IBM Supply Chain Management Ppt

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© 2004 IBM Corporation

Supply Chain Management – New competitive realities

Linda B. BanManagement Briefing SeminarAugust 2, 2004


© 2004 IBM Corporation2 MBS Briefiing August 2, 2004

Agenda

Supply chain management – why is it so hard?

Manufacturer and supplier findings

What affect IT has on supply chain

The road ahead



“Why is supply chain so hard?”In-depth interviews with twenty-nine automotive executives– Sixteen manufacturing and supplier

companies

– Global organizations

– European and North American participation

Interviews covered a broad range of questions around SCM activities within the organization and its impact with its value net– Current opportunities and challenges

– SCM’s influence on the organization

– Technology’s influence/impact on SCM

– Activities and future plans



We broadly defined supply chain management (SCM)

We defined SCM to also include the customer delivery channel



We heard several points over and over again from interviewees

The performance of SCM lags its recognized importance

SCM crosses numerous boundaries, both internally and externally

Globalization has an increasingly larger impact on supply chain tasks

Complexity, ranging from company cultures to product design, multiple sourcing and pricing configurations continues to create significant challenges



Manufacturers have some specific challenges. . . .

Intense cost pressures

Managing the global supply chain– Establishing additional manufacturing footprints

– Identifying sourcing partners

“Being able to efficiently support an increasing number of lower volume vehicle models, each with a higher level of option content and complexity, is a fundamental challenge. To the automotive supply base, this challenge results in greater product and process complexity, lower volumes of individual parts

or options, and a higher level of variation in supply chain demand flows.”

- Manufacturer respondent



. . . see room for improvement in several areas. . .



. . . and are focusing heavily on technology

Standardization– Common nomenclature and data formats

– Common tools

Integration– diverse computer systems

– supply chain processes with engineering, purchasing, logistics, etc

Implementation of portal technologies



Suppliers face similar challenges with a different twist . .

Increased complexity of manufacturer orders

Cost and pricing issues

Risk management in the supply chain

Collaboration and relationship management in the supply chain



. . . feel they are performing well in several areas. . .



. . . and are focusing on the use of technology a little differently

Connection and collaboration with the Tier N supply base

Cost reduction

Inventory visualization

Computer system integration



Manufacturers and suppliers agree on some of the most important things. . .

Inventory is the hidden cost within the supply chain– Taking cost out is still a major problem

Globalization has a significant impact – Identifying and managing suppliers from afar is challenging

Complexity continues to increase– Both product design and in management of relationships

“Success is taking cost out of the supply chain structure, not just moving margins.”

- Manufacturer respondent



…but ambiguity still exists

Selection vs development models– Shifting purchasing philosophies

Component vs module vs system decisions– No consistent definition of the process



IT is important to both manufacturers and suppliers

Portal technology– One face to all suppliers and

functions

– Accessibility of information

– Fast access to ratings• Delivery, cost, quality

Accessibility of information– Inventory optimization

– Better continuous improvement efforts • Information flows more quickly

to all involved parties

Manufacturers Suppliers

Integration of legacy systems to deliver information to portals

Security

Challenges



Access Publish Transact Integrate Internally

Integrate Externally

Adapt Dynamically

Early

Integrating

Advanced“Get on the Net”

“Buying, not browsing…Working, not surfing”

“Optimize operations…dynamically respond to the

needs of customers, employees, partners.”

Manufacturers and suppliers are using technology to move towards optimal integration



By contrast, China auto suppliers have a different focus

Survey of 299 auto suppliers in China– Joint venture and domestic

respondents

Most use in-house technology

Most orders are placed by fax and telephone



By comparison with Europe and North America, IT spending by Chinese automotive suppliers is much lower

0%

10%

20%

30%

40%

50%

60%

Less than $50,000 50,000-100,000 100,001-200,000 200,001+

Chinese firmsJoint ventures

Half of all surveyed firms spend less than $50k a year, 81% spend less than 100kof the 56 companies spending more than that, 33 are joint ventures

Source: Economist Corporate Network “China auto suppliers survey”, 2004



The road ahead for SCM efforts

Key success factors include:

Better linkages between forecasts and material requests

Use of portal technologies to integrate internally AND externally

Integration of functions to improve performance, increase effectiveness and reinforce consistent organizational cultures



Linda Ban

Global Industrial Sector Leader

IBM Institute for Business Value

Automotive Practice

[email protected]

248-552-4570

IBM Supply Chain Management Ppt

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