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8/8/2019 Univ of Sd Mapping Class
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The Fundamentals of Supply Chain Mapping
Kate Vitasek Managing Partner, Supply Chain Visions
September 27, 2002
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1© Supply Chain Visions 2002 – All Rights Reserved
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Agenda
The AcademicsKey Thoughts Before Mapping
Understanding SCM Processes and Participants
The Cool Stuff Supply Chain Mapping Case Studies
The Practical Stuff SCM Measurements
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Key Thoughts Before Mappinga Supply Chain
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Defining SCM – Some Caveats
SCM is like artMultiple ter exist
Everyone has their own interpretationThe key is understanding the clients own terminology
SCM is a strategy
“It is not about moving stuff”
SCM is not a fiefdomIt crosses organizations and functions
SCM is not rocket scienceOr is it?
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Defining SCM - Terminology
! Supply Chain
! Demand Chain
! Value Chain
! eChain
Regardless of the term used, the goal is to create create competitive advantage
Doing things right--efficiency Doing the right things--value-added
SCM impacts both
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SCM Definitions
A resource or network of resources that supports the fulfillment andsatisfaction of a customer through effective, efficient, anddifferentiated flows of product, services, information, and finances.
An extension of integrated logistics to include suppliers andcustomers (Bowersox and Closs)
An offshoot of the logistics function (Battaglia)
The “art” of managing the flow of materials and products fromsource to user
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SCM – The Strategic Perspective
Managing the business process from the initial supplier to the ultimate customer,
focusing on speed and ibility resulting in the lowest total cost and the highest customer satisfaction.
Edith Kelly-Green
Vice PresidentStrategic Sourcing & Supply
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SCM – The Strategic Perspective
Managing the business process from theinitial supplier to the ultimatecustomer , focusing on speed andibil ity resulting in the lowest total cost and the highest customer
satisfaction.
Edith Kelly-Green Vice President
Strategic Sourcing & Supply
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SCM – Integrated Process Perspective
The integration of key business processes from enduser through original suppliers that provides
products, services, and information that add valuefor customers and other stakeholders.
The integrated set of activities completed by the fullsupply chain of participants (suppliers,manufacturers, distributors, resellers & consumers),where technology is used to seamlesslyinform the supply chain from end-to-end
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9© Supply Chain Visions 2002 – All Rights Reserved
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SCM – Integrated Process Perspective
The integration of key business processes fromend user through original suppliers that provides
products, services, and information that add valuefor customers and other stakeholders .
The integrated set of activities completed by thefull supply chain of participants (suppliers,manufacturers, distributors, resellers & consumers) ,where technology is used to seamlesslyinform the supply chain from end-to-end
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Supply Chain Mgmt Processes andParticipants
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11© Supply Chain Visions 2002 – All Rights Reserved
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SCM Processes
The SCM process is made up of many activities thatmust be performed within the supply chain
Purchasing
Transportation
Production Planning
Inventory Control
Warehousing
Distribution
Forecasting
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SCM Processes: SCOR Model PerspectiveSCM Processes: SCOR Model Perspective
Source: Supply Chain Council Source: Supply Chain Council
The SCOR Model is a standard Supply Chain Operations Reference M The SCOR Model is a standard Supply Chain Operations Reference M odel odel
developed by a coalition of companies involved in the Supply Cha developed by a coalition of companies involved in the Supply Cha in Council in Council
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SCM Processes: SCOR Model PerspectiveSCM Processes: SCOR Model Perspective
Plan
DeliverMakeSource
Your Company
Plan
DeliverMakeSource
Plan
DeliverMakeSource
Plan
DeliverMakeSource
Your CompanySupplier Customer
Source: Supply Chain Council Source: Supply Chain Council
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Integrated Supply Chains
DC
Intranet
2-Tier Supplier
Plant Plant
Goods
Demand Plant
Intranet
Manufacturer
DC Plant
Plant DC Demand
Intranet
Retailer
Store DC
Store
Consumer
Demand DC
Goods Goods
Products
Information
Financial Resources
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15© Supply Chain Visions 2002 – All Rights Reserved
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SCM Processes
Source: Andersen Consulting Source: Andersen Consulting
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Supply Chain Participants
The supply chain requires input from nearly every aspect of the organization. Thus, it involves:
Source: Andersen Consulting
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Supply Chain Participants: Inter-CompanySupply Chain Participants: Inter-Company
Suppliers. Source of raw materials, component parts, semi-manufactured products, and other ite that occur early in the supplychain - unfinished or non-consumable products.
Manufacturers. Makers of products. Many consider them to be theheart of the supply chain.
Distributors. Responsible for the packaging, storing, and handling of
materials at receiving docks, warehouses, and retail outlets.
Retailers. These are the manufacturer's customers - the stores thatbuy the actual products. Throughout this course, retailers will also be
referred to simply as customers.
Consumers. This is the ultimate user - the person who goes into astore and buys the product.
Source: Andersen Consulting
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Supply Chain Mapping Case Studies
Example 1: Intuit (Quicken, QuickBook,
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Example 1: Intuit (Quicken, QuickBook,TurboTax) As-Is Supply Chain
Retailer
Disti
CustomerOwnedFacility
Supplier #1
Supplier #2
Supplier #3
Returns Vendor
Intuit
61% (80%)
61% (20%)
39%
RetailBusinessRetailer
Directto EndUser
Business
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Customer
OwnedFacility
Retailer
• Consolidates Supplier #2 and Supplier #3 manufacturing to Manufacturer #1
• Reduced admin to manage vendors
• Core competency shift to Supplier increases productivity and reduces HC at Client
• Consolidated manufacturing leverages MRP/Production runs for high volume SKUs
• Consolidates
shipment volumes
which decreases
cost
• Reduced # of shipments to
manage
Returns Vendor
Intuit
Supply Chain Redesign Phase 1
Retail
Business
Supplier #1
Dist Retailer
Directto EndUser
Business
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• Intuit shifted retail customers to
direct relationship - improvesmargins as do not have to give
Disti discount on 70% of retail
volume
Supply Chain Redesign Phase 2
61% (80%)
Retailer
61% (20%) Intuit
Supplier #1
Disti RetailBusiness
Retailer
Directto EndUser
Business
• Intuit takes direct customer
orders and Supplier #1 combines
direct and retail volume for
improved economies of scale inpurchasing and manufacturing
CustomerOwnedFacility
39%
Returns Vendor
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Overall Supply Chain Improvements
Typical Quantified Benefits
from Integrating the Supply Chain
• Delivery Performance• Inventory Reduction
• Fulfillment Cycle Time
•
Forecast Accuracy• Overall Productivity
• Lowered Supply Chain Costs
• Fill Rates
• Improved Capacity Realization
• 16% - 28%• 25% – 60%
• 30% - 50%
•
25% - 80%• 10% - 16%
• 25% - 50%
• 20% - 30%
• 10% – 20%
Intuit and their supplier were able to realize most of the significant Supply Chain improvements they were hoping for.
" "
"
" "
"
"
"
Source: PRTM/Supply Chain Management benchmarking studySource: PRTM/Supply Chain Management benchmarking study
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Any Other Possibilities?
Example 2: Software for Servers
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Example 2: Software for Servers
As-Is Model: Manufacturing and Distribution Supply Chain
Processes
CPI
M M I
Japan
M M I
Cumbernauld
US Print
Bindco
M M I
North America ES APACCLS Sydney
SPP No Amer icaCLS Hayward
SPP Nether lands(CLS Almere)
CS Nether lands
(Franz Maas / M ontfort )
CS Christy St.(FedEx)
ES Apeldoorn(MMI)
E N D
C U S T OME R
Distributors
Resellers
Distr ibutors
Resellers
Distr ibutors
Resellers
Distr ibutors
Resellers
Distr ibutors
Resellers
Distributors
Resellers
ESJapan
Distr ibutors
Resellers
C S Japan
(Nippon Express)
Distr ibutors
Resellers
Mitac
Distributors
Resellers
SalesLink
7 D istributors
Celestica
Distributors
Resellers
CS Scotland(Banta / BG)
Solectron(Mi lpi tas/Montfort )
33 %
7 %
15 %
9 %
40 %
1 %
15 %
4 %
2 %
5 %
6 %
5 %
2 %
1 %
3 %
5 %
11 %
66 %
25 %
9 %
58 %
Turnkeys 1st Tier W hse 2nd Tier W hse D istr ibutor R esellerO EM
M M I
North Am er ica
31 %
5 %
30 to 45 daylead-time
14 to 49 daylead-time
Fujitsu / Toshiba
7 to 10 daylead-time
(24 to 46 for Asia)
M M I
Cumbernauld
Current Supply Base ModelAs-Is Model:
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US Print
PSC
Univenture
CPI
Bindco
US Print
MMI - Fremont
RRD - Portland
Cal Lithograph
MMI - Salt Lake
Bindco
Zomax
Metatec
US Print
Bindco
CPI
MMINorth America
14Major
Component
Suppliers(CD, Box, &
Print)
49Unique
Negotiations /
Relationships
4Major North
American
Supply BaseCoordinators
Tharco
Distribution
As Is Model:Supply Base
Large Supply BaseDrives
Transactions Up,Reduces
NegotiatingLeverage, and
Adds InventoryTouch Points
Example 2 – Server Manufacturer
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US Print
PSC
Univenture
CPI
Bindco
US Print
MMI - Fremont
RRD - Portland
Cal Lithograph
MMI - Salt Lake
Bindco
Zomax
Metatec
US Print
Bindco
CPI
MMINorth America
14Major
ComponentSuppliers
(CD, Box, &Print)
49Unique
Negotiations / Relationships
4Major North
AmericanSupply BaseCoordinators
Tharco
Distribution
Current Supply Base Model
pStep 1: A Simplified Supply Base
Reduced # of CD
Replicators
Reduced # of Pretty
Box Mfrs
Corrugated Mfr
Reduced # ofPrinters
Major
Component
Suppliers
(CD, Box, &
Print)
9Unique
Negotiations /
Relationships
1Major North
American
Supply Base
Coordinator
MMI NorthAmerica
Solution Center
Resident Planners @ Suncontrol:
* AVL* Aggregate Purchase &
Price Negotiations
Proposed Supply Base Model
Distribution
2nd Tier Turnkey
9
Step 2: Move to a Pull-Based, Direct to End-Customer Distribution Model to reduce complexity lead-times
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Distribution Model to reduce complexity, lead-times,inventory, and obsolescence.
CPI
MMIJapan
MMICumbernauld
US Print
Bindco
MMINorth America ES APAC
CLSSydney
SPP No AmericaCLSHayward
SPPNetherlands
(CLS Almere)
CSNetherlands
(Franz Maas /Montfort)
CSChristy St.(FedEx)
ES Apeldoorn(MMI)
E N D
C U S T OME R
Distributors
Resellers
Distributors
Resellers
Distributors
Resellers
Distributors
Resellers
Distributors
Resellers
Distributors
Resellers
ESJapan
Distributors
Resellers
CSJapan
(Nippon Express)
Distributors
Resellers
Mitac
Distributors
Resellers
SalesLink
7 Distributors
Celestica
Distributors
Resellers
CS Scotland(Banta /BG)
Solectron(Milpitas/Montfort)
33 %
7 %
15 %
9 %
40 %
1 %
15 %
4 %
2 %
5 %
6 %
5 %
2 %
1 %
3 %
5 %
13 %
67 %
25 %
9 %
58 %
Turnkeys 1 st Ti er Wh se 2 nd Ti er Wh se Distributor ResellerOEM
MMINorth America
31 %
5 %
30 to 45 dayleadtime
30 dayleadtime
Fujitsu / Toshiba
7 to 10 dayleadtime
MMICumbernauld
Solution CenterJapan
Solution CenterAmericas
Solution CenterSydney
Solution CenterEurope
E N D
C U S T O
ME R
R e d u c e d # of C om p o
n en t S u p pl i er s
4 RegionalSolution
Centers
NOTE: Each solution center handlesonly its region's languages
5 %
20 %
25 %
50 %
Leverages "S2C" (Supplier-to-Customer) ModelIf applicable, software arrives prior to delivery of hardware
Reseller
ResellerReseller
Reseller
ResellerReseller
14 to 49 daylead-time
7 to 10 daylead-time(24+ for Asia)
SupplyCh i
SupplierE
Example 3:f
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28© Supply Chain Visions 2002 – All Rights Reserved
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Capacity PlanningDemand Planning / ForecastingSupply PlanningMaterial Verification / Consumption
DistributionRepair / RefurbishContinuous Improvement
ChainNino
• Track • Expedite• Reconcile
Consigned
ComponentPO’s
Strategic & CommodityComponent
PO’s
Suppliers•Consigned•Strategic•Commodity
MRP
ProductionPO’s
CapacityPlan
Kevin Ada BuildPlan
Norman
ForecastDemand
PlanNorman
DCTCollaborate
with Sales
Warehouses
Manufacture DAEI
DTV
Retail
ConsumerRepairRefurb
Test
MP
PVT
DVT
EVT
MfgEng
DEV
SupplierEng
DesmondCost
ReductionOpportunities
DCPNew
Territories
Detailed Process Maps are in the Appendix
EngDesmond
• Contracts• Execute• Enforce
OperationsGroup
Game Mfg
Product Group
As-IsProcesses
SupplyChain
SupplierEng Packaged
Example 3:G Mf
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29© Supply Chain Visions 2002 – All Rights Reserved
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ChainNino
• Track • Expedite• Reconcile
Consigned
ComponentPO’s
Strategic & CommodityComponent
PO’s
Suppliers•Consigned•Strategic•Commodity
MRP
ProductionPO’s
CapacityPlan
Kevin Ada BuildPlan
Norman
ForecastDemand
PlanNorman
DCTCollaborate
with Sales
Warehouses
Manufacture(Wistron)
DAEI
DTV
Retail
ConsumerRepairRefurb
Test
MP
PVT
MfgEng
DEV
SupplierEng
DesmondCost
ReductionOpportunities
DCPNew
Territories
EnablingTechnologies
EngDesmond
• Contracts• Execute• Enforce
SAP BAAN
Packaged ApplicationsGame Mfg
Agile WMS
GLOS
Custom Applications
SSTProduct
Returns System
Excel
S.S. DVT
EVT
K L i
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Key Learnings
Avoid sub-optimization--minimizing an area’s costs to thedetriment of supply chain’s costs
Make appropriate tradeoffs across functions and partners inthe supply chain
Eliminate incentives that increase system costs and createteam or corporately-based incentives
Use lowest net landed cost across the supply chain as primary
goal and incentive
K L i
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Key Learnings
Understand cost tradeoffs in the supply chainCustomer service levelsInventory carrying costsLot quantity costsTransportation costs
Warehousing costsOrder processing and information costs
Reducing inventory and carrying costs by rethinking sub-optimalfunctional strategies.
Purchasing --lowest cost for higher volumesProduction --lowest cost for long runs
Sales--increase service by holding moreTransportation--low rate for full truckloadsCustomers--push inventory upstream to lower their inventories
I t / V l f SCM
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Importance/ Value of SCM
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%
Telecom
Semiconductor
Pharmaceutical
Packaged Goods
Computer
Chemical
Appliances
Automotive
% of company revenue spent on supply-chain activitiesBest in Class Average
Source: PRTM
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Supply Chain Measurements
Process Measurement--SCOR M t M d l
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Measurement Model
Issue Metric Measure
Supply Chain
Reliability
On-time delivery Percentage
Order fulfillment lead time Days
Fill rate Percentage
Perfect order fulfillment Percentage
Flexibility and
Responsiveness
Supply chain response time Days
Upside production flexibility Days
Process Measurement--SCOR Measurement Model
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Measurement Model
Issue Metric Measure
Expenses/Costs SCM cost Percentage
Warranty cost as percentage ofrevenue
Percentage
Value added per employee Dollars
Assets/Utilization Total inventory days of supply Days
Cash-to-cash cycle time Days
Net asset turns Turns
Example Scorecard
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Supply-Chain Performance Versus Custom Population
0% – 20% 20% – 40% 40% – 60% 60% – 80% 80% – 100%
Key Perspectives Level 1 Metrics Major
Opportunity Disadvantage
Average
or M edian Advantage
Best-
in-Class
On-Time Delivery to RequestPercent
68.04% 93.1%
Primary Manufacturing StrategyAverage OFLT
27.5 days 7.92 days
Ship from Stock Order ServiceLevel
86% 98%
Upside Production Flexibility: KeyComponents or MaterialAvailability
30 days 4.45 days
Upside Production Flexibility:Direct Labor Availability 7.5 days 29 days
Upside Production Flexibility:Internal Manufacturing Capacity
5.0 days 0 days
Total Supply-Chain ManagementCost
0.08 0.03
Value Added Productivity ($K) $164 $746
Total Days of Supply 76.03 28.03
Cash-to-Cash Cycle Time (Days) 85.81 days 26.57 days
Asset Turns 2.87 turns 9.16 turns
ibility &Responsiveness
Delivery
Performance/Quality
Cost
Assets
C u s t o m e r - f a c i n g
I n t e r n a l
-
f a c i n g
Your Company’s performance
Electronics All
© Copyright 1999 The Performance Measurement Group, LLCxxxxx
ThePerformanceMeasurementGroup, LLC
A PRTM Company
Example Scorecard