Mr. Olivier Aba


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  • Notes: Supply chain involves everybody, from the customer all the way to the last supplier. Key flows in the supply chain are - information, product, and cash. It is through these flows that a supply chain fills a customer order. The management of these flows is key to the success or failure of a firm. Give Dell & Compaq example, Amazon & Borders example to bring out the fact that all supply chain interaction is through these flows.
  • Mr. Olivier Aba

    1. 1. Capacity Building Workshop on Trade Facilitation Implementation: Tools, Techniques & Methodologies Supply Chain Efficiency & Trade Facilitation Geneva, October 18th 2004 Olivier Aba
    2. 2. Workshop Agenda <ul><li>What is a Supply Chain, “SC”, & Supply Chain Management, “SCM”? </li></ul><ul><li>Benefits of Supply Chain Management </li></ul><ul><li>E-business & Supply Chain – opportunities </li></ul><ul><li>E-commerce & Trade Facilitation: how to improve Supply Chain efficiency & competitiveness? </li></ul>SC view from the inside of companies Implications for Trade facilitation & global view
    3. 3. What is a Supply Chain? Customer wants detergent and goes to Supermarket Supermarket Supermarket or 3rd party DC P&G or other manufacturer Plastic producer Chemical manufacturer (e.g. Oil Company) Tenneco packaging Paper manufacturer Timber industry Chemical manufacturer (e.g. Oil Company) Source: Chopra & Meindl 2001
    4. 4. What is a Supply Chain? <ul><li>Every company is involved in one or more Supply Chains </li></ul><ul><li>A supply chain can be defined as “ the sequence of suppliers that contribute to the creation and delivery of a good or service to end customers . This encompasses virtually all aspects of a business—sales processing, production, inventory management, material supply, distribution, procurement, forecasting, and customer service, and several other areas…” </li></ul>Source :Aglira & al. , 1999
    5. 5. Components of a Supply Chain Demand & Supply Planning Sourcing & Supplier Management Manufacturing Storage & Transportation Customer & Order Management PLAN BUY MAKE MOVE SELL Manage the flow of materials, goods or services
    6. 6. Logistics vs. Supply Chain <ul><li>Supply Chain is NOT logistics… </li></ul><ul><li>Supply Chain is MORE THAN logistics </li></ul><ul><ul><li>covers the coordination of most activities & flows upstream : </li></ul></ul><ul><ul><ul><li>from suppliers to manufacturing </li></ul></ul></ul><ul><ul><li>and activities & flows downstream : </li></ul></ul><ul><ul><ul><li>from manufacturing to end-customer </li></ul></ul></ul>
    7. 7. Logistics Costs in Europe (as a % of revenues) Source: ELA, Insight to Impact, 1999 1998 Transportation: 40% Warehousing: 26% Inventory: 18% Admin: 16%
    8. 8. Logistics Costs Worldwide Source: Bowersox, Closs, Cooper, 2002 16.5 China Asia/Pacific 15.4 India 15.0 Brazil South America 14.7 Spain 12.6 Greece 13.1 Germany 12.0 France 11.4 Belgium Europe 10.5 USA 15.3 Mexico North America Logistics as % of GDP (1997) Country Region
    9. 9. Flows in a Supply Chain? <ul><li>There are 3 types of flows to consider in a Supply Chain: </li></ul><ul><ul><li>Material flows </li></ul></ul><ul><ul><li>Financial flows </li></ul></ul><ul><ul><li>Information flows </li></ul></ul>
    10. 10. What is an Internal Supply Chain? A company’s “internal” Supply Chain is made of the material , information and financial flows between the company and its direct business partners. Material flows Financial flows Information flows SUPPLIER MANUFACTURER CUSTOMER
    11. 11. Integrated or Extended Supply Chain Need to take into account the supplier’s suppliers and the customer’s customers because they generally have an impact on the overall Supply Chain performance. Material flows Financial flows 2nd tier suppliers 1st tier suppliers Manufacturer Wholesaler Retailer End-customer Information flows
    12. 12. Porter’s Value Chain Source: ITC, 2002 Inbound Logistics Production Outbound Logistics Marketing & Sales Service Purchasing & contracting Research & development Human resources management & training IT systems PRIMARY VALUE-ADDING ACTIVITIES Finance, planning, etc. SUPPORT ACTIVITIES Margin
    13. 13. Supply Chain Supply Sources: plants vendors ports Manufacturers, Regional warehouses: stocking points Field warehouses: stocking points Customers, demand centers Material Production/ purchase costs Manufacturing/ Inventory & warehousing costs Transportation costs Inventory & warehousing costs Transportation costs Source: Simchi-Levi & al, 2000
    14. 14. SCOR 5 Processes: Overview Source: Supply Chain council, 2003
    15. 15. SCOR 5 Processes (1) <ul><li>Plan : </li></ul><ul><ul><li>Processes that balances aggregate demand & supply to develop a course of action which best meets sourcing, production & delivery requirements </li></ul></ul><ul><li>Source : </li></ul><ul><ul><li>Processes that procure goods and services to meet planned or actual demand </li></ul></ul><ul><li>Make : </li></ul><ul><ul><li>Processes that transform product to a finished state to meet planned or actual demand </li></ul></ul>Source: Supply Chain council, 2003
    16. 16. SCOR 5 Processes (2) <ul><li>Deliver : </li></ul><ul><ul><li>Processes that provide finished goods and services to meet planned or actual demand, including order management, transportation management, and distribution management </li></ul></ul><ul><li>Return : </li></ul><ul><ul><li>Processes associated with returning or receiving returned products for any reason. These processes extend into post-delivery customer support. </li></ul></ul>Source: Supply Chain council, 2003
    17. 17. What is Supply Chain Management? <ul><li>“ Supply Chain Management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities , to the right locations , and at the right time , in order to minimize system wide costs while satisfying service level requirements .” </li></ul>Source: Simchi-Levi & al, 2000
    18. 18. Drivers of Supply Chain Performance <ul><li>Inventory </li></ul><ul><li>Transportation </li></ul><ul><li>Facilities </li></ul><ul><li>Information </li></ul>Source: Chopra & Meindl 2001
    19. 19. Drivers of Supply Chain Performance Competitive Strategy Supply Chain Strategy Drivers Inventory Transportation Facilities Information Source: Chopra & Meindl 2001 Supply Chain Structure Efficiency Responsiveness
    20. 20. Considerations for Supply Chain Drivers Source: Chopra & Meindl 2001
    21. 21. Drivers of Supply Chain Performance <ul><li>Inventory : </li></ul><ul><li>Role of inventory in the Supply Chain: </li></ul><ul><ul><li>Anticipation of future demand </li></ul></ul><ul><ul><li>Production and distribution costs reduction </li></ul></ul><ul><ul><ul><li>economies of scale </li></ul></ul></ul>Source: Chopra & Meindl 2001 Dell
    22. 22. Drivers of Supply Chain Performance <ul><li>Transportation : </li></ul><ul><li>Role of transportation in the Supply Chain: </li></ul><ul><ul><li>Transportation moves the product between different stages in a Supply Chain </li></ul></ul><ul><ul><ul><li>Transportation choices impact the responsiveness and the efficiency of the Supply Chain </li></ul></ul></ul>Source: Chopra & Meindl 2001
    23. 23. Drivers of Supply Chain Performance <ul><li>Facilities : </li></ul><ul><li>Role of facilities in the Supply Chain: </li></ul><ul><ul><li>Where inventory is transformed into another state - manufacturing facility </li></ul></ul><ul><ul><li>Where inventory is stored before being shipped - warehousing facility </li></ul></ul><ul><ul><ul><li>Choices such as number of facilities or capacity impact the Supply Chain </li></ul></ul></ul>Source: Chopra & Meindl 2001 Wal-Mart
    24. 24. Drivers of Supply Chain Performance <ul><li>Information: </li></ul><ul><li>Role of Information in the Supply Chain: </li></ul><ul><ul><li>Serves as the connection between the Supply Chain’s various stages (allows coordination of actions) </li></ul></ul><ul><ul><li>Allows daily operations of each stage of the Supply Chain (ex. : a production scheduling system needs information) </li></ul></ul>Source: Chopra & Meindl 2001 Nokia Zara Dell
    25. 25. SC Nokia <ul><li>Nokia’s frequent & rapid product introduction, major contributors to fast revenue & profit growth are: </li></ul><ul><ul><li>supported by a very flexible & efficient SC </li></ul></ul><ul><li>Nokia has put in place: </li></ul><ul><ul><li>rapid response manufacturing , </li></ul></ul><ul><ul><li>quick-ship logistics, </li></ul></ul><ul><ul><li>global SC web that links Nokia’s suppliers & plants, supports Vendor Managed Inventories and collaborative planning </li></ul></ul>Source: Accenture, 2003
    26. 26. SC Zara (1) <ul><li>Global clothing manufacturer/retailer – 44 countries </li></ul><ul><li>Focused on time to market, costs, order fulfillment & customer satisfaction </li></ul><ul><li>Zara owns 630 retail stores worldwide </li></ul><ul><li>Store managers send customer feedback directly to Zara’s in-house designers via handheld devices </li></ul><ul><ul><li>designers are kept abreast of fast-changing trends & demands </li></ul></ul><ul><ul><li>gives Zara vital information on sale of less-desirable merchandise </li></ul></ul><ul><ul><li>better managed inventories </li></ul></ul>Source: Accenture, 2003
    27. 27. SC Zara (2) <ul><li>Zara acquires fabrics in only 4 colors & postpones dyeing & printing until close to manufacturing  reducing waste and minimizing need to clear unsold inventories </li></ul><ul><li>Zara can deliver new styles in 3 to 6 weeks, compared with up to 5 months for competitors </li></ul>Source: Accenture, 2003
    28. 28. SC Henkel <ul><li>Multinational manufacturer of consumer & industrial products </li></ul><ul><li>Put in place collaborative planning, forecasting & replenishment (CPFR) with Condis, a Spanish supermarket & several packaging suppliers for laundry & home care products </li></ul><ul><li>Involves daily interchange for key items, coordinates business planning (combined promotions & collaborative forecasts) & jointly defined & measured key performance indicators. </li></ul>Source: Accenture, 2003
    29. 29. The “Best” Supply Chains <ul><li>“ They are not just fast & cost effective. </li></ul><ul><li>They are also: </li></ul><ul><ul><li>Agile </li></ul></ul><ul><ul><li>Adaptable </li></ul></ul><ul><ul><li>and they ensure that their companies’ interests stay aligned.” </li></ul></ul><ul><ul><li>Hau L. Lee, Harvard Business Review , October 2004 </li></ul></ul>
    30. 30. Supply Chain & SCM Benefits <ul><li>Reduction of SC costs </li></ul><ul><ul><li>non-transport costs </li></ul></ul><ul><ul><li>transport costs </li></ul></ul><ul><li>Lower inventories </li></ul><ul><li>Improved delivery time </li></ul><ul><li>Improvement in service quality </li></ul>
    31. 31. SC Champions: Service vs. Costs
    32. 32. SC Champions – Costs & Performance
    33. 33. The e-Business <ul><li>e-Business is a collection of business models and processes motivated by Internet technology, and focusing on improving the extended enterprise performance : </li></ul><ul><ul><li>e-commerce is part of e-Business </li></ul></ul><ul><ul><li>Internet technology is the driver of the business change </li></ul></ul><ul><ul><li>The focus is on the extended enterprise: </li></ul></ul><ul><ul><ul><li>Intra-organizational </li></ul></ul></ul><ul><ul><ul><li>Business to Consumer (B2C) </li></ul></ul></ul><ul><ul><ul><li>Business to Business (B2B) </li></ul></ul></ul>
    34. 34. e-Business and e-Commerce <ul><li>e-Commerce definition : </li></ul><ul><ul><li>Is often referred to as “buying and selling using the Internet” </li></ul></ul><ul><li>e-Business definition : </li></ul><ul><ul><li>The transformation of key business processes through the use of Internet technologies (IBM) </li></ul></ul>
    35. 35. Barriers to e-Business Adoption <ul><li>For customers: </li></ul><ul><ul><li>A large proportion of current non-Internet users </li></ul></ul><ul><ul><ul><li>Look at your country </li></ul></ul></ul><ul><ul><li>The poor understanding of the benefits </li></ul></ul><ul><li>For companies: </li></ul><ul><ul><li>No tangible benefits </li></ul></ul><ul><ul><li>Not relevant to the business </li></ul></ul><ul><ul><li>Technology costs too high and difficult to understand </li></ul></ul><ul><ul><li>Concern about fraud </li></ul></ul><ul><ul><li>Concern about confidentiality </li></ul></ul>
    36. 36. Introducing B2B and B2C C2C C2B Consumer B2C B2B Business Consumer Business
    37. 37. e-Business Environment Supplier Customer Local Environnent Local Competitors Intermediates, Channels Global Environment Technologies, innovation used by global competitors Country specific , economic factor, legal constraints, cultural factor International , economic factors, Legal constraints, cultural factors Society Public opinion Media Moral… Environment today has more influence & impact Look at the top 100 companies from 50 years ago, less than a quarter of them remain in the top 100, many have ceased to exist. organization Technologies
    38. 38. e-Business Processes <ul><li>In this context, e-Business specifically refers: </li></ul><ul><ul><li>to “the planning and execution of the front-end and back-end operations </li></ul></ul><ul><ul><li>in a chain using the Internet ” </li></ul></ul>Manufacturer Supplier Retailers Wholesalers Customer Product
    39. 39. B2B & B2C Transactions B2B > 80% of e-business Supplier Intermediaries, channels organization Technologies Retail Channel Consumer customers Organization or business customers Technologies B2C B2B
    40. 40. Disintermediation or “cutting out the middle man” Don’t kill your traditional sales channels but help them in new way of sales Producer Wholesaler Retailer Consumer
    41. 41. e-Business & the Supply Chain <ul><li>Very broad impact of e-business on the Supply Chain: </li></ul><ul><ul><li>upstream : sourcing, procurement </li></ul></ul><ul><ul><li>inbound & outbound logistics : links & use of third parties </li></ul></ul><ul><ul><li>downstream : ordering, warehousing & distribution… </li></ul></ul>Faster Easier
    42. 42. The Role of e-Business in a Supply Chain <ul><li>Supply Chain transactions which can be performed over the Internet : </li></ul><ul><ul><li>Providing information across the Supply Chain </li></ul></ul><ul><ul><li>Negotiating prices and contracts with customers and suppliers </li></ul></ul><ul><ul><li>Allowing customers to place orders </li></ul></ul><ul><ul><li>Allowing customers to track orders </li></ul></ul><ul><ul><li>Filling and delivering orders to customers </li></ul></ul><ul><ul><li>Receiving payment from customers </li></ul></ul>
    43. 43. e-Business Opportunities & SC <ul><li>Reduce facility costs </li></ul><ul><ul><li>Eliminate retail/distributor sites </li></ul></ul><ul><li>Reduce inventory costs </li></ul><ul><ul><li>Apply the risk-pooling concept </li></ul></ul><ul><ul><ul><li>Centralized stocking </li></ul></ul></ul><ul><ul><ul><li>Postponement of product differentiation </li></ul></ul></ul><ul><li>Use dynamic pricing strategies to improve SC performance </li></ul>Source: Chopra & Meindl 2001
    44. 44. e-Business Opportunities & SC <ul><li>Supply Chain Visibility : </li></ul><ul><ul><li>Reduction in the “Bullwhip Effect” </li></ul></ul><ul><ul><ul><li>Reduction in inventory </li></ul></ul></ul><ul><ul><ul><li>Improved service level </li></ul></ul></ul><ul><ul><ul><li>Better utilization of resources </li></ul></ul></ul><ul><ul><li>Improve Supply Chain performance </li></ul></ul><ul><ul><ul><li>Provide key performance measures </li></ul></ul></ul><ul><ul><ul><li>Identify and alert when violations occur </li></ul></ul></ul><ul><ul><ul><li>Allow planning based on global supply chain data </li></ul></ul></ul>Source: Chopra & Meindl 2001
    45. 45. Potential Revenue Opportunities from e-Business & SC <ul><li>Direct sales to customers </li></ul><ul><li>24 hour access for order placement </li></ul><ul><li>Information aggregation </li></ul><ul><li>Information sharing in supply chain </li></ul><ul><li>Flexibility on pricing and promotion </li></ul><ul><li>Price and service discrimination </li></ul><ul><li>Faster time to market </li></ul><ul><li>Efficient funds transfer - reduce working capital </li></ul>Source: Chopra & Meindl 2001
    46. 46. Potential Cost Opportunities from e-Business & SC <ul><li>Direct customer contact for manufacturers </li></ul><ul><li>Coordination in the supply chain </li></ul><ul><li>Customer participation </li></ul><ul><li>Postpone product differentiation to after order is placed </li></ul><ul><li>Downloadable product (software) </li></ul><ul><li>Reduce facility costs </li></ul><ul><li>Geographical centralization and resulting reduction in inventories </li></ul>Source: Chopra & Meindl 2001
    47. 47. Potential Cost Disadvantages of e-business <ul><li>Increased transportation cost due to inventory aggregation </li></ul><ul><li>Increased handling cost if customer participation is reduced </li></ul><ul><li>Large initial investment in information infrastructure </li></ul>
    48. 48. <ul><li>Founded in 1997 </li></ul><ul><li>Sale of French cheeses overseas: </li></ul><ul><ul><li>USA: 70%, Europe: 15%, Asia: 15% </li></ul></ul><ul><li>Reseller, not a producer </li></ul><ul><li>No inventory </li></ul><ul><li>Key elements: quality & logistics </li></ul><ul><li>65% of costs: cheese, packaging, express delivery </li></ul><ul><li>85% of orders delivered in 24 hrs… </li></ul><ul><li>Average sale: 70/80 euros </li></ul><ul><li>Selling price includes transportation costs </li></ul><ul><li>Partnerships: </li></ul><ul><ul><li>Cheese producer & ripener in Loire-Atlantique </li></ul></ul><ul><ul><li>Shipper – FedEx </li></ul></ul><ul><li>Sales (2003): estim - 1 M euros – profitable since 2000 </li></ul>
    49. 49. (1) <ul><li>Founded in 1997 </li></ul><ul><li>Online sale of flower bouquets in France, Europe, USA, Japan, South Korea & Venezuela </li></ul><ul><li>20 theme bouquets, as per the season </li></ul><ul><li>Craft work & Just in Time </li></ul><ul><li>Flowers purchases: 80% from Netherlands </li></ul><ul><li>Centralized flower assembly north of Paris </li></ul><ul><li>25 assembly florists </li></ul><ul><li>Customer can « see » what he is purchasing </li></ul><ul><li>Key success factors: availabiliyt, freshness, leadtime & quality </li></ul>
    50. 50. (2) <ul><li>Downstream logistics critical: transport, delivery, & followup: </li></ul><ul><ul><li>Paris deliveries– E-liko </li></ul></ul><ul><ul><li>Delivereies in France - Chronopost </li></ul></ul><ul><li>Specific packaging designed & used for the flower bouquets </li></ul><ul><li>Delivery fee added on customer bill: 9 euros </li></ul><ul><li>Investment in information systems: 4 M euros – online purchasing system for suppliers, supply chain mangement & order management application </li></ul><ul><li>Local partnerships </li></ul><ul><li>Sales (2003) : about 8 M euros – profitable since 2002 </li></ul>
    51. 51. ChateauOnline (1) <ul><li>Founded in 1998 </li></ul><ul><li>50 people </li></ul><ul><li>Sales: </li></ul><ul><ul><li>50% France – 50% export: Germany, UK, Belgium, Netherlands, Italy, Switzerland, Luxemburg </li></ul></ul><ul><ul><li>70% of sales made with existing customers </li></ul></ul><ul><li>Stakes: customer retention, develop sales, improve quality of service, reduce operating costs </li></ul><ul><li>Approach: Emphasis on processes & use of information systems </li></ul><ul><ul><li>Focus on the customer relationship management - CRM integrated with information system </li></ul></ul><ul><ul><li>Continuous process improvements & integrated inventory management </li></ul></ul><ul><ul><ul><li>Automated E-mail for customer order acknowledgment </li></ul></ul></ul><ul><ul><ul><li>Customer order status available on the site </li></ul></ul></ul><ul><ul><ul><li>Handling of customer problems & anomalies – workflow process between call-center, sales, logistics & accounting </li></ul></ul></ul>
    52. 52. ChateauOnline (2) <ul><li>2000 products from 15 different countries </li></ul><ul><li>Deliveries in France: 5/10 days, overseas: 7/24 days. </li></ul><ul><li>Logistics platform (2000 m2) handled by Easydis (Casino subsidiary) </li></ul><ul><ul><li>800 references, 85 000 bottles </li></ul></ul><ul><li>Transportation towards end customer handled by UPS </li></ul><ul><li>Alliance in 2003 with Henri Maire. Maire is responsible for logistics: wine storage, order preparation & delivery </li></ul><ul><li>Average sale: 200 euros </li></ul>
    53. 53. ChateauOnline (3) <ul><li>European leader of online wine sales </li></ul><ul><li>Honored many times as the best e-commerce website </li></ul><ul><li>Sales (2003) estim – 10 M euros – profitable since end 2003 </li></ul>
    54. 54. ChateauOnline Supply Chain Sales forecasting & Purchases planning Purchases & Supplier Management Storage Transport & delivery Order handling & payment PLAN BUY MOVE SELL Professional Buyers, buying direct in France & overseas Upstream Logistics with partners. Storage & platform Online order management. Promotions, coupons… Secured payment. Outside partners. Transportation Cost billed to customers. 95% of deliveries within leadtime. Information systems
    55. 55. <ul><li>First on-line supermarket in Switzerland </li></ul><ul><li>Created in 1998 </li></ul><ul><li>75 people </li></ul><ul><li>Sales: 15.2 M CHF in 2003; 27 M CHF in 2004 (planned) </li></ul><ul><li>16 000 regular customers </li></ul><ul><li>Average basket: CHF 193 vs 34 in a supermarket </li></ul><ul><li>> 50% market share </li></ul><ul><li>Strategic alliance with Migros in September 2003 & with a common & new online website in January 2004: </li></ul><ul><ul><li>find Migros as well major brand articles </li></ul></ul><ul><ul><li>offer an excellent price/quality ratio </li></ul></ul><ul><li>Major items sold: </li></ul><ul><ul><li>Fruits & vegetables (bananas, carots, apples…) </li></ul></ul><ul><ul><li>Delicatessen (chicken, ham) </li></ul></ul>
    56. 56. Supply Chain Suppliers Logistics Center La Poste Suppliers Suppliers La Poste La Poste CUSTOMERS
    57. 57. Logistics (1) <ul><li>« Ordered today, delivered tommorow” </li></ul><ul><li>Distribution center in Bremgarten (close to Zurich) </li></ul><ul><ul><li>7000 m2 </li></ul></ul><ul><li>6 000 products – 80% fresh products </li></ul><ul><li>300/450 orders/day </li></ul><ul><li>Delivery cost billed to customer: CHF 12/delivery </li></ul><ul><li>Specific packaging: delivery box returned & isotherm for fresh produce </li></ul><ul><li>Transportation in refrigerated trucks from the logisitics center to the Swiss Post distribution centers </li></ul><ul><li>Goods delivered by Expresspost at the address given at order time, directly at the customer door </li></ul>
    58. 58. Logistics (2) <ul><li>Own logistics center (not outsourced) </li></ul><ul><li>30 people </li></ul><ul><li>Products stored as per the nature of goods, process sequence, & items turnover </li></ul><ul><li>Specifics: </li></ul><ul><ul><li>customer requests items in small quantities, not full boxes or palets </li></ul></ul><ul><ul><li>need for different temperature storage areas: from -18 to + 20 degrees centigrades </li></ul></ul><ul><ul><li>need for maximum handling care: fruits & vegetables, bottles… </li></ul></ul><ul><li>Order handling: 33 minutes on average </li></ul><ul><li>Order cost: CHF 24 </li></ul><ul><li>95% of orders delivered as per customer order </li></ul>
    59. 59. challenges <ul><li>Increase the amount fo the average basket & frequency of purchases </li></ul><ul><li>Increase the margin </li></ul><ul><li>Increase the efficiency of the order handling </li></ul><ul><li>Reduce distribtuion & delivery costs </li></ul>
    60. 60. SC Collaboration Information flows Suppliers - Manufacturers - Distributors - Retailers - Customers Processes Organizational structures Enabling technologies Source, INSEAD, 2002 Material flows Financial flows
    61. 61. Supply Chain Trends (1) <ul><li>Focused towards customers : </li></ul><ul><ul><li>move from push - by firm to pull - by customer </li></ul></ul><ul><ul><li>more “personalized” </li></ul></ul><ul><ul><li>logistics chain to take into account need for global coherence, thus rationalization … </li></ul></ul><ul><ul><li>global process allowing for reactivity … </li></ul></ul>
    62. 62. Supply Chain Trends (2) <ul><li>Integration & synchronization of the logistic network : </li></ul><ul><ul><li>demand driven </li></ul></ul><ul><ul><li>sharing of demand data between customers & suppliers </li></ul></ul><ul><ul><li>integration of incompatible information systems </li></ul></ul><ul><ul><li>set up of appropriate production flexibility for the firms & its partners </li></ul></ul><ul><ul><li>permanent synchronization efforts between internal & external logistic chain </li></ul></ul>
    63. 63. Supply Chain Trends (3) <ul><li>Partnership strategy on the way up: </li></ul><ul><ul><li>move from risk reduction approach to balanced relationship </li></ul></ul><ul><ul><li>focus on core competencies , brand, customers, new product introduction </li></ul></ul><ul><ul><li>outsourcing of “non-strategic activities”, such as delivery, transport, storage </li></ul></ul>
    64. 64. SC Transformations <ul><li>From functions to processes </li></ul><ul><li>From profit to performance </li></ul><ul><li>From products to customers </li></ul><ul><li>From inventory to information </li></ul><ul><li>From transactions to relationships </li></ul>Source: Christopher, 1998
    65. 65. The SC of the Future Source: Christopher, 1998 Focus on markets & creation of customer value From products to customers Focus on key performance drivers of profit From profit to performance SC partnerships From transactions to relationships Demand based replenishment & quick response systems From inventory to information Integral management of materials & goods flow From functions to processes Leading to Changes
    66. 66. Supply Chain <ul><li>SCM is more than just technology & information systems </li></ul><ul><li>SC is vital especially for e-commerce </li></ul><ul><li>SC implies a process and transversal approach across functions </li></ul><ul><li>One of the key drivers is information </li></ul><ul><li>Emphasis is placed on collaboration & coordination </li></ul><ul><li>Requires substantial investment in information systems </li></ul><ul><li>Agility & adaptability </li></ul><ul><li>Integrated SC and SCM require major organizational transformations </li></ul><ul><li>The human dimension remains essential : </li></ul><ul><ul><li>People & change management </li></ul></ul><ul><ul><li>Partnerships management </li></ul></ul>
    67. 67. Example: Supply Chains in Tunisia <ul><li>Analysis of Supply Chains in 5 export related sectors: </li></ul><ul><ul><li>Garement </li></ul></ul><ul><ul><li>Automotive components </li></ul></ul><ul><ul><li>Dates </li></ul></ul><ul><ul><li>Olive Oil </li></ul></ul><ul><ul><li>Arts & craft e-commerce </li></ul></ul><ul><li>The selected companies are considered as « best in class » in Tunisia </li></ul>Source: MKC, 2003
    68. 68. Tunisia SC case studies (1) Source: MKC, 2003 International Local Local E-commerce craft International Local Local Olive Oil International Local Local Dates International International Off-shore Automotive components International International Off-shore Garement Large Local/international International Local Garement ME Local International Local Garement SME Target Market Product Sourcing Status Sector
    69. 69. Tunisia SC Case studies (2) <ul><li>The analysis clearly identified functional & structural weaknesses that have a major impact on the SC costs </li></ul>
    70. 70. SC Costs <ul><li>Non-transport costs </li></ul><ul><ul><li>ordering & admin costs </li></ul></ul><ul><ul><li>load/unload </li></ul></ul><ul><ul><li>inventory carrying cost </li></ul></ul><ul><ul><li>storage cost </li></ul></ul><ul><ul><li>losses/damages </li></ul></ul><ul><ul><li>stock outs </li></ul></ul><ul><ul><li>emergency shipment costs </li></ul></ul><ul><li>Transport costs </li></ul><ul><ul><li>truck </li></ul></ul><ul><ul><li>airfreight </li></ul></ul><ul><ul><li>ship </li></ul></ul>Costs are important, but also need to look at efficiency...
    71. 71. Tunisia SC Case Studies SC performance (1) Non transport costs: 9.7 % Source: MKC, 2003 80 26 CIF E-commerce craft 26 14 CIF Olive Oil 53 24 CIF Dates 25 18 CIF Automotive components 25 13 CIF Garement Large 37 14 EWW Garement ME 47 17 EXW Garement SME SC costs as % of Value Added SC costs as % of sales Incoterms Sector
    72. 72. Tunisia SC case studies SC Performance (2) Non transport costs: 12.4 % Source: MKC, 2003 80 26 CIF E-commerce craft 26 14 CIF Olive Oil 53 24 CIF Dates 25 18 CIF Automotive components 25 13 CIF Garement Large 37 14 EWW Garement ME 47 17 EXW Garement SME SC costs as % of Value Added SC costs as % of sales Incoterms Sector
    73. 73. Tunisia SC Case Studies SC Performance (3) Non transport costs: 6.8 % Source: MKC, 2003 80 26 CIF E-commerce craft 26 14 CIF Olive Oil 53 24 CIF Dates 25 18 CIF Automotive components 25 13 CIF Garement Large 37 14 EWW Garement ME 47 17 EXW Garement SME SC costs as % of Value Added SC costs as % of sales Incoterms Sector
    74. 74. Tunisia SC Case Studies SC Performance (4) Non transport costs: 10.3 % Source: MKC, 2003 80 26 CIF E-commerce craft 26 14 CIF Olive Oil 53 24 CIF Dates 25 18 CIF Automotive components 25 13 CIF Garement Large 37 14 EXW Garement ME 47 17 EXW Garement SME SC costs as % of Value Added SC costs as % of sales Incoterms Sector
    75. 75. Tunisia SC Case Studies SC Performance (5) Non transport costs: 8 % Source: MKC, 2003 80 26 CIF E-commerce craft 26 14 CIF Olive Oil 53 24 CIF Dates 25 18 CIF Automotive components 25 13 CIF Garement Large 37 14 EXW Garement ME 47 17 EXW Garement SME SC costs as % of Value Added SC costs as % of sales Incoterms Sector
    76. 76. Tunisia SC Case Studies SC Performance (6) Non transport costs: 6.8 % Source: MKC, 2003 80 26 CIF E-commerce craft 26 14 CIF Olive Oil 53 24 CIF Dates 25 18 CIF Automotive components 25 13 CIF Garement Large 37 14 EWW Garement ME 47 17 EXW Garement SME SC costs as % of Value Added SC costs as % of sales Incoterms Sector
    77. 77. Supply Chain Cycle Time (in days) Source: Delvin & Yee World Bank, 2002 87 21 1 57 Jordan to USA Garments Okra Potatoes Garments Coffee Tuna Product .08 1 2 7 .29 Goods preparation 29 12 16 Egypt to Germany 4.46 15.4 152 4.96 Total # of days .71 27 31 2.20 Transportation up to final destination 3.67 65 114 2.47 Ordering process, sourcing & manufacturing Jordan to UK Egypt to USA Yemen to Japan Yemen to Germany
    78. 78. Supply Chain Costs Source: Delvin & Yee World Bank, 2002 6.7 truck & air 88 12 Jordan to USA Garments Okra Potatoes Garments Coffee Tuna Product 89 59 80 24 62 Transport costs in % 26 truck & ship 41 Egypt to Germany 48 15.4 7.2 54.9 SC costs as % of landed price truck & air truck & air truck & ship truck & air Main modes of transportation used 11 20 76 38 Non Transport SC costs in % Jordan to UK Egypt to USA Yemen to Japan Yemen to Germany
    79. 79. Tunisia SC analysis: First Findings <ul><li>Lack of coherence in the practices of the parties involved in the export process </li></ul><ul><li>Lack of links & access to international markets </li></ul><ul><li>Costly & inequitable border control process </li></ul><ul><li>Insufficient intermodal transfer infrastructure </li></ul><ul><li>Not harmonized processes & documents </li></ul><ul><li>Deficiencies in road transport & multimodal transport underdeveloped </li></ul><ul><li>Lack of institutional coordination </li></ul>Source: MKC, 2003
    80. 80. Implications for Trade Facilitation & Policy Decision Makers <ul><li>Most companies have the same objectives: </li></ul><ul><ul><li>Improve response time </li></ul></ul><ul><ul><li>Reduce inventory </li></ul></ul><ul><ul><li>Reduce costs: </li></ul></ul><ul><ul><ul><li>transport costs </li></ul></ul></ul><ul><ul><ul><li>non-transport costs </li></ul></ul></ul>
    81. 81. Food for thought… <ul><li>Supply Chain is a critical element of the companies as well as country’s performance in any economy… </li></ul><ul><li>What can be done to improve the global logistics & SC performance of companies & of the country? </li></ul>Part of the answer rests within the companies The rest is reated to the external environment
    82. 82. Questions for Policy Decision Makers… (1) <ul><li>What is the state of the Supply Chain & Trade Facilitation in your country? How does it serve domestic as well as foreign trade actors (import & export)? </li></ul><ul><li>What is the impact of the logistical system in the performance of the domestic economy & foreign trade? What are the hurdles & obstacles to an improved performance? </li></ul><ul><li>Can the performance of import and export companies be improved significantly? How? </li></ul>
    83. 83. Questions for Policy Decision Makers… (2) <ul><li>What are the plans to improve the links & interrelationships within the SC & Trade Facilitation ? </li></ul><ul><li>In what way can the current regulatory environment be amended to allow for a development of the SC ? Note that Supply Chain & Trade Facilitation are related to transversal processes, linking many different sectors & actors and thus under no direct control by any government institution… </li></ul>
    84. 84. Implications for Trade Facilitation & Policy Decision Makers <ul><li>Information Flow: </li></ul><ul><ul><li>Telecom infrastructure </li></ul></ul><ul><ul><li>Basic skills & access to IT technology & PC’s </li></ul></ul><ul><ul><li>Access to & development of use of Internet </li></ul></ul><ul><li>Inventory: </li></ul><ul><ul><li>Port, road infrastructure </li></ul></ul><ul><ul><li>Efficiency & dependability in admin procedures </li></ul></ul><ul><li>Transport & dependable logistics: </li></ul><ul><ul><li>Port, road infrastructure </li></ul></ul><ul><ul><li>Skills & knowledge (import/export/logistics) </li></ul></ul><ul><ul><li>Coordination </li></ul></ul><ul><ul><li>Management of information flow </li></ul></ul><ul><li>Regulatory environment: </li></ul><ul><ul><li>Responsive & efficient </li></ul></ul><ul><ul><li>Work by exception – customs </li></ul></ul><ul><ul><li>Listen to “customers” </li></ul></ul>Go back to the 4 drivers of SC...