Live Learning Center. Solution-Driven Integrated Learning Paths. Make the Most of Your Educational Experience

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1 Solution-Driven Integrated Learning Paths Educational Sessions Lean Global Supply Chain Basics of Operation Management Demand Management, Forecasting, and S & OP Professional Advancement Special Interest Topics Plant Tours Networking Events/Peer Interaction Materials for Sale at the APICS Bookstore Make the Most of Your Educational Experience Develop a Learning Plan Assess your learning needs Use teamwork Prepare to learn Create your own Action Plan Live Learning Center Sync-to-Slide

2 Global Supply Chain Learning Path Sponsored by: John Long, CSCP, is the principal consultant and president of NMT Company LLC. He has 15 years of success in strategic global sourcing and supply quality management in North America, Europe, and Asia-Pacific Rim countries. He is a subject matter expert in developing processes, plans, and approaches to generate lucrative international business opportunities. Long served in the APICS Tulsa chapter as Vice President of Membership and Development. He also served as the Communications Chair of NAPM-Tulsa, which received the Affiliate of the Year Award in He holds a bachelor's degree from Xi'an Jiaotong University and an MBA from Oral Roberts University, Tulsa, Oklahoma. Strategic Sourcing for Optimal Supply Chain Management John Long, President & Principal Consultant of NMT Company, LLC

3 Learning Path Achieving a globally integrated supply chain is a transformation process and an ongoing journey. While the voyage is challenging, it can be fruitful, resulting in rising profitability, enhanced customer satisfaction, reduced costs, and heightened competitive advantage if you implement strategic sourcing. In this presentation, you will learn to identify, select, and maximize resources in emerging markets, as well as how to connect both sides of the supply chain for significant progress... Fragmented Global Supply Chain What does it look like? How sourcing can be typically done wrong... More time is spent managing the lengthy process rather than leveraging suppliers Lack of resources & infrastructure Confusion regarding objectives Overemphasis on cost as sole criteria Technology constraints Disenfranchisement of cross-functional teams Business disruptions Inconsistent sourcing methodologies What Is A Globally Integrated Supply Chain Like? Communication Materials: Electrical Mechanical MRO Others Services: Subcontract Wind farm Const/Mgmt Vegetation Engineering Design Technology Construction Maintenance Environment Strategic Sourcing Order Planning Order Planning Collaboration Strategy Execution Order Creation SAP Order Execution and Settlement

4 stra te gic; adjective (1825) Definitions c:of great importance within an integrated whole or to a planned effect tac ti cal ; adjective (1570) (1) : of or relating to small-scale actions serving a larger purpose (2) : made or carried out with only a limited or immediate end in view Fad ; noun (1867) : a practice or interest followed for a time with exaggerated zeal : CRAZE Why Strategic Global Sourcing? In 2000, most firms had < 20% of their annual spend allocated to global sourcing. By 2010, it s estimated that more than half of firms will have a global spend of > 40%, with nearly one-fifth of firms spending > 80% of their annual spend in the global sourcing arena. What do these Fortune 500 companies have in common? IBM ($50bil) Wal-Mart ($9Bil) - Shenzhen AMAT ($2Bil) Xi an Trade Journal, Magazine, Internet, thought leaders The launch of the new APICS Global Sourcing Workshop Series in September 2008 Understanding Global Sourcing Needs Are you losing customers to low-cost imports? Do you need to improve your bottom line by leveraging your global presence? Do you need to find suppliers in lower cost countries to help reduce your costs? Have you been reluctant to source globally because of what you have heard about quality and potential theft of intellectual property? Have you always wondered how business was conducted in a different country?

5 Global Supply Chain Strategy Maps Developing Global Sourcing Solutions Global sourcing Cost reduction Quality assurance Excellence in execution Cooperation & communication Product development Project management What Drives Global Sourcing? Growth drivers such as differentiation of products in terms of affordability, quality, availability, etc. Leverage spend global presence-economies scale and technology more effectively. Organizational directions and business strategies to position products and services with increased agility. Business transformation driven by cost, product quality, and customer service with global scalability and flexibility. Advantage through reduced price points and enhanced competition, not just to cut cost. Long-term access to cost-effective capabilities.

6 Strategic Sourcing Process Spend analysis sort out commodities, streamline and map out corporate supply chain solutions Organize for the future, opportunistic approach to developing a new supply strategy, obtain business involvement & consensus Ultimate goals and objectives alignment (the deliverables) Review historical issues, supplier usage/performance; determine future items & supplier requirements/expectations; and assess future state against current supplier capabilities Cooperation and collaboration within and across organizational boundaries (cross functional) communicating commercial issues Increases ongoing efficiency and responsiveness of the supply chain, interaction with supplier partners, identify their capabilities Negotiation in CAMPish and competitive environments, negotiate fairly but effectively Grow supplier relationships by requiring competitive performance and suggesting goals for continuous improvements A Consistent Global Sourcing Strategy Yield optimal relationship Competitive performance Continuous improvement Global key suppliers Market trends Supplier capabilities Regional economics Global economics Product trends Competitive analysis Reward Spend Analysis Spend by part/category Spend by region Spend by supplier Spend by business unit Spend by month/year Cost Reduction STRATEGY Risk Risk Risk Technical requirements and specs matched to capability Right-source based on criticality Review historical issues Category Characteristics Specifications Functionality User requirements Criticality to business VA Opportunities Expending global network complexity Reduce uncertainty Prepare for unexpected Total Cost of Ownership Internal costs Supplier costs Economic levers Engineering of product Performance criteria Align goals & objectives with reengineering cost Understand all cost elements Benchmarking Quality matters more even in Global Sourcing Supplier Identifies Defect In their facility Finds Defect in US Client s Mfg. facility Customer of Client finds Defect at project site Rule of 10 s $10,000 $100,000 $1,000 Supplier submits to MRB Parts dispositioned Supplier corrects Client builds trust Client Writes supplier NCR Parts dispositioned Client or supplier corrects Supplier capability questioned Client writes SN War room review Huge $$ to correct Supplier recovery

7 Product Development Product assemblies and subassemblies that benefit most from the lowercost regions due to their time-consuming and labor-intensive nature. Research, identify, and select international suppliers who are a good match for your business, offering quality products or services meeting your specifications. OEM/Other industrial product specialty and knowledge to align optimal global sources for your custom engineered products. Developing a new product takes a broad pool of qualified business partners and suppliers throughout the world, covering a diverse range of industrial/oem products, components, and assemblies. Unexpected events may surprise some, therefore always stand ready to meet them with confidence. For a product based company, transportation lead time is one of the biggest issues in international sourcing. China - with its accession to the World Trade Organization (WTO), the Holy Grail of distribution and trading rights is within reach. Trial (or pilot run) to identify the kinks before going full-scale. Find creative ways to meet requirements and deadlines and consistently assure a success for every shipment. Project Management Project scoping includes all details from tooling requirements to logistics coordination for a cost-effective and fully managed project. Required tooling and/or machinery developed in Asia is often more cost-effective, such as progressive dies for precision metal stampings or injection molds for plastics. Operation management the overseas production operation managed to attain full benefit from the labor and cost savings. JIT delivery from the international supplier factory floor to delivery to Customer the international project can be as seamless as the domestic one. Engineering Coordination integrate valuable engineering input into overall global sourcing project, adding benefits, reducing cost, and more. Cost Reduction combine the cost efficiencies to produce results, aligning sourcing requirements with growing network of global suppliers. TQM quality assurance factors into every detail of the Project Management process. H GLOBAL SOURCING THREE WAVES OF VALUE CREATION Transformation Journey Business Transformation (not transaction) that requires strategies Efficiency standardized infrastructure Continuous Improvements Process Optimization Sustainable Growth Leverage Cost Cheap labor low cost without quality Quality Quality Process (Quality at low cost) = Future L Negotiation (immediate) Tactical (short term) Speed Strategic (long term) Transformational (continuous improvements) H

8 Roadmap to Opportunity Strategic relationship proactively create savings opportunities Collectively work with both supply chain and operations Work only with operations or supply chain Multiple transactions Bid buy single transactions Win/Win Supply Chain Maturity and Alignment with Strategy Map Cost Reduction Quality Enhancement Process Improvement Value Propositions Major Takeaways Achieving Goals: Achieving a globally integrated supply chain Understanding the Approach: strategic sourcing - a transformation process and an ongoing journey Techniques and Applications: to identify, select, and maximize resources in emerging markets, as well as how to connect both sides of the supply chain for significant progress Deliver Results: rising profitability, enhanced customer satisfaction, reduced costs, and heightened competitive advantage

9 Questions New Millennium Technology Company 1801 West El Paso Street Broken Arrow, OK USA Tel: