Supply Chain Management for Future
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A seminar delivered to create a perspective of 'Supply Chain Management for Future' for an august audience of 70+ Supply Chain Professionals
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Supply Chain Management for Future
- 1. delivered by Pinak Kulkarni SPARK focused on YOUR Sustainable Performance Improvement Supply Chain Management for Future
- 2. Common Views on Supply Chain • “Supply Chain” is just another term for “Logistics” • Supply Chain includes other functions such as purchasing, engineering, finance and marketing, and related control activities in the single company • The Supply Chain is all the functions in definition #2, plus those in a company’s suppliers’ suppliers and a company’s customers’ customer as well SPARK Sustainable Performance Improvement
- 3. Do you have Supply Chain Practices like this? Sales & Distribution (Demand) Manufacturing (Capacity) Procurement (Material) C U S T O M E RSubordinate to Manufacturing objectives Subordinate to Sales & Distribution objectives Subordinate to Sales & Marketing objectives The approach leads to achieving ‘Local’ rather than ‘Global’ Optima SPARK Sustainable Performance Improvement
- 4. Consequences of Supply Chain Practices • Huge Buffers – Raw, WIP, and Finished-Goods Inventories – Capacity Buffers – Lead-time Buffers • Practice – Inexperienced with Models & Computers – Confused by Models – Suspicious of Models SPARK Sustainable Performance Improvement
- 5. How does the future look like? SPARK Sustainable Performance Improvement
- 6. Supply Chains importance will increase as that’s where the money is • Supply-chain generally accounts for between 60% and 90% of all company costs • A 2% improvement in supply-chain processes has 3000% - 5000% the impact of a 2% improvement in efficiency for… IT, HR, Finance… Sales… Fortune-10 Company Supply-Chain Cost % Total Costs1 GM Ford Conoco Wal-Mart Chevron IBM Exxon GE 94% 93% 90% 90% 88% 77% 75% 63% 1 Source: Hoovers2006 FinancialData, Supply-Chain Council 2006 SCM Benchmarkdata on SCM cost for discrete & process industries SPARK Sustainable Performance Improvement
- 7. Supply Chain Trends • Volatility & Uncertainty have permanently increased • Securing Growth Requires Truly Global Customer and Supplier Networks • Market Dynamics Demand Regional, Cost-Optimized Supply Chain Configurations • Risk Management Involves the End-to-End Supply Chain • Supply Chain Organizations will need to be truly Integrated and Empowered SPARK Sustainable Performance Improvement
- 8. Comparing BRIC nations • China invested in Infrastructure, communication & transportation. India’s agenda is Social Welfare driven. • In contrast to India, China has a Command & Control political structure. • Russia has a per capita income of $12,000. India is $ 1,400. On top, Russia has a ageing population in contrast to India with half of the population being less than 25 years age. • Brazil & India have similarities of welfare spending, ‘high context societies’ although Brazil has a high per capita. Remember Brazil went into a deep tailspin till 1994 when the new currency was born. SPARK Sustainable Performance Improvement
- 9. What are leaders saying? Cost Containment Customer Intimacy Visibility Globalization Risk Source:An IBM report The Top of the agenda Supply Chain Challenges SPARK Sustainable Performance Improvement
- 10. Challenges of Supply Chain for Future SPARK Sustainable Performance Improvement
- 11. The Complexity Challenge Increase in customer & customer locations Increase in product variety offered High fluctuations in customer orders Increase in strategic suppliers Increase in manufacturing facilities Increase in inventory locations SPARK Sustainable Performance Improvement
- 12. The Flexibility Challenge • Forecasts will be more inaccurate • Need to improve visibility to the current market demand • Product development & SC will have to be integrated • Customers will be more demanding • Management needs to move away from the focus on cash flow & margins SPARK Sustainable Performance Improvement
- 13. The Risk Challenge Inventory management Order fulfillment lead time Service innovation Environmental Consideration New Product Innovation Extended global SC foot print Accounts payable & receivable SPARK Sustainable Performance Improvement
- 14. The Talent Challenge • Supply Chain Talent is one of the major challenges of future. • Skills & Competencies of People in the Supply Chain may become the single largest bottleneck to manage future supply chains SPARK Sustainable Performance Improvement
- 15. Supply Chain Management for Future SPARK Sustainable Performance Improvement
- 16. SCM for Future SCM for future SC Excellence Model Risk Management People Supply Chain Innovation led model Profit Protection Plan SPARK Sustainable Performance Improvement
- 17. Adopt a Supply Chain Excellence Model Supply Chain Leadership Revenue Growth through Partner Collaboration Lay down a Process Driven Model Reduce Supply Chain Complexity Need to speak the financial lingo Develop Supply Strategies with congruent goals Phase out ‘Hero’ model, Phase in ‘Process Model’ Idealized design, Reduce layers, Improve visibility SPARK Sustainable Performance Improvement
- 18. Risk Management Identify your risk appetite Identify Risks Evaluate & Quantify Plan your risk response Continuously Monitor •Modern Supply Chain Practices have reduced buffers in the Supply Chain. •More than 50% executives think that they don’t have any Supply Chain Risk management process SPARK Sustainable Performance Improvement
- 19. People Supply Chain • SCM for Future will be differentiated ONLY of this dimension. • All hard supply chain aspects will work only if the Soft (People) aspects are attended to. • Get ready with mapping skills & competencies of your people. • Train & re-train. You will never train any one enough. SPARK Sustainable Performance Improvement
- 20. Adopt an Innovation-led Model • With the dramatic rise in wages & operating costs in India, Cost arbitrage model for Supply Chain success is over. • Innovate everything – – Product – Services – Supply Chain Design SPARK Sustainable Performance Improvement
- 21. Lay down a Profit Protection Plan Profit Protection Plan Target Volume Price Reduce COGS Rationalize Assets Reduce Working Capital cycle SPARK Sustainable Performance Improvement
- 22. Supply Chain organization of future Supply Chains In-house global In-house local Outsourced Product Development / NPI Warehousing / Transportation Strategic Sourcing Shared services (Finance / IT) Demand Planning S & OP After sales return & repair Manufacturing Final Assembly / Configuration SPARK Sustainable Performance Improvement
- 23. The final thought.. • Managing anything can be viewed as 4 related activities – Getting Information – Making Decisions – Implementing Decisions – Buffering against Imperfections in information, decision-making, or implementation SPARK Sustainable Performance Improvement
- 24. IGNITE POTENTIAL RELEASE POTENTIAL website: www.think-spark.com email: pinak.k@think-spark.com contact: + 91 98814 60636 SPARK focused on YOUR Sustainable Performance Improvement SPARK Sustainable Performance Improvement