Supply Chain Strategy Mind Mapping

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1 Supply Chain Strategy Mind Mapping De strategische klim naar concurrentievoordeel Martijn Lofvers Supply Chain Magazine ICT & Logistiek, 29 oktober 2014

2 What s on the CEO s Mind?: Market Trends Globalization Changing demographics New markets Sustainability importance Dependency IT systems Battle for talent Aging customers Financial risk management Importance cash management New competitors Product life cycles Partners becoming competitors Supply risks Shift from: Financial Forecasting to: Scenario Planning Financial volatility Costs fuel & raw materials Outsourcing & cost-cutting 2

3 Scenarioplanning: Forward Thinking Today A L T E R N A T I V E S Feedback Business and Supply Chain Strategy Execution Divergent Exploration Convergent Evaluation Decision Analysis Execution Mahender Singh, MIT 2008

4 The COO s Agenda: Supply Chain Challenges Global sales market Sustainability importance New markets & customization Longer supply chains Costs fuel & raw materials Open source software & IT Bulk transport Inventory Global chain visibility RFID costs Reverse chain management Carbon footprint New: Cradle to Cradle New: Supply chain finance Supply chain risk management New competitors Trade barriers New: Trade lanes Insourcing & on-shoring Frequent network redesign Shift from: Operations & Logistics to: Supply Chain Strategy Tax & customs impact Chain competition Financial volatility Dependency suppliers 3PL & contract manufacturing Outsourcing & offshoring 4

5 Company Strategy versus Supply Chains A lot of companies have a mismatch between product type and supply chain strategy, according to professor David Simchi-Levi of MIT in Boston, USA. A successful company strategy demands a corresponding operations strategy: BEST PRACTICES Customer value proposition example Supply chain strategy High fashion Zara speed to market Customer experience Dell Direct response by configure to order Product innovation Apple efficiency by outsourcing manufacturing & logistics Every day low prices Wal-Mart cost efficiency Available product selection Amazon efficient & reliable fulfillment Source : Prof. David Simchi-Levi of MIT in Boston, USA (2010)

6 McKinsey survey: Lack of making choices Many companies strategies are below-par*: Only 35% of the companies work with competitive strategy that is capable of beating the competition. Only 20% link their strategy to clear decisions about their product portfolio and allocation of required resources (=supply chain management). Companies with an effective approach to developing strategy place a lot of value on the macro trends. Strategic direction of healthy companies is unclear to 25% of the employees; almost 60% in unhealthy ones. *McKinsey survey among > 2,000 decision-makers (2011)

7 Company strategy: Which mountain to climb?

8 Company Strategy: Critical Success Factors Three possible competitive strategies: Product Leadership ( best product ) Apple Operational Excellence ( best total costs ) Wal-Mart Customer Intimacy ( best total solution ) Cisco Source : Treacy & Wiersema Competitive strategy depends on Critical Success Factors: Critical Succes Factors Operational Excellence Customer Intimacy Product Leadership Low price Order Winner Non-issue Non-issue Fast delivery Non-issue/Qualifier Reliable delivery Order Qualifier Quality compliance Order Qualifier Order Qualifier Order Qualifier Quality level Non-issue Order Winner Mix flexibility Order Winner Non-issue Product flexibility Non-issue Order Winner Non-issue Volume flexibility Non-issue/Qualifier Order Winner Product innovation Non-issue Order Winner Order Winner Service Order Winner Source : PwC (2012)

9 Supply chain design: 6 different models* Operational Excellence: 1. Continuous flow by synergy from collaborative partnerships; 2. Efficient, lowest costs supply chain; Product Innovation: 3. Fast supply chain focused on competitive costs and continuous product innovation; 4. Agile supply chain for unpredictable demand; Customer Intimacy: 5. Custom-configured supply chain; 6. Flexible supply chain focused on solving customer problems. *Hernán David Pérez, lecturer supply chain management National University of Colombia (2013)

10 6 Supply chain designs: Lean or Agile Lean Agile Fast focused on competitive costs & innovation Agile for unpredictable demand Lean Efficient, lowest costs Flexible focused on customer problems Agile Continuous flow by collaborative partnerships Customconfigured Lean Agile

11 Supply Chain Processes: company view Laws & regulations Support Human Resources IT Finance Manual labor Management info Money Suppliers Market needs Research & Development Market innovations Supply Chain Management Market fulfillment Marketing & Sales Market needs Customers Materials Makings Movements Maintenances Goods Purchasing Production Distribution Service Goods Logistics

12 Organizational functions: roles and en positions

13 Economic crisis: strategy, fielding and mind set Offensive Normal Defensive Dug.... in.....

14 Strategy execution: Choosing the right route Right routes depend on: Cooperation (internally) Collaboration (externally) Competition (externally) Circumstances (externally)

15 Mind Mapping: Making Sense in 4 Steps External focus Internal focus Strategic Market Trends Diagnose Impact Company Review Goal Plan Execution Supply Chain Solutions Execute Supply Chain Challenges Market Trends? Impact Company? Challenges? Solutions? Which market trends relate to the topic of the mind map? What impact do these trends have on the company? What are the related supply challenges? What are the required capabilities/processes?

16 Strategic Execution Mind Mapping: Making Sense in 4 Steps Market Trends Impact Company Demographical trends Economic trends Sociological trends Technological trends Ecological trends Political trends Sales & Operations Planning? Order to Cash optimization? Procure to Pay optimization? Supply chain collaboration? Customer collaboration? Et cetera External focus Supply Chain Solutions Market Trends? Impact Company? Challenges? Solutions? Goal Internal focus Finance Marketing & Sales Supply Chain IT HR R&D Planning Sourcing Making Delivering Servicing Returning Supply Chain Challenges Which market trends relate to the topic of the mind map? What impact do these trends have on the company? What are the related supply challenges? What are the required capabilities/processes?

17 Example mindmap: MedtechSupply Chains

18 Strategic Winners Cycle : Beyond the Golden Circle* Where? External focus Market Trends Diagnose Internal focus Impact Company Why? * By Simon Sinek Review Goal Plan Execution Process Improvements Execute Process Challenges What? How? Where? In which market is the company/division playing? Why? What is our right of existence? How? What are our core and unique processes? What? What are our products and services?

19 Strategy, Supply Chains & Communication Challenges: No well defined competitive strategy for company and/or division and/or geography. No clear internal communication about competitive company strategy. No matching supply chains with competitive strategy. No evolving competitive strategy over time. Solution: Structural use of mind maps for strategy and execution. Making strategic use of the Winners Cycle.

20 Thank you for listening Martijn Lofvers Owner & Publishing Director Supply Chain Magazine Mobile: +31 (0) LinkedIn:

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