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Global Supply Chain Integration

Some thoughts from IBM GBS on the challenges and opportunities entailed in global supply chain integration

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Global Supply Chain Integration

  1. 1. Mondher Ben-Hamida, CPIM, CSCP Associate Partner / Global Electronics SME IBM GBS Supply Chain Strategy Practice [email_address] +1.415.425.7184 A Tale of Ants, Humans and Chaos
  2. 2. 2009 ELECTRONICS INDUSTRY MAP (PDIF) Product Lifecycle Mgmt (IS01, SCM) Strategic Drivers Industry Solutions (ISA Code) Solution Offerings Industry Framework Infrastructure Reduce Operating / Infrastructure costs Brand and Product Commoditization / pressure to innovate Consumer Driven Innovation / strategic selling and sales execution Globalization and Merger Integration Tighter integration and partnering industry ecosystem Supply, Demand & Global Integration (IS09, SCM, FMS, HCM) Electronics MES (IS10, SCM) Marketing, Sales & Service Transformation (IS05, CRM, S&C) <ul><li>Requirements Management (Telelogic/Rational) </li></ul><ul><li>Product Innovation management/IPD </li></ul><ul><li>Integrated BOM </li></ul><ul><li>Embedded system/Software lifecycle management </li></ul><ul><li>Test outsourcing </li></ul><ul><li>Next generation PDM/web-based and extended PDM </li></ul><ul><li>Unified Verification Management </li></ul><ul><li>eGIE/CBM/Shared Service Design </li></ul><ul><li>Global Supply Chain Planning </li></ul><ul><li>Supply Chain Visibility (VMI/CPFR) </li></ul><ul><li>Master Data Mgmt </li></ul><ul><li>Supply Chain Mgmt ERP* </li></ul><ul><li>Green Supply Chain </li></ul><ul><li>Global Financial System Consolidation </li></ul><ul><li>“ Solar Fab In A Box” </li></ul><ul><li>Semiconductor , Flat Panel Display, Solar MES (SIView, LCDView, SolarView) </li></ul><ul><li>Enterprise MES </li></ul><ul><li>View Factory Suite/Manufacturing Process Improvement </li></ul><ul><li>GIView (Globally Integrated View)/Mfg Cockpit </li></ul><ul><li>Marketing Transformation / Market Planning </li></ul><ul><li>Sales Transformation </li></ul><ul><li>Multi-Channel Management (MCM) </li></ul><ul><li>Service Management </li></ul><ul><li>Med Device Contract Sales & Service </li></ul>Product Development Integration Framework Supply Chain Visibility / VCC Manufacturing Integration Framework (MIF) Infrastructure: servers, storage, communication networks & associated services
  3. 3. ABOUT THE PRESENTER Mondher Ben-Hamida, CPIM, CSCP Associate Partner / Global Electronics SME IBM GBS Supply Chain Strategy Practice Education 1997 1995 Master of Science in Industrial Engineering and Operations Research, University of Minnesota, Minneapolis, MN, USA. Master of Engineering in Industrial Engineering, ENIT, Tunis, Tunisia Languages <ul><li>English </li></ul><ul><li>French </li></ul><ul><li>Italian </li></ul><ul><li>Arabic </li></ul>Fluent Fluent Fluent Fluent Specialization <ul><li>Supply Chain Strategy </li></ul><ul><li>Global Issues in SCM </li></ul><ul><li>Enterprise Sustainability </li></ul><ul><li>Advanced Planning Tools </li></ul>Experience Overview Mondher is an Associate Partner in the IBM Supply Chain Strategy group. The practice is responsible for providing strategic and operational guidance to senior executives within client organizations. Mondher is an Industrial Engineer and a Global Supply Chain Strategist with over 13 years of global management and manufacturing consulting experience. Primary focus has been the design and implementation of Supply Chain Management strategies and tools, Advanced Planning and Scheduling solutions and Theory-Of-Constraints initiatives. Mondher is a frequent speaker at various supply chain events (APICS, SCC, AMR, etc.) and has published a number of articles on various topics ranging from supply chain strategy to reducing the environmental impact of logistics operations. He is also a co-inventor of a supply chain carbon modeling tool (patent pending). Mondher is a universal citizen and his passion for solving global supply chain problems along with his fluency in 4 languages has led him to operate in four continents Sample Engagements <ul><li>Helped one of the world’s largest fabless companies (wireless phone chip segment) define and implement a comprehensive supply chain collaboration model (VMI, Consignment and Schedule Sharing) with three of its most strategic customers on 3 continents. </li></ul><ul><li>Led a major supply chain strategy definition for one of Europe’s largest industrial conglomerates. Activities included assessing state of current operations model, compiling and documenting appropriate best practices and devising a novel supply chain vision that is customer centric (secured agreement on a new market segmentation) and emphasizes the agreed upon core competency (fulfillment). </li></ul><ul><li>Led a major supply chain strategy redesign effort at McDonald’s. This executive level initiative assessed competitive trends and provided a global vision for the future supply chain integration model along with a ‘playbook’ of practical steps to achieve the vision </li></ul><ul><li>Selected by AMR Research as an SME and voting panelist for the 2007 World’s Top 25 Supply Chains </li></ul><ul><li>Served as the Make Best Practices Lead and co-author of SCOR 7.0 </li></ul>
  4. 4. OBJECTIVES Briefly discuss the challenges most companies face in optimizing the integration of their global supply chain operations Provide a critical analysis of the root cause(s) of these challenges Provide an Overview of IBM’s Approach and Competitive Differentiators 1 2 3
  5. 5. First off, what is Global SCI and why is it important? <ul><li>Global competition is, to a large extent, a competition between supply chain models. </li></ul><ul><li>Superior supply chain execution, while not sufficient for business success, is a necessary condition </li></ul>The supply chain needs to be aligned with the market needs Complication # 1 Complication # 2 Complication # 3 Supply chain costs need to be minimized Supply Chain Integration is the act of turning a complex and diverse network of partners and operations into a functioning ecosystem. The supply chain needs to be flexible and responsive Need to ensure consistency in design and execution Outsourcing is a key strategic imperative Shrinking control yet ultimate accountability to customers ABC, Inc. Tier 1 Tier 2
  6. 6. What are the key pain points of our clients? An External View <ul><li>Make </li></ul><ul><li>Make vs. Buy </li></ul><ul><li>Reach of production facilities </li></ul><ul><li>Product mix at each location </li></ul><ul><li>Source </li></ul><ul><li>Level and scope of collaboration with suppliers </li></ul><ul><li>Global vs. regional sourcing model </li></ul><ul><li>Design </li></ul><ul><li>Internal vs. external along various dimensions </li></ul><ul><li>Level of integration and upstream design collaboration with suppliers </li></ul><ul><li>How to listen to the needs and wants of a global customer base </li></ul><ul><li>Service </li></ul><ul><li>Warranty plans and logistics </li></ul><ul><li>Customer service partners </li></ul><ul><li>Reverse logistics </li></ul><ul><li>Deliver </li></ul><ul><li>3PL/4PL agreements </li></ul><ul><li>Customer segmentation and service agreements </li></ul><ul><li>What to hold and where and how much </li></ul>Plan Customers Side <ul><li>Network Design Decisions </li></ul><ul><li>Centralized vs Decentralized model </li></ul><ul><li>Global demand Planning </li></ul><ul><li>Make vs. Buy </li></ul><ul><li>#, Location and scope of CM partners </li></ul><ul><li>Global Inventory Planning </li></ul>
  7. 7. What are the key pain points of our clients? An Internal View Division / BU / Geo People Processes Systems Technology Measures Division / BU / Geo People Processes Systems Technology Measures Division / BU / Geo People Processes Systems Technology Measures People Processes Systems Technology Measures Lack of true Supply Chain organization Excessive customization, often for no reason, with limited, if any, synergies between divisions Too many systems and instances hindering data consolidation and sharing Disparate systems and supporting technologies hinder integration and collaboration Inconsistent and often conflicting set of measures Corporate HQ
  8. 8. Why Is Global Supply Chain Integration a Difficult Task? The Uncanny Resemblance Between Complex Systems And Supply Chains according to Chaos Theory <ul><li>Complex systems consist of a large number of elements. </li></ul><ul><li>The elements have to interact and this interaction must be dynamic. </li></ul><ul><li>The Interaction is fairly rich, i.e. any element in the system influences, and is influenced by, quite a few other ones. </li></ul><ul><li>Firstly, the interactions are non-linear . </li></ul><ul><li>The interactions usually have a fairly short range, i.e. information is received primarily from immediate neighbours. </li></ul><ul><li>There are loops in the interaction. </li></ul><ul><li>Complex systems are usually open systems , i.e. they interact with their environment. </li></ul><ul><li>Complex system operate under conditions far from equilibrium. </li></ul><ul><li>Complex systems have a history. Not only do they evolve through time, but their past is co-responsible for their present behaviour. </li></ul><ul><li>Each element in the system is ignorant of the behaviour of the system as a whole. </li></ul>
  9. 9. Root Cause # 1 The Gap Between Business Needs And Business Models Phase 1 Phase 2 Phase 3 Business creation and local market establishment Aggressive Global Growth Saturation Reputation Matters Growth Matters Execution Matters Suitability of Supply Chain Models and Tools Low High Elapsed Time / Supply Chain Planning Complexity High Low ABC, Inc. Tier 1 Tier 2 ABC, Inc.
  10. 10. Root Cause # 2 – The Challenge Of Internal Integration “Tell Me How You’ll Measure Me, And I’ll Tell You How I’ll Behave” Corporate HQ Low High High Low CEO CSO* (*) – Global Chief Supply Chain Officer EMEA Division CEO CSO* BU XYZ CEO CSO* A desire to grow rapidly (Phase 2) provided divisions with a great deal of independence which led to the proliferation of overly localized supply chain processes and solutions While the division-level supply chain officer might listen to the corporate-level officer, his/her performance/bonus is decided by the Division/BU head The tendency to promote local performance has greatly diminished the scope and impact of corporate supply chain officers
  11. 11. Root Cause # 3 – The Challenge Of External Integration Integration is about Collaboration; However, Are We Wired For It? The Idea: Unlike ants and bees, humans aren't hard-wired for cooperation; we tend to act out of self-interest. That inclination repeatedly draws us into &quot;social dilemmas&quot; where, in an attempt to gain more for ourselves, we ultimately fare worse than we would have by cooperating. The evidence: The trick is to establish an agreement where everyone's self-interest is best served by cooperating. That means removing incentives to violate the agreement. The Conclusion: Businesses are nothing but federations of human beings. We think we’re different and unique and we behave in ways that protect and promote that uniqueness. We need to overcome some innate apprehensions to build a winning value proposition for key supply chain partners
  12. 12. Root Cause # 4 – The Issue of Asymmetric Benefits What’s in it for me? Many Supply Chain Integration Efforts failed because the incentives were not properly defined and established
  13. 13. Lessons Learned and Tools to Leverage
  14. 14. Our Approach – A High Level Overview Electronics Industry – Globally Integrated Enterprise Supply, Demand & Global Integration eGIE / CBM / Shared Service Design Global Supply Chain Planning Supply Chain Visibility (VMI/CPFR) Master Data Mgmt Supply Chain Mgmt ERP Green Supply Chain (enabling IBM’s Smarter Planet) Global Financial System Consolidation “ Solar Fab In A Box”
  15. 15. Consulting Guideline # 1 Build the Right Model Define the End State Ensure that the Supply Chain Strategy is Aligned with the Corporate Strategy The End State Supply Chain vision should be aligned with the corporate strategy and goals The supply chain working model needs to be built with as much commonality as possible. Core Capabilities Core Competency Extended Capability 1 Extended Capability 2 Extended Capability 3 Customer Stream A Customer Stream B Customer Stream C Supporting Processes High Low Time to Accomplishment Value Chain Total Performance High Today “ Incremental” Approach “ Vision / Backward” Approach World Class Performance Hurdle Ideal State
  16. 16. Consulting Guideline # 2 Define the Right Levers for a Globally Integrated Supply Chain Model Company ABC People Processes Systems Technology Measures / Reporting Most companies’ (and their consultants!) reflex is to consolidate their supply chain supporting systems (e.g. reducing # of SAP instances, etc.) Always start with these dimensions taking into account the company structure and working model <ul><li>For instance: </li></ul><ul><li>Does the company want to have a global fulfillment model (e.g. ship from anywhere to anywhere) or prefer to have regional fulfillment centers isolated from each other </li></ul><ul><li>Do the various business units (or geo’s) compete for the same resources? </li></ul>Global Supply Chain Integration is, above all, about integrating data feeds to provide a holistic view of the system performance. The choice of a centralized or distributed SC infrastructure should not be driven by technology but rather by real business needs
  17. 17. CASE STUDY – A GLOBAL HIGH TECH COMPANY GTM GTM GTM GTM GTM ESB <ul><li>End-State </li></ul><ul><li>Consolidated Supply Chain systems onto single backbone </li></ul><ul><li>Integrated “Best of Breed” solutions </li></ul><ul><li>Established hubs for business intelligence </li></ul>SC GTM GTM GTM GTM GTM ESB Hub Hub Hub <ul><li>Initial Steps </li></ul><ul><li>Establish Enterprise Service Bus (ESB) </li></ul><ul><li>Implement virtual information hubs </li></ul>SC SC SC SC SC SC SC SC SC SC GTM GTM GTM GTM GTM <ul><li>Current State </li></ul><ul><li>Multiple systems with point-to-point interfaces </li></ul><ul><li>Poor visibility across supply chain </li></ul>Hub Hub
  18. 18. Why Is IBM Uniquely Positioned To Help With Global SCI? The Three Dimensions Of Our Offering By leveraging innovative ideas from our research division and proven best practices from our internal supply chain group , we are uniquely positioned to help our clients improve their supply chain strategy and operations Advisory Services Research Internal Supply Chain Supply Chain Strategy Practice
  19. 19. Why Is IBM Uniquely Positioned To Help With Global SCI? A Rich Portfolio of Tools to lead the Field of Supply Chain Analytics and Enable Smart Design Decisions (1) – ‘Recent Acquisitions’ refer only to ILOG and Cognos (2) – ILOG can be seen as the Intel Inside of most SCM/APS Solutions (1) Some of our Existing Assets Recent IBM Acquisitions (2) SCPM (Supply Chain Process Modeler and Simulator) SNOW (Supply Chain Network Optimization Workbench) WSP (Warehouse Site Planner) VCC (Virtual Command Center)