Scm competitiveness-sgd-2013-iii econvention-nagpur (2)


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SCM needs to be looked at from competitiveness point of view. SC can be made competitive by investing rightly into various priorities.

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Scm competitiveness-sgd-2013-iii econvention-nagpur (2)

  1. 1. Supply Chain Management for Global Competitiveness S G Deshmukh ABV-Indian Institute of Information Technology & Management , Gwalior Int Conference on Managing Supply Chain for Global Competitiveness IIIE and RCOEM Nagpur 25 Oct 2013 1
  2. 2. Acknowledgement This presentation is based on extensive information sharing sessions with  Prof R P Mohanty (VC, SOA)  Prof Manoj Tiwari (IIT Kgp), Prof Ravi Shanker(IITD), Dr Jitesh Thakkar (IITKgp)  Thankful to numerous research scholars and faculty members from various institutes for making us realize the importance of SCM in today's competitive scenario. 2
  3. 3. Before I begin.. You may look at some of my presentations available at 3
  4. 4.  Speaking points.. About SCM.  Imperatives & Implications  1:  Shelf life  2: Digital environment everywhere  3: Sharing & Connectivity Global competitiveness report  Implications for SCM  Closing remarks.. 4
  5. 5. IT is making world flatter ! (Thanks to Friedman)        Outsourcing dominated paradigm Team work and leadership assumes new meaning Geography has become history: Time and distance are no longer the important variables Mobile dense and multimedia rich environment has accelerated digital environment. Connectivity has made the global village possible Working on-line, flexi-time, tele/videoconferencing, and continuous learning are changing the traditional notions of how work gets done. Internet is changing the way we communicate with – Source : Fridman, T L, The World is flat: Farrar, Straus & Giroux , 2005 5
  6. 6. Observations..  Transformation taking place  The way we communicate has changed. SCM is no exception to this !  Traditional way of conducting business has drastically changed.  Demanding customers and changing technology 6
  7. 7. Supply Chain Management.. ..a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products and the distribution of these finished products to customers….. Mohanty R P & Deshmukh S G,(ed,) 2011, Handbook of Supply Chain Management, Excel Books
  8. 8. Today's market..  increasingly competitive markets with new entrants providing superior products and services  visible shift from seller to a buyer's market with increasing consumer emphasis on price and quality  the necessity for an industry to succeed in globalised economy.
  9. 9. Today's customer  Very much enlightened ?  Guided /influenced by web/mobile/media  Short attention/retention span ?  Has now options, as he can choose, what he would like to buy from various alternatives, and also he can dictate terms.  Youthful? Energetic? Ready to spend ?
  10. 10.  Observations.. Supply Chain Management has matured as a discipline  Developments in IT have made integration possible  Basic issues in SCM : Management of Material Flow, Information Flow and Money Flow  Basic principles can be applied to a variety of contexts
  11. 11. Goal of SCM…  “to manage upstream and downstream relationships with suppliers and customers in order to create enhanced value in the final market place at less cost to the supply chain as a whole” M Christopher
  12. 12. Typical key words in SCM..        Integration Interfaces Sharing Collaboration Inventory Information IT
  13. 13. Insights..      Inventory manifests in various forms Inventory and information can be exchanged Managing lead time helps in management of inventory Modelling helps in understanding issues from a different perspective Performance needs to be measured on various dimensions (hence BSC, SCOR etc.)
  14. 14. Imperative 1: Shortened product shelf life  Web enabled world: Number of ideas getting generated, developed and produced  Faster product life cycle  Shelf life has shortened considerably (example: mobile phones, tablets)  Pressure on manufacturing 15
  15. 15. Implications  You have to update continuously and must know the state-of-the-art  You have to innovate continuously  Continuous up gradation about customer feedback  Proper synchronization between design, operations and supply chain 16
  16. 16. Imperative 2: Digital environment everywhere !
  17. 17. Implications  You can not afford to be invisible in the digital world  Someone is going to measure you and make you visible !  You and your products/services are constantly indexed, searched  You are also under constant onslaught of new and emerging ideas !  Your availability 24x 7 basis ! 18
  18. 18. Imperative 3 : Sharing & connectivity !     Connecting with suppliers and customers Sharing of information Professional networks Social networks
  19. 19. Implications  Sharing of information/Knowledge made easy through IT  You must share and connect  Your collaborator may be anywhere in the globe available 24 x 7 basis  Power & influence of social media as a binder! 20
  20. 20. Example: Apple vs Amazon ? Miles Trevor Blog 13 Dec 2012
  21. 21. Comparison on…     Agility – the ability to quickly and cost-effectively shift amounts and/or types of production and delivery to improve operational performance in volatile conditions Collaboration – the ability to work across organizational boundaries to solve systemic operational problems and create new value for both customers and partners Execution – the consistent and reliable delivery against commitments and within budgeted expenses Innovation Miles Trevor Blog 13 Dec 2012
  22. 22. Why talk about competitiveness? Traditional thinking: competition is driven by the 4P’s    Today: supply chain capabilities determine competitiveness! Wal-Mart versus K-Mart Compaq/HP versus Dell A final product is not the sole goal   Customer experience is determined by supply chain: quality, cost, delivery Significant proportion of value sourced from suppliers! Supply chains are connected systems enabled by IT  Competitiveness of one tier is a function of the supply and distribution functions, i.e. surrounding tiers. “Value Chains compete, not individual companies!” (Christopher 1992)
  23. 23. Creating a competitive supply chain 1. Develop strategic objectives and tactics, decide competitive priorities 2. Integrate and coordinate various activities in the internal supply chain through IT 3. Coordinate activities with suppliers with customers in a collaborative manner 4. Coordinate planning and execution across the supply chain in a digital environment 5. Form strategic partnerships
  24. 24. Supply Chain : Competitive priorities 1. Quality 2. Cost 3. Flexibility 4. Velocity 5. Customer service
  25. 25. Velocity  Inventory velocity  The rate at which inventory(material) goes through the supply chain  Information velocity  The rate at which information is communicated in a supply chain
  26. 26. Competitive priorities : Sand Cone Model Cost Customer service Flexibility & Velocity Quality
  27. 27. Challenges  Barriers to integration of organizations  Getting top management on board  Dealing with trade-offs  Small businesses  Variability and uncertainty  Long lead times
  28. 28. Supply Chain Issues Strategic Issues Design of the supply chain, partnering Tactical Issues Inventory policies Purchasing policies Production policies Transportation policies Operating Issues Production planning and control
  29. 29. Long term strategy          Enhance focus on competitiveness Creating conditions for investment in and growth of the manufacturing sector Lowering the cost of manufacturing Investing in innovations Strengthening education and training at all levels Adoption of global best practices in SCM Right market framework, competition and regulation Issues relating to competitiveness in small and medium industries Infrastructure development
  30. 30. Perspectives on competitiveness Competitiveness is a concept comprising of the potential, the process and the performance. GMR (2001) To be competitive, several factors must exist: the desire to win, commitment or perseverance and the availability of certain resources. Khalil (2000) Competitiveness is defined in terms of ‘helping business to win’, ‘price’, product range and quality and ‘distribution and marketing’. Dou and Hardwick(1998) Competitiveness arises or results from firm-specific initiatives like: better management, leveraging and stretching of resources. Hamel and Prahlad Ability to design, produce and /or market products or services superior to those offered by competitors, considering the price and non-price qualities. Cruz and Rugman(1992) Competitiveness is synonymous with productivity and is assumed To capture quality feature as well as efficiency feature. Porter (1990) Competitiveness is the ability to raise income as rapidly as competitors and to make investments necessary to keep up with Them in the future. Scott (1989) Extent to which a business sector offers potential for growth and attractive return on investment WCR(1994) (1993)
  31. 31. Competitiveness..   Extent to which a business sector satisfies the needs of customers from the appropriate combination of the following product/service characteristics: price, quality, innovation , and satisfies the needs of its constituents; for example, workers in terms of involvement, benefit programmes, training, and safe workplace; offers attractive return on investment and also offers the potential for profitable growth. Company competitiveness is defined as "the ability to design, produce and/or market products superior to those offered by competitors, considering the price and non-price qualities" (WCR, 1991).
  32. 32. Global Competitiveness..   The Global Competitiveness Report 201213, published 5th. Sept 2012 Ranking of 144 countries on 12 selected criteria
  33. 33. The Global Competitiveness Report  Launched in 1979 covering 112 countries  Goal: to provide a benchmarking tool for policymakers and business leaders  Today 144 countries in the gambit
  34. 34. Definition of competitiveness  “The   set of institutions, policies, and factors that determine the level of productivity of a country” The level of productivity, in turn, sets the sustainable level of prosperity that can be earned by an economy. Source: GCR, 2011
  35. 35. Global Competitiveness Index framework Key for factor-driven economies Key for efficiency-driven economies Key for innovation-driven economies The Global Competitiveness Index A. Basic Requirements B. Efficiency Enhancers C. Innovation & Sophistication Factors 1. Institutions 5. Higher education and training 11. Business sophistication 2. Infrastructure 6. Goods market efficiency 12. Innovation 3. Macroeconomic environment 7. Labor market efficiency 4. Health and primary education 8. Financial market development 9. Technological readiness 10. Market Size
  36. 36. Global Competitiveness Index 2012-13 select economies ranking Rank Score (Out of 144) Economy 1 2 3 7 8 10 13 20 29 32 37 59 65 Switzerland Singapore Finland United States United Kingdom Japan Taiwan Australia China Oman Kuwait India Philippines 5.72 5.67 5.67 5.47 5.45 5.40 5.28 5.12 4.83 4.62 4.56 4.32 4.26
  37. 37. The Global Competitiveness Report 12 Pillars of competitiveness •Institutions •Infrastructure •Macro-economic environnent. •Health & basic education •Higher education & training •Market efficiency – goods •Market efficiency – labour •Market efficiency –finance •Technological readiness •Market size •Business sophistication •Innovation factor-driven economies efficiency-driven economies innovation-driven economies
  38. 38. GCR economies.. Source: Stage Labeled as No Examples Stage 1 Factor driven economy 38 Countries India, Kenya, Ghana Transition from Stage 1 to 2 17 Countries Egypt, Libya, Srilanka Efficiency driven economy 33 countries China,Indonesia,Thaila nd Transition from Stage 2 to 3 21 countries Argentina, Chile, Malaysia Innovation driven economy 35 Countries Australia, UK, USA Total 144 countries Stage 2 Stage 3
  39. 39. Global Competitiveness Index Goods market efficiency components Intensity of local competition Extent of market dominance Institutions Effectiveness of anti-monopoly policy Infrastructure Extent and effect of taxation Macroeconomic environment Health and primary education Total tax rate Number of procedures required to start a business Higher education and training Time required to start a business Goods market efficiency Agricultural policy costs Labor market efficiency Prevalence of trade barriers Trade tariffs Financial market development Prevalence of foreign ownership Technological readiness Business impact of rules on FDI Market size Burden of customs procedures Business sophistication Innovation Imports as a percentage of GDP Degree of customer orientation Buyer sophistication
  40. 40. Global Competitiveness Index Financial market development components Availability of financial services Institutions Infrastructure Macroeconomic environment Affordability of financial services Financing through local equity market Health and primary education Ease of access to loans Higher education and training Venture capital availability Goods market efficiency Labor market efficiency Restriction on capital flows Financial market development Soundness of banks Technological readiness Regulation of securities exchanges Market size Legal rights index Business sophistication Innovation
  41. 41. Global Competitiveness Index areas for improvement Business sophistication components Institutions Local supplier quantity Infrastructure Macroeconomic environment Local supplier quality Health and primary education State of cluster development Higher education and training Nature of competitive advantage Goods market efficiency Value chain breadth Labor market efficiency Financial market development Control of international distribution Technological readiness Production process sophistication Market size Extent of marketing Business sophistication Willingness to delegate authority Innovation Reliance on professional management
  42. 42. Global Competitiveness Index Institutions Infrastructure Innovation components Macroeconomic environment Health and primary education Capacity for innovation Higher education and training Quality of scientific research institutions Goods market efficiency Company spending on R&D Labor market efficiency University-industry collaboration in R&D Financial market development Government procurement of advanced technology products Technological readiness Market size Business sophistication Innovation Availability of scientists and engineers Utility patents per million population
  43. 43. Implications of GCR..  Various activities in SCM can enhance competitiveness: Example: Infrastructure, Penetration of ICT, Business sophistication, Innovation etc.tor  Competitiveness can be visualized at  Industry level  Sectorial level  National level  Global level
  44. 44. Closing remarks..  Digital environment and IT has made SC a challenging task  Merging of product and service supply chains  Several issues in SCM  Framework of Global Competitiveness report provides an opportunity for improvement in SC
  45. 45. Well Known Conferences for Practitioners in SCM  Council of SCM Professionals Conference  POMS Conference  Gartner Supply Chain Executive Conference (17-18 Sep , 2012 at London, UK)
  46. 46. Useful web resources …   
  47. 47. Thank you & stay in touch.. 48