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Ch.3 design your organization for performance
- 1. Design Your Organization for Performance Core Discipline 3 : Strategic Supply Chain Management The 5 Disciplines for Top Performance Lecturer : Dr Dadang Surjasa SSi MT MM Post-Graduate Program Trisakti University R Ardano Pasha 122011810061 Rayyan 122011810065 Herry Cuaca 122011810035
- 2. Tujuh dikali tujuh sama dengan empat sembilan. Setuju tidak setuju yang penting penampilan — Someone not famous Rayyan 122011810065 R Ardano Pasha 122011810061 Herry Cuaca 122011810035
- 3. Agenda Layout 01 Organizational Change is an Ongoing Process 02 Evolution of the Supply Chain Organization 03 Guiding Principles for Organizational Design Form follow function; Every process required accountability; Know & grow your core 04 Gaining Respect for the Supply Chain Discipline Focus on the skills you need 05 Next-Generation Organizational Design 06 Case Study : Centralized supply chain planning at IKEA Functional, Transitional, Partial Integrated & Integrated SC Organization
- 4. Living Sports Healthy Life Set of ―Operation‖ Department Effective end-to-end SCM Receiving – Production - Logistics Plan – Source – Make – Deliver – Return Finding the right people with the right skills Determining how to structure the organization Defining roles and responsibilities Companies face three primary challenges :THINKING : 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study BACKGROUND :
- 5. Organizational Change is an Ongoing Process
- 6. HOW : Elevating order delivery performance and reducing order-fulfillment cycle time In 2002, Strategic decision to focus on improving its return on assets and customer service Robert Schlaefli says : ―This didn’t happen overnight __ Having a map of where we wanted to go with the organization made it a lot easier to implement the necessary process changes ‖ Fundamental overhaul of the company’s operations strategy and a move to outsourced manufacturing California Taiwan 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study STRATEX NETWORK
- 7. Stratex operations after adopting the outsourcing model.Stratex operations before adopting the outsourcing model. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study STRATEX NETWORK
- 8. Your organizational design should not be static — It should evolve with your company. ‖ ― 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study
- 9. Support the overall business strategy Provides the skill and core competencies Has metrics in place to measure performance Follows a set of practical design principles 6 Month Periodic assessment of how well your organization is aligned with your strategic imperatives is essential. 1 2 3 4 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Effective Supply Chain Organization :
- 10. Evolution of the Supply Chain Organization
- 11. Functional Supply Chain Organization 1970s-1980s Transitional Supply Chain Organization 1980s-1990s Partially Integrated Supply Chain Organization Middle-Late 1990 Integrated Supply Chain Organization NOW ? 1 2 3 4 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study
- 12. Functional Supply Chain Organization Transitional Supply Chain Organization 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Functional SC Organization Transitional SC Organization Partially Integrated SC Organization Integrated SC Organization The traditional operations organization is functionally oriented. Key supply chain activities and associated groups report directly to their relevant functional managers. This type of organizational structure was typical in the 1970s and 1980s, and it is still quite common today. Responsibilites expand beyond functional areas such as manufacturing and logistics to include managing suppliers and filling customer orders Order management reports to the sales or sales operations function
- 13. Partially Integrated Supply Chain Organization Integrated Supply Chain Organization 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Functional SC Organization Transitional SC Organization Partially Integrated SC Organization Integrated SC Organization Began to see the emergence of positions such as supply chain manager or vice president of supply chain The beginning of the now-widespread philosophy of the supply chain as an end-to-end process The concept of a ―holistic‖ supply chain organization
- 14. Guiding Principal for Organizational Design
- 15. 01 02 03 04 . For every process, assign an accountable function or individual Know, grow and keep your core capabilities Organize around the skills you need, not the skills you have Form should follow function – that is, organization shoud mirror process 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study
- 16. is an example of a company that reorganized to support a new top-down planning capability. It was able to do fully integrated, automated planning—everything from high-level supply chain planning to production scheduling for each manufacturing facility—on a daily basis. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Shipping performance 75% 95% 1. Simplify planning 2. Keep manual intervention to a minimum 3. Improve customer service while improving asset utilization G O A L R E S U L T Plan overrides 90% 50% Time spent on manual calculations decrease Focus on ensuring data accuracy increase Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need
- 17. Put aside any organizational charts and focus instead on the activities within your core supply chain processes Establish common goals and objectives, well- defined roles and responsibilities, and a strong management system with clear measurement and accountability It found that just changing the reporting structure, moving like skills together, and breaking down the walls between manufacturing, procurement, and distribution yielded immediate benefits WHAT TO DO : 1 2 For example : 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need
- 18. The goal of an effective supply chain organization is to optimize the end-to-end order-fulfillment process. Not individual functions. All while achieving the lowest total cost. ‖ ― 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need
- 19. The company’s executive team turned its attention to the supply chain. Order-fulfillment process at Company X Faced with increasingly irritated customers and a sales force that complained about time wasted chasing orders instead of developing new business Set an aggressive goal: to cut the average order-fulfillment cycle time from 25 days to 4 days or less. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need
- 20. RACI defined : R Responsible Designates the person or function responsible for executing a particular activity. **Responsibility can be shared A Accountable Designates the person or function ultimately accountable for completing the activity **Accountability cannot be delegated C Consulted Designates person(s) or function(s) that must be consulted before a decision or activity is finalized ** Two way communication I Informed Designates the person(s) or function(s) that must be notified of the completion or output of a decision or activity ** One way communication 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need
- 21. For example : a database of nonstandard but preapproved contract language was developed. *It helped cut the time needed for contract reviews from over 5 days to less than 1 day Order-fulfillment process at Company X After 10 months, the company had exceeded its initial goal— order-fulfillment cycle time averaged just over 3 days 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need
- 22. BEFORE AFTER 1 2 3 4 5 1 2 3 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need
- 23. 27% 52% 75% 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need How do you know? Is a core competency something you should be good at? Yes Is a core competency something you are good at? Maybe 1 2 3
- 24. Flextronics describes how it has upgraded its role as ―vendor‖ to that of ―virtual manufacturer‖ to technology companies by offering design, engineering, manufacturing, and logistics solutions. Mike McNamara Chief operating officer at Flextronics ―It’s important for us to have people within our customers’ companies with whom we can talk supply chain.‖ ―We see a lot of companies who are no longer capable of performing some very critical activities.‖ 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need He says : Competitive Advantage Business Growth Customer Service Superior Offerings Four tests of core competency. Is this activity critical to : How do we know?
- 25. 5. Finally, get consensus on whether to develop these skills in-house through training and targeted hiring or to use supply chain partners to fill the gaps 3. Summarize the skills that will be needed to create or defend competitive advantage, to help grow the business, and to ensure customersatisfaction 2. Use your company’s longer- term strategy as a guide to establish this list of proficiencies 4. Identify any gaps between the skills needed and those already in place 1. Start with a list of key supply chain processes and the core competencies needed to execute those processes 1 2 3 4 5 How to know and grow your core ? 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need
- 26. Gaining Respect for the Supply Chain Discipline
- 27. Things need to keep In Mind Assign an accountable function or individual For every process Organization Should mirror process Form Should Follow Process around the skills you need, not the skills you have Organize & keep your core capabilities Know, Grow 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study
- 28. The development of supply chain management as a core competency and an organizational imperative doesn’t just happen — A conscious effort is needed. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need
- 29. Clearly, balancing the competencies you need with the competencies you have is critical to executing your strategy. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need
- 30. As you design your organization, keep in mind that technologies don’t deliver success — people do. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Form Follow Function Every Process Requires Accountability Know and Grow Your Core Focus on the skills you need
- 32. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study “The end-to-end supply chain typically needs management skills and roles that did not exist previously” The right people in the right position Key Role Available carrier path Hiring plan Supply chain strategy Human Resources Dept. Supply Chain Organizer Communicate the role needed!
- 33. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Make • Outsourcing Partner Relationship Manager • Negotiate partner • Best-in-class performance from supply chain partners. • Inspire to work collaboratively. Source • Global Commodity Manager • Manage across continent • Structure the supply base for lowest total cost ownership • Manage suppliers Deliver • Customer Relationship Manager • Understanding Customer business & channel • Understanding of supply chain operation to support Customer requirement Plan • Supply Chain Process Improvement Manager • Understanding of supply chain best practices • Inspire to work collaboratively • Recognize opportunities for improvement & automation Plan • Supply Chain Performance Analyst • Understanding of supply chain metrics and appropriate methods for target-setting • Institutionalize metric-driven review & continuous improvement New roles for end-to-end Supply Chain Management
- 34. Case Study -Centralized Supply Chain Planning at IKEA-
- 35. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Supply Chain Management: An international journal, Vol.18, No. 3, pp. 337-350. Centralized supply chain planning at IKEA
- 36. Sales item •3000 models Suppliers •1400 suppliers Distribution center •30 DC Store • 280 stores 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study A global Furniture Company Around the world!
- 37. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study A worldwide leader in furniture retailing, has gone from decentralized to centralized planning of its network of suppliers, distribution centers, stores and forwarders. This has taken them from a fragmented management to a coordinated, centralized, supply chain planning. Decentralized SC Planning Centralized SC Planning Research concept Prerequisites ? Centralized Planning approach ? Effect ? Obstacle ?
- 38. Prerequisites for centralized supply chain planning 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Functional product Vertical Integration Dominating organization Power & competences One planning domain
- 39. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Old Planning Concept 50 % 25 % 45 % 75 % 75 % Imbalance of demand coverage Forecasting by regional level SCM Planning problem : Some stock-out, some have excess stock
- 40. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Centralized Supply Chain Planning Approach Planning Processes • Standardized working method • Centralized organizational structure Planning Organization • Decision of regular activities • Centralization of decision Planning System • High degree of automation • Data collection • Validation
- 41. Limited transparency between functions and sub-processes Parallel planning system (software) was being used Lack of standardized software support & working method 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Lack of trust & communication among SCM stakeholder No synchronization of order stock & data No tools to monitor forecast deviation Problem identification
- 42. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study New Planning Processes
- 43. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Implementation Step
- 44. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Effect & Obstacle of New Centralized SC Planning Planning processes Increased forecast accuracy reduced safety stock levels manual interventions were made to plans, everyone did not establish and follow standardized working methods Planning Organization Created specialist competence in demand & material planning Cost efficiency insufficient end-user training and support difficulties adhering to a common and standardised way of working Planning system reduce the number of forecasters from 120 to around 30, but increase average forecast accuracy. the software forced the demand planners and need planners to adopt the standardized planning processes and working methods for a variety of functions lack of support for capacity planning for DCs, stores, or transport Several data quality problems were also identified in the early phases. EFFECT OBSTACLE
- 45. 1 2 3 4 5 6 Organizational Change is an Ongoing Process Evolution of the Supply Chain Organization Guiding Principles for Organizational Design Gaining Respect for the Supply Chain Discipline Next-Generation Organizational Design Case Study Summary Comparison Old & New Planning Concept
- 46. THANKS HERRY CUACA R ARDANO PASHA RAYYAN