SCL Antwerp - Alan Waller, Solving Efeso, Embrace the Supply Chain of the Future

Solving Efeso © 2013
Professor Alan Waller OBE
Antwerp, Belgium
2 June 2015
Leveraging the Supply Chain for Competitive Advantage
SCL Antwerp -
Embrace the Supply Chain of the Future

- 2 -Supply Chain and Logistics Summit Solving Efeso © 2013
 Vice President, SC Innovation, Solving Efeso
 Visiting Professor,Cranfield School of Management
 Immediate Past International President, CILT
 Global Research Committee, APICS SCC
 President, Leaders in Supply Chain Europe
 Chairman, ELUPEG Europe
 Director and Trustee, Transaid

Ever more
demanding
customers and
consumers
Changing market
boundaries and new
channels
Aggressive global
competition
Industry
consolidation and
alliances
Sustainability/ Risk/
Environmental
issues
Financial/Economic
pressures
Speed of technology
change
Shortening product
life cycles
Hypercompetition
+
Globalisation
Competitive Pressures in the Supply Chain
Serving localised customer needs through longer, more complex supply lines
Supply Chain Management in a Global World

Agenda
 Global Developments
 The Role of Supply Chain
 Next Generation Supply Chains
 The Challenges and Opportunities of Strategic Change
 Making it Happen - Case Study in Indonesia
 The Way Forward

Agenda
 The Way Forward

The Emerging Value Chain- The Global Picture
VALUE CHAIN
RESPONSE
Retailers
 Increased customer reach
 Enhanced propositions/choice
 Increased availability
 Increase SC control
 Responsible sourcing
Manufacturers
 Focus on core
 Network/outsource
 Agility
 Volume economics
 Supply Chain visibility
 Collaboration
 Sustainability
 Management of risk
 Process driven
Systems
 ERP
 Bolt-ons /APS
 Joining SC players
 Process driven
Technology
 New products
 New channels
 New customers
 Low cost
Consumers
 Ever more demanding -
collectively and individually
 Pro-active
 Interactive
 Multi-channel
 Omni-channel
 Responsible buying
Logistics Companies
 Dedicated solutions
 Value-Added solutions
 Collaborative solutions
 Break the vicious circle

Agenda
 The Way Forward

Organisation of the Future:
Supply Chain Management in the Boardroom
Supply Chain Management coordinates the internal and external networked
resources to drive VALUE through the business
Ext.
Finance IT HR Comm.
R & D
Supply
Chain Sales
&
Mktg.
Strat.
Planning
Leading
Processes
Value Adding
Processes
Support
Processes
Core Business Processes
VALUE CREATION
 The Supply Chain strategy will
complement and enable the overall
business strategy for top line growth
 Excellence in Supply Chain execution will
deliver the bottom line results
 The Supply Chain leader of the future will
have to:
 Understand interfacing functions
 Make increasingly strategic decisions
 Move from "value delivery" to "value
creation"
 Manage risk in the extended enterprise
 Merit board level recognition
SUPPLY CHAIN AS A FUNCTION- AND AS A PROCESS!

Supply Chain as a Function -
AND as a Value Added Process in the Boardroom
Value
Revenue
Cost
Fixed
Assets
Working
Capital
Fiscal
Volume
Channel management
Brand build
Price
Service bundle
Emotional Intelligence
Loyalty
Customer Intimacy
SCE excellence (warehousing / distribution)
Waste reduction
Operational effectiveness
Conversion to opportunity cost
Utilisation
Market capacity
Contract manufacturing (inc cost impact)
Network strategy
Relationships / trust to build confidence
Cycle time
Tax efficiency
Treasury planning / hedging
‘Handles’
for Agility
Source:
Conference
Board
Europe:
European
Council on
Global SC

Agenda
 The Way Forward

Global Supply Chain - Where Will the Next Generation
Innovation Come From?
New Thinking Of Old Practices
Old Practices / Old Thinking
New Practices and New Thinking
New Practices Designed On Old Thinking
New
Old
Old New
SupplyChainThinking
Supply Chain Practice
• Collaboration across supply chain creating
value added economics
• Control towers for collaboration
• Responsible sourcing
• Sustainability - social/, economic &
environment
• Focus on skills and leadership
• Align supply chain strategy with business
strategy
• Retail focus on On-Shelf-Availability and
In-store logistics
• Supply Chain design with risk
management principles
• Extended Supply Chain Network Review
• Managing Complexity
• Retail focus on total Supply Chain cost – not
just pushing cost upstream
• Focus on Product/Channel/Customer
Profitability - Cost-to-serve
• Collaboration along Supply Chains to create
visibility/synchronisation
• Supplier Development for Supply Chain
performance
• Manufacturing for Supply Chain performance
Source: Alan Waller 2013

Key takeaways from the report........
Next
Generation
Supply
Chains
Moving towards Next Generation Supply Chains
- The Chief Supply Chain Officer Report 2013 (SCM World)
Business
• Integration of Supply Chain
Leadership into Business
Leadership
• Alignment of Supply Chain
Strategy and Business
Strategy
• Larger investment in Direct to
Customer Channels
Customer
• Tangible performance is
expected from Social &
Environmental factors, not just
a positive image
• Consumers are segmenting
faster than business can
respond - variety and channel
• Move to Omni-Channel
models pushing complexity
further upstream in terms of:
• Packaging
• Pricing
• SKU Count
• Networks
• Fulfilment Channels
Supply Chain
• Focus on integrated operations
& cost reduction
• Skills in supply chain are
considered to have parity with
sales and R&D
• Complex risk management
strategies being expanded from
supply side to the entire supply
chain
Value Generation
• Recognition that Supply Chain enables value creation
in:
• Customer service
• Customer loyalty
• Strengthening supplier relationships
• Acceleration of new product introduction
• Business expansion in existing and new
markets
• Expansion of value-added services
• Facilitation of premium pricing
• Leveraging opportunities created by external
supply chain disruptions

Key takeaways from the report........
Next
Generation
Supply
Chains
Moving towards Next Generation Supply Chains
- The Chief Supply Chain Officer Report 2014 (SCM World)
Business
• CEO's delegating less Supply
Chain strategic decision
making
• Visible link between Supply
Chain capability and margin
growth
• Route to market is a "2 way
street" with pressure coming
from more integrated
manufacturing and
consolidated supplier bases
Customer
• Growing volatility and more
complexity in customer
demand
• Use of social media for real
time demand sensing and
customer feedback
• Digital demand growth is
increasing # of SKUs
• New generation of tools &
skills required to capture and
process "big data" customer
demand
Supply Chain
• Deeper operational integration
in value chains
• True cost to serve capability for
each and every order
• Digital demand fulfilment is
fragmenting fulfilment modes
and shortening cycle times
• Trend towards Agility more
important than traditional Lean
practice
Value Generation
• Traditional cost cutting and process standardisation
will become less important in terms of value
generation as digital technologies become more
accessible
• Too much demand noise in "big data", is not focusing
enterprise resources on the real value creation
opportunities
• Uncertainty was previously risk.....is now considered
a value driver with "Agile" companies able to fulfill
profitable orders in time gaining competitive
advantage

Agenda
 The Way Forward

M4SC (Management 4 Supply Chain) Approach:
Value Chains - so much more than trucks and sheds...
According to the Harvard
Business Review, 40% of
all investments are
wasted due to a lack of
alignment with business
strategy
Source: Supply Chain Council 2013

Alignment with Business Strategy and Flawless Execution
are Keys to a High Performing Supply Chain
Most companies choose a working business strategy and fail to execute it functionally,
alignment and flawless execution of supply chain strategies yields a competitive
advantage over many competitors.
Companies with a highly efficient structure are twice as successful as those with
operational failings

Top 5 Concerns Amongst Executives Worldwide
Implementation is a key concern...."Excellence in Execution" and "Consistent
Execution of the Strategy"
0.00% 20.00% 40.00% 60.00%
Financial risk, volitility and credit
risk
Global economic performance
Speed, flexibility, adaptability to
change
Consistent execution of Strategy
by Top Management
Excellence in Execution
43.80%
44.60%
46.60%
47.00%
55.00%
Cite challenge as being of 'Greatest Concern'
Source: The Conference Board 2010
Note: The global top 5 list is weighted by regional representation in global GDP as established by the International Monetary Fund

Bridging the Implementation Gap
Pan-regional supply chain integration across Europe
There are major challenges in translating vision into reality
‘86 ‘88 ‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02
% of Companies
0%
75%
50%
25%
100%
Opportunity Awareness
Effective Implementation
Active Implementation
Strategy Planning
‘04 ‘06 ‘08 ‘10
Source: A Waller Surveys 1992, 1994 , 1996, 2002, 2004 and 2010

Change from vertical Supply Chains to Demand Webs -
Supply Chain Implementation becomes also a key external issue
Vertical integration Network organisation
Businesses are responding by focusing on core competencies and outsourcing non-
core activity creating networked organisations
Source: Chatham House Forum
 “From 2005, over half of SCM
functionality is provided from
outside the enterprise ”
(Gartner Group)
 Supply Chain is an External
Agenda
 Businesses must work in real
partnership with the other
businesses in the Extended
Supply Chain key to this
success
 This redefines the role of
Supply Chain Management as
a Board Process

Supply Chain Strategy in the Boardroom Survey 2009-2012
Cranfield School of Management / Solving Efeso - Key Survey Results
What is Supply Chain
functionally responsibility for?
Is the senior supply chain person
on the Board?
Over 50% of companies have the Supply
Chain Leader on the Executive Board of
their Business Unit
For manufacturers, nearly 40% of
supply chain leaders are responsible for
Source, Make and Deliver

Implementation Challenges – The Business Opportunity
 50% chance of successful implementation of Strategic Change
 Barriers to change
 Variable CEO/Board involvement in Supply Chain Strategic Change
 Company Culture
 Skills and Leadership
 Disciplines of Performance Behaviour
 Engaging the Leadership Team in driving Change Management
 Aligning Supply Chain and Business Strategy
 Adopting the Key Get-rights for successful change:
– High Performing Organisation Model - aligning the organisation to succeed
– Performance behaviours - willingness to change and responsibility for performance
– Kotter Steps - "Get the Vision Right"
Excellent and Successful Implementation is a Key Competitive Advantage
What issues do companies need to look at to deliver competitive advantage?
Source: Solving Efeso/ Cranfield School of Management Research 2009-2012

Solving Efeso/Cranfield School of Management
Supply Chain Strategy in the Boardroom Survey 2009/2012
N= 181
Success of Supply Chain Strategies
This is a 50% chance
of success or failure!

0.0 2.0 4.0 6.0
1- Not at all
2
3
4
5- Fully
There is clear and strong correlation between the extent of Board involvement
and success
Source: Solving Efeso/Cranfield : Supply Chain Strategy in the Boardroom Survey 2009/2012
Board involvement in SC strategy
N= 56
Increasingboardinvolvement
Increasing success
Success of implementation

The SC strategy process is highly cross-functional
with several functions at least consulted
•There is clear and strong correlation between the involvement of
other functions and success N= 181
Source: Solving Efeso/Cranfield : Supply Chain Strategy in the Boardroom Survey 2009/2012

Other ingredients of success
Success is higher when:-
• Sales & Marketing, Finance and IT functions are held
accountable
• The process is vision led
• SC strategy review happens frequently
• Quantitative modelling techniques are used
• A high level of adaptation takes place
• Risk management is an integrated part of the strategy
and implementation process
• There is a focus on benefit tracking
Source: Solving Efeso/Cranfield : Supply Chain Strategy in
the Boardroom Survey 2009/2012

Customer and business focused mindsets and management
behaviours are required to succeed
This is a major shift away from today’s functional ways of working
Key
Management
Behaviours
End-to-End Supply
Chain Mentality
Switch from a
Stock Push to a
Demand Pull
Philosophy
Total
Commitment to
Customer Service
Anticipate End
Customer and
Manage Demand
Proactively
Focus on
Performance of
Extended
Enterprise
Management of
Partnerships

Company culture, lack of senior management leadership and lack of
information are the top 3 barriers to overcome
N= 181
Rank Barrier to success
1 Company culture
2 Senior management lack of leadership
3 Lack of information along the Supply Chain
4 CEO lack of support
5 Management skills inadequate
6 Lack of clear goals
7 Lack of IT systems
8 Inertia/Lack of urgency
9 Lack of resources
10 Lack of KPIs and tracking
11 Fear of change
12 Too many conflicting priorities
13 Over ambitious timeline
14 Change overload
15 Lack of IT skills
16 Inappropriate performance mechanisms

Respondents rate People barriers much higher than technical barriers
N= 181
Sum of scores for people related vs technical related barriers
‘No technical barriers or
restraints, the issues are
around change management.
The situation is improving with
implementation successes
which feed to accelerate the
implementation process.’
‘The main constraint is the
speed of change. We reckon
that we are not very good at
change management - the
culture doesn’t let us be fast
enough.’
Technical 20%
Type of barrier
"...Survey Quotes..."

The key “get rights” for Supply Chain Strategies and Initiatives
Supply Chain Strategy
in the Boardroom..
Top level support
Benefit Tracking
Active involvement of
other functions
Change
Management
dealing with
cultural and
people issues
Frequent /
continuous
review
Continuous
adaptation
Share learning Vision led
Quantitative
Modelling
Risk Management
Source: Solving Efeso/Cranfield School of Management:: Supply Chain Strategy in the Boardroom Survey 2009/2012:

Agenda
 The Way Forward

 1,811,569 sq km land
 251,160,124 inhabitants
 GDP / Capita (ppp): $5,000 (2012 est.)
Making it Happen- A Case Study in Indonesia
-Leveraging Supply Chain to Realise the Market Opportunity
 SEA is a massive and growing market place
 Urban GDP per capita in Indonesia is 10
times the average
 Within ‘Urban’, analysis showed over 5
million ‘New Consumers’ (‘A’ Socio-
Economic class), growing at over 30% per
annum
 The ‘Traditional Market’ (necessity
purchases of small quantities),is served by a
diverse and highly fragmented retail
structure supported by an inefficient complex
trade channel
 The ‘New Consumer’ market (regular
purchases of bulk quantity), is served by a
developing self-service trade that demands a
new level of supply performance
 Failure to support the ‘New Consumer’ is a
lost opportunity and will lead to a decrease
in market share

Indonesia - Major Multinational FMCG Manufacturer
Traditional Trade Channels
2 Factories
plus third party
suppliers
2 Central Warehouses
Harbour Warehouses
20 Regional Depots
300 Primary Distributors
3000 Secondary Distributors
> 200,000 Retailers

Indonesia - Major Multinational FMCG Manufacture - over 7
weeks of finished goods inventory
Ware-
house
stock
(11 days)
Transit
stock
(1 day)
Depot
stock
(7 days)
Transit
stock
(3 days)
Transit
stock
(3 days)
Factory
stock
(3 days)
Retail
stock
Distributor
stock
(21 days)
Transit
stock
(1 day)

Indonesia - Major Multinational FMCG Manufacturer - evolution
of Trade Channels
 Retail Outlets
– Traditional Shop/Toko
– Self-Service Outlet
– Small Family Chain
 Regional/National/International Chains
– Wholesale Supply
– Dedicated Distributor
– Non-dedicated/Full-line Wholesaler
– Cash ‘n’ Carry
 Over 50% will still be through the traditional route
The New Retailers will drive overall Market Growth of 30% pa

Indonesia - Major Multinational FMCG Manufacturer - Servicing
the Trade Channels
Traditional Trade
operations
 Full Loads of allocated stock
collected by Distributors
 Small vans sell weekly to
Traditional Retailers/Tokos
 Traditional Products typically
in small single-use packs
The Self-Service Trade will not thrive with existing Trade Channels
Self-Service Trade needs
and wants
 Large Volume deliveries to
individual stores/(RDCs)
 Frequent daily delivery
 Central ordering
 Specified lead-times /
demanding service levels
 New products / Large pack
sizes / case picking

Innovation and The Strategic Vision
An Integrated Supply Chain to meet all customer needs at
lowest total cost
Development of a new trade channel to meet the rapidly
developing self-service market
Maintain and improve the traditional route to market
Introduce Flexible Manufacturing Processes to create an agile
supply chain response
Develop Existing Key Suppliers Through Partnerships
Develop Partnerships with the New Retailers
Develop LSP Partnerships
Introduce new systems to support the Supply Chain Vision
A Vision to benefit all Supply Chain Players and grow market share

Business Benefits
Protect and Grow Market Share
Align the business to address the new market requirements
Provide reliable service to the self-service sector through a
shorter less complex and more responsive supply chain
Improve but not disrupt the traditional trade channel
Improve supply and manufacturing to benefit both trade
channels
Reduce inventory
Reduce costs
Improved overall customer service
A Supply Chain Vision creating value, growth, and competitive edge
in a rapidly changing environment and market place

Key elements driving successful implementation
 Communicate and get buy-in to the Vision
 Commit the CEO and set up a Supply Chain Executive in the Board Room
 Establish the overall project on the Board Agenda as a key priority
 Appoint an Internal Champion – the very best the business has
 Define, schedule and prioritise the change projects (41 projects)
 Appoint internal project leaders and cross-functional project teams
 Set up a communication plan and communication programme
 Set up Supply Chain Master Classes (Locally and in the UK)
 Work with suppliers/outsourcing partners and customers
 Audit changes in the business culture and performance:
– Assess: Innocence/Awareness/Understanding/Action/Results
– All Board members, internal management and external partners
 Integrate the change programme with systems implementation programme
 Strategic Modelling for options and risk analysis, and monitoring progress

The key “get rights” for Supply Chain Strategies and
Initiatives -- the key essentials for the Indonesian success
Supply Chain Strategy
in the Boardroom..
Top level support
Benefit Tracking
Active involvement of
other functions
Change
Management
dealing with
cultural and
people issues
Frequent /
continuous
review
Continuous
adaptation
Share learning Vision led
Quantitative
Modelling
Risk Management
Source: Solving Efeso/Cranfield School of Management:: Supply Chain Strategy in the Boardroom Survey 2009/2012:

Agenda
 The Way Forward

Conclusions and Way Forward
 The practice of good supply chain varies hugely across different businesses
 There is a clear link between supply chain excellence and business success
 There are identifiable businesses where rapid implementation of a new supply chain
strategy has positively impacted business performance, and also where failure in
implementation has significantly damaged the business.
 Experience of undertaking over 55 Supply Chain Strategic projects in all sectors and
geographies has identified wide-spread implementation difficulties.
 The 2009/2012 research has quantified the impact of these difficulties, and has
identified and prioritised the key barriers to success, together with identifying key
‘get-rights’ that provide a positive link to success
 Businesses that want to embrace the opportunities presented by Next Generation
Supply Chains need to proactively put in place the building blocks, and follow the
key ‘get-rights’, that will guarantee success
 The most challenging areas relate to culture and management performance

Closing comments: 5 Key Messages for the CEO
 How well is Supply Chain represented in the
Leadership team, and how does this reflect the
correct scope of responsibility?
 How well is Supply Chain supporting the Corporate
and Customer service strategies? Ensure SC is not
solely a cost issue
 Encourage cross-functional participation in the
development of the SC strategy – it helps success
 Accept that SC strategy implementation is not
straightforward – so build risk management into the
process
 Two main barriers to successful implementation of
SC strategy are internal issues – Culture and
Leadership

More Information?
The Stage One Survey Report is available to download free of charge
Workshops to discuss the findings and understand the implications for
businesses are being run across Europe and in other Regions of the World
according to demand
A White Paper has been published that is available without charge to all
survey participants
We are embarking on a next phase of research to establish precisely what
characterises High Performance Organisations and High Performance Supply
Chains, together with identifying the leadership qualities and the performance
behaviours that need to be put in place to ensure business success
For further information and participation in the next stage of research please
contact:-
email: alan.waller@solvingefeso.com
Home Business: +44(0)1933 403712
Mobile:+44(0)7802 170507

SCL Antwerp - Alan Waller, Solving Efeso, Embrace the Supply Chain of the Future

Recommended

Recommended

More Related Content

What's hot

What's hot (19)

Similar to SCL Antwerp - Alan Waller, Solving Efeso, Embrace the Supply Chain of the Future

Similar to SCL Antwerp - Alan Waller, Solving Efeso, Embrace the Supply Chain of the Future (20)

More from Global Business Intel

More from Global Business Intel (20)

Recently uploaded

Recently uploaded (20)

SCL Antwerp - Alan Waller, Solving Efeso, Embrace the Supply Chain of the Future

Editor's Notes