Supply Chain Changes

8/8/2019 Supply Chain Changes

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SUPPLY CHANGE CHANGES


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Implementing collaborative relationship- theroles of players within the organisation inimproving supply chain functions.

A cross functional levels involving all levels. The foundation for collaborative relationships

has four dimensions. They encompass planning, execution of change

programs, and ongoing operations. Skillfully applied, these techniques will improvecommunication and make working togethermore pleasant and effective.


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1. A philosophy that promotes change.

2. Structured implementation programs.

3. Participative methodologies.

4. Institutionalized changes.


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The Shewhart cycle of PlanDoCheckAct,

taught by W. Edwards Deming in Japan,

provides a durable and effective model.

The cycle has four steps that repeat to

continuously upgrade a process.


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Set an overall strategy for the organization.

It should include a vision, financial objectives, expected mergers and

acquisitions, product development plans, and operations improvement. Set a high level specification, or vision, for the new supply chain and

divide the supply chain into process.

Develop a portfolio of supply chain-related initiatives and projects

organized by process. Classify the projects using the strategy frameworks a local adaptation

that better fits the organization and organize teams to execute the

projects.


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Write the project action plans.

Apply a methodology to evaluate and change the

process.

Test solutions in pilot testing, implement the

organization structure and measurements needed for

full scale implementation.

Use appropriate technology to support the

redesigned processes.


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Observe the results.

Change the solution based on those results.

Evaluate the change.

Learn from the result.

Begin the planning cycle again.

Extend the application as appropriate.

Step 4: ACT


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The top management involvement is considered,practically universally, a prerequisite for success in anyprogram for change.

When examining the cause of success or failure, it willoften appear on a list of project management factorslike :

Project manager skills Team member numbers and skills

Strong system integrators and software suppliers Cooperation of users Money and time Project control Top management involvement (tmi)


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The call for tmi is seldom accompanied by sound

advice about how and how much tmi is needed or

even what it is. It is probably the hardest item on the

list to describe, yet it could be the most important.

The process begins with a clearer definition of just

who is top management.


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There were six categories depending on strategic contribution and

scope.

All projects for change should have some level of top management

attention.

The practical reality is that top managers will necessarily ration time and

energy based on the importance of each project.

The shading in the figure suggests that those projects that fall in theupper-right-hand corner should have the most attention and

involvement.

These are also the projects that require senior level sponsorship.


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If we are talking about an autonomous business unit,

this would be the president or general manager and

his or her direct reports.

A functional project(S1) whether strategic or

nonstrategic might fall under a department head

with less frequent intervention by peers or the

business unit president.


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Strategic direction comes from a vision of where the

organization needs to go.

We often find that many projects form out of a haphazard

process, have no strategic contribution at all, and should

be discontinued.

E.g. : Microsoft

Its the job of senior management to sort out which

projects are strategic and which only maintain a position.


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A typical example is a large program for upgrading

systems by implementing new software.

The project is huge in terms of money, time, and

distraction. Budgets may be measured in the tens of

millions. But the new system will seldom deliver anything

distinctive in the way of competitive position.

The projects can be any of three levels: supply chain,

business unit, or functional area.


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Strategic Flexibility - shift of focus from the mechanics of implementation

to their contribution in terms of an intended direction.

The supply chain strategy must be flexible enough to change in the face

of changing strategies.

Example - a shift from stressing rapid product development to producing

low cost products quickly and cheaply.


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Strategic project selection should depend on the skills that the company

needs to cultivate.

JIT will develop one type of capability, software solutions another. Both

may reach the same end-point eventually in terms of lead times and

production flow.

The skills developed as a result of the choice will be different, so the

choice is critical with respect to the ability to compete in the future.


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Portfolio refer to the body of projects underway or proposed for implementation.

The goal of portfolio management is to design and authorize the best set of

projects to implement ones strategy.

Supply chain projects of all types may be proposed in any given period

frequently in conjunction with the annual budgeting cycle. But the management

team has to pick the best ones.

A common practice is to use financial criteria for project approval.


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These methods use discounted cash flow (DCF)

techniques to compute net present value(NPV) or return on

investment(ROI).

All three approaches weigh improvement in cash flow

against the capital investment required. An unfortunate

consequence of this approach is that, once one has

learned the game, the numbers will follow.


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Classification Description Justification Method

S projects Strategic projects at thesupply

chain, business unit, or

functional levels

Identified in strategy, orDevelops strategic

capability,Or Supports

driving force

N projects that emulateindustry norms

Projects that implementcommon industry

practices.Stay-in-the game

projects.

Responds to a deficiency,or Incorporates common

new technology expectedof industry participants

Financially motivated Nprojects

Optional projects thatreduce

cost or increase revenues.

Financial discounted cashflow methods (ROI, NPV)


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1. Designing supply chains for strategic advantage.

2. Implementing collaborative relationships. (Thistask is the subject of this chapter.)

3. Forging supply chain relationships.

4. Managing supply chain information

5. Removing cost from the supply chain.


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Existence of walls between the functions is the primary reason for the

consulting industry.

Strategy setting is certainly heavy on planning; removing cost requiresan understanding of what works in the real world of operations.

The critical factor in determining the time to implement change is

governed by the need to communicate direction to various functional

groups.

All levels and functions should play a role in supply chain management.


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Another obstacle is a reluctance to go beyond the organizations

boundaries for input about supply chain design.

In planning participation in the improvement process, one should at leasthave a checklist to aid in assembling the skills needed for the effort.

This checklist provides a starting point for assigning representatives to

supply chain improvement projects.

It shows how typical functional areas might, depending on the situation,

participate in each of the tasks.


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Functions 1 2 3 4 5

Senior Management P P P S S

Finance/Legal S S S S

Marketing & Sales P P P S

R&D/ProductDevelopment

P P P P

Human Resources S

Information Systems S S S

Process Design S S S S S

Operations P P PC PC

Materials Procurement P P PC

Production Control PC C

Distribution C P PC PC

Suppliers C SC C C


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P=Primary roles for supply chain design

S=

Support roles in design and implementation C= Collaboration/test through design and

implementation.

The first seven areas are typically staff

functions. The rest are line functions.


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Primary responsibility resting with Marketing & Sales andProduct Development.

Senior Management provides direction throughoutdesign. The Process Design function can design solutions,and other functions shown can provide input and testthose solutions.

The Finance/Legal function should set constraints and

review progress.

Suppliers and customers should provide direct personalparticipation or provide inputs through conferences,surveys, or interviews.


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Collaborative relationships refer to interactions within

the enterprise, organization structures,

empowerment, and other measures that will speed

information and gain the most from every employee.

Overall improvement within the internal environment

will be there.


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Partnerships come in many forms all along the supply chain, so many

functions can participate by working with outside organizations.

From traditionally structured buysell relationships to outright

acquisitions, so many support functions may have to make the

partnership work.

Marketing and Sales, and Product Development can be sponsors if the

changes will lead to improving the positioning of a product.


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Supply chain can be defined in terms of both physical

movement and information movement.

Information may be back office transaction data or,

increasingly, front office market and sales

applications and shop floor decision support.

The physical flow is from Finance, Operations, and

Distribution.


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Whats new about supply chain management is the idea that its a Chain

of multiple companies that deliver products and services, not chains of

individual departments.

To avoid one department reducing its own costs at the expense of

another, its particularly important that cost reduction be a cross

functional initiative.

Sponsorship are shown here from Product Development for taking cost

out of new products or new versions of existing products.


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Documents

Supply Chain Changes