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Looking at Supply Chain as a Complex System Profitable Growth Revenue Cost of Goods Corporate Trade-offs Working Capital Corporate Social Responsibility Investment Trade-offs R&D Strategy and Investment Asset Strategy and Investment Forecast Accuracy Customer Service InventorySupply Chain Trade-offs Channel Strategy Product and Supplier Strategy Service Portfolio Sales Distribution Manufacturing Logistics ProcurementSupply Chain Policies Policies Policies Policies Policies Waste Returns Backorders First Pass Yield Empty Miles Material Yield
Developing the Supply Chain Strategy Business strategy What are the right things to do to increase company value? Value-network strategy What are the right ways to support the business strategy?Align demand right trade-offs betweenthe What are the Right product Design value drivers for each value network? Build Align supplyrelationships platforms supply organizational relationships response systems andSupply chain strategy manage talent Effective Supply Demand Networks Design Networks Continuous Networks Improvement Joint Value Innovation Supply Chain Execution of buy- Creation Strategies Methodologies Network Design Capabilities Required side strategies Business Process How do I do the right things right?
Food Value Chain Working Capital Inventory and Costs Retail Store Retail Consumer Warehouse Manufacturing Suppliers Sales Sales Sales SalesDemand Time Time Time Time Days of Working Capital 60 55 50 2009 45 40 2008 35 2007 30 25 2006 20 15 2005 10 2004 Retailers Food Manufacturers Containers and Packaging Inventory data source: CFO Magazine September 2010-2004
The Bullwhip Effect. Retailer DC Manufacturer DC Suppliers Store Demand Signal Accurate Difficult Almost WeeklyTrivial Easy Impossible Forecasting is ...Instant 3-10 Days 10-20 Days Delay from 20-50 Days 7-20 Days 20-45 Days Purchase toVariable 45-80 Days Signal Red Represents Emerging Economies with Distributor Trade
Traditional Supply Chains do not Respond Fast Enough with Market Data Production POS store Shipments to DC Kraft Foods Presentation MIT Supply Chain Forum, November 2011