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Scoring High on the Supply Chain Maturity Model Heino Huettner May 10, 2007
Discussion Topics ,[object Object],[object Object],[object Object]
Continued pressure on margins through growth & cost containment Changing market boundaries and new channels Aggressive global competition Shortening product lifecycles ,[object Object],[object Object],[object Object],Source: Value Chain Study –  IBM IBV Industry consolidation and alliances Increased reliance on specialization and partnerships Supply Shocks Demand Shocks The supply chain is under fundamental pressure
[object Object],[object Object],[object Object],Today’s global supply chain challenges are driving the need for improved end-to-end performance ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Global sourcing of supply Move to contract manufacturing Complex logistics networks Capacity constraints Distributed information Excess inventory Long lead times Excess manpower Deteriorated customer service Business performance uncertainty & risk EQUALS Supply Chain Suppliers Manufacturers Plan Source Make Customer Channels Stores Distribution Centers Flows:  Product, Process,  Information,  Cash Sell Deliver
Companies have traditionally focused their supply chain initiatives on increasing internal operations excellence Cost-cutting focused on optimizing internal processes  Achieving functional optimization Applying proven technology Increasing outsourcing of non-core functions Increasing customer service levels
Companies are now placing more focus on the supply chain to transform their businesses… Radically changing the way they think, organize and execute Integrating end-to-end from opportunity to cash Looking at the end-to-end processes horizontally vs. in silos Creating high value services Reinvention using breakthrough business models
... to build a competitive advantage and reach strategic objectives on demand supply chain  Responsive  Variable  Focused  Resilient Cost-cutting focused on optimizing internal processes Reinvention using breakthrough business models
Leading firms are progressing toward the vision of an on demand, customer-driven supply chain – one that is integrated end-to-end across the business and with key customers, partners, suppliers & service providers. on demand Traditional  S tatic  Supply Chain Horizontal Integration Functional Excellence External Collaboration on demand Supply Chain Those companies with high performance supply chains carry less inventory, have shorter cash-to-cash cycle times and are more profitable. Source:  “The AMR Research Supply Chain Top 25 and the New Trillion-Dollar Opportunity” AMR Research.
Discussion Topics ,[object Object],[object Object],[object Object],[object Object]
In 2005 IBM GBS carried out surveys on value chains in all major developed countries. North America Western Europe Japan Australia/ New Zealand China India The survey design with benchmarking metrics was a collaborative effort
Value Chain Study:  Follow the leaders: Scoring high on the supply chain maturity model ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
As political and economic uncertainty led to increased costs and lead times, remaining competitive and correctly identifying customer needs are the key challenges for most firms ,[object Object],[object Object],How has political/economic uncertainty impacted your supply chain efforts over the past 5 years? What are the most significant management challenges for your site’s new product development efforts?
To achieve profitability objectives, firms concentrate on best fit to customer requirements, on supplier collaboration and on global sourcing.  Strategy and Initiatives What is the primary  strategy  for your site’s  new product development efforts? What are the  key factors  (initiatives) to achieving your objectives?
Implementation and effectiveness of NPD practices differ by geography. Overall, collaboration with customers is most widely implemented and most effective Practices > New Product Development To what extent have the following new product development practices been implemented at your site? How effective are those practices? 96% 96% 81% 59% 88% 48% 66% 58% 83% 87% 74% 91% 92% 91% 95% 85% 88% 73% 81% 95% 85% 92% 80% 90% 72% 89% 96% 97% Australia/NZ Japan WesternEurope North America
While on-budget performance is generally better than on-time performance, both are clearly below target. Performance Metrics What percentage of new products is launched to market on-time? What percentage of new products is launched to market on-budget?
Real-time monitoring and rapid response to marketplace changes are well established in Supply Chain Planning. Around 50% of firms also share risks across their supply network and aligned variable costs with revenues. Practices > Supply Chain Planning ,[object Object]
Direct sourcing from low-cost jurisdictions is on the rise, while sourcing from developed countries is stable or decreasing. Practices > Sourcing & Procurement W.Europe North America Japan A/NZ
The relationship of procurement functions to suppliers is mostly focused on price or total cost. ,[object Object],[object Object],* see also low cost of quality in Japan Which of the following best describes your site's relationship with suppliers? Practices > Sourcing & Procurement ,[object Object],[object Object],What percentage of your site's total annual purchases is procured via maverick buying? Enforcing process compliance promises considerable potential.
With the exception of Japan, logistics practices are widely implemented. A formal distribution strategy and differentiated logistics services are among the most effective practices Practices > Logistics Effectiveness To what extent have the following logistics practices been implemented at your site? 87% 98% 75% 79% 83% 97% 80% 79% 89% 99% 82% 86% 92% 96% 89% 92% 81% 91% 81% 65% 95% 96% 75% 87% 98% 97% 88% 89% Australia/NZ Japan WesternEurope North America
Agenda ,[object Object],[object Object],[object Object]
Companies are utilizing new approaches to transform themselves into even more responsive organizations and to connect their supply chains end-to-end Focused Responsive Variable Resilient ,[object Object],[object Object],[object Object],[object Object],[object Object]
As a result, Supply Chain Management is becoming an increasingly critical focus area ,[object Object],[object Object],[object Object],[object Object],[object Object],1 Source: CEO Perspective on Supply Chain Management, University of Chicago Graduate Business School & Charter Consulting, 2006 2 Source: Third Annual Global Survey of Supply Chain Progress, Computer Sciences Corporation & Supply Chain Management Review, 2005
Top supply chains have a common trait in that they respond quickly to shifts in demand with innovative products and services ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: IBM Value Chain Study, 2005/2006 IBM Institute for Business Value IBM Business Consulting Services Follow the leaders Supply chain Management
Where are you on the journey to supply chain maturity? S tatic  supply chain Horizontal integration Functional excellence External collaboration On demand supply chain Time Supply chain maturity and benefits
A Collection of Observations, News, Resources & Innovations on the changing nature of Supply (chain) management http://aconris.wordpress.com/

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Scoring High on the Supply Chain Maturity Model

  • 1. Scoring High on the Supply Chain Maturity Model Heino Huettner May 10, 2007
  • 2.
  • 3.
  • 4.
  • 5. Companies have traditionally focused their supply chain initiatives on increasing internal operations excellence Cost-cutting focused on optimizing internal processes Achieving functional optimization Applying proven technology Increasing outsourcing of non-core functions Increasing customer service levels
  • 6. Companies are now placing more focus on the supply chain to transform their businesses… Radically changing the way they think, organize and execute Integrating end-to-end from opportunity to cash Looking at the end-to-end processes horizontally vs. in silos Creating high value services Reinvention using breakthrough business models
  • 7. ... to build a competitive advantage and reach strategic objectives on demand supply chain Responsive Variable Focused Resilient Cost-cutting focused on optimizing internal processes Reinvention using breakthrough business models
  • 8. Leading firms are progressing toward the vision of an on demand, customer-driven supply chain – one that is integrated end-to-end across the business and with key customers, partners, suppliers & service providers. on demand Traditional S tatic Supply Chain Horizontal Integration Functional Excellence External Collaboration on demand Supply Chain Those companies with high performance supply chains carry less inventory, have shorter cash-to-cash cycle times and are more profitable. Source: “The AMR Research Supply Chain Top 25 and the New Trillion-Dollar Opportunity” AMR Research.
  • 9.
  • 10. In 2005 IBM GBS carried out surveys on value chains in all major developed countries. North America Western Europe Japan Australia/ New Zealand China India The survey design with benchmarking metrics was a collaborative effort
  • 11.
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  • 13. To achieve profitability objectives, firms concentrate on best fit to customer requirements, on supplier collaboration and on global sourcing. Strategy and Initiatives What is the primary strategy for your site’s new product development efforts? What are the key factors (initiatives) to achieving your objectives?
  • 14. Implementation and effectiveness of NPD practices differ by geography. Overall, collaboration with customers is most widely implemented and most effective Practices > New Product Development To what extent have the following new product development practices been implemented at your site? How effective are those practices? 96% 96% 81% 59% 88% 48% 66% 58% 83% 87% 74% 91% 92% 91% 95% 85% 88% 73% 81% 95% 85% 92% 80% 90% 72% 89% 96% 97% Australia/NZ Japan WesternEurope North America
  • 15. While on-budget performance is generally better than on-time performance, both are clearly below target. Performance Metrics What percentage of new products is launched to market on-time? What percentage of new products is launched to market on-budget?
  • 16.
  • 17. Direct sourcing from low-cost jurisdictions is on the rise, while sourcing from developed countries is stable or decreasing. Practices > Sourcing & Procurement W.Europe North America Japan A/NZ
  • 18.
  • 19. With the exception of Japan, logistics practices are widely implemented. A formal distribution strategy and differentiated logistics services are among the most effective practices Practices > Logistics Effectiveness To what extent have the following logistics practices been implemented at your site? 87% 98% 75% 79% 83% 97% 80% 79% 89% 99% 82% 86% 92% 96% 89% 92% 81% 91% 81% 65% 95% 96% 75% 87% 98% 97% 88% 89% Australia/NZ Japan WesternEurope North America
  • 20.
  • 21.
  • 22.
  • 23.
  • 24. Where are you on the journey to supply chain maturity? S tatic supply chain Horizontal integration Functional excellence External collaboration On demand supply chain Time Supply chain maturity and benefits
  • 25. A Collection of Observations, News, Resources & Innovations on the changing nature of Supply (chain) management http://aconris.wordpress.com/