The importance of SCM

The importance of SCM Executives surveyed for an Accenture, INSEAD, Stanford University research project How important is SCM to your business? Has the importance of SCM increased? Moderately Important Not Important 1% Not Increased Decreased 2% 10% 9% Very Important 45% 44% Critical Increased Somewhat 51% 38 % Increased Significantly Accenture (2010) 1

A Bit of History: 1930-1950 Bank Robber Slick Willie Sutton When asked why he robbed banks, Sutton simply replied "Because that's where the money is." 2 SCOR Benchmarking - Presentation

Where the Money Is Supply-chain generally accounts for between 60% and 90% of all company costs1 A 2% improvement in process efficiency for supply-chain processes has 3000% - 5000% the impact of a 2% improvement in efficiency for IT, HR, Finance 1 Sales Any surprise most Process Methodologies or techniques had their origin primarily in Supply-Chain Management? Six-Sigma Lean BPR ERP ISO MRP-II TQM Fortune-10 Company Supply-Chain Cost % Total Costs 2 GM Ford Conoco Wal-Mart Chevron IBM Exxon GE Citi 1 AIG 1 94% 93% 90% 90% 88% 77% 75% 63% 0% 0% 1 Exclusive of Financial Services companies 2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 SCM Benchmark data on SCM cost for discrete & process industries 3 SCOR Benchmarking - Presentation

600 Minutes Supply Chain Studie Utvecklingsprojekt och intresseområden för beslutsfattare inom logistik Kvalitativ studie med 137 beslutsfattare Kvantitativ studie över Internet med 76 beslutsfattare Hösten och vintern 2009/2010.

Respondenter Respondenternas befattning Logistikchef/-direktör Supply Chain Manager/-director 1% 7% 9% 4% 38% Transportchef/Distributionschef Platschef/Fabrikschef/Produktion schef 41% Utvecklingschef/Affärsutvecklings chef VD/Vice VD (n=76)

Investeringar inom IT Kommande investeringar inom IT Förbättra befintliga ERPsystem Logistiksystem 25 25 22 RFID 20 19 19 18 17 17 17 EDI (Electronic Data Interchange) 15 Ökad visiblitet gentemot leverentörer och kunder 10 Planeringssystem 5 Lagersystem 0 (N=40) Systemintegration

Investeringar inom IT Kommande investeringar inom IT Prognossystem 16 14 16 15 13 13 12 E-handelssystem Spårbarhetssystem 12 10 8 9 8 Transportplaneringssystem Implementera ett nytt ERPsystem 6 MPS-system 4 2 Mobila kommunikationslösningar 0 (N=40)

Investeringar - affärsstödjande tjänster Kommande investeringar inom affärs- och verksamhetsutveckling Optimering av Logistik Flöde 40 38 37 Leverantörssamarbete 35 30 29 28 27 26 26 26 Transportlösningar 3Parts Logistik 25 20 Global Sourcing 15 Lean 10 Miljöbaserade lösningar 5 Tull- och transportadministration 0 (N=40)

Huvudteman Bedömning av forumets huvudteman 5,0 Flexibilitet i Supply Chain Lean 4,5 4,0 4,1 3,7 3,6 3,6 3,5 3,3 Miljölogistik Leverantörsrelationer 3,5 3 3,0 IT-stöd 3,0 2,5 2,0 Lagerhållning Strategiska lokaliseringsfrågor Möta konjunktursvängningar 1,5 1,0 (N=76)

Ett akademiskt område kan definieras av: Definitioner Modeller Terminologi Standarder (mätsystem) Eller av: Brist på definitioner Olika modeller Oklar terminologi Brist på standarder Inga mätsystem

SCM Definitions Stock and Boyer (2009) reviewed 173 definitions Without the adoption of a uniform definition accepted by researchers, confusion will continue to hinder the study and further development of SCM; and research will extend in various directions, rather than build upon itself (Stock and Boyer, 2009, p.691)

SCM Definitions For practitioners, the absence of a comprehensive SCM definition makes it more difficult for supply chain executives to claim authority and responsibility for the right combination of functions and processes. It also makes it more difficult to benchmark against other companies and industries on supply chain metrics, job responsibilities, and other human resource issues, because of the differences that exist from one company to the next. (Stock and Boyer, 2009, p.691)

En bild av en supply chain

Source: Arlbjørn, de Haas, Mikkelsen & Zachariassen (2010) UPSTREAM DOWNSTREAM 3rd tier 2nd tier 1st tier FOCAL 1st tier 2nd tier 3rd tier D E M A N D M A N A G E M E N T O R D E R F U L F I L M E N T C U S T O M E R R E L A T I O N S H I P M A N A G E M E N T R & D M A N A G E M E N T M A N U F A C T U R I N G M A N A G E M E N T S U P P L I E R R E L A T I O N S H I P M A N A G E M E N T S O U R C I N G M A N A G E M E N T R E T U R N M A N A G E M E N T

1998 CLM DEFINITION OF LOGISTICS.is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers' requirements. [Council of Logistics Management, 1998]

2006 CSCMP DEFINITION OF SCM Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies. [Council of Supply Chain Management Professionals 2006]

CSCMP 2012 SCM Boundaries and Relationships Supply chain management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and highperforming business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance, and information technology.

SUPPLY CHAIN MANAGEMENT is the integration of key business processes from end user through original suppliers, that provides products, services, and information that add value for customers and other stakeholders. [The International Center for Competitive Excellence, 1994] [The Global Supply Chain Forum, 1998]

Pilot Study 10 companies Supply Chain Integration: 2 Supply Chain Information Sharing: 1.8 Supply Chain Visibility: 1.5 Supply Chain Collaboration: 1.8

Informationsöverföring Strategic Tactical Operational Data Information Knowledge

Conclusions SCM Integration What to integrate? Number of aspects (technologies, processes, performance measures ) No clear guidelines for practitioners regarding what to integrate in the different stages of the integration process How to integrate? Several recommendations (inter-firm collaboration, SC design, information sharing ) Different opinions regarding in what sequence to conduct internal and external integration Chronologically structured approach is missing Who to integrate with? Strategic and systematic managing only between T1-F-C1 Dyadic supplier-buyer relationships only coordination of order processing, operational scheduling Why to integrate? Number of benefits both on general level and more specific level presented Lack of concrete empirically proved evidence confirming the proposed benefits

Hinder och drivkrafter Category Terminology Sub-categories Definitions, frameworks, standards Organizational Structure, process orientation, measurement and reward systems Relationships Trust, mutual understanding, power and control, privacy and security Technology Information systems, complexity, standards General Eco-System,laws,trends, globalization, business models

SCM Frameworks GSCF (Lambert) SCOR (scc) CSCMP Mentzer Others (e.g cfpr, sustainability)

Types of Inter-company Business Process Links Tier 3 to Initial suppliers Tier 2 Suppliers Tier 1 Suppliers Tier 1 Customers Tier 2 Customers Tier 3 to Consumers/ End-customers 1 1 2 2 Initial Suppliers n 1 n 1 2 3 n 1 n 1 2 3 n 1 n 1 n n 1 2 3 1 n n 1 2 n Consumers/End-customers Managed Process Links Monitor Process Links Not-Managed Process Links Non-Member Process Links Focal Company Members of the Focal Company s Supply Chain Non-members of the Focal Company s Supply Chain Source: Adapted from Douglas M. Lambert, Martha C. Cooper, and Janus D. Pagh, Supply Chain Management: Implementation Issues and Research Opportunities, The International Journal of Logistics Management, Vol. 9, No. 2,

Supply Chain Management Vision The key to achieving an integrated flow of product and information throughout the supply chain is to create a focused customer interface, a focused supplier interface, and an integrated, process-oriented, supply chain which is driven by the customer. Underlying Process Vision Customer Relationship Management Customer Service Management Fulfillment Customer Demand Management Supplier Relationship Management Process Lunds Source: Universitet/Dag 3M Näslund,Sep 7, 2010 Manufacturing Flow Management

Supply Chain Management Integrating and Managing Processes Across the Supply Chain Information Flow Tier 2 Supplier Tier 1 Supplier Purchasing Production Manufacturer Logistics PRODUCT FLOW R&D Marketing Finance Customer Consumer/ End - user Supply Chain Management Processes CUSTOMER RELATIONSHIP MANAGEMENT CUSTOMER SERVICE MANAGEMENT DEMAND MANAGEMENT ORDER FULFILLMENT MANUFACTURING FLOW MANAGEMENT SUPPLIER RELATIONSHIP MANAGEMENT PRODUCT DEVELOPMENT AND COMMERCIALIZATION RETURNS MANAGEMENT Source: Adapted from Douglas M. Lambert, Martha C. Cooper, Janus D. Pagh, Supply Chain Management: Implementation Issues and Research pportunities, O Lunds The International Universitet/Dag Journal of Logistics Näslund Management,Sep 7,, Vol. 2010 9, No. 2, 1998, p. 2.

IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENT Typical Functional Silos Business Processes Customer Relationship Management Marketing Account Management Research & Development Requirements Definition Logistics Production Purchasing Finance Requirements Manufacturing Definition Strategy Sourcing Strategy Customer Profitability Customer Service Management Account Administration Technical Service Performance Coordinated Specifications Execution Priority Assessment Cost To Serve SUPPLIERS Demand Management Order Fulfillment Manufacturing Flow Management Supplier Relationship Management Demand Planning Special Orders Packaging Specifications Order Booking Process Requirements Environmental Requirements Process Stability Material Specifications Forecasting Network Planning Prioritization Criteria Inbound Flow Capability Planning Plant Direct Production Planning Integrated Planning Sourcing Selected Supplier(s) Integrated Supply Supplier Management Tradeoff Analysis Distribution Cost Manufacturing Cost Materials Cost CUSTOMERS Product Development and Commercialization Business Plan Product Design Movement Process Material Requirements Specifications Specifications R & D Cost Returns Management Product Product Reverse Remanufacturing Strategy, Information Specification Visibility Material Revenue & Life Cycle Information Design Architecture, Logistics Data Base Costs Information Architecture, Data Base Strategy, Information Visibility Note: Process sponsorship and ownership must be established to drive the attainment of the supply chain vision and eliminate the functional barriers that artificially separate the process flows. Source: Adapted from Douglas M. Lambert, Larry C. Guinipero and Gary J. Ridenhower, Supply Chain Management: A Key to Achieving Business Excellence in the 21 st Century, unpublished manuscript as reported in Keely L. Croxton, Sebastián J. García-Dastugue and Douglas M. Lambert, The Supply Chain Management Processes, The International Journal of Logistics Management, Vol. 12, No.2 (2001), p. 31.

The SCOR model an industry open standard SCOR is a supply chain process reference model containing over 200 process elements, 550 metrics, and 500 best practices including risk and environmental management Organized around the five primary management processes of Plan, Source, Make, Deliver and Return Any interested organization can participate in its continual development Plan Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source Return Return Return Return Return Return Return Return Suppliers Supplier Supplier Your Company Customer Customer s Customer Internal or External Internal or External 28 SCOR Benchmarking - Presentation

Supply-Chain Operations Reference-model (SCOR) 10 Level 1 and Level 2 Processes Plan P1 Plan Supply Chain P2 Plan Source P3 Plan Make P4 Plan Deliver P5 Plan Returns Suppliers Source Make Deliver S1 Source Stocked Products M1 Make-to-Stock D1 Deliver Stocked Products S2 Source MTO Products S3 Source ETO Products M2 Make-to-Order M3 Engineer-to-Order D2 Deliver MTO Products D3 Deliver ETO Products D4 Deliver Retail Products Customers Return Source Return Deliver Enable

SCM Frameworks (Mentzer)

SCM Sustainability (Carter and Rogers 2008)