Developing Operations Strategies: What, Why, And How?

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1 Developing Operations Strategies: What, Why, And How? Gene Tyndall Tompkins International Valerie Bonebrake Tompkins International Tompkins Supply Chain Leadership Copyright Forum 2015 August 31 September 2, 2015 Your Supply Chain. The Right Way.

2 Session Agenda What is an Operations Strategy Developing the Right Operations Strategy Managing a Strategy to Achievement Three Steps to Developing the Right Operations Strategy Additional Discussion 2

3 What Is An Operations Strategy? Strategy is not a vision, mission, goals, priorities, or plans It results from strategic choices about how to operate How to enable the business strategy How to provide the needed customer services Choices are necessary because: There are different ways to operate in every channel or market Differentiated services are what bring and maintain customers The right choices and execution of those determine the winners ASW Planning Document 3

4 Developing The Right Operations Strategy It s About Needed Capabilities! Capabilities Target Customers Maximize Economic Value Value Proposition 4

5 Key Questions To Ask Are our supply chains flexible enough to support new strategies? Are we meeting our margin targets? Can we improve? Is our supply chain performance differentiating us from competition? Is our organization aligned to support our strategies? How can we better optimize inventory, improve our S&OP process, and become more demand driven? 5

6 Managing an Operations Strategy to Achievement 1. Strategy Before Structure: Identify the capabilities needed to achieve the desired growth and service levels 2. Determine The Right Structure: Tailored capabilities to achieve the desired service performance levels. 3. Implement It Successfully: Deliver ontime and on-budget to realize needed ROIs. 6

7 Managing Any Strategy To Achievement What capabilities are needed to deliver products to markets effectively and efficiently, in order for business strategies to be achieved? 7

8 Delivering Supply Chain Excellence Identifying Operations Strategy Drivers and Contributors is Key Customers Competitors Internal Assessment Technologies Operations Strategy External Trends New Operations Capabilities Planning & Execution 8

9 Delivering Supply Chain Excellence Operations strategy (what) needs to come before structure(how) Strategy Business Strategy Product, Marketplace and Customer Value Proposition Operations Strategy Supply Chain Capabilities Structure Facilities Design Network Design Transportation Design Technology Design Organizational Design Inventory Management Implementation Implementation Execution 9

10 Developing The Right Operations Strategy The Advanced Solutions Workshop (ASW) utilizes a three step process to develop the right operations strategy * How is Omnichannel impacting Supply Chains * Where do our Supply Chains fall short of Customer Expectations * Where is time and cost in our Supply Chain Journey? * What opportunities could improve our supply chains? * Do these opportunities impact supply chain costs, time, disruption? * How do we qualify benefits? SCAN FOCUS * Set Evaluation Criteria * Prioritize Initiatives * Define Opportunity Initiative Plan ACT 10

11 It Is About The Work Process ASW Preparation, Execution, and Follow-UP are Keys to Success STEP 1: Plan and Prepare for the ASW STEP 2: Conduct ASW STEP 3: Workshop Outcomes Report Out Gain exposure and knowledge Develop and qualify improvement opportunities Develop Workshop Materials Cross- Functional team Executive participation Professional Facilitation &Thought leadership Graphics Capture Formulate a report and roadmap Final team review and signoff 11

12 Prepare For The ASW: Establish The Current AS-IS State Preparation is Key Map the supply chain flows of product, information, cash, and work: Product flows and processes from port of origin to end delivery Capacity assessments Compare (benchmark) processes and performance levels Review supply chain information technologies Develop SWOT analysis and assessment document with improvement opportunities Capacity assessment For the ASW we now have: Deep understanding and documentation of current business and supply chain Documentation of key statistics Benchmark GAP analysis Summary of existing capacity KEY: Location Database (50) Location Information Xportation Master Database (44) Freight Rates, Carriers (43) Shipping Reqs Existing Interface Future Interface Customer Database (51) Customer Information Invoice History Database Deployment Planning (Manugistics) (42) Inventory Movements Pending Order Database (45) Advance Orders DC WMS System (12 Factories) Product Database (52) Product Information (41) Inventory Adjustments 1.9%+ Data Flow / System Interfaces Current OMS, Current Inv. Mgmt., New WMS (49) Historical Invoice Data (48) Pend. Orders Merch. Info Database (MAD) (47) Inventory Availability Check (39) ASNs (40) Freight Information Bakery (53) Merchandising Information CSN (46) Inventory Status Inventory Management BITARS Benchmarking (38) Receipts MAD Interface NOS EDI Transportation Management (1) Merchandising Data (2) Pending Orders (3) Order Status (4) Delivery Schedules (5) Customer Updates (6) Product Data (7) Messages (36) SKUs (35) Quality Holds (34) Shipments (33) Inventory Receipts (32) Inventory Adjustments (31) Returns (37) Freight Claims Billing System APS -0.3% +4.9% OMS Pick to Light Sales Rep. HHT (8) New Orders (9) Msgs (10) Returns, Credits (11) Merch Info (12) Invoices/Credits, Routes (13) Invoice Adjustments (17) Orders (18) Order Updates (19) Expected Returns (20) Return Confirmation (21) Route Schedules (22) Ship Confirmation (30) Wave Reqs (29) Pick Confirmation (14) Expected Returns Warehouse Management System (12 regional systems) Warehouse Control System (28) Adjustments (27) Sort Confirmations (26) Order Reqs Sortation Delivery HHT (25) Order/Lane Assignments Field (16) Customer Data Regional Warehouse (23) Daily Routes (24) Orders (15) Daily Routes Route Planning Draft - for discussion only. Supply Chain Systems Planning Project 11/7 Map Work, Information, and Product Flows 12

13 Conduct The ASW To Determine Operations Strategy And Needed Capabilities SAMPLE AGENDA TIMES ACTIVITIES DAY 1 Sample Plan 9:00 Kick-off 9:15 Review Project to Date 9:30 Strategic Intent 10:00 Leading Practices Benefits & Opportunities 12:00 Lunch 1:00 Brainstorm Scenarios 3:30 Clarify Long Term Vision 5:00 Day 1 Closing DAY 2 (Additional Activities / Sessions) Define Alternatives, Quantify, Assess Risk, Project Planning DAY 3 (1 Week Later) Review for Group Refinement & Approval Facilitator ROLES ASW Leader Executive Sponsor Program Manager Everyone Else: Participants RULES Everyone Participates/ No One Dominates Group Genius - Build on Each Others Ideas Stay Focused and Engaged Trust the Knowledge in the Room BREAKOUTS Functional Areas have detail sessions with narrow focus Cross functional in nature with emphasis on functional area Operational in understanding, senior leaders for decisions 13

14 ASW Exercises Are Used To Structure The TO BE Direction The Goliath s are aggressive Market share in segment is under attack ecommerce is firing on all cylinders a definite growth engine Opportunities and associated risks must be understood and strategies developed to mitigate risk and improve performance 14

15 Breakout Teams Address Issues Rapidly And Iteratively Identify key supply chain events required to meet customer needs start with the customer! 15

16 Graphics Capture Helps Visualize The Future Together the team creates the vision for the operating strategy that enables the future Client Logo Client Logo Client Logo 16

17 An ASW Answers Key Questions What do customers expect? What services do we need to provide? What capabilities do we need? What gaps must be filled? 17

18 Develop The Operational Capabilities To Achieve The TO-BE Leveraging the work products from the previous two steps, develop, review, finalize, and document the preferred operations strategy and the roadmap to achieve Finalize Preferred TO-BE Strategy Details Team/Stakeholder Collaboration/Portfolio of Initiatives Stakeholder (internal and external) reviews Formulate initiatives Change management considerations Validate End State Value Proposition for Achieving the TO-BE Strategy Benefits potential - how the strategy enables profitable growth Qualification of initiatives and ROI Risks and dependencies Develop Initial Operations Strategy Roadmap Documentation of supply chain capabilities Prioritized initiatives, transition plans, and timelines to achieve the capabilities 18

19 Validate The Initiatives Determine the impact and viability of opportunities 19

20 Report Out Sample Work Products Work products occur sequentially through the ASW process ASW outputs include diagnostics, opportunity matrix, capability, and resource gaps, criteria for supply chain effectiveness, and detailed action plans (or Roadmap) Facilitated Workshops & Client Interviews Opportunities Assessment Strategic Plans by Identified Opportunity Definition of Supply Chain Success Criteria Resource & Capability Gaps 20

21 Make Operations Strategy A Reality 21

22 Developing Operations Strategies: What, Why, And How? Discussion 22

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