Introduction to ops rules transformation expertise

Introduction to OPS Rules Transformation Expertise

December 2012

© OPS Rules Partners, LLC 2012

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We work closely with MIT Professor Simchi-Levi and use his latest IP to identify Supply Chain Opportunities for Clients

In Operations Rules, Professor David Simchi-Levi identifies the crucial element in a company's success: the link between the value it provides its customers and its operations strategies. And he offers a set of scientifically and empirically-based rules that management can follow to achieve a quantum leap in operations performance.


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Why Operations Strategy is so Important

We live in the Internet Age when it is difficult to create and maintain a competitive advantage

IP and innovations are difficult to keep proprietary Companies need to innovate and transform continuously

Many companies have used 6-sigma techniques as an operations strategy They “leaned out” their supply chains making them fragile rather than resilient Regional supply chain strategies have also underperformed

Transformations that matter only occur when business model innovations enable more efficient use of physical assets, working capital and peopleOPS Rules provides radical performance improvements that shift the balance of power in industries

We help your teams analyze your business environment and develop the strategic insights you need to innovate your business model

We help you use superior strategy to super-charge your continuous improvement efforts


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OPS Rules helps Companies make Significant Business Improvements by Optimizing their Operations Strategies

Potential Operating Strategy

Improvements

Complexity Management

Supply Chain Segmentation

Supply Chain Risk

Management

Flexibility Management

End-to-End Optimization

Why it is Important

Identifies hidden costs of Long-Tail

Products

Aligns supply chain design with Customer Preferences

Quantifies risk exposure across the Supply Chain

Optimizes the level of Supply Chain Flexibility

Optimizes Supply Chain costs and inventory levels

and location

What is InvolvedClassification of

product portfolio to reveal hidden costs

Define supply chain segments based on

price/service preferences and design well-aligned, supply chain segments

Quantify the degree of supply chain risk at each major node in the

supply chain in terms of profit or revenue exposure

Understand the costs of supply chain flexibility and determine optimal level of

flexibility across global supply chain

Use Supply Chain Network Modeling Software to simulate and optimize

supply chain performance

How best achieved

1. Create all-inclusive cost model to capture & report actual costs

of Long-tail products

2. Investigate root causes

3. Develop tactical and strategic recommendations to

reduce Long-tail costs in the short and long

term

1. Re-evaluate customer trade-offs with respect to price/costs and service

flexibility 2. Redesign supply chains to share scale advantages

and allow supply chain differentiation where helpful 3. Optimize differentiated supply chain

segments 4. Engage sales and R&D to ensure

functional strategies align

1. Map the Supply Chain

2. Quantify financial

risks across the Supply Chain 3. Develop strategies

and remedies to reduce overall

supply risk

4. Implement improvements and

monitor results

1. Investigate existing strategy with respect to

flexibility 2.

Evaluate relative effectiveness and efficiency

of current strategy quantitatively

3. Update flexibility strategy in light of current

business and GTM strategies and demand

variability 4. Phase-in

improvements

1. Benchmark current supply chain performance 2. Identify opportunities for improved performance

tradeoffs 3.

Simulate current operations 4. Simulate potential

improvements 5. Iterate until optimal

solution is apparent

Representative Business Impacts

Reduce freight and manufacturing costs by 30%; Increase Revenue, Profits and Market Share significantly


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OPS Rules Created a Repeatable Process to help Companies Benefit from Professor Simchi-Levi’s Intellectual Property

Responsiveness

Efficiency

HighCost

LowCost

ShortResponse

LongResponse

A

C

B

Directi

on of

Impro

vement

Current Strategy

Supply chain performance trade-offs are different in each situation

Operating problems and their root causes understood/resolved

Customer preferences analyzed Unique customer segments identified Micro-optimization strategies considered Clear operations strategy defined Competitive differentiation strategy and

plan of actions agreed


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SellDistributeSupply

OPO

Plan/Design

Development Supply Chain

Fulfillment Supply

Chain

After current Execution Problems are Addressed, we Focus on Creating a Strategic Operations Competitive Advantage

Produce

Development-related Vectors of Differentiation

Product/Platform Architecture Design for Supply Chain Customer Value Proposition Make/Buy Strategy Strategic Partnerships Strategic Sourcing & Supplier

Development Supplier Contracting

Fulfillment-related Vectors of Differentiation

Push/Pull Optimized Planning Complexity Reduction Flexibility Supply Chain Segmentation Macro/Micro/Supply

Chain/Production Optimization Supply Chain Risk Management Managing Long Tail Products Operations Performance Management

Source

OPS Rules Operations Strategy Platform


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We use Data to Ensure Root Causes and Alternative Cures are Fully Understood before Implementation Begins

Analyze- - - - -

Understand opportunities & root causes of problems

Innovate- - - - -

Reduce complexity & risk and optimize strategy

Transform- - - - -

Pilot, prove, inspire & lead the change effort

Data Collection Comprehensive Scope Performance Benchmarks Customer-centered Approach

Evaluation Quantitative & Qualitative

Benchmarking Key Customer Interviews Customer Value Proposition

Improvements

Conclusions Definitive Root Cause Analysis Preliminary Strategic

Alternatives Requirements for Simulation &

new Metrics

Scenario Planning Micro Supply Chain

Optimization Potential Vectors of

Differentiation Scenario Analysis Planned

Scenario Analysis Current State Simulation Scenario Evaluation Optimal Scenario Identified

Scenario Validation Quick Wins Piloting Customer/Supplier Test Drives Final Solution Specification

Transformation Planning Create a Vision Evaluate Challenges & Risks Agree Transformation Roadmap

Adoption Focus on new Behaviors Lead & Inspire the Team Over-communicate the Way

Forward

Implementation Create/Deploy new

Capabilities Monitor Progress to Close Gaps Use Simulation to Prioritize

and Evaluate Continuous Improvement Projects


OPS Rules Transformation Expertise


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OPS Rules Brings High-Value Operations experience

We Integrate Carefully with the People, Culture and Realities while Driving Results

Our transformation capabilities will enable success in both limited-scale performance and in a broader-scale rollout

We have led a supply performance assurance effort at several global manufacturers

Our unique IP and insights from David Simchi-Levi can be leveraged for innovative approaches

There is no one-size-fits all. Plans are structured around current realities and culture.

Don’t waste peoples’ time. This is a busy environment with ongoing initiatives and priorities.

Our techniques get early engagement. People will test whether this is a “program du jour”.

Our prioritization techniques are sensitive to over-driving the resources

We do whatever is needed to make the people and program successful


Every Aspect of Organizational Change is Addressed in Order to Achieve Transformation Success

Readiness

Transformation

Sustainability

OrganizationalChange

Management

Stakeholder EngagementStakeholder Reality CheckTransformation Readiness EvaluationCulture AnalysisBegin Cultural ChangeTransformation Process Buy-inFirst pass transformation

workload analysisInitial Transformation

Strategy

Create a sense of urgencyPull together the guiding team

Develop the change vision and strategyCommunicate for understanding and

buy inEmpower others to act

Produce short-term winsDon’t let up

Create a new culture

Collaborative Strategic Planning and ManagementTime-based goals and objectivesComplete set of metricsTransparency across functions and between levelsContinuous Improvement/Adaptation

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Our Approach is Optimized to Engage Key Stakeholders Early and Help them Shape and Own the Transformation Vision

Time

Deg

ree

of S

up

por

t fo

r Ch

ange

Awareness

Stakeholder Perspective

Action Steps

What do changes look like? What is my role? How committed is the

leadership? How will this affect me? How will this affect the

business?

What is the transition scope, full impact and rationale for the transformation?

Define scope of transformation Identify sponsors and key

stakeholders Plan project work steps and

milestones

Define transition vision and business benefits

Develop shared vision for change

Accept and respond to input from stakeholders

Begin to generate buy-in Highlight the need for and

benefits of transformation Develop action plan to remove

barriers that impede pace of transformation

Provide sufficient training and support

Align reward system to new environment

Empower stakeholder groups to fully own business processes

Implement training focused on long-term use and continuous improvement

How will the change affect my job?

What will I be trained on? How ready are we? How ready is the

business?

What happens after implementation? Is this transformation really here for keeps? How do we continue improving? How can this transformation help us grow the business?

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Understanding

Acceptance

Commitment


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Gathers readiness insights from personnel at many levels and locations

Gives us a baseline of stakeholder perceptions

Informs early communications and messaging

Project team addresses each issue in the project plan

Do you have what’s needed to execute program? What are the transformation issues you will encounter?

Case for Transformat

ion

Transformation Management

Organizational

Systems

Leadership Alignment

Organizational Alignment

Capable Organization

1. There is a solid business case to justify the project initiative

5. The scope of project is narrow and fairly simple to manage

Business System: Assets, processes, skills and technology which generate added value and provide value

9. Organization leadership strongly supports the objectives of the Transformation

13. Key geographic, functional, and labor stakeholder groups are committed to the transformation

17. Organization has sufficient data & operational expertise to support the transformation

Our Transformation Readiness Assessment Tool Identifies the High-priority Issues to Address in Implementation

Tool Excerpt Illustration


Strategic Stakeholder Analysis Identifies Issues Important to Key Players and how to Address them

13© OPS Rules Partners, LLC 2012

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Maturity Models Measure Transformation Progress at the Enterprise Level and Organization Level

Create a common vision of what it takes to operate as an enterprise

Give an honest , evidence-based view of current maturity level

Enable deliberate planning for a desired degree of advancement

Enterprise Maturity Model

Level 1 2 3 4 5

Enterprise Management

Change Management Organization

Governance

Alignment

Management Process

Problem / Barrier Resolution

Strategy & Planning

Execution & Results

Process Driven

Metrics - Drivers and Results

Cost Management

Improvement Process

Tools & Methodology

Results Evidenced


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OPS Rules Capabilities, Techniques and Tools will ensure a Successful Transformation

Personnel and Resources Consultants with C-level experience who have

led operations and transformations Lean and Six Sigma experience On-demand training of OPS methods for

client personnel

Project Preparation & Planning Transformation readiness assessment Transformation workshop series to scope,

charter, plan, measure progress Project roadmaps and detailed plans Pilot program design and execution

Stakeholder Engagement and Communications Outbound planning and execution tools Engagement outreach with 2-way discussion Key stakeholder analysis and mentoring Early adopter recruitment

Vision the End State Performance we are Entitled to have Strategic planning – appropriate Vision of Entitlement-achievement planning Enterprise maturity models/to-be

workflows and metrics vision

Governance: Organization and Project Cross functional team process Concept of operations document Client operating procedures

Driving Performance End-to-end metrics design & definitions Metrics gap analytics & target setting Barrier identification and ranking Barrier removal/escalation techniques Drumbeat gap closure process Correlation of operations / financial metrics


Documents

Introduction to ops rules transformation expertise