Government of Alberta - Home - Alberta, Canada

Government of Alberta Energy Supply Chain Development Seminar Delivering Efficiencies in Supply Chain Management - An International Perspective Colin Oddoye November 29, 2012

kpmg.ca

© 2012 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

1

Agenda

1. Market Overview

1. Alberta Oil & Gas Industry Participant Company Profile

2. Recent Market Developments

3. Perspectives from south of the border

2. Implications for Alberta manufacturers that support the industry

3. Similarities and Differences between Canadian and International Manufacturers (KPMG Manufacturing survey results)

4. Managing Business to Business relationships in competitive times

1. Managing the supplier relationship

2. Fiege Logistics Example


2

Alberta Oil and Gas Industry Participant Company Profile – 1H 2012

0 1000 2000 3000 4000 5000 6000 7000

Total

Indeterminate Employees

Total with Employees

0

500

1000

1500

2000

2500

1 to 4 Employees

5 to 9 Employees

10 to 19 Employees

Conventional O&G Extraction

Non-conventional O&G Extraction

Contract Drilling

O&G Services

0

10

20

30

40

50

60

100 to 199 Employees

200 to 499 Employees

500 plus Employees



Contract Drilling

O&G Services

0

50

100

150

200

250

20 to 49 Employees 50 to 99 Employees



Contract Drilling

O&G Services

Source: Alberta Enterprise and Advanced Education


3

Some Thoughts on Family Business


4

Recent Market Developments


5

The perspective from south of the border

Source Short-Term Energy and Winter Fuels Outlook, October 10, 2012 US Energy Information Administration


6

A New Reality?


7

SUPPLY CHAIN OPERATIONS MODEL

Plan and Manage

Source

Return

Coordinate and Collaborate

Make Deliver

Return

Sup

plie

rs

Cus

tom

ers

Supply Chain Relationships – An Overview


8

Core Supply Chain Management Activity

Supply chain system

selection

Supplier risk management

Procurement transformation

Transportation management / optimization

Inventory management / optimization

Supply chain strategy

SKU rationalization

Retail operations

improvement

Lean operations

Sales & operations planning

Sustainable (green) supply

chain

Logistics management / optimization

Strategic sourcing

Cost optimization

Distribution centre design &

development

Retail loss prevention

Spend analysis

Customer service

transformation

SUPPLY CHAIN OPERATIONS MODEL

Plan and Manage

Source

Return

Coordinate and Collaborate

Make Deliver

Return Sup

plie

rs

Cus

tom

ers


9

Priorities Over The Next 12 To 24 Months

• The top three priorities over the next one to two years for Canadian respondents are improved productivity/efficiency, top-line growth, and bottom-line growth

• Improved risk controls for global respondents is double in focus in comparison to Canadian respondents

Q2. What are your organization’s priorities over the next 12 to 24 months? Select up to three.

3%

9%

10%

11%

17%

19%

19%

23%

25%

45%

47%

50%

Other

Reduced operation complexity

Improved risk controls

Greater speed to market

Reduced input costs

Extension of existing product lines

Increased cash or liquidity

Development of new product lines

Increased competitiveness compared with industry peers

Bottom line growth

Top line growth

Improved productivity/efficiency

Canada (n = 150)

2%

8%

20%

17%

12%

9%

25%

11%

29%

47%

45%

36%

Global (n = 241)

The other priorities include Global expansion, acceptance of renewable energy initiatives, inventory management and building a plant.


10

1%

0%

12%

23%

22%

22%

18%

31%

46%

40%

41%

Global (n = 241)

Factors Considered In Selecting Another organization For Innovation Collaboration

• Nearly half of the Canadian respondents feel that the availability of skills is the most critical factor in selecting another organization to collaborate in innovation

• Processes and technology innovation and financial stability are also important factors

Q10. Which factors are most critical for selecting another organization with which to collaborate in innovation? Select up to three.

6%

0%

19%

16%

18%

25%

28%

29%

31%

37%

46%

Not currently collaborating

Other

Parity

Transparency of communication and information exchange

Shared ethical values/common approach to treatment of employees and other stakeholders

Contracts/relationships within a particular market/territory

Desired geographic location

Appropriate mix of products and/or services

Financial stability

Processes and technology to innovate

Availability of skills

Canada (n = 150)


11

0%

12%

47%

54%

29%

43%

48%

49%

21%

46%

54%

Global (n = 241)

Strategies To Become More Efficient In The Next 12 To 24 Months

• 62 percent of the Canadian respondents plan to improve manufacturing technologies/processes to become more efficient in the next 12 to 24 months

• Increasing supply chain collaboration, shorten the overall product development lifecycle and improve logistics distribution are important areas to gain efficiencies

Q18. What strategies do you plan to deploy to become more efficient in the next 12 to 24 months related to your supply chain and operations? Select all that apply.

23%

9%

27%

33%

43%

47%

49%

50%

51%

51%

62%

Don't know

Shifting of functions or operations to low-tax jurisdictions

Consolidate production/manufacturing sites

Improve visibility and transparency across the supply chain through greater IT investment

Standarized key inputs/components

Upgrade IT systems

Improve logistics planning to reduce time to market

Improve logisitics distribution

Shorten overall product development lifecycle

Increase supply chain collaboration

Improve manufacturing technologies/processes

Canada (n = 150)

Managing Business to Business Relationships


13

Year-End Start-up

Monthly Review

Quarterly Review

Managing the supplier relationship


14

• Accrue costs, receive invoices and authorise payments for month

• Monitor budget Vs year to date (YTD) costs

• Review project progress and milestones

• Review supplier service performance

• Maintain high-level update on market developments

• Quarterly budget reviews with management [Restate targets, budgets, review YTD costs Vs budget]

• Detailed review of market developments

• Agree SRM strategy and plan (Category specific)

• Align annual objectives with business requirements

• Sign-off on budget • Define on-going projects, project

start-ups, project wind-downs that impact budget

• Schedule internal customer review sessions

• Schedule supplier performance review meetings

• Review market developments [Mergers, acquisitions, joint ventures, new products, new developments, new market entries, etc.] Ongoing

• Accrue costs, receive invoices and authorise payments for month

• Year end budget review [Review YTD costs Vs budget]

• Review full year ( Objectives, Market developments, Supplier performance)

• Commence definition of targets and budgets for next period

• Share results and future plans with BUs/suppliers

• Identify new suppliers and carry out acceptance/RFx process

• Renew existing supplier agreements

• Close off existing relationships where relevant

Year-End Start-up

Monthly Review

Quarterly Review

A Year In the life of a supplier relationship manager

The Fiege Logistik Example


16

Fiege Logistik Example

FIEGE key figures Founded in: 1873 Employees: 11,000 in 18 countries Trainees: 400 Branches: 200 Warehouse and logistics areas: 3 million m² Turnover in 2011: EUR 1.5 billion (updated June 2012)


17

Fiege Logistik Example

"Fiege is family-run - and remains family-run." This statement voiced by the owners is manifested by enlarging the management by the fifth generation: Jens Fiege, son of Heinz Fiege, has been managing the international business segment - initially as CEO - since 2004 and became a member of the Executive Board of Fiege Logistik Holding Stiftung & Co. KG in 2009. Felix Fiege, son of Dr. Hugo Fiege, joined the management of the Fiege Group in 2008 as the managing director of FIEGE Engineering and became a member of the Executive Board of Fiege Logistik Holding Stiftung & Co. KG in 2012

Thank you

Presentation by Colin Oddoye

Documents

Government of Alberta - Home - Alberta, Canada