Enhancing Customer Value through Supply Chain Excellence

Transcription

1 Enhancing Customer Value through Supply Chain Excellence Picture Source: ecom/ep's%20&%20lp's% e.com/ep 20-%20TRLPS21%20- %20New%20Frontier%20- %20New%20York%20Staff %20Band.htm Emeritus Professor Martin Christopher Cranfield School of Management Cranfield University Cranfield Bedford MK43 0AL United Kingdom Tel : 44 (0) Fax : 44 (0) [email protected]

2 Agenda Defining supply chain excellence Investing in the 4Rs Keeping a lid on Supply Chain Complexity Aligning the supply chain with the value proposition Transforming the supply chain into a demand chain H 2

3 New competitive realities Input costs are rising but New sources of low cost competition mean that the pressure on price will continue and Continued concentration ti of markets means that t bigger, more powerful customers will demand more from their suppliers whilst Conventional marketing strategies have less effect in a time-sensitive, on-demand world H 3

4 Nothing ever changes In 50 years between 1870 and 1920 the cost of distributing necessities and luxuries has nearly trebled, while production costs have gone down by one-fifth... What we are saving in production we are losing in distribution. Ralph Borsodi The Distribution Age 1929 H 4

5 The goal of supply chain management To manage upstream and downstream relationships with suppliers and customers in order to create enhanced value in the final market place at less cost to the supply chain as a whole. H 5

6 The Top 10 Supply Chains 1. Apple 6. Procter & Gamble 2. McDonald s 7. Cisco Systems 3. Amazon 4. Unilever 5. Intel dnvnzmvdmdahfdbfhdabffdsfsdhbb 8. Samsung Electronics dsfdgh 9. The Coca-Cola Cola Company 10.Colgate-Palmolive Source: Gartner, Inc H 6

7 The four pillars of supply chain excellence Supply Chain Excellence Responsiveness Reliability Resilience Relationships H 7

8 Managing the 4Rs Responsiveness : Time-based competition is now the norm. The focus is on agility. Reliability : Unreliable processes create uncertainty and variability. Equally, lack of visibility adds to uncertainty. Resilience : Today s turbulent and volatile markets require supply chains that are capable of dealing with the unexpected and the unplanned. Relationships : As supply chains become more complex and as out-sourcing increases dependency on suppliers, the need for relationship management increases. H 8

9 The impact of complexity Much of the cost in today s supply chains is there because of the continuing increase in their complexity. Complexity is also a major barrier to agility and responsiveness. H 9

10 Seven types of supply chain complexity Network complexity e.g. too many nodes and links Process complexity e.g. too many steps Range complexity e.g. too wide a range Product complexity e.g. too many unique components Customer complexity e.g. too many service options Supplier complexity e.g. too many suppliers Organisational complexity e.g. too many levels and silos H 10

11 Coping with supply chain complexity Deep customer insight to identify the things that customers value - the order winning criteria. Supply chain processes must align with the value proposition. ii Eliminate the complexity that customers will not pay for. Exploit the complexity that customers value but seek to minimise the costs involved. Use appropriate KPIs to ensure that complexity is a business priority. H 11

12 Characteristics of world class supply chains Their processes are closely aligned to the company s value proposition o They focus on responsiveness They constantly seek to drive out complexity from their supply chains Their supply chains are customer driven H 12

13 Designing the supply chain from the customer backwards Traditional supply chains are production driven Designed to optimise production flows Often based on lean thinking Functional orientation rather than integrative Cost rather than responsiveness has been the driver H 13

14 Aligning supply chains to customer segments Markets are segmented, so supply chains must reflect this Customers buy on value How can value segments be identified? Supply chains must deliver the value proposition Designing customer-specific supply chains H 14

15 What does it take to become customer driven? There are a number of critical principles underpinning customer-driven supply chains The consumer is the start of the supply chain, not the end Increasingly customers are becoming co-creators Markets become fragmented; from mass-markets to markets-of-one Agility and responsiveness are fundamental requirements H 15

16 The implications for business and organisational transformation Demand chain management requires a number of fundamental changes in the way we do things Shifting from a product focus to a customer focus Changing g from a functional to a process organisation Substituting information for inventory Making a transition from forecast-driven to demand-driven H 16

17 Moving away from one size fits all Supply chain design must reflect customer requirements but also must reflect product demand profiles. Do current supply chain arrangements provide sufficient flexibility to enable differentiated customer/product responses? Flexible supply chains need high levels of agility : short lead-times; ability to vary volume and mix quickly; can be rapidly re-configured. H 17

18 The road to supply chain excellence Understand the segmentation of the market Define the value proposition for each segment Align the supply chain with the value proposition Focus the business around value delivery and complexity reduction Utilise performance metrics that will reinforce these goals Picture source: H 18