1. Building Supply Chains for Competing
Against Uncertainty
Rich Sherman, Director of North America
Supply Chain Council
www.supply‐chain.org

2. 2009 Was a Tough Year

3. Companies Must Respond to the Challenge
• Increased need to differentiate in a global market
• Time compression – global sourcing & delivery
• Customers expect perfect accuracy, information, and
service (RFID, Customization, etc.)
• Competition for capital is intense – pressure to
optimize material flow and inventory increases
• Companies will seek to leverage more outsourced
business, manufacturing & logistics processes
• Companies must be more agile responding to change
faster and managing more inventory locations
Companies Must Transform Their Operations to Meet Growing
Business Challenges through New Process Improvement Initiatives!

4. SCM is Paramount in Times of Economic Uncertainty
• In 2009, US business logistics costs fell to $1.1 trillion3 – good news?
• Bad News – Orders for new goods dropped substantially and
downturn in each sector translated to lower shipping volume 3
• Supply‐chain generally accounts for between 60% and 90% of all
company costs1
• A 2% improvement in process efficiency for supply‐chain processes
has 3000‐5000% the impact of a 2% improvement in efficiency for…
IT… HR… Sales… & Finance1
1 Exclusive of Financial Services companies
2 Source: Hoovers 2006 Financial Data, Supply-Chain
Council 2006 SCM Benchmark data on SCM cost for
discrete & process industries
3 CSCMP 21st Annual State of the Logistics Industry
Focused initiatives in Supply Chain Management can result in 30-35% cost
reductions, liberation of working capital, and revenue increases of 3-5%!

5. And SCM Improvement Creates Shareholder Value
The Supply Chain All Financial & Shareholder
Impacts . . . Metrics . . . Value
• Improve customer service and Liberate
Working
response Capital
• Optimize inventory flow, Improve
utilization & productivity Capital
Reduce Efficiency
Fixed
• Best-in-class customer Capital
relationships Increase
• Differentiated service Increase Shareholder
capabilities Revenue Value
and Margin
• Best-in-class strategic supplier Increase
partnerships Profit
• Leverage of outsourcing of Optimize
business processes Cost Model
• Unique supply chain models
Effective Supply Chain Management can increase a Return on
Invested Capital (ROIC) by 30% and More!
5 AMR 2009 ‐ SCC & SCOR Executive Overview

6. Supply Chain Council Member Companies Outperform
the Market – 14 of AMR Top 25 are Members
• Comparison of Fortune‐1000
Council member company share
price aggregate growth from
2003 – present to S&P 500 and
DOW indices.
• Growth inflected after 2 years,
and the spread between SCOR
index companies and other
industrials has grown to almost
30 points.
• Growth is increasing
exponentially: Compound
interest on SC performance.
• Correlates SCC
Membership/SCOR investments
with Shareholder value.
• Same pattern evident in FTSE‐
Realtime: www.scorlabs.org/scor/scorindex
100, DAX, NIKKEI and other
indices.
6 AMR 2009 ‐ SCC & SCOR Executive Overview

7. Enterprises Are Changing How They Plan,
Source, Make and Deliver Product
• Product Strategies
• Customer Speed & Enterprises are
Strategies Granularity discovering new value
• Time Strategies in operations
• Visibility & management.
Collaboration
• New Channels Reach &
There is a GAP
• Transportation Execution
between traditional
• Logistics Strategies ERP and day to day
operations decision
support!
• Demand Integrated Sales &
Management Operations Planning,
Integration
• Supply Management to Ops
Decision Support Tools
• Performance Planning
& SC Collaboration
are imperatives!
Management
• Business Process
Outsourcing
Companies Must Transform Their Operations to a Demand
Responsive Supply Network to Meet Growing Business Challenges!

8. Companies Are Reinventing Their Supply Chains

9. The Supply Chain is Evolving to a
Collaborative Demand Responsive Network
Wholesale
Suppliers Distributors
Retailers
Manufacturers
Interne Customer
t/ Interne Demand
Portals t/ Interne
Portals t/
Portals
Virtual
Manufacturers Logistics
Providers Info
A Technological Infrastructure is Emerging to Enable Real Time
Contract Goods
Communication and Data for Integrated Demand – Supply
Manufacturer
Planning, Execution, and Decision Support to Synchronize Supply
s
in Response to Demand Change!

10. What’s The Next Big Thing?
• Cloud Computing
– Supply Chain Visibility
– Software as a Service (SaaS)/On Demand
– Location Based Technology/Mobility/Telematics
– Business Intelligence/Decision Support
• Auto Id/Info
– Beyond RFID
– Voice Recognition/Response
– Intelligent Sensors, Monitors, Devices
• Robotics
– Picking, Packing, Putaway
– Load, Unload
• Internet Transparency &Social Media for Business
– LinkedIn, Twitter, Blogging, Search
– Offers, Location, Orders, Navigation, Behavior

11. Technology Breakthrough:
The Smart Supply Network
• Optimization for Visibility & Global Flow Control
• Smart Transactions (Telematics/RFID) Convey Information in Real
Time Across the Supply Network
• Convergence of Planning & Execution ‐ Basis for Demand
Planning/Crossdocking/Outbound Consolidation
• Optimum Supply Network Material Flow through Collaborative,
Synchronized Activity Planning & Scheduling
Smart Smart
Transactions Transactions
Vendor Crossdock & Customer
Custom Pack Distribution
A New ParadigmLabel
& in Supply Chain Management is Emerging
Center
Outbound that is
Consolidation
Opening a Window of Opportunity to Gain Market Leadership!

12. The SCOR® model – a cross‐industry open standard
• The five integrated processes provide a boundary‐free view of the true end‐
to‐end Extended Supply Chain
• SCOR provides process definitions, metrics, benchmarks, best practices
including environmental and risk management, and HR skills requirements
• Utilized by members as an organizational engagement model for operations
excellence supporting all methodologies such as Lean Six Sigma
• An Unbiased foundation for Performance and Value Based Outsourcing
Plan
Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source
Return Return Return Return Return
Return
Return Return
Your Company Customer’s
Suppliers’ Supplier Customer
Customer
Supplier
Internal or External Internal or External
12 AMR 2009 ‐ SCC & SCOR Executive Overview

13. Changing the Game!
Transform From To
Supply Chain Supply Network
Long and slow Fast and flexible
Forecast‐based Demand responsive
Manufacturer‐driven Customer‐driven
Internal focus External focus
Designed from product Designed from usage back
forward
Cost‐reduction Value creation
Linear, sequential Processes Dynamic, synchronized
processes

14. Welcome to Day Two!
• Another Outstanding Line Up of Speakers
• More Case Studies, Thought Provoking Panels –
• Please Ask Questions, Ask Questions…
• Text Me Your Questions – 512‐294‐6558
• Network, Introduce Yourself, Share Experience
• Take Away New Ideas and Approaches
• Share with your Colleagues when you return
• Have a great Day 2 at the Conference!

15. Thank You!
www.supply-chain.org
Rich Sherman, Director of North America
Email: rsherman@supply-chain.org
Direct: +1 512-266-9041
Mobile: +1 512-294-6558