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What the best companies are doing with cycle time compession, omnichannel / multichannel, supply chain segmentation, risk mitigation
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Is This Your Supply Chain?
What do you know about your SC performance?
Do much fire-fighting (reactive vs proactive)Have little/no metrics, beyond complaints or
charge backs or costs
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Yours?
Monolithic supply chain operationLittle / no service differentiation beyond
customer order requirementsDefined by costs, tasks, and/or functions?
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Is This Your Supply Chain?
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Perfect Order
Delivered / Complete / Accurate / On-Time
How well do—you do with customer orders?your suppliers do with your POs?
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Benefits of Real SCM
Customer advantage -- IT’S ABOUT THE CUSTOMER!!!!!
Competitive differentiationTranslates into better revenue and
margins
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Are You Happy with the Supply Chain that You
Built?
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How Do You View Global Logistics?
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SCM—Hot Topics
Time Compression Omnichannel / MultiChannelSegmentationRisk Mitigation
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Cycle Time Compression
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Cycle Time
Cycle time--time from recognize need (before PO is issued) until product delivered to you--and sold, and paid by customer (funds availability affects procurement)
Not just length, includes varianceTime—important for business
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Cycle Time
Inventory-factor of uncertainty (buffer)—longer the cycle time, more the uncertainty, more the inventory
Key factor for responsiveness and agilityIn Lean, extra time is waste
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Cycle Time Compression
Identify and assess each sub-cycleLook for gaps, redundancies, and
meaninglessExternal and internal (especially)Streamline practices & operations
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SC Omnichannel / Multichannel
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What It Is
Selling through multiple channels For B2C and B2BSell 24/7 from anywhere in the worldFrom any device (e-commerce and m-
commerce)
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Omni
Think Amazon and moreHome Depot
building 3 e-commerce fulfillment centers100,000 products (vs 35,000 for stores)
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SCM Omnichannel Issues
Speed and accuracy of order shipmentHow to position inventoryWhere to position inventoryWhat inventory to positionTechnology— integrated visibility for
inventory and orders in all channels
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Multi/Omni Channel
Direct shipping of gloves “from/for” other party’s ecommerce siteE-tailer does not have to hold inventoryCan your suppliers ship to customers
elsewhere in world for you?
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Supply Chain Segmentation
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What Segmentation Is
Superior best practiceDividing business into discrete groups (not
based on business units) based on similar characteristics
Address important company issuesServes strategic purpose
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Key Issues for Segmenting
Differing markets Product portfolios Customer portfolios Inventory yield Omnichannel sales
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More Issues for Segmenting
Global operations Channel partners Customer attrition Suppliers Supply chain risk
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Why Segment
Stop one-size-fits-all “service” approachReduce internal and external noise that
creates chaos & diverts resourcesDesign & align operations for different
sectorsBuild competitive differentiation
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How to Segment
1) Identify segments2) Profile sectors--and customers in them3) Determine how customers in each segment
differ for SC services4) Evaluate supply chain services, including ones
not met, and performance for each segment
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Segment Approaches
Cost—good concept—allocating and assigning costs—not direct costs
Value—economic—not good to identify segment characteristics
Need—drivers that segments have for specific service(s)
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What To Do with Results--Have Actionable Info--
1) Prioritize segments2) Be specific 3) Evaluate the quality of service 4) Implement services for each segment5) Develop metrics for each segment’s service
and measure
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ExampleOrder Size and Annual
Volume
Order Requirements
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Large Orders Segment
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Special Preparation Segment
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Direct to Store Segment
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Redesigned Supply Chain
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Supply Chain Risk Mitigation
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What Risk Is
About business continuityConcept traction—FukushimaInsurance focus—assetsPlus contingency planning
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Supply Chain Risk
ComplexityGeographic scope
offshoring/sourcingoutsourcing
Low inventorylean manufacturingJIT manufacturing
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Supply Chain Risks
Deloitte global survey45% say SC risk program only somewhat
effective or not effective53% say SC disruptions have become more
costly48% say frequency of risk disruptions with
negative outcomes have increased
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More Deloitte
Technology, industrial products, diversified manufacturing most likely to say SC disruptions have become more costly
Most costly outcome—margin erosion71% say SC risk is important in strategic
decision-making
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More
Top challenges to risk management (RM)lack of cross-functional collaboration (32%)cost of implementing RM strategies (26%)
SC RM is organized around silos (75%)leads to lack of visibility and collaborationmakes difficult to assess and manage
risk on holistic basis
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Threat Sources
Natural disasters Geopolitical Pandemics Technological Terrorists Commodity prices
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Sources
Labor costs Currency Ports Markets Suppliers Execution
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Intl Country Risk Guide
39 China, Peoples' Rep.
62 Thailand
86 Indonesia
114 Sri Lanka
129 Pakistan
Rank in 06/12 Country
1 Norway2 Brunei3 Luxembourg4 Switzerland5 Singapore6 Sweden7 Oman8 United Arab Emirates9 Germany
10 Canada11 Hong Kong12 Taiwan13 Qatar13 Saudi Arabia15 Denmark16 New Zealand17 Japan18 Kuwait19 Finland20 Korea, Republic21 Trinidad & Tobago22 Netherlands23 Australia24 Austria24 Malaysia
54 Mexico
Source: PRS Group
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Suppliers
Tier 1 Suppliers and More
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Risk
Measure risk—Financial ImpactTime to Recover
Identification and mitigation—not just for MNCsCannot mitigate what you do not identify
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Where Will Your Supply Chain Take You?
