Supply Chain Management Hot Topics

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What the best companies are doing with cycle time compession, omnichannel / multichannel, supply chain segmentation, risk mitigation

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Supply Chain Management Hot Topics

  1. 1. 1 Supply Chain Hot Topics by Tom Craig tomc@ltdmgmt.com
  2. 2. 2 Is This Your Supply Chain? What do you know about your SC performance? Do much fire-fighting (reactive vs proactive) Have little/no metrics, beyond complaints or charge backs or costs
  3. 3. 3 Yours? Monolithic supply chain operation Little / no service differentiation beyond customer order requirements Defined by costs, tasks, and/or functions?
  4. 4. 4 Is This Your Supply Chain?
  5. 5. 5 Perfect Order Delivered / Complete / Accurate / On- Time How well do— you do with customer orders? your suppliers do with your POs?
  6. 6. 6 Benefits of Real SCM Customer advantage -- IT’S ABOUT THE CUSTOMER!!!!! Competitive differentiation Translates into better revenue and margins
  7. 7. 7 Are You Happy with the Supply Chain that You Built?
  8. 8. 8 How Do You View Global Logistics?
  9. 9. 9 SCM—Hot Topics Time Compression Omnichannel / MultiChannel Segmentation Risk Mitigation
  10. 10. 10 Cycle Time Compression
  11. 11. 11 Cycle Time Cycle time--time from recognize need (before PO is issued) until product delivered to you--and sold, and paid by customer (funds availability affects procurement) Not just length, includes variance Time—important for business
  12. 12. 12 Cycle Time Inventory-factor of uncertainty (buffer)— longer the cycle time, more the uncertainty, more the inventory Key factor for responsiveness and agility In Lean, extra time is waste
  13. 13. 13 Cycle Time Compression Identify and assess each sub-cycle Look for gaps, redundancies, and meaningless External and internal (especially) Streamline practices & operations
  14. 14. 14 SC Omnichannel / Multichannel
  15. 15. 15 What It Is Selling through multiple channels For B2C and B2B Sell 24/7 from anywhere in the world From any device (e-commerce and m- commerce)
  16. 16. 16 Omni Think Amazon and more Home Depot building 3 e-commerce fulfillment centers 100,000 products (vs 35,000 for stores)
  17. 17. 17 SCM Omnichannel Issues Speed and accuracy of order shipment How to position inventory Where to position inventory What inventory to position Technology— integrated visibility for inventory and orders in all channels
  18. 18. 18 Multi/Omni Channel Direct shipping of gloves “from/for” other party’s ecommerce site E-tailer does not have to hold inventory Can your suppliers ship to customers elsewhere in world for you?
  19. 19. 19 Supply Chain Segmentation
  20. 20. 20 What Segmentation Is Superior best practice Dividing business into discrete groups (not based on business units) based on similar characteristics Address important company issues Serves strategic purpose
  21. 21. 21 Key Issues for Segmenting  Differing markets  Product portfolios  Customer portfolios  Inventory yield  Omnichannel sales
  22. 22. 22 More Issues for Segmenting  Global operations  Channel partners  Customer attrition  Suppliers  Supply chain risk
  23. 23. 23 Why Segment Stop one-size-fits-all “service” approach Reduce internal and external noise that creates chaos & diverts resources Design & align operations for different sectors Build competitive differentiation
  24. 24. 24 How to Segment 1) Identify segments 2) Profile sectors--and customers in them 3) Determine how customers in each segment differ for SC services 4) Evaluate supply chain services, including ones not met, and performance for each segment
  25. 25. 25 Segment Approaches Cost—good concept—allocating and assigning costs—not direct costs Value—economic—not good to identify segment characteristics Need—drivers that segments have for specific service(s)
  26. 26. 26 What To Do with Results --Have Actionable Info-- 1) Prioritize segments 2) Be specific 3) Evaluate the quality of service 4) Implement services for each segment 5) Develop metrics for each segment’s service and measure
  27. 27. 27 Example Order Size and Annual Volume Order Requirements
  28. 28. 28 Large Orders Segment
  29. 29. 29 Special Preparation Segment
  30. 30. 30 Direct to Store Segment
  31. 31. 31 Redesigned Supply Chain
  32. 32. 32 Supply Chain Risk Mitigation
  33. 33. 33 What Risk Is About business continuity Concept traction—Fukushima Insurance focus—assets Plus contingency planning
  34. 34. 34 Supply Chain Risk Complexity Geographic scope offshoring/sourcing outsourcing Low inventory lean manufacturing JIT manufacturing
  35. 35. 35 Supply Chain Risks Deloitte global survey 45% say SC risk program only somewhat effective or not effective 53% say SC disruptions have become more costly 48% say frequency of risk disruptions with negative outcomes have increased
  36. 36. 36 More Deloitte Technology, industrial products, diversified manufacturing most likely to say SC disruptions have become more costly Most costly outcome—margin erosion 71% say SC risk is important in strategic decision-making
  37. 37. 37 More Top challenges to risk management (RM) lack of cross-functional collaboration (32%) cost of implementing RM strategies (26%) SC RM is organized around silos (75%) leads to lack of visibility and collaboration makes difficult to assess and manage risk on holistic basis
  38. 38. 38 Threat Sources  Natural disasters  Geopolitical  Pandemics  Technological  Terrorists  Commodity prices
  39. 39. 39 Sources  Labor costs  Currency  Ports  Markets  Suppliers  Execution
  40. 40. 40 Intl Country Risk Guide 39 China, Peoples' Rep. 62 Thailand 86 Indonesia 114 Sri Lanka 129 Pakistan Rank in 06/12 Country 1 Norway 2 Brunei 3 Luxembourg 4 Switzerland 5 Singapore 6 Sweden 7 Oman 8 United Arab Emirates 9 Germany 10 Canada 11 Hong Kong 12 Taiwan 13 Qatar 13 Saudi Arabia 15 Denmark 16 New Zealand 17 Japan 18 Kuwait 19 Finland 20 Korea, Republic 21 Trinidad & Tobago 22 Netherlands 23 Australia 24 Austria 24 Malaysia 54 Mexico Source: PRS Group
  41. 41. 41 Suppliers Tier 1 Suppliers and More
  42. 42. 42 Risk Measure risk— Financial Impact Time to Recover Identification and mitigation—not just for MNCs Cannot mitigate what you do not identify
  43. 43. 43 Where Will Your Supply Chain Take You?

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