SUPPLY CHAIN MANAGEMENT A MULTIDISCIPLINARY APPROACH FOR COMPETITIVNESS IN VOLATILE TIMES. Venus Klaus August 04, 2012 Kufstein

Transcription

1 SUPPLY CHAIN MANAGEMENT A MULTIDISCIPLINARY APPROACH FOR COMPETITIVNESS IN VOLATILE TIMES Venus Klaus August 04, 2012 Kufstein

2 Agenda Introduction and what is SCM Hypercompetition fast Changing Environment extreme Volatility. Corporate Strategy and SCM Strategy Aligning SCM Priorities with Strategy SCM Interdisciplinarity - Model & Empirical Testing Preliminary Results Conclusions - Next steps PAGE 2

3 Introduction Klaus Venus Partner and CEO of a Supply Chain & Logistics Consulting Business 12 Years Head of Supply Chain Management Mondi, International Paper and Packaging Company, turnover 6,2 bn EUR in 2010 winning the European SCM Award 2008 for the implemented End to End SCM integration in Mondi UFP Member of the Board in a Logistics Association VNL Foundation and lead of SCM-Expert Group since Years Supply Chain Operations Management and Logistics Experience as Director Production, Logistics and Sourcing in the Food Industry PAGE 3

4 What about is Supply Chain Management? Customer Consumer Management Catalogue Management Order Managemet Warehouse Management Inventory Management Delivery Management Supplier Management Supplier Money flow e.g. Customer payment, transaction accounting, supplier settlement Information flow e.g.customer forecast, delivery to address, product availability promise Physical flow e.g. Manufacture, store, pick, pack, ship, deliver, return PAGE 4

5 Definitions Definition based on consensus of 173 definitions - 3 major themes: Activities, benefits, constituents/components (6 core elements) Definition: The management of networks of relationships within and between interdependent organizations and business units consisting of material suppliers, purchasing, production facilities, logistics, marketing, and related systems that facilitate the forward and reverse flow of materials, services, finances and information from the original producer to final customer with the benefits of adding value, maximizing profitability through efficiencies, and achieving customer satisfaction J. R. Stock, S. L. Boyer: Developing a consensus definition of SCM: a qualitättive study, 2009 PAGE 5

6 Agenda Introduction and what is SCM Hypercompetition fast Changing Environment extreme Volatility. Corporate Strategy and SCM Strategy Aligning SCM Priorities with Strategy SCM Interdisciplinarity - Model & Empirical Testing Preliminary Results Conclusions - Next steps PAGE 6

7 Aging Strucutre PAGE 7

8 2011: Billions of NEW Dollars printed Quelle: CHEF INFO, April 2009 PAGE 8

9 Currency Fluctuations /$ PAGE 9

10 Commodities rally.rohstoffmärkte GSCI- Index PAGE 10

11 Scenarios are Changing instantly and unsteady Atomic power shall help the British Government to achieve their climate targets. 14 old atomic power plants shall be replaced till 2035 by new ones. PAGE 11

12 Cities are booming People living in cities % % % % PAGE 12

13 Attractivity gets newly defined Mumbai:80% are very happy (Urban Age Questionnaire) PAGE 13

14 Agenda Introduction and what is SCM Hypercompetition fast Changing Environment extreme Volatility. Corporate Strategy and SCM Strategy Aligning SCM Priorities with Strategy SCM interdisciplinarity - Model & Empirical Testing Preliminary Results Conclusions - Next steps PAGE 14

15 Material Portfolio Management Supplier Management Strategic Key Priorities are Aligning Supply Chain... with company strategy, aligning incentives across functions and with external parties, arming people with the right data, so they can make holistic decisions, and building flexibility to quickly respond to demand, rather than relying on forecast (Cohen, 2005). Corporate Strategy Production Strategy Channel Supply Chain Strategy Sourcing Strategy Operational Tactical Sales & Operations Planning Demand Planning Supply Planning Order to Cash Fulfil Demand Materials Requirement to Payment PAGE 15

16 Supply Chain Performance Indicator focuses on both quantitative Performance and qualitative Process Maturity Quantitative elements provide visibility Key Supply Chain Management Metrics Delivery into overall supply chain performance Asset Performance/ Flexibility Cost Management Responsiveness Delivery Performance Order Fulfillment Lead Time Production Flexibility Total Supply Chain Management Cost Inventory Days of Supply Cash-to-Cash Cycle Time Net Asset Turns Qualitative elements provide insights on the maturity of a company s supply chain processes based on a stages of maturity Stage 1 Functioal Focus Discrete supply chain processes and data flows well documented and understood Resources managed at department level and performance measured at functional level Stage 2 Internal Integration Company-wide process and data model continuously measured at the company, process, and diagnostic levels Resources managed at both functional and crossfunctional levels model Stage 3 External Integration Strategic partners throughout the global supply chain collaborate to: Identify joint business objectives and action plans Enforce common processes and data sharing Define, monitor, and react to performance metrics Stage 4 Cross-Enterprise Collaboration and Optimization IT and ebusiness solutions enable a collaborative supply chain strategy that: Aligns participating companies business objectives and associated processes Results in real-time planning, decisionmaking, and execution of supply chain responses to customer requirements Supply Chain Performance Scorecard Supply Chain Performance Indicator Assessment of Supply Chain Practices (not a full diagnostic) 16 PAGE 16

17 Agenda Introduction and what is SCM Hypercompetition fast Changing Environment extreme Volatility. Corporate Strategy and SCM Strategy Aligning SCM Priorities with Strategy SCM Interdisciplinarity - Model & Empirical Testing Preliminary Results Conclusions - Next steps PAGE 17

18 Aligning SCM Priorities with Strategy Strategy People Process Metrics & KPIs Information & Systems Comprehensive, Flexible, End-to-End approach Cross Functional Teams with Clear Accountabilities Common Processes Standardised Reports & Metrics Alignment of KPI s Integrated Systems PAGE 18

19 Agenda Introduction and what is SCM Hypercompetition fast Changing Environment extreme Volatility. Corporate Strategy and SCM Strategy Aligning SCM Priorities with Strategy SCM Interdisciplinarity - Model & Empirical Testing Preliminary Results Conclusions - Next steps PAGE 19

20 Influencing Theories Multidisciplinary View Management Theory Transaction Cost Theory Inter-Organizational Theory Hybrid fields Strategic Management Key antecedent disciplines Marketing Systems Thinking Information Theory Industrial Dynamics Social Theory Game Theory Production Engineering Production Economics Psychology Other Theories J. R. Stock, S. L. Boyer: Developing a consensus definition of SCM: a qualitättive study, 2009 PAGE 20

21 Building Blocks of the Model Customer orientation SCM-Maturity Strategic View on SCM/ Practices and Processes Leadership Operative Performance Finanzielle Performance Customer Satisfaction Competitiveness In comparison what I found in literature, this thesis is the most comprehensive study in the field of SCM PAGE 21

22 Structural Model Process organizational View versus a hierarchical View Firm Performance Customer Orientation H 1 Culture Trust, Leadership H 2a Strategic View on SCM (Corp. Strategy - SCM Strategy H 3 H 2b SCM Practices (collaboration, postponement) H 4 H 8 H 9 Operational Performance H 6 H 5 Financial Performance H 11 H 7 H 9a H 10 Customer Satisfaction H 12 Competitive Advantage PAGE 22

23 Agenda Introduction and what is SCM Hypercompetition fast Changing Environment extreme Volatility. Corporate Strategy and SCM Strategy Aligning SCM Priorities with Strategy SCM interdisciplinarity - Model & Empirical Testing Preliminary Results Conclusions - Next steps PAGE 23

24 Preliminary Results of the Study Interview test with 2 companies in depth across different functions, model review with 2 SCM experts 15 interviews with SCM-Managers or Operations-Managers Interviews were chosen to secure a high level of quality and reliability as the interview is semi-structured and questions can be understood better by interviewee through additional explanations Interviews are done by different people to eliminate the personal bias (increase validity of results) PAGE 24

25 Industrial Sector / Turnover Industrial Sector Turnover 0% 7% 14% 29% Assembly Industry Chemical & Pharmaceutical Industrie 21% 7% Process Industry Automotive 22% % Merchandise % Other Mio. 50% PAGE 25

26 Number of Employees / Name of Function Number of Employees Name of Function 7% 7% 22% 50% 36% % 14% 64% Supply Chain Management Logistik Produktionsplanung Sonstige PAGE 26

27 Profil for a Company with low interdisciplinary view on SCM We have clear defined Service Levels Wir haben klar definierte Kundenservicelevels Wir definieren die Kunden- Servicelevels We define gemeinsam our mit den Kunden. Service Levels together with our customers 1 0 We measure our Service Wir messen die Kunden- Servicelevel-Erreichung Levels regularly monatlich. 2 Kundenorientierung Umsatz EBIT ROCE Working Capital Bestand Cash to Cash Wir definieren unsere Servicelevels und bieten diese am Markt an. We define our Service Levels and offer them to the market Kundenzufriedenheit Our Unsere Customer Kundenzufriedenheit Satisfaction ist is... better als than die unserer Mitbewerber. competition We Wir messen measure unsere our customer Kundenzufriedenheit satisfaction periodisch regularly und regelmäßig. 0 0,5 1 1,5 2 2,5 3 3,5 4 4,5 5 Ideal Mittelwert Mittelwert Ideal PAGE 27

28 Profil for a Company with high interdisciplinary approach to SCM Customer Orientation Wir definieren die Kunden- We define Servicelevels our Service gemeinsam with our customers mit den Kunden. We Wir have haben clear klar defined definierte Kundenservicelevels. customer Service 5 Levels 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 Wir messen die Kunden- Servicelevel-Erreichung We measure our service performance monatlich. regularly Ideal Mittelwert Umsatz EBIT ROCE Working Capital Bestand Cash to Cash Our Unsere Customer Kundenzufriedenheit satisfaction is ist better... als than die competition unserer Mitbewerber. Wir messen unsere Kundenzufriedenheit periodisch und We measure our customer satisfaction regelmäßig. regularly We define our Service Wir and definieren offer it unsere to the market Servicelevels und bieten diese am Markt an. Kundenzufriedenheit Mittelwert Ideal PAGE 28

29 Competitiveness View of Companies Competitiveness In Summary our performance In Summe is ist better unser than our competitors Wettbewerbsfähigkeit... als die unserer Mitbewerber. Our Supply Unsere Chain Supply is better Chain than Performance our competitors ist... als die der Mitbewerber. Our Unser Service is ist better... als than das our der competitors Mitbewerber. 5 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 Our Products are better than our Unsere Produkte sind... als die der competitors Mitbewerber. Unsere Our Prices Preise are sind better... als than die der our competitors Mitbewerber. Ideal MW Gesamt Our Assortment Unser Sortiment is better ist than... our als das der competitors Mitbewerber. Unsere Our Costs Kosten are sind better... als than die our der competitors Mitbewerber. PAGE 29

30 Preliminary Findings Significant correlations between SCM organization, SCM practices, SCM processes, SCM-strategy and SCM overall (0,89 -,944) Companies who have a clear SCM strategy, a SCM-organization, employ postponement and supplier & customer collaboration are higher mature in SCM and show more stable results in volatile times ( ) Cash to cash cycle negatively impacted by SCM-performance - Where no regular measuring exists companies show a higher volatility of C2C in volatile times PAGE 30

31 Preliminary Findings Absolut figures (financial and qual. SCM-performance) are not useful in cross industry comparision Companies who rank higher in terms of strategic view on SCM show as well a higher customer orientation Companies who rank higher in processes, practices and have a higher rank on strategic view on SCM show as well higher levels of support for SCM from top management and management believes SCM delivers significant contribution to results (Leadership-impact) More mature companies in SCM express a good idea about their positioning in terms of competitors and rank normally in terms of service and SCM better than peers There seems to be a strong correlation between strategic importance of SCM and competitiveness PAGE 31

32 Main Findings from the Interviews Service levels are not formalized Service levels are defined from the company without customer involvement Supply Chain strategy not formalized ROCE is not known by the SCM-Managers Working Capital is not known by the SCM-Managers Qualitative SCM performance is not measured regularly by about 30% of the companies and 20% do measure it wrong There is no supply chain segmentation - based on different service requirements Complexity is not measured to a high degree - What drives the complexity (Input material, Output/products, markets, sales structure, ) PAGE 32

33 Agenda Introduction and what is SCM Hypercompetition fast Changing Environment extreme Volatility. Corporate Strategy and SCM Strategy Aligning SCM Priorities with Strategy SCM Interdisciplinarity - Model & Empirical Testing Preliminary Results Conclusions - Next steps PAGE 33

34 Interdependences between Corporate Strategy, SCM-Strategy, Leadership and Competitiveness 34 PAGE 34

35 QUESTIONS? PAGE 35