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Enhancing the Role of Supply Chain Management (SCM)

ISM – Florida Gulf Coast Tampa, FL April 15, 2010. Enhancing the Role of Supply Chain Management (SCM). Richard D. Rich C.P.M. Seminole Electric Cooperative, Inc. An Organization’s SCM Issues. Internal respect (or not) Productivity (cost and performance) of the Supply Chain Group

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Enhancing the Role of Supply Chain Management (SCM)

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  1. ISM – Florida Gulf Coast Tampa, FL April 15, 2010 Enhancing the Role of Supply Chain Management (SCM) Richard D. Rich C.P.M. Seminole Electric Cooperative, Inc

  2. An Organization’s SCM Issues • Internal respect (or not) • Productivity (cost and performance) of the Supply Chain Group • Insufficient buying power (low volume clout) • Lack of value-add impact, traditionally

  3. Gaining Respect Strategic sourcing now a necessary process for all size SCM Orgs • It helps engage stakeholders in ways that opens doors and brings many benefits • Total cost of ownership initiatives have business-wide benefits • Engage Senior Management utilizing cash flow, working capital and asset control benefits. Buyers Must Broaden and Deepen their Activities

  4. Dangers to Buyers’ Jobs/Careers Today • Senior management cutting costs anywhere they can • Suppliers are mounting value-add initiatives that bypass traditional internal buying and materials management activities • Outsource companies go direct to the CFO or CEO with their offerings • Consulting and systems companies have many quick-change ideas that involve outsourcing buying and materials management Uplift the value of what you do so as not to be sidelined

  5. Opportunities • Don’t always need volume buying power – many buyers simply make their company be a low cost, easy-to-do-business-with customer of key suppliers • Many value-add opportunities are beyond price – the key is stake holder problems, costs, and opportunities Switch from being an administrative buying service to bringing value-add to internal customers in the company.

  6. When Others Perceive that Procurement Fails to Deliver • Other functions/people perform spending functions • Upper management micro manages • Supply Chain isn’t invited to major project decisions • Supply Chain isn’t invited to innovation initiatives • Widespread backdoor buying • Supply forecasting performed by others in the firm • Supply Chain doesn’t procure key raw materials / components • Outsourcing decisions made with little or no input by Supply Chain • Upper management perceives little need for central supply function

  7. Supply Chain Performance What Really Makes The Magic? Findings from a board reputation study Output Reputation Interactions Observations Expectations

  8. Enhancing the Roles of Supply Chain... Department/Personal Output A. Customer Service B. Relations with Other Departments C. Information Others Seek

  9. Enhancing the Roles ofSupply Chain... Interactions with Other Departments A. Roles and Role Conflicts B. Personalities C. Impressions

  10. Enhancing the Roles of Supply Chain... III.Observations of Supply Chain A. Auditors' Findings Ethics C. External Observations

  11. Enhancing the Roles of Supply Chain... ENHANCING THE ROLE OF SCM IV. Reputation • A. Ethics • B. Observation by Others • C. Perception

  12. Enhancing the Roles of SCM V. Expectations of Supply Chain A. Mission within the Firm B. Input to Company Budgeting System C. Supply Chain skill set

  13. Enhancing the Roles of SCM Some Winners • Physically visit internal customers…and do it often • Tell what Supply Chain can and does do • Be active, not passive, with Cost Reduction and Cost Avoidance programs • Passive way: define problem , accomplish, announce • Pro-Active way: ascertain stakeholder priorities, agree with them, accomplish…share limelight and be appreciated • Tell about your plans • Explain what's happening in the supply market – people are interested • Learn stakeholders’ language, problems, and quests

  14. Enhancing the Roles of SCM The Bottom Line What others really want of Supply Chain •Partner • Problem solver •Model business manager • Conduit (access to outsiders) •Oracle (help them see their future) But: it is a “one-on-one” process

  15. Enhancing the Roles of Supply Chain... BUT! And, this is a big “but.” It is not done by the CPO talking up Supply Chain in senior staff meetings. That is only one half of it….creating the big picture. The depth is accomplished one-on-one between nearly everyone in the group creating “wins” and links with individuals throughout the entire firm/organization It is a “one-on-one” process

  16. Enhancing the Roles of SCM To Build Value-Add and Gain Respect • What small Supply Chain Group Leaders find that works: • Evolving toward strategic sourcing with large or big impact buys • Engage stakeholders • Pursue total cost of ownership with important equipment items • Engage senior management where cash flow, assets, and long term costs are important Think and act less as a buyer and more as a value-adding Supply Chain professional

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