Leading Collaborative Supply Chain Transformations

Transcription

1 Leading Collaborative Supply Chain Transformations William B. Lee, Ph.D., CFPIM President, William B. Lee International Tish Patel Senior Consultant, SAP President, Houston APICS Chapter 1 William B. Lee, Ph.D., CFPIM Current: Educator, Consultant, and Board Member Books: Creating Entrepreneurial Supply Chains: A Guide for Innovation and Growth, 2012; Leading Effective Supply Chain Transformations: A Guide to Sustainable World-Class Capability and Results, 2010; (both with J. Ross Publishing) Articles: Creating Entrepreneurial Supply Chains, Supply Chain Management Review, May/June APICS E&R Foundation: Board of Directors APICS Body of Knowledge Committee: Member Previous Rice University: Professor, Director of Energy Programs, and Dean of Executive Education APICS International Board of Directors and Member of Leadership Team Freeman Companies: Board of Directors and Chair, Compensation Committee Deloitte: Senior Partner, Director of Supply Chain Consulting, Director of Change Management Consulting, and National Partner for Education and Research Oliver Wight Management Consulting: President and Board member 2 1

2 Tish Patel Current President, Houston APICS Chapter (A Platinum Chapter) SAP, Senior Consultant, Manages Global PMO Office Six Sigma Black Belt Previous Over Twenty Years of Broad Experience in Global Supply Chain and IT Integration Projects HP, Set Up Large Control Tower Operations in China; Compaq Computers and AT&T Mobility, Created and Led Large Supply Chain and Logistics Projects; Also Worked in Oil and Gas, Life Sciences, and Consumer Products Education: BBA, University of Houston, International Marketing, Organizational Behavior and Management 3 Transformative Ideas Are Not Always Obvious! I have an idea! Duh, what do we need that for? 4 2

3 One Company That Needs a Transformation! By next Friday, December 31, we ll have almost 10,000 units on the back lot! I thought we were in a make-to-order business? 5 5 What Do We Mean By Collaboration? Transformation? 6 3

4 Some Best Practices for You to Think About from this Presentation 1. Be on the lookout for collaborative transformational needs and opportunities. INNOVATION 2. Stimulate innovation. 3. Use collaborative transformations and innovation to foster profitable growth. Growth Emerging Technology Time 7 Learning Objectives COLLABORATIVE and INNOVATIVE TRANSFORMATIONS How to recognize and assess opportunities and needs: In the existing situation. For collaborative transformation. For enhanced innovations. 8 4

5 Agenda 1. Introduction to supply chain transformations 2. Why are we interested in transformation? 3. How do we know that we have needs and opportunities? 4. How can we convince the organization? 5. How can we develop transformative ideas? 6. How can we manage the risks? 7. How can we reap the payoff? 8. A final word 9 1. Introduction to Supply Chain Transformations It is not the biggest, nor the strongest, nor the most intelligent that will survive. It is the species most adaptable to change. Charles Darwin 10 5

6 Earlier Supply Chain Transformative Innovations 11 CEMEX: Innovation, Growth, and Transformation in a Fragmented Industry CEMEX founded in 1906 in Mexico Now one of the world s largest building materials companies 2011 sales = US$15.1B Entrepreneurial supply chains Innovative culture and practices, particularly information technology CEMEX is engaged in a rigorous transformation 1. Flattening the organization decentralizing authority and nurturing world class human resources 2. Building a solid balance sheet 3. Reshaping product/market portfolios SOURCE: CEMEX 2011 Annual Report 12 6

7 CEMEX Information Technology Example Different types of customers have different requirements for on time, reliable delivery External Internal Contractual Transformative collaboration among plants, logistics, and customers Satisfy individual customers instead of general customers Use one on one, team based, collaborative approach Commit to deliver a customer s concrete pipe on Monday, aggregate on Tuesday, concrete block on Wednesday, concrete on Thursday, and decorative concrete on Friday Help customers better serve their customers in both time and cost 13 CEMEX Information Technology Example I want my concrete pipe on Monday, my aggregate ontuesday, my concrete block on Wednesday, my concrete on Thursday, and my decorative concrete on Friday. 14 7

8 Who Wudda Thunk It? Can an industry such as cement and its derivative products (ready mix concrete, concrete blocks, concrete pipe, etc.) be the setting for innovation? Who would have suspected that a basic industry such as this could be the focus of significant collaborative supply chain transformations. Look at CEMEX s Web site: to get more information on the company. It s really informative Why Are We Interested In Transformation? Transformation Investment must be rational. If you can t understand it, don t do it. (Warren Buffet) BNSF NetJets 16 8

9 Breakout Example from Transformation Project San Francisco RDC X Coverage Areas Coverage Areas Before Bakersfield Transformation Bakersfield X X Las Vegas RDC Los Angeles RDC X San Francisco RDC X Coverage Areas Coverage Areas After Bakersfield Transformation New Bakersfield Breakout RDC 17 X X Los Angeles RDC Las Vegas RDC X What Is a Control Tower? Provides a centralized and standardized control mechanism for proactively managing, executing, and reporting events in the supply chain. Decisions and actions are real-time driven, based on an end-to- end view of what should happen, what is happening, and what will happen. Simplify Operations Leverage Processes Manage Events with Real- Time Visibility Optimize Costs Provide Supply Chain Data 18 Report and Analyze with Standard Metrics 9

10 Example Capability with Control Towers We need 10 containers from China. Ship through Long Beach. TRANSPORTATION MANAGEMENT SOFTWARE CHINA CONTROL TOWER No, wait! Divert shipment to Seattle. X 19 Scope and Functions of a Control Tower. Strategic Tactical Operational 20 10

11 Important Control Tower Elements OPPORTUNITIES AND NEEDS SUPPLIERS CUSTOMERS PROCESSES TECHNOLOGIES PEOPLE How Do We Know We Have Needs and/or Opportunities? If all you have is a hammer, everything looks like a nail. (Anonymous) PLAN Cash Value DELIVER SOURCE MAKE DELIVER SOURCE MAKE DELIVER SOURCE MAKE DELIVER SOURCE SUPPLIERS OUR COMPANY Information CUSTOMERS Product and Process Development Competition is no longer company to company but supply chain to supply chain Return ADAPTED FROM:

12 4. How Can We Convince the Organization? My Organization n Give me a place to stand, and with a lever I will move the whole world. (Archimedes) Give me a place to stand and with a lever I will move the whole Information world. About (Archimedes) the Consequences of my Behavior My Beliefs About Consequences Of My Behavior + The Value of the Consequences to Me My Confidence That I Can Perform the Behavior + = Consequences My Behavioral Performance on the Job My Decisions About How to Behave The Environment Within Which I Exist 23 Why We Fail at Transformative Projects ACTIONS BUT Supply Chains Have Operated Neither More BECAUSE Focus Has Been on Pressuring Suppliers, not on the Supply Many Companies Have Rationalized Their Efficiently nor Supply Chains Effectively Chain Processes Hundreds Have Restructured Their Supply Chains Supply Chain Restructuring Efforts Have not Met Original Targets Focus Has Been on the Supply Chain Organization, not on the Supply Chain Processes Information Systems Have Proven to Be Less Focus Has Been on the Information Technology, not on the Supply Chain Billions Have Been Spent to Automate Inefficient Than Totally Effective Supply Chains Initiatives Processes And we could go on and on and on 24 12

13 Kennedy s Man on the Moon Speech Convinces a Nation of a Transformative Idea Neil Armstrong lands on the moon, July 20, 1969 < 7 years later President Kennedy makes his man-on-the-moon speech at Rice University, Houston, September 20, That s one small step for a man, one giant leap for 1. Current situation mankind. 2. Vision 3. Path forward How Can We Develop Transformative Ideas? Where there is no vision, the people perish. (Proverbs 29:18, King James Version of the Bible) Visioning will provide an opportunity to: Think outside the box and view the company s supply chains differently. Standardize the supply chain processes and practices whenever possible. Improve work flows and methods. Identify radical new supply chain designs. Look for opportunities to improve customer service. Consider new technologies and practices

14 A Capital Equipment Company s Transformative Stage Gate Process Gate 1 Gate 2 Gate 3 Gate 4 TRANSFORMATI ION OPPORTUNITY VISIONING MARKETING TECHNOLOGY MANUFACTURING Stage I: Build Knowledge Stage II: Determine Feasibility Stage III: Test Practicality Stage IV: Prove Profitability Stage V: Manage Life Cycle Ideas Experiments Projects Production Profits 27 Collaborative Transformation: Link Product Development with S&OP Concept & Market Analysis Strategy Alignment & Feasibility Program Development Product & Process Development Product & Process Validation Stable Production & Customer Acceptance STRATEGY ALIGNMENT & FEASIBILITY 1. Establish Bases of Differentiation 2. Confirm Concept with Prospective Customers 3. Identify Operating and Option Requirements 4. Develop Make / Buy / Reuse Strategy 5. Determine Design and Manufacturing Feasibility 6. Develop Early Supplier Involvement, Sourcing, and Cost of Operations Strategy 7. Develop a Maintainability Strategy 8. Perform Rough Assessment of Organizational Development, Training, and Manpower Issues 9. Draft Critical Path Plan with Multiple Scenarios 10. Develop Market Launch Plan 11. Develop Plan to Incorporate Lessons Learned 12. Make Program Leader Recommendation 13. Assess Market Forecast 14. Develop Business Case 15. Develop Program Proposal 16. Execute Gate Review Process Responsible: Advanced Design Approve: Senior Leadership Team Monthly S&OP and Product Development Stage/Gate Process JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN

15 6. How Can We Manage the Risks? You ve got to be careful if you don t know where you re going, because you might not get there. (Yogi Berra) CONSIDER To make it easier to manage fast-moving consumer demand, ZARA created an extremely fast global supply chain. CONSIDER Boeing 787 example. Very late deliveries because of supply chain difficulties. CONSIDER Your suppliers are your suppliers because they have capabilities that you do not have treat them accordingly and not as adversaries to be exploited. 29 One Company s Transformation Risk Management OBJECTIVE: SUCCESSFUL SUPPLY CHAIN TRANSFORMATION TRANSFORMATION ELEMENTS Implement commodity team concept Link supply chain objectives to business objectives Create sense of urgency for the speed of change Ensure that supply chain metrics drive enterprise-wide behavior Implement optimal organization structure Implement early supplier involvement (ESI) Upgrade demand management capability Improve make-or-buy decision process RISK ISSUES Limited acceptance for commodity teams No unified vision between groups Need for cultural shift from firefighting to strategic focus for supply chains Lack of linked and consistent metrics Current structure supports silo mentality Current ESI is limited Too much forecasting and lack of connectivity with customers Process is inconsistent and lacks reliability RISK MITIGATION PLAN Create three cross-discipline commodity teams to see how they work Create line-of-sight linkage from supply chain to business objectives Conduct education and training programs on need for strategic view Standardize enterprise metrics and link to supply chain metrics Create total enterprise supply chain organization Create incentives for Engineering to actively implement Enhance forecast accuracy metrics and use to drive connectivity efforts Implement strategic sourcing process 30 15

16 Supplier Quality Risk Assessment Framework HIGH Confidence in Management LOW Low Risk Moderate Risk Medium Risk High Risk! Company is notified of a specific quality problem in time to do something about it ality Notifications HIGH Qu LOW RISKY SUPPLIERS HIGH RISK SUPPLIERS Looking Back LOW Quality Escapes HIGH Company is not notified of a specific quality problem in time to do something about it (i.e., the item escapes from the supplier) How Can We Reap the Payoff? Interviewer: Tell me, Mr. Sutton, why do you rob banks? Willie Sutton: Because, that s where the money is. (Anonymous) Increased Revenue Improved Quality TRANSFORMATION Enhanced Service Reduced Costs 32 16

17 So, What Happens with the Payoff? Beginning Transformation Without Any Improvement After Some Work and With Some Improvement PERFORMANCE After Much Work and With Much Improvement 33 Keeping the Improvements Going Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Developing a Strategic Vision Setting Objectives Crafting a Strategy to Achieve the Objectives and Vision Implementing and Executing the Strategy Monitoring Developments, Evaluating Performance, and Making Corrective Adjustments Revise as Needed in Light of Actual Performance, Changing Conditions, New Opportunities, and New Ideas 34 17

18 9. A Final Word I really didn t say everything I said. (Yogi Berra) Now, what do you think??? Collaboration? Transformation? 35 Thank You for Coming Please Ask Your Questions and Make Your Comments We Have All Sorts of Ways to Deal with Them! 36 18

19 Contact Information William B. Lee, Ph.D., CFPIM Corresponding author Del Monte Drive, Suite 1606 Houston, TX Tish Patel 37 19