“Supply Chain Resilience & supply chain strategy” - CIPS Event uploads... · “Supply Chain Resilience & supply chain strategy ... Centre for Logistics & Supply Chain Management,

“Supply Chain Resilience & supply chain strategy”

Prof. Dr. Richard Wilding, Professor of Supply Chain Strategy.

Prof. Dr. Richard Wilding, Centre for Logistics & Supply Chain Management, Cranfield School of

Management, Cranfield, Bedford, England, MK43 0AL www.richardwilidng.info

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“Supply Chain Resilience &

supply chain strategy”

Professor Richard WildingCranfield School of Management

www.cranfield.ac.uk/som

www.richardwilding.infoProf. Dr. Richard WildingCentre for Logistics & Supply Chain ManagementCranfield School of Management, Cranfield, Bedford, England, MK43 0AL.Tel: +44 (0)1234 754170 Fax: +44 (0)1234 751712 Email: [email protected]

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Cranfield School of Management is…

Cranfield University …..

•Established 1946 - TO £136m

• 2,000 employees

• 3,000 postgraduate students:- 73% on taught degrees- 27% research

• Two 3*/4* hotels on campus

• Over 10,000 alumni in 110 countries

• 4th busiest airport in the UK!

One of the largest postgraduate management schools in Europe…





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Themes & Agenda

The sources of Supply Chain Risk.

Linking Supply Chain Risk Management to the strategic process

Risk mitigation strategies within the supply chain.

Competitive Supply Chain Resilience

Relating Supply Chain Risks to wider business consequences – classifying your competitive processes.

Instigating action to involve all stakeholders in improving Supply Chain Resilience and Competitiveness.

2007 by Dr Richard Wilding

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Innovation & Risk Reduction

“Innovation is all about creating value, economic value, social value and/or environmental value through the application of ideas that are new to YOU.”





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Better Together! My Linkedin Network.

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We live in a networked world!The Nespresso Coffee Supply Chain Network

Source: Alvarez, Pilbeam and Wilding 2009

Nespresso

Expocafé/Cafexport

Volcafé

Neumann

Ecom CRica

Ecom Mex

Ecom Guat

RFA CRica

SAN Guat

SAN Mex

Fundanatura

Fed NacCaféColb

NeumannColb?

Ecom Orosi

VolcaféCRica

Ecom LGiorgia

NeumannHuila?

VolcaféS Dgo

FNCNariño

FNCCauca

EC Jardín?

ECCaldas

EcomProj

IFC

EcomProj

Global

National

Local

NespressoCA

NespColombia

RFA

Processors and or exporter

NGOInternational development agency

Ecom

Cooxupé

EFICO

Cooxupé

Imaflora

Other?





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How are the following related?

The Seven Valley Steam Railway

Leather Luxury Car Seat

Gilbert PresentationRugby Ball

How are the following related?

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What can destroy your supply chain?

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What can destroy your Supply Chain?





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What events destroy your Supply Chain?

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What events destroy your Supply Chain?





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What can destroy your Supply Chain?

Are you happy with the iphone supply chain?

Source: http://images.apple.com/supplierresponsibility/pdf/Apple_SR_2011_Progress_Report.pdf

“Audit reveals child labour, poisoned workers at Apple Suppliers”

137 workers at the Suzhou facility of Wintek had suffered n-hexane poisoning.

91 cases of underage workers were found in ten factories. In one plant, 42 children were discovered.

Apple Supplier Responsibility 2011 Progress Report





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What resources are you currently experiencing shortages of?

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Oil

Land

People

MetalsFood

Money

Energy

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Not long now until Coffee!

WWF 2009 - http://www.worldwildlife.org/ted/change.html





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Water is the new CO2!?

0.1 for the water itself

2.5 to make the plastic lid

5.5 to make the paper cup and sleeve

7.5 to grow the sugar for one teaspoon.

49.5 to feed the cows that make the milk

143 to grow the coffee

208.1 LitresWWF 2009

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Peak Oil – Changing the Risk Profile of the Supply Chain

Source: Professor Martin Christopher, Cranfield School of Management 2008.





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Peak Oil


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“ ….. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and without timely mitigation, the economic, social and political

costs will be unprecedented.”

US Department of Energy, 2005






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Options for reducing the risk of peak oil on your supply chain.

More local for local manufacturing based on ‘small footprint manufacturing’ practices

Greater levels of collaborative working and asset sharing to improve transport utilisation

Leverage economies of scale through bigger vehicles and vessels (e.g. Emma Maersk)

Utilise postponement techniques to enable low cost country sourcing of ‘vanilla’ products to be moved in bulk for local finishing

Re-work network optimisation calculations based on a $200 barrel of oil cost and realistic carbon cost


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Sources of Supply Chain Risk

EXTE

RNAL

INTE

RNAL

Vulnerability= RISK +

EXPOSURE ControlCommunication, Contracts, IPR, Organisation,

Compliance, KPIs

SupplyLead times, unreliability,

visibility,IPR leakage,

ethics

Environmental,Government Regulations,

Security, Customs, Tariffs & Quotas

Ethics

DemandUncertainty

within the lead time, margin and markdown

management

Mitigation / Contingency

Planning, Back up, Safety cover, disposal channel

ProcessForecasting, Flow

control,Documentation, IT integration,

Costing





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Uncertainty Generation in Supply Chains.

Amplification

Parallel Interactions

Deterministic chaos

Supply chain Uncertainty

The Supply Chain Complexity Triangle

Amplification

OverOrdering

UnreliableDelivery

SafetyStock

Increase

DemandDistortion

Shortages

TIME

CAPACITYREQUIRED APPARENT

REAL





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Simulation Days

Ord

er o

r T

arge

t Q

uan

tity

0

2000

4000

6000

8000

10000

12000

14000

336 356 376 396 416 436 456 476 496 516 536 556 576 596 616 636 656

Car Build Target Orders toSupplier A

ProductionTarget A

Orders by A on B ProductionTarget B

EFFECT OF A ONCE OFF STEP INCREASE OF 10% IN DEMAND ORDER OSCILLATIONS DOWN THE SUPPLY CHAIN

Hoarding Mentality due to Japan

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''Clearly, chipmakers are attempting to hoard inventory given increased risk of supply side dislocations up and down the entire chain, impacting end product availability.''

Steven Pelayo, Analyst – HSBC – 28/03/11





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Deterministic Chaos

Well defined, rational behaviour can generate chaos!

23% of managers generate chaos!

Costs 500% greater than optimal!

Aggressive Stock Management generates chaos.

Low target inventory.

Little consideration of pipeline.

Rapid correction of discrepancies between actual and desired.





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Parallel Interactions

Metro Brake Servo Assembly

Shell and cover

Tandem Master Cylinder Body

Fluid Reservoir Body

Diaphragm

AP Brakes Division

W.H.Smiths (Tools) Ltd.

Qualcast (Foundaries) Ltd.

AP Rubber Division AP Pressings Division

Rover Group

“Parallel interaction” describe interactions that occur between different channels in a supply network.

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Suppliers’ suppliers

Supplier Inbound ManufacturerIntermediate Distribution /

FinishingDistribution Retail

Extended chains accumulate risk





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Supply Chain Risk Management

“The identification and management of risks withinthe supply chain and risks external to it through acoordinated approach amongst supply chainmembers to reduce supply chain vulnerability asa whole – this is not a single company concept.”

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Supply Chain events destroy Share Value!

Source: Singhal and Hendricks – December 2000 - Georgia Tech & Univ of Western Ontario

-25

-20

-15

-10

-5

0

-61 -49 -37 -25 -13 -1 11 23 35 47 59

Trading day relative to announcement date

Ave

rag

e sh

areh

old

er r

etu

rns

(%)

-8.6%

-17.5%





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The destruction of Competitive Advantage

Ericsson

Specific

Supply Network

Corporate

Individual symptoms or events that cause disruption to the supply chain

Those networks that represent high exposure to the organisation.

Implications of corporate culture and policy setting on supply chain vulnerability.

Types of Vulnerability Nokia

single supplier

common platform

event tracking

multiple suppliers

various platforms

event tracking

Fire at Philips

found out viaa technician

didn’t have a plan ‘B’

bad newstravelled slowly

left the mobilehandset market

$400m lost inmissed sales

found out viaan executive

reviewed dailyfrom weekly

product re-design

Bad newstravelled fast

executive hit squad

used power toget outcome

met demand

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Factors contributing to Supply Chain Risk & Organisational Stability.

The adoption of Lean “anorexic” practices.

The globalisation of Supply Chains

Focussed Factories and Centralised Distribution

The trend to outsourcing

Reduction in the supplier base

Volatility of demand

Lack of transparency and control procedures





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Building the Resilient Supply Chain.

THE RESILIENT SUPPLY CHAIN

CONTINUOUS MONITORING AND INTELLIGENCE

SUPPLY CHAIN TRANSPARENCY

SU

PP

LY C

HA

IN

CO

LLA

BO

RA

TIO

N

AG

ILIT

Y

SU

PP

LY C

HA

IN R

ISK

MA

NA

GE

ME

NT

CU

LTU

RE

PRODUCT DESIGN FOR THE SUPPLY CHAIN

THE FOUNDATION OF EFFECTIVE SUPPLY CHAIN STRATEGY

SU

PP

LY C

HA

IND

ES

IGN

&

EN

GIN

EE

RIN

G

Copyright Professor Richard Wilding 2011

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Cranfield School of Management -The Demand Chain Management Community

Demand Creation

Logistics & Supply Chain ManagementMarketing

Demand Creation Demand Fulfilment

Demand Chain Management

Demand Fulfilment

The alignment of demand creation and fulfilment processes across functional and organisational boundaries





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Corporate Strategy

Competitive Strategy

Supply Chain Strategy

Supply ChainProcess & Product

Design

Supply ChainInfrastructure

Design

Supply ChainInformation

System Design

Supply ChainOrganisation

Design

Supply Chain Strategy – Process, Infrastructure, Information Systems and Organisation

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Linking customer value to supply chain strategy

Identifyvalue

segments

Develop thesupply chain

strategy

Identifythe market

winners

Define thevalue

proposition

What do our customers value?

How do we translate theserequirements into an offer?

What does it take to succeedIn this market?

How do we deliver againstthis proposition?

Identifyvalue

segments


strategy

Identifythe market

winners

Define thevalue

proposition





Identifyvalue

segments


strategy

Identifythe market

winners

Define thevalue

proposition









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Competitive Supply Chain ResilienceA unique way to increase resilience in your supply chain

LO

CA

TE

SU

PP

LY C

HA

INR

ISK

S

SE

LE

CT

SO

LU

TIO

NS

OP

TIO

NS

Th

e C

SC

R M

eth

od

is…

Focused on improving competitiveness

Successful in delivering value

Modular and flexible in design & use

Built on cross industry experience and world class tools

Takes an end-to-end and integrated view of the supply chain.

Recognises that supply chain must change to meet future visions

COMPETITIVESUPPLY CHAIN

RESILIENCE

Un

derstan

din

g

Act

ion

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Defining the Success factors for the segment/market. – Task 1

1. Brief description of customer segment/market

2. Critical Success Factors for this segment/market

Importance

……………

……………

……………

……………

……………

…………… 100%

3. Comments or Observations

2008 by Prof. Richard Wilding





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Task 2 - Identifying Supply Chain Processes that Support the Success Factors

Key Success Factor

1. 2. 3. 4. 5.

Supply Chain Processes that enable “Key Success Factors”

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*



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Task 3 - Classify the Supply Chain processes that support the key success factors for each segment/market.

CompetitiveProcesses

QualifyingProcesses

UnderpinningProcesses

InnovationProcesses

•Classify the processes using the triangle.






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Task 4 - Sources of Supply Chain RiskBrain Storm the sources of Vulnerability to your Supply Chain.

EXTE

RNAL

INTE

RNAL

Vulnerability= RISK +

EXPOSUREControl

Supply

Environmental,

Demand

Mitigation / Contingency

Process


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Task 5 Prioritise Key Supply Chain Vulnerabilities

Key Processes

Vulnerabilities Key Process Vulnerability

Ratings

Process Group Vulnerability

Ratings

Vulnerability Priority Ratings

UnderpinningProcesses

CompetitiveProcesses

TransformationProcesses

QualifyingProcesses






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Task 6 - Vulnerability Action Plan Exercise (Top 3 Vulnerabilities from Task 5)

Vulnerability 1. 2. 3.

What Capability is required to address this vulnerability?

Perfect world!

What capability do we have now?

How do we bridge the Gap?

What is the impact of this capability on the Key Success Factors (Task 1)?


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Competitive Supply Chain Resilience

1. Understand what are the success factors for a market or segment.2. Identify the Supply Chain Processes that support these success

factors3. Classify the Processes using the “Process Triangle”. 4. Identify the risks/vulnerabilities in the Supply Chain 5. Understand how these risks/vulnerabilities impact on the Supply

Chain Processes.6. Understand our current capability to deal with the risk and what

capability is required to remove this.7. By investing in the capability to deal with the risk/vulnerability how this

will impact on the success factors for the market or segment?

“Demonstrating the link between Supply Chain Risk Management and the success factors in a market and therefore improving our competitive position”





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A key message on Risk within Supply Chains.

Accept uncertainty is inherent in supply chains…….

“If a man presumes certainty, he shall end with doubts,

but if he will be content with doubts, he will end with

certainties”.

Francis Bacon 1561-1626

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Cranfield School of Managementwww.cranfield.ac.uk/som

Download the free podcasts and iTunesU course easy link via www.richardwilding.info or visit iTunes.com

View free Videos on www.yourtechtv.com and www.youtube.com/supplychainpodcast

Links & Further Information

Professor Richard Wildingwww.RichardWilding.infowww.linkedin.com/in/richardwildingwww.facebook.com/supplychainprofessorwww.twitter.com/supplychainprof or @supplychainprof





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A world-class business school

Financial Times Executive Education Rankings 2010

Ranked by clients as the top UK business school for customised executive development and amongst the world’s top 10.

In the top 3 business schools globally for international delivery

Ranked 1st in the UK for programme preparation; flexibility in programme design, contemporary and relevant teaching materials; the quality of faculty and level of programme follow-up.

Economist Ranking of MBA Programmes

1st in the UK, 4th in Europe

Europe's largest faculty specialising in the management of Logistics & Supply Chains

Globally recognised Centre of Excellence

Internationally recognised MSc in Logistics and Supply Chain Management.

Accreditations

One of an elite group of business schools worldwide to be triple AMBA, EQUIS and AACSB accredited

www.cranfield.ac.uk/som

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Professor Richard WildingCranfield School of ManagementCranfield, Bedford, England, MK43 0AL.Tel: +44 (0)1234 754170 Fax: +44 (0)1234 752158 Email: [email protected]: www.cranfield.ac.uk/som/lscm

www.richardwilding.info

Please keep in touch!


If you would like further information on the techniques described in this presentation, for example,supporting journal articles, or would like to discussthe content further, please don’t hesitate to contact the author at the following address:

Professor Richard Wilding, BSc, PhD, CEng, Eur Ing, FIET, FCILT. Full Professor and Chair in Supply Chain Strategy.

As Chair (Full Professor) in Supply Chain Strategy at the Centre for Logistics and Supply Chain Management, Cranfield School of Management U.K. Richard works with European and International companies on logistics and supply chain projects in all sectors including pharmaceutical, retail, automotive, high technology, food drink and professional services to name a few. He is a highly acclaimed presenter and regularly speaks at Industrial Conferences and has undertaken lecture tours of Europe and Asia at the invitation of local Universities & Confederations of Industry. He has published widely in the area of supply chain management and is Editorial Advisor to a number of top journals in the area.

Professor Wilding was winner of the “Individual Contribution Award” at the “European Supply Chain Excellence Awards 2010” this is presented to the individual who has made an outstanding contribution to supply chain excellence. In 2009 his biography was entered into the 162nd edition of “Who’s Who” described as "Britain's most famous reference book" for those who have "reached the pinnacle of excellence in their field". At the European Supply Chain Distinction Awards 2008, received the `Distinguished Service Award for Thought Leadership and Service to Supply Chain Management`. Richard was appointed in 2005 as the first ever Full Professor and Chair of "Supply Chain Risk Management" in the World. This was in recognition of his significant contribution to this subject area. Supply chain risk is still a key focus of his research within the context of an organisations overall Supply Chain Strategy, thus enabling companies to create sustainable and resilient competitive advantage. His Doctoral research, undertaken while employed at the University of Warwick, applied chaos and complexity science to logistics and supply chain management and resulted in the development of new management guidelines for supply chain re-engineering to mitigate risk. This innovative research received international media coverage including features on the BBC World Service and articles in the Times, Financial Times and New Scientist. More recently his research into inventory policies of organisations in times of risk & uncertainty resulted in international media coverage including live interviews on BBC1 television news, BBC News 24, BBC Television’s “The Money Programme”, BBC 5 live and Independent Radio News. The research was also covered by the print media including the Financial Times, Sunday Times, The Guardian, and The Independent newspapers. Richard is both a European and Chartered Engineer, he is a chartered fellow of both the Institute of Engineering and Technology (Manufacturing Division) and the Chartered Institute of Logistics & Transport (CILT). Professor Wilding was elected by the 20,000 members of the CILT U.K. to the Board, and is a Director and Trustee of the institute. He is a founder & steering Committee Member of the CILT "Logistics Research Network", a global network of academics and practitioners involved in state-of-the-art logistics and supply chain research. He is also Co-Chairman of the CILT "Leaders in Supply Chain" Forum, a group limited to the top 120 Logistics and Supply Chain Directors from Europe. Richard is also a Member of The Higher Education Academy in recognition of his innovative approaches to teaching and course design. Richard’s special areas of interest include the creation of collaborative business environments, reducing supply chain vulnerability & risk, time compression and techniques for aligning supply chains to maximise customer value and reduce cost.

Web: www.richardwilding.info and www.cranfield.ac.uk/scm

LinkedIn Profile www.linkedIn.com/in/richardwilding

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