Managing the Supply Chain of the Future

Transcription

1 Managing the Supply Chain of the Future Emeritus Professor Martin Christopher Cranfield School of Management Cranfield University Cranfield Bedford MK43 0AL United Kingdom Tel : 44 (0) Fax : 44 (0) m.g.christopher@cranfield.ac.uk Picture:source:

2 Agenda The 3 rd Industrial Revolution Entering the age of volatility and complexity Keeping the options open Developing structural flexibility The changing skills profile of the supply chain manager 2

3 The 1 st Industrial Revolution From cottage industry to the factory Picture source: 3

4 The 2 nd Industrial Revolution The Assembly Line Picture source: 4

5 The 3 rd Industrial Revolution Digital Communication Rapid Manufacturing Customised solutions The servitization of products Picture source: data/assets/image/0005/629294/varieties/carousel.jpg 5

6 Volatility Index 6

7 Anticipated Sources of Volatility Demand Volatility Volatility of Market Prices of our Outputs Volatility of Prices of our Inputs: Raw Materials, Resources (including Energy) Exchange Rate Volatility 18% 22% 15% 16% 29% 30% 12% 15% Current Year Next 2 Years_ Source: The Hackett Group 2012, Key Issues Study 7

8 Increasing complexity and uncertainty in global supply chains The trend to out-sourcing and off-shoring has led to Higher levels of inter-connectedness and inter-dependency which means that Supply chains are more complex than before and uncertainty and risk have increased. Picture source: 8

9 Complexity a definition Complex is the opposite of independent whereas complicated is the opposite of simple. Complex systems theory studies how relationships between parts give rise to the collective behaviours of a system and how the system interacts and forms relationships with its environment. Source: Wikipedia Picture source: 9

10 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. Picture source: 10

11 Complexity in the global supply chain : the Boeing

12 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 Picture source: 12

13 The rise of demand-driven supply chains Because markets have become more turbulent they have become harder to predict. As a result there is a growing requirement to move from being forecastdriven to being demand and event-driven. This implies a higher levels of responsiveness and agility across the supply chain. Picture source: 13

14 Keeping the options open The best decision are those that keep the most options open Supply chain real options include: the option to expand or contract; the option to abandon; the option to switch and the option to defer decision Real options enable the business to take advantage of the upside of risk Picture source: %202011/October_2011/Keep-your-options-open-178x178pixels.jpg 14

15 The supply chain of the future Market Driven Tomorrow s Model Turbulence & Uncertainty Information Based Customer Value Oriented Mass Production/ Economies of Scale Mass Customisation/ Economies of Scope Yesterday s Model Stable Conditions Inventory Based Low Cost Production Supplier Driven 15

16 Conventional supply chain design Based on conditions of relative stability Designed to optimise production flows Often based on lean thinking Network optimisation based on cost rather than responsiveness Picture source: 16

17 Structural vs Dynamic Flexibility Dynamic flexibility is a reflection of the agility of the supply chain, particularly its ability to respond rapidly to variations in volume and mix. Structural flexibility is the ability of the supply chain to adapt to fundamental change, e.g. if the centre of gravity of the supply chain changes, can the system change? Picture source: 17

18 Moving from dynamic to structural flexibility Dynamic Flexibility Low High Low Efficient Supply Chain Traditional Supply Chain Structural Flexibility High Adaptable Supply Chain 18

19 Gaining structural flexibility Investigate local-for-local alternative to global sourcing and centralised manufacturing Focus on the economies of scope rather than the economies of scale Create bandwidth through asset sharing, e.g. capacity and inventory Adopt a real options approach to supply chain decision making The impact of new technology 19

20 The first law of organisational development When the rate of external change exceeds the rate of internal change then you ve got problems. Picture source: 20

21 Seven necessary business transformations Business Transformation Process Requirement From supplier-centric to customer-centric From push to pull From inventory to information From transactions to relationships From trucks and sheds to end-to-end From functions to processes From stand-alone competition to network rivalry The design of customer-driven supply chains Higher levels of agility and flexibility Capturing and sharing information on real demand Process alignment with suppliers and customers Implement pipeline management Create cross-functional teams focused on value creation Introduce pro-active relationship management With customers and suppliers 21

22 Functions of the Two Halves of the Brain Left-Brain Definers Right-Brain Definers Logical Detail Orientated Facts Rule Text Linear or Sequential Verbal Rational Analytical Objective Acknowledges Looks at Parts Makes Deductions Able to Identify Talent and Assign Roles Intuitive Holistic, Big Picture Orientated Imagination Rules Context Random or Simultaneous Visual Empathetic Creative Subjective Appreciates Looks at Wholes Makes Connections Able to Cultivate Chemistry and Instill Collaboration Source: Supply Chain Management Review, September/October 2010 and 22

23 Who can see the future? I give the Rolling Stones about another two years Mick Jagger

24 Thank you For further information Dr Martin Christopher Emeritus Professor of Marketing and Logistics Cranfield School of Management Cranfield Bedford MK43 0AC United Kingdom Web: 24