CoE for a Smarter Supply Chain - Current Supply Chain

Dr. Lai Ving-Kam
Associate Professor-Logistics and Supply Chain
Malaysia
Centre of Excellence (COE) for a Smarter Supply Chain
Part 1 of 3 - Current Supply Chain and Centre of Excellence

Center of Excellence (CoEs)
• A strategic, cross-functional and global team that
– facilitates organization to synchronize / complement all the
business sustaining competencies
– Ensures a progressive environment is optimally constructed,
performing, and supportive of changing requirement s
• Establish organization-wide constant renewal and
enhancement of pertinent conceptual, definitions,
calculations, business rules
– Eliminate indecision, procrastination, confusion in strategic
analysis
• Encourage business sustainability
– Migrating reporting capabilities to the business users
– Promoting digitalization and Internet of Things in making
on-demand data in decision making supporting system a reality
4
Source : VingKam Lai Aug 2017 4th Edition Supply Chain & Logistics Congress, Kuala Lumpur , Malaysia
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7
7
Market Paradigm Shift

3
The Flow of Information supports two
Independent Replenishment cycles
Consumer
Store Supplier
Warehouse
Replenishment
Push to DC
Replenishment
Pull to Store
OrderSize
Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
Customer
Demand
Customer
Demand
Retailer OrdersRetailer OrdersRetailer OrdersRetailer Orders
Distributor OrdersDistributor OrdersDistributor OrdersDistributor Orders
Production PlanProduction PlanProduction PlanProduction Plan
Bullwhip
Effect
Components of Demand
Demandforproductorservice
| | | |
1 2 3 4
Year
Average
demand over
four years
Seasonal peaks
Trend
component
Actual
demand
Random
variation
Managing Uncertainty in a Supply Chain Connectivity
Create an adept and agile adaptive
responsive supply chain to delight
and retain market shares
Supply Chain Intelligence and
Risk Management
Supply Chain Visibility and
reliability
Supply Chain Planning and
Control
Supply Chain Optimal Execution
Supply Chain Connectivity
10
Concentrated
SeasonalityBullwhip
Effect

Diagnostic Analysis Framework
13

The Adaptive Responsive Supply Chain
Today’s Mandate for Sustainable Profitable Growth
Efficiency or Adaptive Responsiveness?
How do you balance your supply chain?
16

19
1. Products become
more fashionable
2. Products and
Technology lifecycle
continuouslyshortening
3. Prices cascading
downward rapidly
and continuously
4. Constant change of
consumer preferences
5. Technology
Mutations-
Non proprietary
towards Open
technology &
multi technology
interfacing
6. Products
commoditization
Global Market Changes
4
Adaptive 3 - stage Lifecycle curveConventional 5 – stage Lifecycle curve
Lifecycle cascading !
Explore the
power of
Continuous
Cost
Reduction
Resilience
in Adaptive
Responsive
Supply Chain
18 months to 70 months
3 months – 12 months
How can we execute continuous cost reduction?
Source: Lai VK (2015). “Comparative Study on Continuous Cost Reductions between Electronics and Non Electronics sub sectors in Fashionable Products”

Competitive Strategy
Facilities
Supply Chain Structure
Efficiency Responsiveness
Cor
ContinuousCostReductionframework
Cross–architecturalComponentDrivers
Source: Lai VK (2015). “Comparative Study on Continuous Cost Reductions between Electronics and Non Electronics sub sectors in Fashionable Products”
Predetermined
and adaptive
processes ?
What we need ?
22
Structured System

Guides and Directs
-Integrate
-cooperate
Coordinate
Distributor Order
Production Plan
Customer Demand
Retailer Order
Bullwhip Effect
Adaptive
Responsive Supply
Chain
Deterministic
Business strategies
Technology &
Product Strategies
Product
Strategies &
Policies
Cost-price
relationship
Management
Competitiveness
•Sustainability
•Responsiveness
•Cost Efficiencies
•Robustness
•Agility
•Flexibility
•Survival
•Quality
Sustainable
Profits
Uncertainty
/ Volatility
Structured A-RSC
Framework
25

28
- as cost and Sales Drivers

Managing the Supply Chain - Conflicting Goals
Efficiency Responsive
Supply Chain
Adaptive
As low cost as possible
Satisfy customer at all cost
Balancing between
low cost and making
customer happy profitably
Higher
cost
Low
Responsiveness
X
X
A-RSC
31

Familiarity Matrix:
Nation’s wrong focus
Decreasing knowledge of the technology
Decreasingknowledgeofthemarket
Market
Penetration
Market
Extension
Market
Expansion
Product
Extension
Business
Extension
Business
Expansion
New Business
Model
Business
Penetration
Product
Expansion
: Led to wild geese migration to other nations and China
34
Correlation
between
Technology
and
Supply
Chain

Apart from the
questionable
investment
incentives and
policies,
what have
transpired?
Is it the
efficient
supply
chains that
existed the key
attraction?
Is it the
location
of the
supply
chains?
Or, is it part
of natural
development
in the time-
compressed
competition?
Why are the industries migrate?
Why ?What ? Why ? Why ?
37Dr. VK Lai May 19, 2016 India Supply Chain Summit Mumbai

Japan 1950s
Korea
Taiwan
Hong Kong
late 1950sg
Malaysia
Singapore
1960s
Flying Geese
industries
Migration
USA
Europe
1980s
China 90s
Thailand
Philippines
Indonesia
Vietnam
Rest of
ASEAN
1990s
3Flying geese paradigm (FGP) - Wild Geese flying pattern
Why?
1. Perceived to be in the
peripheral of supply Chain network
2. Tap into the experienced manufacturing
workforces from Malaysia / Singapore.
3. Abundance of Cheap labour

Japan 1950s
Korea
Taiwan
Hong Kong
Mid 1950sg
Malaysia
Singapore
1960s
China
Thailand
Philippines
Indonesia
Vietnam
Rest of ASEAN
1990s
India
USA
Europe
1980s
Africa
2014-5
?South America
2025
China
Manufacturing
2025
Germany
Manufacturing
4.04.0
USA
Re-shoring
Africa
2020
One Belt One Road
Japan?
Central
Asia
Eastern
Europe
On-Demand Regional Connectivity
43
Dr. VK Lai Associate Professor - India Supply Chain Summit 19-20, May 2016
India
2020
ASEAN
Reintegration?

2015 CCR Fig & Table
Development
Introduction
Growth
Maturity Decline
Cost
Sales
Profit
Research
Market
Saturation
Rapid
Expansion
Promotion Changing
Customer
Preference
Development
Development
Development
Development
Sales
Sales
Sales
Sales
End-Of-Line
End-Of-Line
End-Of-Line
End-Of-Line
1st Generation
Product
Lifecycle
2nd Generation
Product
Lifecycle
3rd Generation
Product
Lifecycle
‘N’ Generation
Product
Lifecycle
Cost
Sales
Profit
Dollars
Dollars
A
B
Conventional Product Lifecycle Curve
Fashionable Product Lifecycle Curve
18 months
<3 Months - <6 months
5
stages
3
stages
<6 months <3 Months <2 Months E.O.L
NOW
Old

52
July 26, 2009 52
Innovation Drivers
The “innovation imperative” is being driven by a number of broad changes
in the business environment.
The changes are accelerating change, resulting in a state of
“continuous disequilibrium” in industries and markets.
In this environment, innovation skills are becoming as much of
a requirement for success as operational excellence.
These trends include:
•Knowledge Economy.
Higher levels of education globally, and rapid advances in knowledge at
all levels of the society and the economy result in “knowledge content”
accounting for an increasingly larger percentage of GDP.
•Connectivity.
Higher levels of connectivity in the economy, largely due to information
technology advances, create:
•More rapid diffusion of knowledge and ideas
•More discriminating customers, who change their requirements more rapidly
•Flexibility.
New business designs and communications systems create an ability to rapidly
form novel combinations of all the elements of the value chain –
people; capital; hard assets; and knowledge.
•Globalization.
The spreading of market economies both creates new opportunities to sell
innovation and creates more competition, requiring higher levels of
innovation to succeed. Dr. VK Lai May 19, 2016 India Supply Chain Summit Mumbai

The key factors that could possibly explain the
decrease in innovation productivity are:-
a. Lack of effective product
portfolio planning and
development in innovation
strategies that are aligned with
the firms’ financial and
strategic goals.
b. Proprietary technology is very
expensive and can be reverse
engineering shortly after the
technology is marketed.
c. Technology company license
open –standard technology to
occupy the market space with
speed and then launch
subsequent generation to lead
the market

1
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