Breakout Session #  207 Michael P. O’Hara, General Manager – Services Industry, Nextance, Inc. Tuesday, April 27, 2004 2:4...
<ul><li>“ What makes Dell and Wal-Mart successful? It’s the </li></ul><ul><li>business model, and  supply chain is an enab...
The end-to-end approach to the supply chain is now seen as a competitive edge ,  a feature so sexy it inspires extra oglin...
Supply Chain is a Strategic Lever in Services Organizations Goal Delivering the right products and services at the right c...
Supply Chain <ul><ul><li>No longer just a term relegated to the manufacturing industry – but a discipline driving organiza...
<ul><li>Where are we today? </li></ul>
The Supply Chain Continues to Mature Current state <ul><li>The result of incremental improvements </li></ul>Driven by rapi...
Islands of Automation and Process Pockets of innovation exist but lack maturity of manufacturing sector  pCard eprocure-me...
Strategic sourcing Online RFx Contract management Supplier management Spend optimization Integrated supply chains Demand m...
Companies are Still Lagging in Getting to a World Class Supply Chain  <ul><li>Abundance of Technology/Absence of Technolog...
Titanic and the Rudder <ul><li>State of the Art  </li></ul><ul><li>Incorrectly Applied Technology  </li></ul><ul><li>Lack ...
Rapid Advancements in Technology have caused Supply Chain “Gridlock” <ul><li>Innovation is coming in waves – in some cases...
Technology <ul><li>Strategic Sourcing </li></ul><ul><ul><li>Sourcing analytics </li></ul></ul><ul><ul><li>Supplier evaluat...
Big Picture
Some of the Top Issues Facing Supply Chains in Services Organization <ul><li>Information/Tools </li></ul><ul><ul><li>Lack ...
Lack of Single Contract Repository <ul><ul><li>No single capture point for contractual information </li></ul></ul><ul><ul>...
Manual, Fragmented Contract Development <ul><li>Contract development using multiple forms  </li></ul><ul><li>No standardiz...
Inability to Match Invoices to Contract <ul><li>Inability to match invoices to contractual terms, pricing, and conditions ...
Foundational Underpinnings –  Contracts as the “Rudder” <ul><li>Contract Management and it’s related processes sit at the ...
Return on Investment Contract Management & Automation <ul><li>Effective contract development and management looks holistic...
End-to-End Sourcing and  Procurement Management <ul><li>Automation …  </li></ul><ul><ul><li>Capture paper-based contractua...
Inability to Capture and Reuse Data <ul><li>Key supply chain data captured in nonelectronic format </li></ul><ul><li>Contr...
Poor Supplier Performance Measurement and Management <ul><li>Organizations have poorly documented handoffs to internal cli...
<ul><li>You can’t change what you don’t manage </li></ul><ul><li>You can’t manage what you can’t measure </li></ul><ul><li...
<ul><li>Technology, Process and People are the Keys to Success </li></ul>
Organizational “Golden Threads” <ul><li>Common themes and issues relevant to organization’s today </li></ul><ul><li>Expens...
Organizational “Golden Threads” <ul><li>Common themes and issues relevant to organization’s today </li></ul><ul><li>Expens...
The Four Enablers Find, Define, Implement and Integrate the Right Practices, People, Processes and Tools Best Practices To...
Consider the Airline Industry – Two prevalent business models exist: Efficient vs. Effective Low-Fare airlines realized th...
Why is the end-to-end process important to you? Productivity & Efficiency Expense Control Managed Risk Adoption & Complian...
Creating a World Class Supply Chain Learn from experience <ul><li>Transactions into information </li></ul>Turn Information...
Predictions – One Day We’ll See….. <ul><li>Standardization – Information, Processes and Technologies </li></ul><ul><li>Int...
Upcoming SlideShare
Loading in …5
×

Achieving Excellence in End-to-End Supply Management

2,821
-1

Published on

Achieving Excellence in End-to-End Supply Management

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
2,821
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • Key corporate strategic initiatives
  • Achieving Excellence in End-to-End Supply Management

    1. 1. Breakout Session # 207 Michael P. O’Hara, General Manager – Services Industry, Nextance, Inc. Tuesday, April 27, 2004 2:45pm – 3:45pm Achieving Excellence in End-to-End Supply Management
    2. 2. <ul><li>“ What makes Dell and Wal-Mart successful? It’s the </li></ul><ul><li>business model, and supply chain is an enabler . </li></ul><ul><li>That’s why you’re seeing this growing importance of </li></ul><ul><li>supply chains. People realize this is the weapon of the </li></ul><ul><li>future ” </li></ul><ul><li>Robert Moffat </li></ul><ul><li>Vice President, Supply Chain </li></ul><ul><li>IBM </li></ul>
    3. 3. The end-to-end approach to the supply chain is now seen as a competitive edge , a feature so sexy it inspires extra ogling on Wall Street. Dell Computer and Nokia already get higher valuation because of their superior operations. Forbes Magazine October 13, 2003
    4. 4. Supply Chain is a Strategic Lever in Services Organizations Goal Delivering the right products and services at the right cost:value and at the right time Methods ALIGN … Procurement with organizational demand EXECUTE … Strategic sourcing Contractual agreements MANAGE … Supply Chain performance OPTIMIZE … Internal and external Supply Chain
    5. 5. Supply Chain <ul><ul><li>No longer just a term relegated to the manufacturing industry – but a discipline driving organization’s to greater efficiency, reduced expenses, reduced risk and increased organizational responsiveness to rapidly changing business landscape. </li></ul></ul><ul><li>Comprises the entire end-to-end process of planning, sourcing, selecting, acquiring, receiving, paying, managing and disposing of goods and services </li></ul><ul><li>The opportunity - </li></ul><ul><li>Organization’s still maturing their supply chain practices </li></ul><ul><li>Significant opportunity to gain greater supplier leverage and dramatically reduce operating expenses </li></ul><ul><li>The right technology is a key enabler in the process </li></ul>
    6. 6. <ul><li>Where are we today? </li></ul>
    7. 7. The Supply Chain Continues to Mature Current state <ul><li>The result of incremental improvements </li></ul>Driven by rapid change <ul><li>Technology </li></ul><ul><li>Competition </li></ul><ul><li>Consolidation </li></ul><ul><li>Internet </li></ul>“ Big Picture” perspective missing <ul><li>Focus on narrow opportunities (e.g., sourcing savings) </li></ul>
    8. 8. Islands of Automation and Process Pockets of innovation exist but lack maturity of manufacturing sector pCard eprocure-ment Exchanges Ware-houses Spend Data On-line RFx Reverse auctioning Contract Systems Consortiums
    9. 9. Strategic sourcing Online RFx Contract management Supplier management Spend optimization Integrated supply chains Demand management Performance management Compliance Integrated tools Trends in the Services Sector Web applications e-Procurement Exchanges Portals Inside and Outside Organization Where is the integration of Technology and Process, of People and Information? 1995 1998 2000 2005 M A R K E T Birth of Supply Chain Management for services industries
    10. 10. Companies are Still Lagging in Getting to a World Class Supply Chain <ul><li>Abundance of Technology/Absence of Technology </li></ul><ul><li>Incorrectly Applied Technology </li></ul><ul><li>Lack of an Established Business Model </li></ul><ul><li>Lack of Well-Defined Processes </li></ul><ul><li>Not Understanding the “Big Picture” </li></ul>
    11. 11. Titanic and the Rudder <ul><li>State of the Art </li></ul><ul><li>Incorrectly Applied Technology </li></ul><ul><li>Lack of Well-Defined Processes </li></ul><ul><li>Absence of Standards (W.J. Lovett) </li></ul><ul><li>Didn’t understand the big picture (ship is the lifeboat) </li></ul>
    12. 12. Rapid Advancements in Technology have caused Supply Chain “Gridlock” <ul><li>Innovation is coming in waves – in some cases, the rising tide isn’t lifting all ships </li></ul><ul><ul><li>A large part of that innovation targets specific problems in lieu of looking at the whole picture </li></ul></ul><ul><li>We’re coming from behind – pressure to catch-up, stay competitive by implementing piecemeal solutions </li></ul><ul><li>Prior investment in technology is substantial – organizations are hesitant to change </li></ul><ul><li>Some newer technologies have over-promised and under-delivered </li></ul><ul><ul><li>Some organizations are wary of unproven tools, some choose to wait it out </li></ul></ul>
    13. 13. Technology <ul><li>Strategic Sourcing </li></ul><ul><ul><li>Sourcing analytics </li></ul></ul><ul><ul><li>Supplier evaluation </li></ul></ul><ul><ul><li>RFx & auctions </li></ul></ul><ul><ul><li>Contract management </li></ul></ul><ul><li>Supplier Enablement </li></ul><ul><ul><li>Supplier portal </li></ul></ul><ul><ul><li>Supplier connectivity </li></ul></ul><ul><li>Content </li></ul><ul><ul><li>Content consolidation </li></ul></ul><ul><ul><li>Catalog content management </li></ul></ul><ul><li>Operational Procurement </li></ul><ul><ul><li>Self-service procurement </li></ul></ul><ul><ul><li>Plan-driven procurement </li></ul></ul><ul><ul><li>Services procurement </li></ul></ul><ul><ul><li>Asset Management </li></ul></ul>
    14. 14. Big Picture
    15. 15. Some of the Top Issues Facing Supply Chains in Services Organization <ul><li>Information/Tools </li></ul><ul><ul><li>Lack of single contract repository </li></ul></ul><ul><ul><li>Inability to capture and reuse data </li></ul></ul><ul><ul><li>Inaccessible, lack of visibility to data </li></ul></ul><ul><ul><li>Non-standardized naming conventions </li></ul></ul><ul><ul><li>Lack of Demand Planning/Demand Mgmt Tools </li></ul></ul><ul><li>Process </li></ul><ul><ul><li>Manual, fragmented contract development </li></ul></ul><ul><ul><li>Application’s inability to accommodate process flexibility and provide process structure as needed </li></ul></ul><ul><ul><li>Lack of scalability </li></ul></ul><ul><ul><li>Disparate processes, tools, and information </li></ul></ul><ul><ul><li>Lack of well-defined processes (playbook) </li></ul></ul><ul><ul><li>Tug of war for process ownership </li></ul></ul><ul><li>Performance </li></ul><ul><ul><li>Poor supplier performance measurement and management </li></ul></ul><ul><ul><li>Limited visibility into consumption and spend analytics </li></ul></ul><ul><ul><li>Weak industry, market, commodity, and supplier intelligence </li></ul></ul><ul><ul><li>Poor demand management </li></ul></ul>
    16. 16. Lack of Single Contract Repository <ul><ul><li>No single capture point for contractual information </li></ul></ul><ul><ul><li>Contracts executed on paper </li></ul></ul><ul><ul><li>No aggregate view of third-party relationships, liabilities, performance </li></ul></ul>Problem <ul><li>Inconsistent management of supplier and spend base </li></ul><ul><li>Lost leverage opportunities </li></ul><ul><li>Increased expenses </li></ul><ul><li>Maverick spend </li></ul><ul><li>Risk for regulatory compliance issues </li></ul><ul><li>Supplier stability and operational continuity </li></ul>Impact <ul><ul><li>Centralized contract management system </li></ul></ul><ul><ul><li>Capture detailed contract terms and conditions </li></ul></ul><ul><ul><li>Integration with existing systems to enhance logical processes </li></ul></ul>Best Practice
    17. 17. Manual, Fragmented Contract Development <ul><li>Contract development using multiple forms </li></ul><ul><li>No standardized templates </li></ul><ul><li>Deferring to vendor contracts </li></ul>Problem <ul><li>Risk of noncompliance of legal, regulatory, and internal compliance </li></ul><ul><li>Risk of overlooking key favorable protections and terms </li></ul>Impact <ul><li>Automated </li></ul><ul><ul><li>Application-based, structured approach </li></ul></ul><ul><ul><li>Technology can drive contract type, clauses, fallback </li></ul></ul><ul><li>Paper-based </li></ul><ul><ul><li>Commodity-specific contract templates approved by legal department </li></ul></ul><ul><ul><li>Strict version control, legal review, and approval </li></ul></ul><ul><ul><li>Periodic audit of executed contracts for compliance to standard benchmark terms </li></ul></ul>Best Practice
    18. 18. Inability to Match Invoices to Contract <ul><li>Inability to match invoices to contractual terms, pricing, and conditions </li></ul><ul><li>Inability to isolate maverick spending by matching contracted supplier to paid supplier and contracted good and services to paid goods and services </li></ul>Problem <ul><li>Missed potential for a cost reduction by ensuring that invoices match contracts </li></ul>Impact <ul><li>A “No P.O./No Pay” policy helps with matching invoice to contracted terms </li></ul><ul><li>Systems that can load and match invoice to contracts and send an “OK to pay” to the Accounts payable system </li></ul>Best Practice
    19. 19. Foundational Underpinnings – Contracts as the “Rudder” <ul><li>Contract Management and it’s related processes sit at the </li></ul><ul><li>center of an effective and efficient supply chain </li></ul><ul><li>Sourcing and Contract Automation is a best practice driving: </li></ul><ul><ul><li>Standardized contract templates </li></ul></ul><ul><ul><li>Reduced cycle time from business unit engagement to contract execution </li></ul></ul><ul><ul><li>Maintaining legal integrity and corporate intent behind contractual agreements through structured development processes </li></ul></ul><ul><ul><li>Integrated sourcing processes and integrated sourcing information </li></ul></ul><ul><ul><li>Effective supplier management </li></ul></ul><ul><ul><li>Enhancing the ability to mitigate risk </li></ul></ul><ul><ul><li>Reducing Expenses in several aspects of the end-to-end process </li></ul></ul>
    20. 20. Return on Investment Contract Management & Automation <ul><li>Effective contract development and management looks holistically at sourcing and procurement approaches the process of engaging suppliers, developing structured agreements and managing and enforcing compliance across the entire spend base . ROI on effectively managing the entire supply chain can be 3-10% of an organizations entire spend. Other key factors such as operational risk can be greatly mitigated </li></ul><ul><li>Organizations deploying e-sourcing solution can potentially realize gains from 3-10%, sometimes more, sometimes less based on the commodity. Unless the e-sourcing event is a spot-buy, it still is susceptible the same problems as a typical sourcing event. Did the organization get the savings? </li></ul>E-sourcing
    21. 21. End-to-End Sourcing and Procurement Management <ul><li>Automation … </li></ul><ul><ul><li>Capture paper-based contractual information into an electronic repository </li></ul></ul><ul><ul><li>Utilize standard contract templates to maintain legal integrity in accordance with corporate objectives, workflow to ensure proper review and controls </li></ul></ul><ul><ul><li>Reduce cycle time to execute contracts – streamline the engagement and interaction necessary with suppliers (automated RFx/electronic document exchange and import) </li></ul></ul>Manage <ul><li>Engagement … </li></ul><ul><ul><li>Captures the needs of the organization in a standard, accessible template that can be used by sourcing </li></ul></ul><ul><ul><li>Drives compliance, reduces maverick spend </li></ul></ul><ul><ul><li>Creates organizational awareness around supply chain/sourcing </li></ul></ul><ul><li>Automation and compliance … </li></ul><ul><li>Generate requisitions from executed contracts, streamlining process, eliminating handoffs, reducing cycle time, driving compliance </li></ul><ul><li>Catalog creation … </li></ul><ul><li>Generate catalogs for e-procurement or ERP systems from executed contracts </li></ul><ul><li>Source </li></ul><ul><li>Procure </li></ul><ul><li>Pay </li></ul><ul><li>Plan </li></ul><ul><li>Spend leverage, payment automation, and compliance … </li></ul><ul><ul><li>Matching contracts suppliers to “paid” suppliers is a critical sourcing requirement to leverage spend and reduce maverick suppliers </li></ul></ul><ul><ul><li>Reconciling invoices to contracts can drive compliance and reduce payment errors; critical to organizations when substantial payments do not have a matching requisition </li></ul></ul>Performance management, compliance, cost reduction – captured contractual detail captured is critical to being able to effectively scorecard/manage supplier performance to contract terms and conditions. Accessibility to contracted supplier information matched to spend is critical to managing leveraging the supply base as well as measuring usage, risk mitigation and internal adoption <ul><li>Spend leverage … </li></ul><ul><li>Visibility across existing contract base, commodities, products, and services </li></ul><ul><li>Via extensive search capabilities, quickly find existing contracts or opportunities to leverage existing agreements and arrangements </li></ul>
    22. 22. Inability to Capture and Reuse Data <ul><li>Key supply chain data captured in nonelectronic format </li></ul><ul><li>Contract data can be used by other systems and processes, but is not readily available </li></ul>Problem <ul><li>Lack of data integrity </li></ul><ul><li>Inability to match supply chain inform-ation to original contract terms and conditions </li></ul><ul><li>Inability to gain ready access to contractual detail </li></ul><ul><li>Inability to view aggregate contractual data </li></ul>Impact <ul><li>Centralized contract management system </li></ul><ul><li>Robust capture of detailed contract terms and conditions </li></ul><ul><li>Integration with existing systems to enhance logical processes </li></ul><ul><li>Aggregated data warehouse of key supply-chain information </li></ul>Best Practice
    23. 23. Poor Supplier Performance Measurement and Management <ul><li>Organizations have poorly documented handoffs to internal clients </li></ul><ul><li>Without supplier performance data organizations do not know if suppliers and products perform as stated in the agreement </li></ul>Problem <ul><li>Savings do not materialize and uncertainty arises around actual costs of provided goods and services </li></ul><ul><li>Risk of operational stability and increased expenses and lost productivity </li></ul>Impact <ul><li>Clearly defined performance metrics </li></ul><ul><li>Train supplier managers to assess and measure suppler performance </li></ul><ul><li>Scorecarding process </li></ul><ul><li>Key performance indicators </li></ul>Best Practice
    24. 24. <ul><li>You can’t change what you don’t manage </li></ul><ul><li>You can’t manage what you can’t measure </li></ul><ul><li>You can’t measure what you don’t know </li></ul>Functional Truths
    25. 25. <ul><li>Technology, Process and People are the Keys to Success </li></ul>
    26. 26. Organizational “Golden Threads” <ul><li>Common themes and issues relevant to organization’s today </li></ul><ul><li>Expense Management </li></ul><ul><li>Revenue Growth </li></ul><ul><li>Shareholder Value </li></ul><ul><li>Increased Productivity </li></ul><ul><li>Risk Mitigation </li></ul><ul><li>Customer Retention and Customer Satisfaction </li></ul><ul><li>Operational Stability </li></ul><ul><li>Regulatory Compliance </li></ul>
    27. 27. Organizational “Golden Threads” <ul><li>Common themes and issues relevant to organization’s today </li></ul><ul><li>Expense Management </li></ul><ul><li>Revenue Growth </li></ul><ul><li>Shareholder Value </li></ul><ul><li>Increased Productivity </li></ul><ul><li>Risk Mitigation </li></ul><ul><li>Customer Retention and Customer Satisfaction </li></ul><ul><li>Operational Stability </li></ul><ul><li>Regulatory Compliance </li></ul>Directly impacted by the organization’s supply chain Influenced by the organization’s supply chain
    28. 28. The Four Enablers Find, Define, Implement and Integrate the Right Practices, People, Processes and Tools Best Practices Tools Process People Process Tools
    29. 29. Consider the Airline Industry – Two prevalent business models exist: Efficient vs. Effective Low-Fare airlines realized that several factors make success for an airline, moving people quickly, while providing a standard level of service at a low-cost is their goal. Other airlines tried to vary the offering and looked for efficiency in moving passengers by funneling customers through a “hub”. Focusing on one aspect of efficiency and assuming that gain would outweigh other shortcomings proved disastrous. They lost focus on the total picture and assumed efficiency would equate to profitability. Southwest, realized the simple concept, planes make money when they are in the air. What looked like an effective model for the major airlines, simply wasn’t. Multiple Types of Aircraft Hub System Differentiated Service Variable Costs Unprofitable Average time in air per day : 8.6 Focus on efficiency One type of Aircraft Point-to-Point Standardized Service Low Cost Profitable Average time in air per day : 11.5 Focus on efficiency and effectiveness Major Airlines Low Fare Airlines
    30. 30. Why is the end-to-end process important to you? Productivity & Efficiency Expense Control Managed Risk Adoption & Compliance Sourcing and Supply Chain Automation Standardized processes Supplier Enablement Contract Development Efficiency Supplier Rationalization Demand Visibility Effective Supplier Management Alignment to Corporate Goals Supplier Risk Assessment Supply Risk Management Contingency Planning Process Controls Policies and Procedures Metrics and Measures Supplier Performance Organizational Compliance <ul><li>Spend Reduction </li></ul><ul><li>Increased adoption & compliance to contract terms and conditions </li></ul><ul><li>Decreased cycle time </li></ul><ul><li>Increased efficiency </li></ul><ul><li>Reduced Risk </li></ul>Results Business Initiatives Value Drivers
    31. 31. Creating a World Class Supply Chain Learn from experience <ul><li>Transactions into information </li></ul>Turn Information into knowledge <ul><li>Continuous improvement </li></ul><ul><li>Scale, adapt, and extend </li></ul><ul><li>Right People, Processes, Practices and Tools </li></ul>Build flexibility Create game plan <ul><li>Understand your supply chain </li></ul><ul><li>Define processes </li></ul><ul><li>Get organizational commitment </li></ul>Extend supply chain <ul><li>Optimize internal supply chain </li></ul><ul><li>Enhance supplier capabilities </li></ul>Manage supply chain performance <ul><li>Create dashboard </li></ul><ul><li>Measure compliance </li></ul>
    32. 32. Predictions – One Day We’ll See….. <ul><li>Standardization – Information, Processes and Technologies </li></ul><ul><li>Integration of People, Processes, Tools and Information </li></ul><ul><li>Rising Value of Supply Chain – Organizations will view the strategic and operational value of supply chain equally with Finance, Marketing, Product Development and other critical business operations </li></ul>
    1. A particular slide catching your eye?

      Clipping is a handy way to collect important slides you want to go back to later.

    ×