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CIPS Australia 3 rd Annual Conference People powering contemporary high-performance supply chains by Prof. John Gattorna Sydney – October 2007 1

John Gattorna Cipsa Presentation_v3

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Page 1: John Gattorna Cipsa Presentation_v3

CIPS Australia 3rd Annual Conference

People powering contemporary high-performance supply chains

byProf. John Gattorna

Sydney – October 2007

1

Page 2: John Gattorna Cipsa Presentation_v3

Materials

Information

Suppliers Manufacturers Retailers/Distributors

Inboundlogistics

Internaloperations

Outboundlogistics

Narrow focus oftraditional logistics

Broad focus ofintegrated supply

chain management

CustomerDemands(by segment)

Externalinterfaces

Internalinterfaces

Figure 1.1: Operationalizing the concept of supply chains

Note: All figures referenced in this presentation refer to figure numbers in Living Supply Chains ( Gattorna, 2006 )

Fact, like it or not: all enterprises have multiple supply chains running through them

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Page 3: John Gattorna Cipsa Presentation_v3

Supply Chains as Human Systems

Products and Services only move through supply chains as a result of human decision – making

On the outside: It is customers who decide to buy, and how ( Buying Behaviour)

On the inside: It is employees, management, and Boards who decide how to respond ( Cultural )

... everything else are simply enablers ( Technology, Processes, KPIs, Incentives, etc)

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Page 4: John Gattorna Cipsa Presentation_v3

Adapted from Figure 1.2: Elements of the ‘dynamic alignment’ framework

What is needed is an over-arching organizational concept to inform the design and management of supply chains

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Page 5: John Gattorna Cipsa Presentation_v3

Aligning for success – 4000m pursuit, Athens ‘04 5

Page 6: John Gattorna Cipsa Presentation_v3

A common metric is essential to compare and assess the degree of ‘alignment’ across the 4 levels

Figure 1.3: General characteristics of the four dominant behavioral forces or logics

Source: Adapted from Figure 29.2 in Gattorna (1998)

BehavioralForces

Force for cohesion co-operation and relationships

Force for creativity change and flexibility

Force for analysis, systems and

control

Force for energy action and results

‘Feelin

g’

‘Sensing’

‘Intuition’

‘Thinking’

I D

PA

Integration Development

ProducerAdministration

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Page 7: John Gattorna Cipsa Presentation_v3

This will lead us to a new ‘service-cost’ paradigmbased on ‘alignment’ – the old one is flawed

Figure 1.9: Paradigm shift to a best-of-both-worlds strategy

Source: Adapted from Figure 1.1.1 in Gattorna ( 2003)

Time

Cost

Logistics Cost (% of Sales)

Logistics Cost (% of Sales)

CustomerSatisfaction

(%)

CustomerSatisfaction

(%)

Time

Traditional Paradigm New Paradigm

Satisfaction

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Page 8: John Gattorna Cipsa Presentation_v3

Figure 1.10: Primary customer service logics

‘Customer service’ means different thingsto different customers

(I) (D)

(A) (P)

UNDERSTAND ME SURPRISE

BECONSISTENT RESPOND

Customer Service = Reliability,

Predictability, Consistency

Customer Service = Responsiveness

in a commercial way

Customer Service = Empathy,

Understanding, Relationship

Customer Service = Innovative, Creative response to unique

needs

• Integration• Mature – imminent change??• Loyalty and long-term relationships• Brand loyalty• “Joint Venture” mentality• “Quality” emphasis• Teamwork• Consensus

• Early / young market• No clear patterns / traditions yet to be

established• New product / technology• High level R&D (eg. CDs)• Supplier-led risk• Entrepreneurial• Lower price sensitivity

• Stable market, patterns are established• Commodity• Drive for efficiency – “experience” culture• Value for money• High price sensitivity• Procedural• Standards• Structure

• Patterns emerge - growth• Customer led demand• Sales, promotion, distribution important• Strong commercial attitude – anti-

relationship (eg. price sensitive); opposite to loyalty

• “Hollywood” syndrome – only as good as your last performance

• Product differentiation

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Page 9: John Gattorna Cipsa Presentation_v3

Source: Adapted from fieldwork at Fonterra, 2001

Figure 2.2: Four (4) most common dominant buying behaviors

You must identify the dominant buying behaviours evident in your marketplace –normally 3 or 4 at most

Collaborative Efficient Dynamic (QR) Innovative Solutions

Mostly predictableRegular deliveryMature or augmented productsPrimary source of supplyTrusting relationshipTeamwork/partnershipInformation sharingJoint developmentForgivingPrice not an issue

Predictable demand within contractRegular deliveryEfficiency low cost focusMultiple sources of supplyLittle sharing of informationMore adversarialStandard processesPower imposedTransactionalVery price sensitive

Unpredictable demandCommodity relationshipTime priority/urgencyOpportunity focusAd hoc source of supplyLow loyalty, impersonalFewer processesOutcome orientedCommercial deals based on pragmatismPrice aware

Very unpredictable demandHigher riskFlexible delivery responseInnovation focusRapid changeIndividual decision makingSolutions orientedManagement of IPIncentives/egoNo price sensitivity

Close workingrelationships for

mutual gain

Consistent low cost response to largely

predictable demands

Rapid response to unpredictable supply

and demand conditions

Supplier-led development and

delivery of new ideas

Ia A Pa Dp

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Page 10: John Gattorna Cipsa Presentation_v3

Figure 2.1: ‘Multiple Supply Chain Alignment’ on the customer side

You must identify the dominant buying behaviours evident in your marketplace –normally 3 or 4 at most

“User Segmentation”

“Service propositions”

The identified dominant buying behaviours in the user/consumer base

The portfolio of different service strategies designed to respond to identified buying behaviours

The distinctly different sub-cultures required to underpin the corresponding service propositions

“Internal Capabilities”

“Shape & create”The different leadership styles that are required to shape the corresponding sub-cultures

User Markets

Strategy

Cultural Capability

Leadership Styles

Leader-ship

Org../Process

ServicePropos.

Needs

Leader-ship

Org. /Process

ServicePropos.

Needs

Leader-ship

Org./Process

ServicePropos.

Needs

Leader-ship

Org./Process

ServicePropos.

Needs

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Figure 2.3: Four (4) Generic supply chain types

Four (4) generic supply chains have been identified – and variations of these may exist

Rel

atio

nshi

p w

ith c

usto

mer

Predictability of demand

“Continuous Replenishment”

“Lean”

Loose

TightHigh Low

Predictable demand, easily managed through tight collaboration with customers. Focus on retention of customer relationships.

Demand predicable, (e.g. from historic off-take), but the loose relationship does not necessitate an extreme service level. Focus on efficiency.

Respond opportunistically & manage yield. Focus on providing creative solutions for premium price.

Unplanned or unforeseen demand, and a sometimes loose relationship with customers - almost always demands an agile response at higher cost-to-serve. Focus on the service-cost equation

“Fully Flexible”

“Agile”

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Figure 2.4: Flow types and matching supply chain types

These 4 supply chains co-exist, like laminar flow in a pipeline, and have to be de-constructedfor clarity

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Page 13: John Gattorna Cipsa Presentation_v3

*Segment names selected by Foster’s

Figure 2.6: Foster’s new behavioural-based segmentation in Australian beverage industry

Small volumesDifficult delivery locationsMerchandising supportLimited spaceTight financeStable demandCertainty of SupplyRegular ordersPrice sensitiveRelationship important

Large volumesStanding ordersStraight forward regular deliveriesRelatively high stock levelsPrice sensitiveAppropriate promotions

Small volumesSome unpredictable in demandRegular ordersDifficult delivery locationsPack presentation importantPremium/value-addsPrice awareVariety important

Small volumesSpecial solutionsSpecific delivery arrangementsCreative sales and logistics arrangementsSmall volumesValue-for-money

eg., Small & remote customers; not buying direct

eg., Fine dining restaurants; casinos; resorts; theme parks; 5-star hotels

ILLUSTRATIVE

eg., suburban hotels, and bottle shops

eg., Major retailers; CML; Woolworths

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Figure 2.7: The three (3) different supply chains at Coca-Cola Japan

Delivering Coca Cola in three (3) different ways

ILLUSTRATIVE

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Page 15: John Gattorna Cipsa Presentation_v3

Appendix 2B: Multiple Supply Chains in the Healthcare Industry

Multiple supply chains in the Healthcare Industry

WARDS

Theatres Radiology

Labs

Pathology

Stores KitchenOffice

Engineering

DirectLarge Volumes

LeanSupply Chain

A

FlexibleDeliveries

(Mixed)

AgileSupply Chain

Pa

Direct DeliveriesSmall & Frequent

CollaborativeSupply Chain

Scheduled DeliveriesMajor Items

Fair DealSupply Chain

Pharmaceuticals MedicalSupplies Food Domestic

Supplies Maintenance CapitalEquipment

aI

A

i

SupplierWarehouses

WholesalerCross-Docking

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Page 16: John Gattorna Cipsa Presentation_v3

Appendix 2B: Multiple supply chains in processed food manufacturer Goodman Fielder

…and in a fmcg conglomerate

Fresh Daily(Supermarkets,small retail and

McDonalds

A Pap

DA

i

Flow Flexibility Fresh Bulk

SupermarketDCÕs

Fast Food ChainsFood service distributors

Food processorsSmall Industrial

Bulk Industrial

Uncle Tobys Meadow Lea Milling & Baking ÉÉÉÉÉÉÉ ..

Business Units Õ Factories

ILLUSTRATIVE

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Page 17: John Gattorna Cipsa Presentation_v3

Figure 2.10: Logistics network optimization at major New Zealand Pulp & Paper Manufacturer

The ultimate solution is a logistics network optimization model aligned to major customer & supplier segments

Suppliers

Suppliers

Mill

Mill

Mill Distribution

Centre

Mill Distribution

Centre

Distribution Centre

Distribution Centre

Markets

Markets

Interfacility Transport

Inbound Transport

Outbound Transport

Raw Material Finished ProductIntermediate Product

MODELING VARIOUS COST-SERVICE SCENARIOS

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Page 18: John Gattorna Cipsa Presentation_v3

Source: Adapted from Figure 3.5.2 Gattorna (2003)

Figure 2.11: Supply side alignment, the mirror image of the customer side

Supply-side and demand-side alignments are the mirror-image of each other

CUSTOMERMARKET

SUPPLIERMARKET

Reverse Alignment

Forward Alignment

Enterprise

Supplier Behaviours• Trusted & reliable partners• Planned creativity• Process driven• Opportunistic

SC Strategies• Continuous replenishment• Lean• Agile• Fully flexible

Buyer Behaviours• Collaborative• Efficiency/consistency• Demanding/quick response• Innovative solutions

Procurement Strategies• JIT Replenishment• Scenario• Transactional• Volatile

Cultural Capabilities• Group• Hierarchical• Rational• Entrepreneurial

Leadership Styles• Coach• Traditional• Company Baron• Visionary

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Page 19: John Gattorna Cipsa Presentation_v3

Executing a multiple supply chain strategy:working together with people to deliver the

required responsiveness

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Page 20: John Gattorna Cipsa Presentation_v3

Source: Adapted from Figure 4.3.3 in Gattorna (2003)

Figure 3.1: The ‘performance’ iceberg

Understanding the power of unseen cultural forces

VISIBLECONSCIOUS

INVISIBLEUNCONSCIOUS

UNDERLYING ASSUMPTIONS� Taken for granted assumptions about the organisational reality

VALUES AND BELIEFS� Goals of the enterprise� Means used to accomplish these goals

VISIBLE PATTERNS OF BEHAVIOUR� Structure� Strategy� Systems

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Page 21: John Gattorna Cipsa Presentation_v3

Source: Adapted from Figure 4.3.5 in Gattorna (2003)

Figure 3.2: The four (4) generic enterprise sub-cultures

4 basic types of sub-culture exist, and various combinations are possible

Means: Synergy, teamwork,co-operation

Ends: Cohesion

Means: Innovation, flexibility,readiness

Ends: Growth

Means: Systems,measurements,controls

Ends: Order

Means: Action, objectives,energy

Ends: Results

Group Entrepreneurial

RationalHierarchical

IndirectControlI

A

D

PDirectControl

InternalFocus

ExternalFocus

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Page 22: John Gattorna Cipsa Presentation_v3

Figure 3.3: Details of each sub-culture

Emphasis on cohesion, teamwork, synergy and consensus.

• Closed informal communication which is shared by way of cliques and membership of an “inner circle”

• Control achieved by commitment to Common Values• Management support emphasises the internal climate

and environment• Individual’s tasks are negotiated by consensus• Rewards are based on informal standards and the

ability to maintain internal cohesion – good team players

• Deviant behaviour is tolerated – provided it adheres to consensus values

Group Culture Entrepreneurial CultureEmphasis on individualism, creativity, fast

response.• Open informal communication which is shared with

whoever happens to be around at the time• Control achieved by commitment to a common

vision• Management support emphasises leading and

inspiring• Individuals are empowered to perform their roles• Rewards are based on creativity and

entrepreneurial behaviour• Deviant behaviour is tolerated – provided it is goal

directed

Emphasis on order, stability, information and control.

• Closed, formal communication which is shared only on a “need to know basis”

• Control achieved by focus on processes• Management support emphasises procedures• Individual’s tasks are established by precedence• Rewards are based on formal standards and the

ability to maintain internal cohesion – good administration

• No deviation from approved processes

Hierarchical Culture

Emphasis on analysis, guidelines and sustained high levels of activity.

• Open formal communication by way of committees and memoranda

• Control achieved by focus on results• Management support emphasises planning• Individuals are given structural authority to perform

their roles• Rewards are based on formal standards and

relevant results – analysis and action• No deviation from plans or performance standards

Rational Culture

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Page 23: John Gattorna Cipsa Presentation_v3

Source: Adapted from Hofstede (1980)

Fig 3.6: National Country Values

If you operate overseas, the respective Country culturesoverlay company cultures (1) – and modify behavior

LowPower

Distance

HighPower

Distance

CollectiveOrientation

IndividualOrientation

SouthAfrica Italy

Spain

Belgium

France

Austria Israel Denmark

New Zealand Great Britain

Australia

USACanada Germany

Norway

Finland

Taiwan

Greece Japan Thailand

Turkey Brazil

IndiaMexico

Singapore

Hong Kong

A

I D

P

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Page 24: John Gattorna Cipsa Presentation_v3

Source: Adapted from Hofstede (1980)

Fig 3.7: National Country Values

Country cultures overlay company cultures (2) – and modify behavior

Feminine

Masculine

UncertaintyAvoiding

UncertaintyAcceptingCanada

India

New ZealandUSA

Australia

Singapore

Netherlands

NorwayDenmark

Sweden

BelgiumSwitzerland

Germany

Japan

Italy

Portugal ThailandFinland

Taiwan

Hong Kong

Great BritainSouth Africa

A

I D

P

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Page 25: John Gattorna Cipsa Presentation_v3

Leading from the front:converting customer

insight into successful operational execution

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Page 26: John Gattorna Cipsa Presentation_v3

Figure 4.2: Leadership styles

In successful organizations, the leadership (at all levels) is always in close touch with customers

ThinkingI

A

D

PDoing

Consensus Individual

COACHContinue to:Lead by teachingMake decisions by consensusGet the best from people

Watch out for:Slow response to suddenenvironmental changeMarket-related performance

VISIONARYContinue to:Lead by inspirationRespond to turbulenceUse information to create change

Watch out for:Tangential interestsShort on the detailPeople policiesInefficient response to opportunities

COMPANY BARONTRADITIONALISTContinue to:Lead by procedureUse information to maintain controlImplement proven business tactics

Watch out for:Inability to respond toenvironmental changeEfficiency at the expense ofeffectiveness

Continue to:Lead by objectivesFocus on whatÕs importantPlan for future profitability

Watch out for:Paralysis by analysisPolitical in-fightingEffectiveness beforeefficiency

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Page 27: John Gattorna Cipsa Presentation_v3

Continuous Replenishmentsupply chains:

where relationships matter most

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Page 28: John Gattorna Cipsa Presentation_v3

Continuous Replenishment supply chains –demand side

…where relationships matter most

Coach• Conscientious• Leads by teaching• Concerned for others• Loyal; committed; politically astute• Seeks agreement by consensus

Group sub-culture• Relationship ‘cluster’• Standard processes, eg. Customer Account Management• CRM;SRM;VMI;ECR;CDP;CPFR• Emphasis on loyalty and retention• Encourage participative schemes• Authority/autonomy negotiated by consensus• Consultative; face-to-face• Team building• Recruit team players

• Share information• Strategic partnerships• Long term stability• Mutual trust

Cultural Capability• O.D• Process• IT• KPIs• Incentives• Job Design• Internal Coms.• T & D• Recruitment

Collaboration Zone

Value Proposition

Focus

Leadership Style

Close relationship with selected customers

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Page 29: John Gattorna Cipsa Presentation_v3

Continuous Replenishment supply chains clusters, focused on loyal high-value customers

Account Teams/clusters configured with a ‘Relationship’ mindset bias

Note: Individual team members return to their respective Functions for training and other specialist matters

FUNCTIONS

Customer A

Procurement Production Finance Sales/Mktg Logistics

CEO

Customer B

Customer C

P

PL

FS/M

P

P

LF

S/M

P

PL

FS/M

I

a

COO

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Page 30: John Gattorna Cipsa Presentation_v3

Lean supply chains: Focusing on efficiency and

lowest cost-to-serve

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Page 31: John Gattorna Cipsa Presentation_v3

Lean supply chains – demand side

…focusing on efficiency and lowest cost-to-serve

Traditional• Leads by procedure; precedents essential• Implements proven business practices• Cost controller; efficiency focus• Uses information to control• Seeks stability • Risk averse

Hierarchical sub-culture• Organize clusters around core processes• Standard processes; emphasis on cost• L-T capital investment in ERP & other IT systems• DIFOTEF; forecast accuracy; productivity ratios;• Conformance to policies• Centralized control – rules and regulations apply• Regular; structured; on ‘need to know’ basis• Emphasis on analysis and measurement• Recruit players with analytical skills

• Seek economies of scale• Low cost production & distribution• Forecast demand; mature products;

predictable lead-times

Cultural Capability• O.D• Process• IT• KPIs• Incentives• Job Design• Internal Coms.• T & D• Recruitment

Value Proposition

Focus

Leadership Style

High volume; Low variety; Low costs; MTF

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Page 32: John Gattorna Cipsa Presentation_v3

Lean supply chain clusters focused on key processes that drive efficiency and routine for price sensitive customers

PM = Process Manager Process teams configured with a cost improvement bias

Note: Individual team members return to their respective Functions for training and other specialist matters

FUNCTIONS

Procurement Production Finance Sales/Mktg Logistics

CEO

PM

PL

FS/M

P

PM

LF

S/M

PM

PL

FS/M

FULFILMENT

ORDER MGT

SOURCING

A

PriceSensitive

Customers

COO

32

Page 33: John Gattorna Cipsa Presentation_v3

Agile supply chains:where quick response

is paramount

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Page 34: John Gattorna Cipsa Presentation_v3

Agile supply chains – demand side

…where quick response is paramount

Company Baron• Leads by objectives• Embraces change• Goes for growth• Focuses on what’s important• Analytical; fact-based solutions

Rational sub-culture• Clusters designed for speed and focused on specific sub-

segments• Process short-cuts; fast response• Applications: Postponement; SCP; APS; Network Models;• Absolute speed of response• Achieve targets; cash and in-kind bonuses• Authority /Autonomy established by clear and published limits• Formal; regular; action-oriented• Problem-solving; resource management• Recruit personnel who are results- driven

• Fast decision-making• Fast delivery• Rapid response in unpredictable conditions

Cultural Capability• O.D• Process• IT• KPIs• Incentives• Job Design• Internal Coms.• T & D• Recruitment

Value Proposition

Focus

Leadership Style

Manage the enterprise for responsiveness; quick reaction ; MTO

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Page 35: John Gattorna Cipsa Presentation_v3

Agile supply chain clusters designed to react fast to demanding customers in volatile markets

Clusters are focused on different parts of the same segment but possibly different product categories

Note: Individual team members return to their respective Functions for training and other specialist matters

FUNCTIONS

Procurement Production Finance Sales/Mktg Logistics

CEO

a P

a P

a P

Sub-sets ofDemandingcustomersegment

P

P

LF

S/M

P

P

L

FS/M

P

P

L

FS/M

COO

35

Page 36: John Gattorna Cipsa Presentation_v3

Example of an Agile organization 36

Page 37: John Gattorna Cipsa Presentation_v3

Fully Flexible supply chains: where nothing

is impossible

37

Page 38: John Gattorna Cipsa Presentation_v3

Lean supply chains – demand side

…where nothing is impossible

Visionary• Leads by inspiration; authentic• Informal• Decisive• Cares about ideas• Values innovation

Entrepreneurial• Small multi-disciplinary cluster, usually on standby• No standard processes; use local initiative at the time• Low systems requirements; event management appls.• Emphasis on finding creative solutions, very fast• Reward individualism & risk-taking behaviour• Autonomy through empowerment• Spontaneous and informal• Lateral thinking; brainstorming• Recruit enterprising, resourceful personnel

• Meet unplanned/unplannable demand• Innovative solutions, delivered fast

Cultural Capability• O.D• Process• IT• KPIs• Incentives• Job Design• Internal Coms.• T & D• Recruitment

Value Proposition

Focus

Leadership Style

Hedge and deploy resources

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Page 39: John Gattorna Cipsa Presentation_v3

Fully Flexible supply chain cluster with embedded capacity to deliver innovative solutions to desperate customers, fast

FUNCTIONS

Procurement Production Finance Sales/Mktg Logistics

CEO

Focus is on single events/emergencies at any one timeD

p

Single cluster made up ofmulti- disciplinary, multi-tasking,multi-talented individuals

P

P

L

F

S/M

SpecialServices

Desk (SSD)

39

Page 40: John Gattorna Cipsa Presentation_v3

Hybrid Supply ChainCombinations in Practice

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Page 41: John Gattorna Cipsa Presentation_v3

Multiple combinations of supply-side and demand-side elements of enterprise supply chains

CustomerBuying Logics

D

p

Pa

A

�I

aa

D

p

Pa

A

�I

aa

SupplierSelling Logics

Decoupling Pointat Enterprise

Supply-side Customer-side

VOLATILE * (Fully Flexible)

JUST-IN-TIME *REPLENISHMENT

(Continuous replenishment)

SCENARIO * (Agile)

TRANSACTIONAL * (Lean )

FULLY FLEXIBLE

AGILE

LEAN

CONTINUOUS REPLENISHMENT

EXAMPLES

GENERAL PARTSEGGED BUS COMPANY

1

2

12

•Different names for supply-side component

Figure 8.4: Mixed Supply Chain Logics

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Page 42: John Gattorna Cipsa Presentation_v3

Zara’s design brings fashion to market, fast

1. Zara stores aredigitally linked toheadquarters; employeescollect and share inputfrom customers daily

2. Zara designerssketch new stylesbased on customerinput and “hot spot ”trends

6. One distribution centre dispatches product to stores twice weekly

3. Textiles aresourced fromglobalsuppliers

4. Zara’s parentperforms thecapital-intensiveproductionactivities

5. Local workshopsperform finalsewing/assembly

1

24

5

Partners

Zara

Customersare young

fashionableprofessionals

6

3

Information flows

Product flows

Source : Mercer Management Consulting

42

Page 43: John Gattorna Cipsa Presentation_v3

Multiple supply chain alignment in the Australianconstruction materials market

Source: Carpenter Ellis

Figure 6.4 Resultant Metropolitan Distribution Network

COMMERCIALPROJECT

COMMERCIALSUPPORT

RESIDENTIALPROJECT

RESIDENTIALSUPPORTDISTRIBUTOR

TRADE CENTRE

PICK CENTRE

DISTRIBUTIONCENTRE

Focused service offer and tailored operations to achieve alignment

Logic: A

Logic: Pa

Logic: Ia I

a

A

Pa

43

Page 44: John Gattorna Cipsa Presentation_v3

It all boils down to the ultimate challenge of managing different combinations of organizational configurations, co-incidentally

Multiple organization formats within an enterprise

Cont. Repl. Cluster� Emphasis on balancing the interests

of both function and customer

� High levels of communication and

collaboration.

� Best for medium-sized companies.

� Dual authority and reporting.

Lean Cluster� Employees organized around core

processes.

� Team-work is promoted for more

efficient delivery of services.

� Uses cross-functional teams and

processes.

� Sharing responsibilities and

decisions by promoting team-work.

Agile Cluster� Suitable for rapid response.

� Focus on the core competences

required.

� Decentralized.

� Small companies can use each

othersÕ capabilities and resources.

� May be virtual

� Highly collaborative culture buy

allows individual flair.

F/Flexible Cluster� Consists primarily of small teams of

specialists .

� Permanent or temporary teams.

� Emphasis on innovation and

problem-solving.

� Loose structure with no hierarchy.

� Power balance, highly cooperative

and contributive culture

FUNCTIONS

Customer A

Procurement Production Finance Sales/ Mktg Logistics

CEO

Customer B

Customer C

P

PL

FS/M

P

P

LF

S/M

P

PL

FS/M

Account Teams configured with a ŌRelationship Õbias

Note: Individual team members return to their respective Functions for training and other specialist matters

I

a

COO

FUNCTIONS

Customer A

ProcurementProcurement ProductionProduction FinanceFinance Sales/ MktgSales/ Mktg LogisticsLogistics

CEO

Customer B

Customer C

P

PL

FS/M

P

P

LF

S/M

P

PL

FS/M

Account Teams configured with a ŌRelationship Õbias

Note: Individual team members return to their respective Functions for training and other specialist matters

I

a

COO

FUNCTIONS

Procurement Production Finance Sales/ Mktg Logistics

CEO

PM

PL

FS/M

P

PM

L

FS/M

PM

PL

FS/M

PM = Process Manager Process teams configured with a cost improvement bias

Note: Individual team members return to their respective Functions for training and other specialist matters

FULFILMENT

ORDER MGT

SOURCING

A

Price Sensitive

Customers

COO

FUNCTIONS

ProcurementProcurement ProductionProduction FinanceFinance Sales/ MktgSales/ Mktg LogisticsLogistics

CEO

PM

PL

FS/M

P

PM

L

FS/M

P

PM

L

FS/M

PM

PL

FS/M

PM = Process Manager Process teams configured with a cost improvement bias

Note: Individual team members return to their respective Functions for training and other specialist matters

FULFILMENT

ORDER MGT

SOURCING

AA

Price Sensitive

Customers

COO

FUNCTIONS

Procurement Production Finance Sales/ Mktg Logistics

CEO

Clusters are focused on different parts of the same segment but possibly different product categories

Note: Individual team members return to their respective Functions for training and other specialist matters

a P

a P

a P

Sub-sets of Demanding customer segment

P

P

L

FS/M

P

P

L

FS/M

P

P

L

FS/M

COO

FUNCTIONS

ProcurementProcurement ProductionProduction FinanceFinance Sales/ MktgSales/ Mktg LogisticsLogistics

CEO

Clusters are focused on different parts of the same segment but possibly different product categories

Note: Individual team members return to their respective Functions for training and other specialist matters

a Pa Pa P

a Pa Pa P

a Pa Pa P

Sub-sets of Demanding customer segment

P

P

L

FS/M

P

P

L

FS/M

P

P

L

FS/M

COO

FUNCTIONS

Procurement Production Finance Sales/ Mktg Logistics

CEO

Focus is on single events/emergencies at any one timeD

p

_ Single cluster made up of multi - disciplinary, multi -tasking, multi -talented individuals

P

P

L

F

S/M

Special Services Desk (SSD)

FUNCTIONS

Procurement Production Finance Sales/ Mktg Logistics

CEO

Focus is on single events/emergencies at any one timeD

p

_ Single cluster made up of multi - disciplinary, multi -tasking, multi -talented individuals

P

P

L

F

S/M

Special Services Desk (SSD)

44

Page 45: John Gattorna Cipsa Presentation_v3

A Final Word

Stay close to your customers; know their businesses inside out,and understand their patterns of demand (behavioral segmentation)

Make sure everyone in the company is working to the same customer demand data

Gear up to respond rapidly to the volatile (unpredictable) component of your customers’ demands

Recognize that you will simultaneously be part of multiple supply chains in and between your suppliers and customers

Organize your people in ways that mirror the demand patterns of your customers

Think ‘alignment’ at every point along the supply chains you participate in

Remember the future is about supply chains competing against each other; you should aim to be involved in only winning combinations

Continue to grow successfully in a volatile world by…..

Forecasting for capacity; and Executing to demand

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Six (6) questions for you to consider…

1. Has your company/enterprise attempted to design/operate your supply chain network based on ‘alignment’ principles?

2. Has your company/enterprise used behavioral segmentation of customers to inform the design/operation of its supply chains?

3. Has your company consciously attempted to shape various sub-cultures to execute the different types of supply chains it has running through the business?

YES NO

YES NO

YES NO

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Six (6) questions for you to consider… cont.

4. Does top management in your company treat logistics/supply chain management as a specialist ‘function’ or as an integral part of the business?

5. Do you think top management in your company understands the role culture plays in powering corporate supply chains?

6. If no, are they in denial?

YES NO

YES NO

YES NO

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Dr. John GattornaBE, Melb., MBA, Monash, PhD., Cranfield

John Gattorna established and led Accenture’s supply chain practice in ANZ/Southern Asia for several years, and was one of the Firm’s most respected thought leaders. Previously, he operated his own consulting company, specializing in marketing, logistics, and channels strategy, servicing an international clientele. Indeed, John is generally regarded as a global ‘thought leader’ in the supply chain management space, and continues to be much sought after as a speaker on the international conference circuit.

John has authored/co-authored several books and numerous articles on marketing, marketing planning, pricing, customer service, channels strategy, logistics, and supply chain management. His latest book, Living Supply Chains: how to mobilize the enterprise around delivering what your customers want, was published by FT Prentice Hall in May 2006, and is written specifically for C-level executives in major global enterprises. A Chinese language edition is due in July 2007.

The Gower Handbook of Supply Chain Management (5th edn), published in 2003, is the definitive work on supply chain management theory and practice; rights to Chinese and Russian language editions have been granted, and the former was published in March 2004. His previous book co-authored with Andrew Berger, Supply Chain Cybermastery, was published at the height of the e-commerce boom in 2001, and has since been translated into Chinese. An earlier book, Strategic Supply Chain Alignment, published in 1998, was the first publication to bring a behavioural dimension to the task of building high-performance supply chains. This book has since been translated into both Japanese and Chinese.

Although John originally came from industry he has a strong academic pedigree having taught undergraduate, post-graduate, and executive programs at the University of New South Wales and Macquarie University in Sydney; Oxford and Cranfield universities in the UK; and Normandy Business School, Le Havre, France. He currently holds Visiting Professorships at Cranfield School of Management and Macquarie Graduate School of Managementand is Chairman of the Advisory Board, Institute of Logistics & Supply Chain Management, Victoria University in Melbourne.

In the early 1990s, John was one of the original co-developers of the “Alignment” concept, and since then has continued to research, develop, and apply this powerful framework to the design and management of enterprise supply chains. His work has evolved into the ‘Dynamic Alignment’ concept that he is currently applying to enterprise supply chains, globally.

Going forward, John intends to continue his research, teaching and writing in the supply chain space, and act as an independent adviser, mentor, coach, educator, thought leader, and point-of-view provider to C-level executives and Boards around the world.

e:[email protected] | w: www.johngattorna.com | t. +61 2 9956 5046 | 08/06/07

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Books authored and co-authored

Gattorna, John, Living Supply Chains: how to mobilize the enterprise around delivering what your customers want, Published by FT Prentice Hall, London, 2006. Go to www.pearson-books.comChinese language edition currently under preparation and due for publication late- 2007 by PHEI, BeijingGattorna, John (ed) (2003), Gower Handbook of Supply Chain Management, Aldershot: Gower PublishingChinese language edition published by Century-Wave Co./PHEI, Beijing in March 2004; Russian language edition to be released sooBerger, A.J. and Gattorna, J.L. (2001), Supply Chain Cybermastery, Aldershot: Gower PublishingChinese language edition published in 2002 by Century-Wave Co./PHEI, BeijingGattorna, J.L. (ed) (1998), Strategic Supply Chain Alignment, Aldershot: Gower PublishingJapanese language edition published in 1999 by Japan UNI Agency, Inc., TokyoChinese Language edition published in 2003 by Economic Management Publishing House, BeijinGattorna, J.L. and Walters, D.W. (1996), Managing the Supply Chain: a Strategic Perspective, London: MacMillan Press

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