Upload
gabriel-benson-leung
View
217
Download
0
Embed Size (px)
Citation preview
8/9/2019 T1S1-Supply Chain Excellence
1/28
Supply Chain Ex c el lenc e =St ra t egy Al ignm ent
Track 1 Session 1
8/9/2019 T1S1-Supply Chain Excellence
2/28
Lar ry Lap ide , PhDDirector, Demand Management
MIT Center for Transportation & [email protected]
2 0 0 7 M A T E R I A L H A N D L I N G & L O G I S T I C S C O N F E R E N C E S P O N S O R E D B Y H K S Y S T E M S
mailto:[email protected]:[email protected]8/9/2019 T1S1-Supply Chain Excellence
3/28
Abstract
MIT Supply Chain 2020 Projects research on excellent supplychains found that focusing on achieving corporate customer
objectives rather than just reducing costs and inventories canhave a greater overall impact on financial performance. It alsofound that excellent supply chains are those that support,enhance and are an integral part of a competitive corporate
strategy. Dr. Lapide will cover the Strategic Alignmentmethodology and show how it can be used to tailor your supplychain to compete in the market.
8/9/2019 T1S1-Supply Chain Excellence
4/28
Agenda
SC2020 Excellence Supply Chain Research
Excellent Supply Chain Framework
Illustrations and Case Studies
Strategy Alignment Process and Takeaways
8/9/2019 T1S1-Supply Chain Excellence
5/28
SC2020 Excellence Research: What is an excellent supplychain?
Is part of a profitable company
Is not part of an unprofitable company
Is comprised of supply chain best practices
Some myths on what is an excellent supply chain:
8/9/2019 T1S1-Supply Chain Excellence
6/28
Corporate Competitive Strategy
Excellent Supply Chain
Strategy
Operating Model
OperationalPerformance Objectives
Tailored Business Practices
Fit
Principles leveraged
SC2020 Excellence Research: Excellent Supply ChainFramework
Qualitative research on 21 companies and 9 industries supports that an excellentsupply chain: *
* L. Lapide, MITs SC2020 Project: The Essence of Excellence, Supply Chain Management Review,
April 2006
1. Supports, enhances, and is an integral part of acompanys competitive business strategy.
2. Leverages a (not necessarily unique) supply chain
operating model to sustain competitiveness
3. Executes well against a balanced set of operational
performance objectives/metrics
4. Focuses on a few tailored business practices that
reinforce each other to support the operating model
and best achieve operational objectives.
8/9/2019 T1S1-Supply Chain Excellence
7/28
SC2020 Excellence Supply Chain Research
Excellent Supply Chain Framework
Illustrations and Case Studies
Strategy Alignment Process and Takeaways
Agenda
8/9/2019 T1S1-Supply Chain Excellence
8/28
1. Supports, enhances, and is an integral part of acompanys competitive business strategy
Example supply chain-related competitive strategy elements
(support, enhance and is an integral part)
Lowest prices
Highest margin products
Highest quality
Fastest customer response
Most innovative
Highest Return-on-Assets
Broadest product line
Best customer service
Best post-sales support
Most environmentally responsible
8/9/2019 T1S1-Supply Chain Excellence
9/28
CustomersCustomers
Design Source Make Sell Deliver ServiceReturn Recycle
OperatingModels
BusinessPractices
Performance Management
Order Promising& Fulfillment
InventoryReplenishment
SupplyDemand Alignment
Supply Chain Design and Capacity Planning
Product Portfolio Management
Relationship Management
Post-salesSupport
Supply ChainGovernance &
PartnerRelationships
ProductLaunch
Technology &Info/Funds Flows
ProductPhase-out
$$$$
SupplierSupplier
ContractManufacturer
ContractManufacturer
RetailerRetailer
Virtual OEMVirtual OEM
E-marketplace
WebStoreWebStore
DistributorOEM
2. Leverages a (not necessarily unique) supply chainoperating model to sustain competitiveness
Operating model is
the design of the SCincluding:
Where to Source /
Make /Deliver
Push-pull points
Offshoring
Outsourcing
8/9/2019 T1S1-Supply Chain Excellence
10/28
2. Leverages a (not necessarily unique) supply chainoperating model to sustain competitiveness
SC-Related Competitive Strategy Elements Example Characteristics of Operating ModelAligned To Support and Enhance
Lowest prices Lowest operating costs
Highest margin products Maximum availability at point of sale
Lowest operating cots
Highest quality Highest quality of suppliers
Strongest manufacturing quality controls
Fastest customer response Shortest order-to-delivery cycle
Fastest request-to-promise date
Most innovative Most efficient new product launch
Highest Return-on-Assets Highest plant utilization
Lowest inventories
Broadest product line Adept at managing complexity
Best customer service Specific service for each customer segment
Maximum availability at point of sale
Best post-sales support Maximum availability of service parts
Most environmentally responsible Minimize waste and maximize recycling
8/9/2019 T1S1-Supply Chain Excellence
11/28
Customer Response (customer-facing) Order cycle times Perfect order fulfillment Quality New product time-to-market(Do not relate to financial statements)
Efficiency (internal) Labor productivity
Supply chain costs(Relate to income statement)
Asset Utilization (internal) Facility utilization
Inventory turns Cash-to-cash cycle(Relate to balance sheet)
?
?
?
3. Executes well against a balanced set of operationalperformance objectives/metrics
B l d ti l bj ti b i d t ( i
8/9/2019 T1S1-Supply Chain Excellence
12/28
Asset UtilizationEfficiency
CustomerResponse
Capital Intensive Industries Semi-conductor fab
Petrochemical
Commodities (steel, paper,
coal)
Low Margin and Mature Products Food & Beverage
Basic goods retail
Industrial supplies
High Margin and Short LifeCycle ProductsPharmaceutical
Fashion apparel
Media & Entertainment
Balanced operational objectives vary by industry ( inabsolute terms )
Competing is positioning against industry competitors on a
8/9/2019 T1S1-Supply Chain Excellence
13/28
Relative Objectives
Asset UtilizationEfficiency
CustomerResponse
Competing is positioning against industry competitors on arelative basis (best-in-class rather than peer average)
Dell
Apple
IBM
Amazon
Best Buy
Wal-Mart
However, the competitive positioning will likely vary by product line as well assupply chain within a company
Absolute Objectives
4 Focuses on a few tailored business practices that
8/9/2019 T1S1-Supply Chain Excellence
14/28
4. Focuses on a few tailored business practices thatreinforce each other to support the operating model and bestachieve operational objectives.
Tailored (not best) business practices that:
Align to performance objectives
Fit
Consistent ( make sense together)
Reinforcing ( support each other)
Cross-optimized (work together to achieve commongoals, 1+1=3)
Leverage underlying operating principles for cost-benefit
8/9/2019 T1S1-Supply Chain Excellence
15/28
Supply Chain Principles Illustrations
Fashion versus BasicSupply Chains:Limited Brands
Costs of cycle time and
inventory tradeoff
Service Window Management:Amazon and Cisco
Constraint Relaxation
Practices
Operating
Principles
8/9/2019 T1S1-Supply Chain Excellence
16/28
SC2020 Excellence Supply Chain Research
Excellent Supply Chain Framework
Illustrations and Case Studies
Strategy Alignment Process and Takeaways
Agenda
Aligning Corporate Strategy and Operational Performance
8/9/2019 T1S1-Supply Chain Excellence
17/28
Asset UtilizationEfficiency
Customer ResponseCustomer-focusedperformance objectives
Highest supplier quality
standards
Shortest time-to-market Shortest manufacturing
changeover times
Highest quality products
Most innovative Broadest product line
Illustrative Aligned Customer-Focused Corporate Strategy and
Operational Performance Objectives
Aligning Corporate Strategy and Operational PerformanceObjectives
Customer-focused corporate strategy
Aligning Corporate Strategy and Operational Performance
8/9/2019 T1S1-Supply Chain Excellence
18/28
Asset Utilization
Customer Response
Efficiency
Aligning Corporate Strategy and Operational PerformanceObjectives
Lowest procurement costs
Highest plant utilization
Lowest inventories
Efficiency and asset-focusedperformance objectives:
Illustrative Non-Aligned Customer-Focused Corporate Strategy and
Operational Performance Objectives
Highest quality products
Most innovative Broadest product line
Customer-focused corporate strategy
Tailored Practices Aligned to Operational Performance
8/9/2019 T1S1-Supply Chain Excellence
19/28
Asset UtilizationEfficiency
Customer Response
Tailored practices need to align to strategically-aligned SC performanceobjectives
Tailored Practices Aligned to Operational PerformanceObjectives
SC performance objectives:
Highest supplier quality standards Shortest time-to-market
Shortest manufacturing changeover
times
Tailored PracticesCore strategic supplier program
Collaborative development and
design
Multi-product production lines
with quick changeover
Highest quality products
Most innovative
Broadest product line
Customer-focused corporate strategy
D ll S l Ch i F k
8/9/2019 T1S1-Supply Chain Excellence
20/28
Dell Supply Chain Framework
Asset UtilizationEfficiency
Customer Response
Corporate strategy Highest value-to-price
provider of commodity
computers and accessories to
price conscious customers
Operating Model Direct sales to customers via web/phone
Build-to-order manufacturing
Box-level service
SC performance objectives:1. Lowest fulfillment costs
2. Lowest inventories
3. Lowest procurement costs
Tailored Practices Consigned inventory
supplier hubs
Demand shaping
Inbound transportation
collaboration
8/9/2019 T1S1-Supply Chain Excellence
21/28
Sphere of
Influence
ConsignedSupplierInv Hubs
Supply
Contracts
Principles Illustration: Dells Tailored Practices
DemandShaping
InboundTransportationCollaboration
Demand-
Supply
Matching
Economies of
Scale
Practices
Operating
Principles
Practices and principles support a competitive supply chain strategy focused on
low-costs, low inventories, and minimum cash-to-cash cycle
IBM Supply Chain Framework
8/9/2019 T1S1-Supply Chain Excellence
22/28
IBM Supply Chain Framework
Asset Utilization
Customer Response
Corporate strategy Diversified and value-addedprovider of networked
technology solutions to
businesses
Operating ModelDirect, single face to customer via
sales reps
Build-to-order manufacturing
Extensive pre- and post sales support
SC performance objectives:1. Highest customer satisfaction
2. Lowest inventories
3. Lowest costs
Tailored Practices Consolidated customer
fulfillment process
Launch buffer
manufacturing
Centralized
procurement
Consolidated andoutsourced logistics
Efficiency
Supports a competitive supply chain strategy for high-end networked computer
customers over their lifetime of use
Wal Mart Supply Chain Framework
8/9/2019 T1S1-Supply Chain Excellence
23/28
Wal-Mart Supply Chain Framework
Asset Utilization
Customer Response
Corporate strategy Everyday low pricing for
cost-conscious customers
SC performance objectives:1. Efficiency (e.g., supply chain
costs)
2. Asset utilization
3. Customer response
Efficiency
Supports a competitive supply chain strategy for price-conscious customer base
Tailored Practices Vendor collaboration with co-
managed inventory programs
Flow logistics distribution
including extensive cross-
docking, DSD and
differentiated flow Network design incorporating
large-sized distribution centers
and short-haul private fleets for
economies of scale
Operating Model Lowest cost brick and mortar retailer with
supplier to retailer DC to store flows
Large-format stores carrying a wide variety of
products (not necessarily brands and SKUs)
A d
8/9/2019 T1S1-Supply Chain Excellence
24/28
SC2020 Excellence Supply Chain Research
Excellent Supply Chain Framework
Illustrations and Case Studies
Strategy Alignment Process and Takeaways
Agenda
Strategy Alignment Process
8/9/2019 T1S1-Supply Chain Excellence
25/28
Strategy Alignment Process
Go-To Market
Strategy
Supply ChainStrategy
Step 1 Discuss how supply chain strategy supports business strategy
Identify supply chain competitive strategy elements
Operating
Model
Performance
Objectives
Step 2 Develop operating model that supports SC
competitive strategy elements
Identify operational performance metrics
that are aligned with strategy
Tailored
Practices
Step 3 Develop SC practices tailored to the
operating model
Discuss trade-offs and alignments
8/9/2019 T1S1-Supply Chain Excellence
26/28
Key Takeaways
Excellence means aligning your supply chain to yourcorporate competitive strategy
Align SC strategy to support, enhance and be anintegral part of corporate strategy
Set operating model and operational performance
measures based on what you will excel in, and whatyou wont!!
Implement a few tailored practices that reinforce each
other
8/9/2019 T1S1-Supply Chain Excellence
27/28
Food for Thought
What should Dell and Wal-Mart move to?
Thank you
Larry Lapide, Ph.D.
Director, Demand Management, [email protected]
8/9/2019 T1S1-Supply Chain Excellence
28/28
Quest ions?