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7/31/2019 Presentation - John Langley
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1The Eight Keys to Supply Chain Success
The Eight Keys to
Supply Chain Success
C. John Langley Jr., Ph.D., 2002. The materials contained herein are not to be used or
reproduced without permission. Unauthorized sale or use of these materials is prohibited.
C. John Langley Jr., Ph.D.
Professor of Supply Chain ManagementDirector, Supply Chain Executive Programs
Georgia Institute of Technology, USA
November 8, 2002November 8, 2002
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2The Eight Keys to Supply Chain Success
Agenda for This Mornings
Presentation
Agenda for This Mornings
Presentation
What are the Eight
Keys to Success?
What are the Eight
Keys to Success?
Supply Chain Management:Where Would We Like To Be?
Supply Chain Management:Where Would We Like To Be?
Supply Chain Management:
Where Are We Now?
Supply Chain Management:
Where Are We Now? Propositions
For Success
Closing
Thoughts
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3The Eight Keys to Supply Chain Success
The Last Decade Has Been a Busy One
for Supply Chain Management
Lean Manufacturing/JIT
MRPII
ERP CRM
eProcurement
eFulfillment
Integrated Supply Chain Management
Advanced Planning & Scheduling (APS)
Product Data Management
Warehouse Management (WMS)
Manufacturing Execution Systems (MES)
Exchanges
3rd Party Logistics
Collaborative Planning
Supplier Integration
TQM
Six Sigma
Quality Circles
1992 1996 20021994 1998 2000
MFG Outsourcing
Source: Adapted from Accenture, 2002.
Service Parts Logistics
Supply Chain Visibility
Transportation Management (TMS)
4PL
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4The Eight Keys to Supply Chain Success
But the Business Environment
Still Poses Many Challenges
Globalization
War (Where/When?)
Convergence/Consolidation
Technology Integration
The Internet Potential forDisintermediation
Post-Sale Expectations
E&HT Market Impacts Supply Chain Requirements
Speed, Flexibility, Scalability
Collaboration
Configure to Order
Seamless Integration
Security
Parts & Service Offerings
Extended Supply Chain Financial Performance
Solutions
Value
Trends in High-Tech/Electronics Industries
Source: Adapted from Accenture, 2002.
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5The Eight Keys to Supply Chain Success
Worldwide Supply Chain Expenditures
Continue to Grow
Worldwide Supply Chain Expenditures
Continue to Grow
1980 1985 1990 1995 2000
2100
1680
1260
840
420
0
B
illions(1980$US)
16 Percent
World GDP
16 Percent
World GDP
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6The Eight Keys to Supply Chain Success
Supply Chain Management:
Where Would We Like To Be?
Supply Chain Management:
Where Would We Like To Be?
FunctionalExcellence
FunctionalExcellence
ProcessExcellenceProcess
Excellence
ChannelExcellenceChannelExcellence
IntegrationExcellence
IntegrationExcellence
Time
ValuePerformance
Deliver Value
Effective
Efficient
Deliver Product
Network
Excellence
Desired Future
Progress
Most Current
Progress
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7The Eight Keys to Supply Chain Success
Eight Keys to
Supply Chain Success
Customer &Demand Mgt
Customer &Demand Mgt
CoreCompetencies
CoreCompetencies
GlobalizationGlobalization
LogisticsOutsourcing
LogisticsOutsourcing
PerformanceMeasurement/
Value
PerformanceMeasurement/
Value
CollaborativeRelationships
CollaborativeRelationships
InformationTechnology
InformationTechnology
EffectiveStrategies
EffectiveStrategies
ValueValue
VisibilityVisibility
VelocityVelocity
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8The Eight Keys to Supply Chain Success
The Ability to Anticipate, Respond to,
and Sometimes Create Customer
Demand Will Be a Key Determinant of
Supply Chain Success
Importance of the Customer
and Demand Management
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9The Eight Keys to Supply Chain Success
Obstacles to Enhancing
Customer Satisfaction
Insufficient knowledge of customers needs
Technically cant create a need, but can create demand Functional silos cause little or no coordinated
response to demand information
Too much emphasis on forecasts of demand,with less attention on
Collaborative efforts
Strategic as well as tactical use of demand informationSupply-demand misalignment, and a need
exists for better demand management
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10The Eight Keys to Supply Chain Success
If You Cant Measure It
You Cant Manage ItAnd
If You Cant Quantify It You Cant Sell It
Performance
Measurement and Value
Not everything that can be counted counts,
and not everything that counts can be counted.
(Albert Einstein)
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11The Eight Keys to Supply Chain Success
Performance Measurement and Value
Determination: Top Priorities
Relentless Pursuit of Value
Must be customer-driven
Must include comprehensive, objective measurement ofvalue
New Scorecards for Everyone Throughout Supply
Chain Very Few are Customer-Driven
Need to Develop New Tools for Value Measurement
and Quantification
Encompass elements of value that are hard as well aseasy to quantify
Focus on service as well as cost/top-line and bottom-line
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13The Eight Keys to Supply Chain Success
Information Technology:
Theres Still A Lot to Be Done!
In the flush of internet mania, most businesses overspentwildly on all sorts of disparate software and systems. A lot
of it still doesnt work properly. At almost every big
company, applications that any idiot knows should be
linked for instance the sales system and the one that
tracks inventory remain unconnected and autonomous
islands of data. Employees were told this stuff would
change their lives. Instead theyre screaming infrustration. (Fortune, March 18, 2002)
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14The Eight Keys to Supply Chain Success
Supply Chain Functional Scope:Planning and Execution
International Trade Logistics Mgmt.
Inventory Management
Supply Chain Execution
Supply Chain Planning
Seconds/
Minutes
Hours/
Days
Weeks/
Months
Quarters Years
Strategic
Planning
Tactical
Planning
Operational
Planning
Decision Scope
Time Horizon
Source: Adapted from AMR Research, Inc. 2000
Order Management
Supply Planning
Production Scheduling
Distribution Planning
Demand Forecasting and Planning
Supply Chain Network Design
Manufacturing Planning
Supply Chain Collaboration
Warehouse Management
SC Event Management
Transportation Management
St t i f Eff ti U f S l
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15The Eight Keys to Supply Chain Success
Strategies for Effective Use of Supply
Chain Information Technologies
Achieve enhanced visibility and event management
Real-time window on status of orders and inventory, across
processes, modes, and carriers while in-transit Emphasis not somuch on wheres my stuff? but when is it going to get there?
Achieve improved visibility through collaborative logistics andintegrity among supply chain participants
Need to control total cost of technology, including
implementation and integration
Real-time window on status of orders and inventory, across
processes
Customers must be ready for capable software Need to rely
on suppliers of supply chain services for needed technology
expertise
C ll b ti
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16The Eight Keys to Supply Chain Success
Logistics/Supply Chain Managementis the
Sweet SpotSweet Spotfor Collaboration
Collaborative
Relationships
CollaborativeMarketplace
Th D i d Obj ti Sh ld B
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17The Eight Keys to Supply Chain Success
Shippers & Carriers
Contract & Shipment Management Shippers and Suppliers
Inbound Management
Shippers and Customers Customer Service
Shippers and Partners
Continuous Moves and SharedRoutes
Carriers
CustomersShippers
Suppliers Partners
Collaborative Business Processes Reduce Costs,
Improve Service and Streamline Operations
Full
Collaboration
The Desired Objective Should Be
Full Collaboration
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18The Eight Keys to Supply Chain Success
The Strategic Use of Outsourcing
Is A Vastly Under-UtilizedLogistics/Supply Chain Strategy
The Strategic Use of Outsourcing
Is A Vastly Under-UtilizedLogistics/Supply Chain Strategy
Logistics Outsourcing
B kth h T d i
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19The Eight Keys to Supply Chain Success
Annual U.S. Industry Revenues > $60 Billion;CAGR = 7-8%
Major ConsolidationsContinue to Occur
New CompetitorsArriving on the Scene
Realization That Using a 3PL is
Not an All or NothingDecision
Very Large LogisticsOutsourcing Initiatives
Breakthrough Trends in
Outsourced Logistics Services
E t d P t f T t l L i ti
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20The Eight Keys to Supply Chain Success
42.7%
59.6% 51.0%
74.1%
0%
20%
40%
60%
80%
100%
North America Western Europe
20022005-2007
Expected Percentage of Total Logistics
Expenditures to be Directed to Outsourcing
Source: Georgia Tech, 2002 Third Party Logistics Study.
Next Generation of Logistics
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21The Eight Keys to Supply Chain Success
Next Generation of Logistics
Outsourcing Approaches?
Emphasis
onManagement
of ... Relationships
Integration
Information
Knowledge
InsourcingInsourcing
Basic Services
(Logistics Service Providers)
Value-Added(Third Party Logistics)
Lead Logistics(4PL)
AdvancedServices
Evolutiona
ryMig
ratio
n
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22The Eight Keys to Supply Chain Success
Customers are Desperately Searchingfor Capable Suppliers of Global Supply
Chain and Global IT-Based Services
Globalization
Global SCM:
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23The Eight Keys to Supply Chain Success
Global SCM:
Key Areas of Greatest Need
Managing the Evolution of Global Priorities from Mexico toEastern Europe, Now to Asia-Pacific/China
Transformation or Redesign of Best or Proven Practices toGlobal Supply Chain Setting
Recognize challenges unique to global objectives
Achieve end-to-end process integration and shipment visibility
Involvement of capable facilitators to achieve desired success
Global Supply Chain Strategies to Significantly Impact OverallBusiness Strategies
Interaction of Global Supply Chain Executives to: Identify Common Issues and Problems
Determine Responsive Strategies for Improvement
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24The Eight Keys to Supply Chain Success
Knowing Your Core Competencies
Will Allow You toFollow the
To Effective Supply Chain Management
Core Competencies
Three Essential Tests for
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25The Eight Keys to Supply Chain Success
Three Essential Tests for
Core Competencies
Expertise
Do We Have TheNeeded Skills? StrategicFit
Consistent WithOrganizational
Mission?
Ability to
Invest
Is the ROIAttractive?
Effective Supply Chain
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26The Eight Keys to Supply Chain Success
Supply Chain WinnersWill Be Those Who Identify and
Successfully Implement
the Best Strategies
Effective Supply Chain
Strategies
Key Imperatives for Supply Chain
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27The Eight Keys to Supply Chain Success
Drive Logistics and Supply Chain
Issues Higher Into CustomerOrganizations Make SCM a
Strategic Organizational Priority
Align Supply Chain Strategies With
Overall Business Strategies
Have High Expectations for
Logistics and SCM
Service and Responsiveness
Financial Performance
Key Imperatives for Supply Chain
Success
Capitalize on the Skills of
People Throughout SupplyChain
Fully Utilize All AvailableResources to Effectively
Manage Information
Knowledge
Relationships
Integration
Create Outstanding ValueThrough Logistics andSupply Chain Management
The Future of SCM:
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28The Eight Keys to Supply Chain Success
The Future of SCM:
Two Closing Thoughts of Wisdom
Consider how hard it is to changeyourself, and youll understand whatlittle chance you have of
changing others.(Albert Einstein)
The best way to predict
the future is to create it.(Dr. Peter F. Drucker)
Golden Gate BridgeGolden Gate Bridge
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29The Eight Keys to Supply Chain Success
Golden Gate Bridge
The Two Towers Cant Stand By Themselves
Golden Gate Bridge
The Two Towers Cant Stand By Themselves
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30The Eight Keys to Supply Chain Success