of quality in Japan Which of the following best describes your site's relationship with suppliers? Practices > Sourcing & Procurement <ul><li>Compliance with procurement processes is comparable in America and Europe but limited in Japan and especially Australia/NZ </li></ul><ul><li>Overall, maverick buying represents a considerable volume </li></ul>What percentage of your site's total annual purchases is procured via maverick buying? Enforcing process compliance promises considerable potential.
    19. 19. With the exception of Japan, logistics practices are widely implemented. A formal distribution strategy and differentiated logistics services are among the most effective practices Practices > Logistics Effectiveness To what extent have the following logistics practices been implemented at your site? 87% 98% 75% 79% 83% 97% 80% 79% 89% 99% 82% 86% 92% 96% 89% 92% 81% 91% 81% 65% 95% 96% 75% 87% 98% 97% 88% 89% Australia/NZ Japan WesternEurope North America
    20. 20. Agenda <ul><li>The supply chain is under fundamental pressure </li></ul><ul><li>Reinventing/transforming the supply chain can bring business value </li></ul><ul><li>Many companies are utilizing new approaches </li></ul>
    21. 21. Companies are utilizing new approaches to transform themselves into even more responsive organizations and to connect their supply chains end-to-end Focused Responsive Variable Resilient <ul><li>Supply Chain Visibility </li></ul><ul><li>Synchronizing Supply and Demand </li></ul><ul><li>Sense and Respond Event Management </li></ul><ul><li>Performance Management </li></ul><ul><li>New Organizational Constructs </li></ul>
    22. 22. As a result, Supply Chain Management is becoming an increasingly critical focus area <ul><li>SCM is increasingly becoming a boardroom issue, with critical linkage to financial performance </li></ul><ul><ul><li>Close to 100% of CEOs believe that SCM is either critical or very critical to their business strategy 1 </li></ul></ul><ul><li>Collaboration and visibility (internal and external, local and global), is becoming a top priority </li></ul><ul><ul><li>For the first time ever, 50% of companies collaborate with partners’ supply chains 2 </li></ul></ul><ul><li>The desire to become demand-driven is expanding the market for sophisticated, agile solutions at every point along the supply chain </li></ul>1 Source: CEO Perspective on Supply Chain Management, University of Chicago Graduate Business School & Charter Consulting, 2006 2 Source: Third Annual Global Survey of Supply Chain Progress, Computer Sciences Corporation & Supply Chain Management Review, 2005
    23. 23. Top supply chains have a common trait in that they respond quickly to shifts in demand with innovative products and services <ul><li>To meet profitability and cost objectives, leaders are developing differentiating supply chain models </li></ul><ul><li>Companies are progressing toward the vision of an on demand customer-driven supply chain </li></ul><ul><li>Top-performing supply chains are: </li></ul><ul><ul><li>Coordinating business functions across the supply chain </li></ul></ul><ul><ul><li>Developing mutually beneficial ways to strengthen supply chain relationships </li></ul></ul><ul><ul><li>Using real-time information to create responsive, customer-driven processes </li></ul></ul><ul><ul><li>Developing variable cost structures </li></ul></ul>Source: IBM Value Chain Study, 2005/2006 IBM Institute for Business Value IBM Business Consulting Services Follow the leaders Supply chain Management
    24. 24. Where are you on the journey to supply chain maturity? S tatic supply chain Horizontal integration Functional excellence External collaboration On demand supply chain Time Supply chain maturity and benefits
    25. 25. A Collection of Observations, News, Resources & Innovations on the changing nature of Supply (chain) management http://aconris.wordpress.com/

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