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Supply Chain Hot Topics

byTom Craig

tomc@ltdmgmt.com

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Is This Your Supply Chain?

What do you know about your SC performance?

Do much fire-fighting (reactive vs proactive)Have little/no metrics, beyond complaints or

charge backs or costs

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Yours?

Monolithic supply chain operationLittle / no service differentiation beyond

customer order requirementsDefined by costs, tasks, and/or functions?

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Is This Your Supply Chain?

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Perfect Order

Delivered / Complete / Accurate / On-Time

How well do—you do with customer orders?your suppliers do with your POs?

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Benefits of Real SCM

Customer advantage -- IT’S ABOUT THE CUSTOMER!!!!!

Competitive differentiationTranslates into better revenue and

margins

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Are You Happy with the Supply Chain that You

Built?

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How Do You View Global Logistics?

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SCM—Hot Topics

Time Compression Omnichannel / MultiChannelSegmentationRisk Mitigation

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Cycle Time Compression

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Cycle Time

Cycle time--time from recognize need (before PO is issued) until product delivered to you--and sold, and paid by customer (funds availability affects procurement)

Not just length, includes varianceTime—important for business

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Cycle Time

Inventory-factor of uncertainty (buffer)—longer the cycle time, more the uncertainty, more the inventory

Key factor for responsiveness and agilityIn Lean, extra time is waste

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Cycle Time Compression

Identify and assess each sub-cycleLook for gaps, redundancies, and

meaninglessExternal and internal (especially)Streamline practices & operations

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SC Omnichannel / Multichannel

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What It Is

Selling through multiple channels For B2C and B2BSell 24/7 from anywhere in the worldFrom any device (e-commerce and m-

commerce)

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Omni

Think Amazon and moreHome Depot

building 3 e-commerce fulfillment centers100,000 products (vs 35,000 for stores)

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SCM Omnichannel Issues

Speed and accuracy of order shipmentHow to position inventoryWhere to position inventoryWhat inventory to positionTechnology— integrated visibility for

inventory and orders in all channels

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Multi/Omni Channel

Direct shipping of gloves “from/for” other party’s ecommerce siteE-tailer does not have to hold inventoryCan your suppliers ship to customers

elsewhere in world for you?

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Supply Chain Segmentation

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What Segmentation Is

Superior best practiceDividing business into discrete groups (not

based on business units) based on similar characteristics

Address important company issuesServes strategic purpose

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Key Issues for Segmenting

Differing markets Product portfolios Customer portfolios Inventory yield Omnichannel sales

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More Issues for Segmenting

Global operations Channel partners Customer attrition Suppliers Supply chain risk

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Why Segment

Stop one-size-fits-all “service” approachReduce internal and external noise that

creates chaos & diverts resourcesDesign & align operations for different

sectorsBuild competitive differentiation

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How to Segment

1) Identify segments2) Profile sectors--and customers in them3) Determine how customers in each segment

differ for SC services4) Evaluate supply chain services, including ones

not met, and performance for each segment

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Segment Approaches

Cost—good concept—allocating and assigning costs—not direct costs

Value—economic—not good to identify segment characteristics

Need—drivers that segments have for specific service(s)

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What To Do with Results--Have Actionable Info--

1) Prioritize segments2) Be specific 3) Evaluate the quality of service 4) Implement services for each segment5) Develop metrics for each segment’s service

and measure

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ExampleOrder Size and Annual

Volume

Order Requirements

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Large Orders Segment

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Special Preparation Segment

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Direct to Store Segment

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Redesigned Supply Chain

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Supply Chain Risk Mitigation

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What Risk Is

About business continuityConcept traction—FukushimaInsurance focus—assetsPlus contingency planning

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Supply Chain Risk

ComplexityGeographic scope

offshoring/sourcingoutsourcing

Low inventorylean manufacturingJIT manufacturing

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Supply Chain Risks

Deloitte global survey45% say SC risk program only somewhat

effective or not effective53% say SC disruptions have become more

costly48% say frequency of risk disruptions with

negative outcomes have increased

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More Deloitte

Technology, industrial products, diversified manufacturing most likely to say SC disruptions have become more costly

Most costly outcome—margin erosion71% say SC risk is important in strategic

decision-making

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More

Top challenges to risk management (RM)lack of cross-functional collaboration (32%)cost of implementing RM strategies (26%)

SC RM is organized around silos (75%)leads to lack of visibility and collaborationmakes difficult to assess and manage

risk on holistic basis

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Threat Sources

Natural disasters Geopolitical Pandemics Technological Terrorists Commodity prices

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Sources

Labor costs Currency Ports Markets Suppliers Execution

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Intl Country Risk Guide

39 China, Peoples' Rep.

62 Thailand

86 Indonesia

114 Sri Lanka

129 Pakistan

Rank in 06/12 Country

1 Norway2 Brunei3 Luxembourg4 Switzerland5 Singapore6 Sweden7 Oman8 United Arab Emirates9 Germany

10 Canada11 Hong Kong12 Taiwan13 Qatar13 Saudi Arabia15 Denmark16 New Zealand17 Japan18 Kuwait19 Finland20 Korea, Republic21 Trinidad & Tobago22 Netherlands23 Australia24 Austria24 Malaysia

54 Mexico

Source: PRS Group

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Suppliers

Tier 1 Suppliers and More

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Risk

Measure risk—Financial ImpactTime to Recover

Identification and mitigation—not just for MNCsCannot mitigate what you do not identify

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Where Will Your Supply Chain Take You?