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Managing Today’s Supply Chain

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Managing Today’s Supply Chain

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Managing Today’s Supply Chain

  1. 1. Managing Today’s Supply Chain Trends, Leading Practices, and Risks Council of Supply Chain Management Professionals Grand Rapids, Michigan Roundtable
  2. 2. <ul><li>AGENDA </li></ul><ul><li>What is a company’s Supply Chain? </li></ul><ul><li>Leading practices for managing evolving supply chains </li></ul><ul><li>What has changed or is changing in Supply Chain today? </li></ul><ul><li>Risks/Considerations </li></ul><ul><li>This session is a FACILITATED session….Not a Lecture! </li></ul>
  3. 3. What is a company’s Supply Chain?
  4. 4. Definitions <ul><li>Logistics Management is that part of Supply Chain Management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements. </li></ul><ul><li>Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies. </li></ul><ul><li>Council of Supply Chain Management Professionals (www.cscmp.org) </li></ul>
  5. 5. “It’s Everything” Company Suppliers Supplier’s Supplier Suppliers Customer Customer’s Customer Purchase Pay Typical Advanced View Supply Chain Management is the processes and activities that are involved in the identification, procurement, logistics, and management of Goods and Services within an organization, its suppliers, and its customers
  6. 6. What has changed, or is changing, in Supply Chain? Key Trends to Pay Attention To…
  7. 7. The Drivers of Change <ul><li>Changing supply and customer markets </li></ul><ul><li>Globalization of supply chains </li></ul><ul><li>Unplanned or catastrophic events </li></ul><ul><li>Company consolidation and ownership changes </li></ul><ul><li>Increased emphasis on controls </li></ul><ul><li>Increase demands on time to market </li></ul><ul><li>Continued search for savings or revenue enhancement </li></ul><ul><li>Shortened financial market outlook and demand for rapid response </li></ul><ul><li>Employees are changing </li></ul><ul><li>New technologies </li></ul>The following changes have resulted in where we are today…
  8. 8. What’s Happening Today? <ul><li>The SUPPLY MARKET has changed </li></ul><ul><li>Therefore, SOURCING STRATEGIES are changing </li></ul><ul><li>The LOGISTICS function (warehousing & transportation) is getting much more sophisticated </li></ul><ul><li>Increased use of TECHNOLOGY and suppliers’ capabilities to try and obtain full visibility to the supply chain </li></ul><ul><li>Re-focus on PROCESS capabilities </li></ul><ul><li>Organizations are changing </li></ul>
  9. 9. What’s Coming? <ul><li>Changes in Transportation </li></ul><ul><ul><li>Increasing fuel costs </li></ul></ul><ul><ul><li>Increasing security requirements </li></ul></ul><ul><ul><li>Decreased capacity </li></ul></ul><ul><li>GREEN </li></ul><ul><ul><li>How much fossil fuel does your SC burn? </li></ul></ul><ul><ul><li>What is your carbon footprint? </li></ul></ul><ul><li>Network Optimization </li></ul><ul><ul><li>The supplier and customer markets have changed </li></ul></ul><ul><ul><li>The economics have changed/will change </li></ul></ul>The off shoring trend of the last 10+ years will reverse itself Supply chains will become more regional
  10. 10. Leading Practices for Managing the Evolving Supply Chain
  11. 11. Service/Cash Flow <ul><li>So what is Supply Chain? </li></ul><ul><ul><li>It is your customer experience </li></ul></ul><ul><ul><li>It is your cash flow </li></ul></ul><ul><li>Meyer’s Rule for Supply Chain Design – </li></ul><ul><li>Time = Service = Inventory = Cost = </li></ul><ul><li>Profit </li></ul>
  12. 12. “Best in Class” 3 2 1 I want you to think about the MONEY first If you focus on moving cash faster, it will drive total cost down
  13. 13. Leading Practices <ul><li>Develop and document a Supply Chain Strategy in alignment with the organization – or lead the organization through Supply Chain Strategy </li></ul><ul><li>Focus on the ability to connect people, processes, technology – shift thinking from linear to network </li></ul><ul><li>Simplify processes, controls, and metrics – customer satisfaction </li></ul><ul><li>Instill Total Cost of Ownership and Total System Cost mindset and metrics </li></ul><ul><li>Establish key Supplier and Customer Alliances – source and sell strategically </li></ul><ul><li>Focus on visibility, speed, and accuracy – invest in technology </li></ul><ul><li>Correctly organize the supply chain function and recruit professionals with correct skill sets </li></ul><ul><li>Focus on the cash flow </li></ul>
  14. 14. Risks in today's Supply Chain
  15. 15. <ul><li>What was the impact of these events on your Supply Chain? </li></ul><ul><ul><li>Hurricane Katrina </li></ul></ul><ul><ul><ul><li>Massive disruption of selected transportation routes, including Port of New Orleans </li></ul></ul></ul><ul><ul><ul><li>Shortages and price spikes for various commodities </li></ul></ul></ul><ul><ul><li>West Coast Port Strikes </li></ul></ul><ul><ul><ul><li>1997 Harbor Pilots </li></ul></ul></ul><ul><ul><ul><li>2002 Dock Workers </li></ul></ul></ul><ul><ul><li>California Power Crisis </li></ul></ul><ul><ul><li>Commodity shortages – Steel, Energy, Raw Materials </li></ul></ul>Supply Chain Risk in the Headlines
  16. 16. Potential Risk Factors Research & Development Market Feasibility & Beta Testing Resource Acquisition Production Distribution Point of Sale Customer Service & Transactions The Physical Supply Chain - Innovation - Market Concentration - Regulatory Requirements - Time-to-Market <ul><li>- Cost </li></ul><ul><li>Supplier Relations </li></ul><ul><li>Availability </li></ul><ul><li>Inbound Transport </li></ul>- Facilities - Labor Relations - Geography - Political Factors - Outbound Transport - Managing to Demand <ul><li>Data Integrity </li></ul><ul><li>Product Pricing </li></ul><ul><li>- Availability </li></ul><ul><li>Voice of the Customer </li></ul><ul><li>Market Perception </li></ul><ul><li>Cash Payments </li></ul><ul><li>Cash Collections </li></ul>Risk Analysis 1 Risk Assessment 2 <ul><li>Risk Management 3 </li></ul><ul><li>Information Sharing </li></ul><ul><li>Transferring Exposure </li></ul><ul><li>Reduction Program Implementation </li></ul><ul><li>Avoidance </li></ul>Mitigation Process
  17. 17. Risk Management for the Supply Chain Risk Analysis Risk Assessment Risk Management <ul><li>Provides an objective assessment of the Supply Chain and process weaknesses </li></ul><ul><li>Provides an actionable list of improvements to be implemented </li></ul><ul><li>Provides the foundation for a successful and sustainable security program </li></ul><ul><li>Diagnostics of physical assets </li></ul><ul><li>Mapping of Supply Chain flows </li></ul><ul><li>Gap analyses </li></ul><ul><li>Quantitative models and assessments </li></ul><ul><li>Regulatory reviews </li></ul><ul><li>Sustainable business continuity plans </li></ul><ul><li>Documentation of exposures to Sarbanes-Oxley compliance </li></ul><ul><li>Integrated and holistic Supply Chain strategies </li></ul><ul><li>Broaden cooperation and collaboration between Supply Chain links </li></ul><ul><li>Consider the tradeoffs between costs to implement the program versus potential losses </li></ul><ul><li>Pay equal attention to non-quantifiable risk </li></ul>
  18. 18. <ul><ul><li>Fraud and/or Theft </li></ul></ul><ul><ul><li>Product Delivery Interruptions </li></ul></ul><ul><ul><li>Cost Control and Predictability </li></ul></ul><ul><ul><li>Pricing Control and Predictability </li></ul></ul><ul><ul><li>Supplier Relationship Sensitivity </li></ul></ul><ul><ul><li>Customer Relationship Sensitivity </li></ul></ul><ul><ul><li>Political & Legislative Effects </li></ul></ul><ul><ul><li>Legal Effects </li></ul></ul><ul><ul><li>Quality Control Issues </li></ul></ul><ul><ul><li>Lack of Safeguarding Company Assets </li></ul></ul><ul><ul><li>Speed to Market Issues </li></ul></ul><ul><ul><li>Inadequate Market Intelligence </li></ul></ul><ul><ul><li>Sarbanes-Oxley Non-compliance </li></ul></ul>Prime Supply Chain Risk Elements
  19. 19. Risk Control Categories <ul><li>Risk in relation to a business entity falls into two categories of control: </li></ul><ul><li>Risks that are within the Company’s control </li></ul><ul><li>Risks that are outside of the Company’s control </li></ul><ul><ul><li>Understand the controllable risks within your Supply Chain and manage them accordingly </li></ul></ul><ul><ul><li>Design contingency plans to minimize the potential adverse effects of risks that are outside of your control </li></ul></ul>Financial Risk Control Risk Operational Risk
  20. 20. Risks Within the Company’s Control
  21. 21. Risks Within the Company’s Control
  22. 22. Risks Within the Company’s Control
  23. 23. Risks Within the Company’s Control
  24. 24. Risks Outside of the Company’s Control
  25. 25. <ul><ul><li>Sensitivity of operational continuity during ERP implementations </li></ul></ul><ul><ul><ul><li>Poor implementations may adversely impact the integrity and accuracy of information flow </li></ul></ul></ul><ul><ul><li>Off-shoring and outsourcing exposure </li></ul></ul><ul><ul><li>Security of supply </li></ul></ul><ul><ul><ul><li>What to do in a Seller’s Market? </li></ul></ul></ul><ul><ul><li>Mitigating risk through Contract Management </li></ul></ul><ul><ul><ul><li>Consistent indemnification policy with written clauses adhering to corporate guidelines established by Risk Management department </li></ul></ul></ul><ul><ul><ul><li>Proper insurance coverage </li></ul></ul></ul><ul><ul><ul><li>Performance Metrics ensuring agreements are in compliance and meet expectations </li></ul></ul></ul><ul><ul><ul><li>Internal contract and agreement compliance programs minimize risks associated with dilution of spend leverage due to stakeholder non-compliance </li></ul></ul></ul><ul><ul><ul><ul><li>Missed volume discounts </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Deterioration of negotiating leverage </li></ul></ul></ul></ul>Additional Risk Considerations
  26. 26. THANK YOU!!! Michelle Meyer [email_address] 720-904-8562 Brian Cunningham [email_address] 248-351-5904

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