Council of Supply Chain Management Professionals
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1 Council of Supply Chain Management Professionals April 12, 2012 Raw Material Purchasing Factory Manufacturer s DC Customer s DC Consumer Rick D. Blasgen President & CEO CSCMP
2 SCM = Seed to Table
3 Evolutionary Perspective Focus More Attention From Senior Management Functional Orientation Purchasing Operations Marketing Package Engineering Transportation Inventory Mgt. Warehousing Manufacturing Suppliers Customers etc. Logistics Supply Chain Management Beyond
4 US State of Logistics Metric % Logistics Costs $1.343 t $1.097 t $1.211 t 10.4% % of GDP 9.4% 7.8% 8.3% 6.4% Trans Costs $872 b $695 b $768 b 10.5% Inv. Carrying $419 b $359 b $396 b 10.3%
5 Since 1990 Logistics Costs have risen 184% Average annual increase = $28b 2010 increase was $114b Also. As a % of GDP, Logistics expense went from 11.4% to 8.3%, a reduction of 27%
6 Global Comparison of Logistics Expenditures Economy Higher Output--GDP Better use of resources Multi-use Infrastructure Businesses Market Access Market Integration Cost Efficiency Consumers More Goods and Services Wider Availability Lower Prices/Income U.S. 8.3% GDP Asia 13-20% GDP China 15% GDP Europe 12-14% GDP India 13% GDP Japan 11% GDP Mexico 14% GDP
7 Some Magnitudes The cost of logistics in the US was $1.2 trillion in 2010, 8.3% of the US GDP. It was 17.9% in US expenditures on logistics is larger than the national GDP of all but 12 countries. Total domestic business inventories are valued at $2 trillion. By comparison, estimated logistics costs represent 15% of China s GDP and 13% in India.
8 When Supply Chains Work Well Wal-Mart's supply chain management success is improving productivity in the United States: The effects of the company's supply chain innovations on the retail industry led to a 3.1 percent decline in overall consumer prices between 1985 and In 2004, consumers spent $263 billion LESS than they would have if Wal-Mart were not around! That translates to $895 per person, or $2,329 per household.
9 When Supply Chains Don t Work So Well
10 SCM Has Strategic Profit Impact A study by Georgia Tech showed that a company s stock price drops 8% when the company experiences a glitch in its supply chain. A study at Miami University of Ohio showed that when a company adopts a new supply chain innovation the company s stock price increases. A study by Bain & Company showed that companies employing sophisticated supply chain methods enjoyed 12 times greater profit than companies with unsophisticated methods. Wall Street: New found respect for SCM. In one SCM MBA program in the US, 21/32 grads received job offers from Investment Banking firms because of the importance of SCM to their clients.
11 Top management is interested in what we do! But we must communicate more effectively.
12 Transparency!
13 $30 Decisions $145 Different Decisions?
14 What keeps the CEO up at night? Shareholder Value Revenue Cash Flow Profitability Market Share
15 The World Has Changed Shrinking global marketplace Information and visibility driven
16 New Boardroom Expectations of SCM Reduce costs Profit contribution Less inventory Sustainability Better use of capital
17 What does this all mean? CEO / CFO s - discovered the power of Supply Chain Management. Wall Street Watching industry dynamics Logistics industry represents almost 10% of the economy 3PL s Significant growth Supply Chain Risk Management is critical think about recent events, middle eastern uprisings, Suez Canal, Japan, Thailand, etc.
18 Mega Trends Shifting Demographics China s middle class could grow from 20% to 40% by 2020 Today, 450 million Indians have middle class incomes In Brazil, 30 million have moved to the middle class Income is up 67% 95% of the world population growth through 2050 will occur in developing nations Urban areas will produce nearly all of the population growth over the next 25 years Graying population shifting to global youth
19 Supply Chain Trends and Challenges Globalization. Growing complexity and pressure of dealing with global partners, suppliers and competition. Culture and geopolitical issues. Emerging Asian countries such as China, India and Southeast Asia will become major centers of growth. A lot of talk about manufacturing moving back to US or NA. Lack of Predictability. Supply chain whiplash.oil prices, commodities, currency valuations.
20 Supply Chain Trends and Challenges Consumer Attitudes and Demographics. Aging population. Growing demand for environmentally sustainable and socially responsible products by younger consumers. How to meet needs and maintain loyalty of the consumer? Information Technology will continue to revolutionize the discipline.
21 Supply Chain Trends and Challenges Current economic and political climate hinders free trade, Freer trade flows will still be the route to lift countries out of poverty. CSA 2010, 2011, 2012, 2013.forever? Panama Canal expansion - May provide more economies of scale and port diversification options to major US population centers Supply Chain professionals have an important role to play in communicating with decision makers the value of collaboration and cross country business.
22 Real Estate and Supply Chain The two are inextricably linked Real estate is critically important to the success of a company s supply chain Buildings should be viewed as assets that contribute to supply chain value Knowing fundamentals of SCM will help you communicate to clients/potential clients
23 Recent Warehouse & DC Operations Benchmark Study Inventory turns have increased after three years of continued decline More expansions are being planned to distribution operations Managers are re-installing incentive plans as company coffers are starting to slowly, but surely show signs of new life To realize transportation savings, many are adding satellite DCs and renegotiating freight rates Source : Logistics Management s 5th Annual Warehouse & Distribution Center (DC) Operations Survey
24 Thoughts about 2012 and beyond Shippers will continue to examine outsourcing opportunities Access to capacity will be a major factor Transportation will drive network changes Transitioning to a Trucker s Market Let s learn from the past! A nickel a hundredweight never made anyone rich!
25 Emerging (Emerged?) Supply Chain Trend Collaboration
26 Emerging (Emerged?) Supply Chain Trend Collaboration To cooperate with an enemy that has invaded your country
27 Relationships are critical The essence of SCM is collaboration it is not an option. involves all key participants working toward common goals. Absent collaboration, the supply chain will be nothing more than a collection of firms, each following their own pathways.
28 Back to the Future? New Ideas?! Sales and Operations Planning Multi Vendor Consolidation Forecasting let s include customer promotional activity Let s connect supply to demand! Should we consider outsourcing? Manufacturing should produce what the customer wants. Etc.!
29 Traditional Supply Chain Functional Career Path Executive Level Senior Level Advisory Level Staff Level Entry Level Demand/Supply Planning Procurement Manufacturing Global Logistics Fulfillment
30 Leading Edge SCM Career Path Corporate Executive Level SCM Consulting Level SCM Sr. Level SCM Advisory Level ISC Staff Level Experiences outside of ISC ISC Entry Level Demand/Supply Planning Procurement Manufacturing Global Logistics Fulfillment Supply Chain Management
31 The Future of Supply Chain Professionals Procurement Inventory Management Transportation Customer Service Proficient competencies Technical Managerial Leadership Production Planning & Manufacturing Must have excellent interpersonal skills Materials Planning Warehousing Ability to sustain collaborative relationships
32 CSCMP s Evolving Role Goal Better deliver intellectual capital and educational resources to corporate training/education and SCM personnel through greater collaboration and more formal relationships. Supply Chain Concierge Service
33 CSCMP s New Certification! Become a Supply Chain Superstar with SCPro TM
34 ADVANCE YOUR CAREER WITH CSCMP S SCPRO CERTIFICATION Three (3) level certification includes: Level One Cornerstones of Supply Chain Management Level Two Analysis and Application of Supply Chain Challenges Level Three Initiation of Supply Chain Transformation Visit cscmpcertification.org for more information or to apply today!
35 It s rigorous, It s globally relevant, It tests a broad range of industry skills and mastery of end-to-end supply chain functions.
36 Over 80 Current Corporate Members Brazilian Army Commission
37 Corporate Membership Benefits Individual corporate memberships belong to company Exclusive bundle packages only available to corporate members Great company advantage by overall company savings realized
38 Summary This discipline is a corporate necessity, yet can be a growth vehicle a revenue generating engine. We improve the financial position of companies and economies. Our stature and credibility is increasing. Supply chain professionals need to develop cross cultural skills and a global mindset to maximize opportunities in the increasingly globalized world. To prosper, to tackle these challenges, to take advantage of the opportunities, we need to work closely together!
39 SCM Conducts a Symphony We matter! Suppliers Customers Sales SCM Pro Manufacturing Procurement Marketing Information Tech
40 If people are committed to maintaining yesterday, they are not available to create tomorrow Peter Drucker
41
42 Sometimes, we have to learn to forget
43 Innovation! Be Creative in your Response to Supply Chain Problems
44 The Evolution of SCM Prehistoric 2000 How long will it take?? Warehousing and Transportation Physical Distribution Logistics Inception of SCM Full Implementation of Collaborative SCM ???
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