Supply Chain Management for Future


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A seminar delivered to create a perspective of 'Supply Chain Management for Future' for an august audience of 70+ Supply Chain Professionals

Published in: Business, Technology

Supply Chain Management for Future

  1. 1. delivered byPinak KulkarniSPARKfocused on YOURSustainable Performance ImprovementSupply ChainManagementfor Future
  2. 2. Common Views on Supply Chain• “Supply Chain” is just another term for “Logistics”• Supply Chain includes other functions such aspurchasing, engineering, finance and marketing,and related control activities in the single company• The Supply Chain is all the functions in definition #2,plus those in a company’s suppliers’ suppliers and acompany’s customers’ customer as wellSPARKSustainable Performance Improvement
  3. 3. Do you have Supply Chain Practiceslike this?Sales &Distribution(Demand)Manufacturing(Capacity)Procurement(Material)CUSTOMERSubordinate toManufacturingobjectivesSubordinate toSales & DistributionobjectivesSubordinate toSales & MarketingobjectivesThe approach leads to achieving ‘Local’ rather than‘Global’ OptimaSPARKSustainable Performance Improvement
  4. 4. Consequences of Supply ChainPractices• Huge Buffers– Raw, WIP, and Finished-Goods Inventories– Capacity Buffers– Lead-time Buffers• Practice– Inexperienced with Models & Computers– Confused by Models– Suspicious of ModelsSPARKSustainable Performance Improvement
  5. 5. How does the future looklike?SPARKSustainable Performance Improvement
  6. 6. Supply Chains importance will increase asthat’s where the money is• Supply-chain generally accounts for between 60% and90% of all company costs• A 2% improvement in supply-chain processes has 3000% -5000% the impact of a 2% improvement in efficiency for…IT, HR, Finance… Sales…Fortune-10 Company Supply-Chain Cost % Total Costs1GM Ford Conoco Wal-Mart Chevron IBM Exxon GE94% 93% 90% 90% 88% 77% 75% 63%1 Source: Hoovers2006 FinancialData, Supply-Chain Council 2006 SCM Benchmarkdata on SCM cost for discrete & process industriesSPARKSustainable Performance Improvement
  7. 7. Supply Chain Trends• Volatility & Uncertainty have permanently increased• Securing Growth Requires Truly Global Customer andSupplier Networks• Market Dynamics Demand Regional, Cost-OptimizedSupply Chain Configurations• Risk Management Involves the End-to-End Supply Chain• Supply Chain Organizations will need to be trulyIntegrated and EmpoweredSPARKSustainable Performance Improvement
  8. 8. Comparing BRIC nations• China invested in Infrastructure, communication &transportation. India’s agenda is Social Welfare driven.• In contrast to India, China has a Command & Control politicalstructure.• Russia has a per capita income of $12,000. India is $ 1,400.On top, Russia has a ageing population in contrast to India withhalf of the population being less than 25 years age.• Brazil & India have similarities of welfare spending, ‘highcontext societies’ although Brazil has a high per capita.Remember Brazil went into a deep tailspin till 1994 when the newcurrency was born.SPARKSustainable Performance Improvement
  9. 9. What are leaders saying?CostContainmentCustomerIntimacyVisibilityGlobalization RiskSource:An IBM reportThe Top of the agenda Supply Chain ChallengesSPARKSustainable Performance Improvement
  10. 10. Challenges of Supply Chainfor FutureSPARKSustainable Performance Improvement
  11. 11. The Complexity ChallengeIncrease incustomer &customerlocationsIncrease inproduct varietyofferedHighfluctuations incustomerordersIncrease instrategicsuppliersIncrease inmanufacturingfacilitiesIncrease ininventorylocationsSPARKSustainable Performance Improvement
  12. 12. The Flexibility Challenge• Forecasts will be more inaccurate• Need to improve visibility to the current marketdemand• Product development & SC will have to be integrated• Customers will be more demanding• Management needs to move away from the focus oncash flow & marginsSPARKSustainable Performance Improvement
  13. 13. The Risk ChallengeInventorymanagementOrderfulfillmentlead timeServiceinnovationEnvironmentalConsiderationNew ProductInnovationExtendedglobal SC footprintAccountspayable &receivableSPARKSustainable Performance Improvement
  14. 14. The Talent Challenge• Supply Chain Talent is one of the majorchallenges of future.• Skills & Competencies of People in theSupply Chain may become the single largestbottleneck to manage future supply chainsSPARKSustainable Performance Improvement
  15. 15. Supply Chain Managementfor FutureSPARKSustainable Performance Improvement
  16. 16. SCM for FutureSCM forfutureSCExcellenceModelRiskManagementPeopleSupplyChainInnovationled modelProfitProtectionPlanSPARKSustainable Performance Improvement
  17. 17. Adopt a Supply Chain Excellence ModelSupply ChainLeadershipRevenueGrowththroughPartnerCollaborationLay down aProcessDriven ModelReduceSupply ChainComplexityNeed to speakthe financiallingoDevelop SupplyStrategies withcongruent goalsPhase out ‘Hero’model, Phase in‘Process Model’Idealized design,Reduce layers,Improve visibilitySPARKSustainable Performance Improvement
  18. 18. Risk ManagementIdentify yourrisk appetiteIdentify RisksEvaluate &QuantifyPlan your riskresponseContinuouslyMonitor•Modern Supply Chain Practices have reduced buffers in the Supply Chain.•More than 50% executives think that they don’t have any Supply Chain Riskmanagement processSPARKSustainable Performance Improvement
  19. 19. People Supply Chain• SCM for Future will be differentiated ONLY of thisdimension.• All hard supply chain aspects will work only if theSoft (People) aspects are attended to.• Get ready with mapping skills & competencies ofyour people.• Train & re-train. You will never train any one enough.SPARKSustainable Performance Improvement
  20. 20. Adopt an Innovation-led Model• With the dramatic rise in wages & operatingcosts in India, Cost arbitrage model forSupply Chain success is over.• Innovate everything –– Product– Services– Supply Chain DesignSPARKSustainable Performance Improvement
  21. 21. Lay down a Profit Protection PlanProfitProtectionPlanTargetVolumePriceReduceCOGSRationalizeAssetsReduceWorkingCapital cycleSPARKSustainable Performance Improvement
  22. 22. Supply Chain organization of futureSupply ChainsIn-house global In-house local OutsourcedProduct Development /NPIWarehousing /TransportationStrategic SourcingShared services(Finance / IT)Demand PlanningS & OPAfter sales return & repairManufacturingFinal Assembly / ConfigurationSPARKSustainable Performance Improvement
  23. 23. The final thought..• Managing anything can be viewed as 4 relatedactivities– Getting Information– Making Decisions– Implementing Decisions– Buffering against Imperfections in information,decision-making, or implementationSPARKSustainable Performance Improvement
  24. 24. IGNITE POTENTIALRELEASE POTENTIALwebsite: www.think-spark.comemail: pinak.k@think-spark.comcontact: + 91 98814 60636SPARKfocused on YOURSustainable Performance ImprovementSPARKSustainable Performance Improvement