1 / 60

Seven Habits of Highly Successful Supply Chains

Seven Habits of Highly Successful Supply Chains. S.C. International Trade Conference May 30, 2007. Today’s Supply Chain Realities. Global Supply Chain Synchronization Agility Competitiveness Technology Organization Acceleration. Seven Habits of Highly Successful Supply Chains.

toki
Download Presentation

Seven Habits of Highly Successful Supply Chains

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Seven Habits of Highly Successful Supply Chains S.C. International Trade Conference May 30, 2007

  2. Today’s Supply Chain Realities • Global Supply Chain • Synchronization • Agility • Competitiveness • Technology • Organization Acceleration

  3. Seven Habits of Highly Successful Supply Chains • Understand and Communicate • Benchmarking and Best Practices • Leadership • Assess and Prioritize • Core Competencies • Partnership • Continuous Improvement

  4. Six Levels of Supply Chain Excellence • Level I: Business As Usual • Organizational elements pursuing self interests 2. Level II: Link Excellence • The starting point of Supply Chain Excellence 3. Level III: Visibility • The next step in establishing a visible presence with other supply chain links

  5. Six Levels of Supply Chain Excellence 4. Level IV: Collaboration • Using visibility to do the work smarter and meet marketplace demands 5. Level V: Synthesis • A continuous improvement process to harness the energy of change 6. Level VI: Velocity • The ideal state of synthesis with speed. Faster! Faster!

  6. Six Levels of Supply Chain Excellence

  7. Forecasting Customer Satisfaction Cost Synchronization Under Uncertainty • Proactive: Commodity • Quality Forecasting Performance Scenario Factor I II III Forecasting Bad Customer Satisfaction Good Cost High Bad Bad Low Good Good Low

  8. Understand and Communicate: Then Communicate Again • Internal and External • Where are we? • Where are we going? • It is about Supply Chain vs. Supply Chain

  9. Benchmarking and Best Practices • Use Benchmarking (metrics) to plot Best Practices. • How are you doing in comparison to others? • Are your costs reasonable and in line with others like you? • Are you missing any breakthrough opportunities? • How can you build a consensus around a supply chain path forward?

  10. Benchmarking and Best Practices Supply Chain Consortium • Strong industry leadership • World-class tools • Right participants • Subscriber centric • Excellence in networking

  11. Strong Leadership: Leadership and Content Broad Content: • Profile • Inbound Orders • Truck Transportation • DC Operations • International • Ocean Transportation • Dedicated Fleet • Supply Chain Technology • Air Freight and Parcel • Order Fulfillment – Internet/Catalog • Demand Planning • Supply, Distribution, Inventory and Transportation Planning • Supply Chain Network Design

  12. Question Refinement: Building Momentum • 2004 – 2,900 • 2005 – 7,600 • 2006 – 9,000 Right Participants: • 2004 – 50 Retailers • 2005 – 80 Retailers and Industry leaders • 2006 – 110 Retailers and Industry leaders World-Class Tools: • Web Interview Process • Search • Online Queries • Strategic Assessment Dashboard • Peer Networking

  13. Overall Supply Chain Distribution Center Practices and Trends Vendor Collaboration Highlighting a Few Points in a Few Areas Today

  14. Overall Supply Chain 14 14

  15. Overall Supply Chain - Network Design • The focus on network optimization is improving. • However, 24% of members indicate that their network design has not been reviewed in over 3 years.

  16. Overall Supply Chain – Performance Metrics • Significant cost reductions possible.

  17. Overall Supply Chain - Transportation Mode Shifts As supply chain networks become more efficient, the trend is toward more efficient transportation modes.

  18. Overall Supply Chain – Learnings • Network design is a significant lever, but may not be optimized. The key is to have the right facility types, right number and right location. • Higher fuel prices are changing the balance between transportation and distribution center costs in designing optimal networks. • SKU rationalization is also key – the right quantities, inventoried at the right locations, and flowing through the correct parts of the network. • Accurate demand planning and forecasting is key to using the network optimally. • As companies take greater control of their inbound networks, transportation modes will shift. The burden of finding adequatecapacityshifts from the vendor to the buyer.

  19. Distribution Center Practices and Trends 19 19

  20. DC Operations – Size To put this topic in context, note that the majority of DC’s are in the 201K to 500K square foot size categories.

  21. DC Operations - Trends What trends have you seen in the last 3 years? What trends do you anticipate in the next 3 years?

  22. DC Operations - Layout Wish List If you could make changes, what changes would you make to your current DC layouts?

  23. DC Operations - Slotting Methodologies Best practice can yield exceptional results. Product slotting in DC’s is one example of a potential opportunity.

  24. DC Operations - Slotting Opportunities The benefits of automated slotting can be significant, but not all DC’s have taken advantage of the technology.

  25. DC Operations – Learnings • Automated material handling equipment tops the wish list of DC facility upgrades. • There are several key opportunities to upgrade receiving operations including expanded use of ASN’s for unload planning and automated product receipts. • Automated slot management tools can result in significant productivity improvements, but they are not used in many DC’s. • Expanded use of crossdock and flow through operations is the ultimate key to improved performance. • Current WMS applications have left significant room for improvement.

  26. Vendor Collaboration 26 26 26

  27. Vendors - Where is Performance Today? … significant opportunities for improvement.

  28. Vendors - Expediting and Ordering Behaviors … three of the top four reasons are controlled by the retailer.

  29. Vendors - Joint Initiatives The most significant improvements can result from joint initiatives undertaken with vendors.

  30. Penalties and Rewards • Penalties are a key part of many programs • Positive incentives are less pervasive • Intent – corrective action versus revenue line item • Monitoring programs are not always “transparent”

  31. Vendor Collaboration – Learnings • Implement a timely, accurate and transparent measurement process. Communicate results. Measurement can be two-way, but the retailer creates and maintains the process. • Penalties can be effective, but they need to be reasonable (reflect the cost of non-performance), applied consistently and motivated by a desire to fix problems. • Ordering behaviors need to support performance goals. • Information sharing is essential – sales forecasts and future plans.

  32. Leadership • Leadership shapes culture • Leadership defines direction • Leadership ensures motivation

  33. Leadership Shapes Culture • Type I: Static Consistency • Type II: Dynamic Inconsistency • Type III: Dynamic Consistency

  34. Leadership Defines Direction • Vision – Where? • Mission – How? • Requirements of Success – Science? • Guiding Principles – Values? • Evidence of Success – Key Performance Indicators (KPI)?

  35. Leadership Ensures Motivation • How they think ►Integrity► Optimism ► Credibility ► Urgency ► Enthusiasm ► Determination • How they communicate • How they work • How they treat people

  36. Assess and Prioritize Structure Area: Overall supply chain process Topic: A focused area within process Best Practice: Industry identified best practice for topic Current Practice: Today’s performance for topic Priority: Importance to pursue Actions: Steps to be taken Benefits: Expected results of pursuing actions Responsibility: Who will make it happen?

  37. Area: Supply Chain Event Management Topic: Production Tracking and Visibility

  38. Area: Supply Chain Event Management Supply Chain Roadmap: • Expand on inbound freight management initiative to include electronic PO transmissions, acknowledgement, confirmation and changes. Expand integration with current system to include relevant updates from inbound freight management. • Expand on inbound freight management initiative to include alert capabilities to buyers, suppliers, agents and integrated updates with the current system. • Near-real-time updates and visibility to production events based on tight integration among suppliers, inbound freight management and current system. • Merchandising to expand focus on product strategy and reduce focus on administrative elements. Actions: Benefits: Responsibilities:

  39. Core Competencies • Core Functions: • The unique business functions that allow an organization to be successful • The critical activities included in an organization’s vision statement that allow it to thrive

  40. Core Competencies:Primary and Secondary • Primary focus core competencies: Those activities and processes that differentiate an organization in the marketplace • Secondary focus core competencies: Those activities and processes that must be done well for the organization to retain market share but are not visible to customers

  41. Non-Core Competencies • What is left in an organization after you remove core competencies? • Primary non-core: Activities that, although not core, have an impact on a company’s bottom line. • Secondary non-core: Activities that need to be done, but unless they are really done poorly, they do not have an impact on an organization’s bottom line.

  42. Core Competencies Matrix

  43. Core Competencies Matrix for Chic Retailer

  44. Core Competencies Matrix for a Manufacturer/Distributor

  45. Core Competencies Matrix

  46. Organizations and Leaders Must Focus on Core Competencies • To achieve a highly successful supply chain, organizations must outsource. • However, if an organization does not have a core competency of outsourcing, the outsourcing will fail and leaders will be pulled away from core competencies. • Organizations MUST have a core competency in outsourcing.

  47. Partnerships • Understanding Partnerships • Supply Chain Partnership Evolution and Marriage Partnership Evolution Dating Going Steady Being Engaged Marriage Customer-Driven Organization Invincible Customer Service Cooperative Relationship Planning for Partnership Supply Chain Partnership BETWEEN PEOPLE WITHIN TWO ORGANIZATIONS BETWEEN TWO PEOPLE IN A RELATIONSHIP

  48. Understanding Partnerships • Supply Chain Partnerships believe relationships should be based on: • Building on each other’s strengths • Growing the pipeline’s competitive strength • Integration of systems • Frequent communications at all levels of the organization • Frequent structured interactions on creating supply chain peak-to-peak performance

  49. Understanding Partnerships • Supply Chain Partnerships believe relationships should: • Not be based on antagonism, leveraging, hammering and negotiating • Be long-term based on trust and a true understanding of Supply Chain Excellence • Be based upon sharing of information, planning, scheduling, risk, rewards, problems, solutions and opportunities for creating peak-to-peak performance

  50. Understanding Partnerships • Supply Chain Partnerships believe relationships should be based on working together toward improved performance of the total pipeline on: • Quality • Lead times • New product development • Time • Inventories • Waste • Costs • Customer satisfaction

More Related