Scm competitiveness-sgd-2013-iii econvention-nagpur (2)

transcript

Supply Chain

Management for Global

Competitiveness

S G Deshmukh ABV-Indian Institute of Information Technology & Management , Gwalior

Int Conference on Managing Supply Chain for Global Competitiveness

IIIE and RCOEM Nagpur 25 Oct 2013 1

Acknowledgement This presentation is based on extensive

information sharing sessions with Prof R P Mohanty (VC, SOA)

Prof Manoj Tiwari (IIT Kgp), Prof Ravi Shanker(IITD), Dr Jitesh Thakkar (IITKgp)

Thankful to numerous research scholars and faculty members from various institutes for making us realize the importance of SCM in today's competitive scenario.

Before I begin..

You may look at some of my presentations

available at

http://www.slideshare.net/SanjeevDeshmukh/presentations

Speaking points.. About SCM.

Imperatives & Implications

1: Shelf life

2: Digital environment everywhere

3: Sharing & Connectivity

Global competitiveness report

Implications for SCM

Closing remarks..

IT is making world flatter ! (Thanks to Friedman)

Outsourcing dominated paradigm Team work and leadership assumes new meaning Geography has become history: Time and distance are no

longer the important variables Mobile dense and multimedia rich environment has accelerated

digital environment. Connectivity has made the global village possible Working on-line, flexi-time, tele/videoconferencing, and

continuous learning are changing the traditional notions of how work gets done.

Internet is changing the way we communicate with –

Source : Fridman, T L, The World is flat: Farrar, Straus & Giroux , 2005

Observations..

Transformation taking place

The way we communicate has changed. SCM is no exception to this !

Traditional way of conducting business has drastically changed.

Demanding customers and changing technology

Supply Chain Management..

..a network of facilities and

distribution options that performs

the functions of procurement of

materials, transformation of these

materials into intermediate and

finished products and the

distribution of these finished

products to customers…..

Mohanty R P & Deshmukh S G,(ed,) 2011, Handbook of Supply Chain Management, Excel Books

Today's market..

increasingly competitive markets with new entrants providing superior products and services

visible shift from seller to a buyer's market with increasing consumer emphasis on price and quality

the necessity for an industry to succeed in globalised economy.

Today's customer

Very much enlightened ?

Guided /influenced by web/mobile/media

Short attention/retention span ?

Has now options, as he can choose, what he would like to buy from various alternatives, and also he can dictate terms.

Youthful? Energetic? Ready to spend ?

Observations.. Supply Chain Management has matured as a

discipline

Developments in IT have made integration possible

Basic issues in SCM : Management of Material Flow, Information Flow and Money Flow

Basic principles can be applied to a variety of contexts

Goal of SCM…

“to manage upstream and downstream relationships with suppliers and customers

in order to create enhanced value in the final market place at less cost to the supply chain as a whole”

M Christopher

Typical key words in SCM..

Integration

Interfaces

Sharing

Collaboration

Inventory

Information

Insights..

Inventory manifests in various forms

Inventory and information can be exchanged

Managing lead time helps in management of inventory

Modelling helps in understanding issues from a different perspective

Performance needs to be measured on various dimensions (hence BSC, SCOR etc.)

Imperative 1: Shortened product shelf life

Web enabled world: Number of ideas getting generated, developed and produced

Faster product life cycle

Shelf life has shortened considerably (example: mobile phones, tablets)

Pressure on manufacturing

Implications

You have to update continuously and must know the state-of-the-art

You have to innovate continuously

Continuous up gradation about customer feedback

Proper synchronization between design, operations and supply chain

Imperative 2: Digital environment everywhere !

Implications

You can not afford to be invisible in the digital world

Someone is going to measure you and make you visible !

You and your products/services are constantly indexed, searched

You are also under constant onslaught of new and emerging ideas !

Your availability 24x 7 basis ! 18

Imperative 3 : Sharing & connectivity !

Connecting with suppliers and customers

Sharing of information

Professional networks

Social networks

Implications

Sharing of information/Knowledge made easy through IT

You must share and connect

Your collaborator may be anywhere in the globe available 24 x 7 basis

Power & influence of social media as a binder!

Example: Apple vs Amazon ?

http://blog.kinaxis.com/2012/12/apples-and-oranges-well-actually-apple-and-amazon/ Miles Trevor Blog 13 Dec 2012

Comparison on…

Agility – the ability to quickly and cost-effectively shift

amounts and/or types of production and delivery to

improve operational performance in volatile conditions

Collaboration – the ability to work across organizational

boundaries to solve systemic operational problems and

create new value for both customers and partners

Execution – the consistent and reliable delivery against

commitments and within budgeted expenses

Innovation- http://blog.kinaxis.com/2012/12/apples-and-oranges-well-actually-apple-and-amazon/ Miles Trevor Blog 13 Dec 2012

Why talk about competitiveness?

Traditional thinking: competition is driven by the 4P’s Today: supply chain capabilities determine competitiveness!

Wal-Mart versus K-Mart

Compaq/HP versus Dell

A final product is not the sole goal

Customer experience is determined by supply chain: quality, cost, delivery

Significant proportion of value sourced from suppliers!

Supply chains are connected systems enabled by IT

Competitiveness of one tier is a function of the supply and distribution functions,

i.e. surrounding tiers.

“Value Chains compete, not individual companies!” (Christopher 1992)

Creating a competitive supply chain

1. Develop strategic objectives and tactics, decide competitive priorities

2. Integrate and coordinate various activities in the internal supply chain through IT

3. Coordinate activities with suppliers with customers in a collaborative manner

4. Coordinate planning and execution across the supply chain in a digital environment

5. Form strategic partnerships

Supply Chain : Competitive priorities

1. Quality

2. Cost

3. Flexibility

4. Velocity

5. Customer service

Velocity

Inventory velocity

The rate at which inventory(material) goes through the supply chain

Information velocity

The rate at which information is communicated in a supply chain

Competitive priorities : Sand Cone Model

Quality

Flexibility & Velocity

Customer service

Barriers to integration of organizations

Getting top management on board

Dealing with trade-offs

Small businesses

Variability and uncertainty

Long lead times

Challenges

Supply Chain Issues

Production planning and control

Inventory policies Purchasing policies Production policies Transportation policies

Design of the supply chain, partnering

Operating Issues Tactical Issues Strategic Issues

Long term strategy

Enhance focus on competitiveness Creating conditions for investment in and growth of the

manufacturing sector Lowering the cost of manufacturing Investing in innovations Strengthening education and training at all levels Adoption of global best practices in SCM Right market framework, competition and regulation Issues relating to competitiveness in small and medium

industries Infrastructure development

Perspectives on competitiveness Competitiveness is a concept comprising of the potential, the process and the performance.

GMR (2001)

To be competitive, several factors must exist: the desire to win, commitment or perseverance and the availability of certain resources.

Khalil (2000)

Competitiveness is defined in terms of ‘helping business to win’, ‘price’, product range and quality and ‘distribution and marketing’.

Dou and Hardwick(1998)

Competitiveness arises or results from firm-specific initiatives like: better management, leveraging and stretching of resources.

Hamel and Prahlad (1993)

Ability to design, produce and /or market products or services superior to those offered by competitors, considering the price and non-price qualities.

Cruz and Rugman(1992)

Competitiveness is synonymous with productivity and is assumed To capture quality feature as well as efficiency feature.

Porter (1990)

Competitiveness is the ability to raise income as rapidly as competitors and to make investments necessary to keep up with Them in the future.

Scott (1989)

Extent to which a business sector offers potential for growth and attractive return on investment

WCR(1994)

Competitiveness..

Extent to which a business sector satisfies the needs of customers from the appropriate combination of the following product/service characteristics: price, quality, innovation , and satisfies the needs of its constituents; for example, workers in terms of involvement, benefit programmes, training, and safe workplace; offers attractive return on investment and also offers the potential for profitable growth.

Company competitiveness is defined as "the ability to design, produce and/or market products superior to those offered by competitors, considering the price and non-price qualities" (WCR, 1991).

Global Competitiveness..

The Global Competitiveness Report 2012-13, published 5th. Sept 2012

Ranking of 144 countries on 12 selected criteria

http://www.weforum.org/issues/global-competitiveness

The Global Competitiveness Report

Launched in 1979 covering 112 countries

Goal: to provide a benchmarking tool for policymakers and business leaders

Today 144 countries in the gambit

Definition of competitiveness

“The set of institutions, policies, and factors that determine the level of productivity of a country”

The level of productivity, in turn, sets the sustainable level of prosperity that can be

earned by an economy.

Source: GCR, 2011

Global Competitiveness Index framework

A. Basic Requirements B. Efficiency Enhancers C. Innovation & Sophistication Factors

5. Higher education and training

6. Goods market efficiency

7. Labor market efficiency

8. Financial market development

9. Technological readiness

10. Market Size

11. Business sophistication

12. Innovation

3. Macroeconomic environment

2. Infrastructure

4. Health and primary education

1. Institutions

Key for efficiency-driven

economies

Key for innovation-driven

economies

Key for factor-driven

economies

The Global Competitiveness Index

Global Competitiveness Index 2012-13

select economies ranking http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf

(Out of 144) Economy Score

1 Switzerland 5.72 2 Singapore 5.67 3 Finland 5.67 7 United States 5.47 8 United Kingdom 5.45 10 Japan 5.40 13 Taiwan 5.28 20 Australia 5.12 29 China 4.83 32 Oman 4.62 37 Kuwait 4.56 59 India 4.32

65 Philippines 4.26

The Global Competitiveness Report 12 Pillars of competitiveness

•Institutions •Infrastructure •Macro-economic environnent. •Health & basic education

•Higher education & training •Market efficiency – goods •Market efficiency – labour •Market efficiency –finance •Technological readiness •Market size

•Business sophistication •Innovation

factor-driven

economies

efficiency-driven

economies

innovation-driven

economies

GCR economies.. Source: http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf

Stage Labeled as No Examples

Stage 1 Factor driven economy 38 Countries

India, Kenya, Ghana

Transition from Stage 1 to 2 17 Countries

Egypt, Libya, Srilanka

Stage 2 Efficiency driven economy 33 countries

China,Indonesia,Thailand

Transition from Stage 2 to 3 21 countries

Argentina, Chile, Malaysia

Stage 3 Innovation driven economy 35 Countries

Australia, UK, USA

Total 144 countries

Institutions

Infrastructure

Macroeconomic environment

Health and primary education

Higher education and training

Goods market efficiency

Labor market efficiency

Financial market development

Technological readiness

Market size

Business sophistication

Innovation

Global Competitiveness Index

Goods market efficiency components

Intensity of local competition

Extent of market dominance

Effectiveness of anti-monopoly policy

Extent and effect of taxation

Total tax rate Number of procedures required to start a business

Time required to start a business

Agricultural policy costs

Prevalence of trade barriers

Trade tariffs

Prevalence of foreign ownership

Business impact of rules on FDI

Burden of customs procedures

Imports as a percentage of GDP

Degree of customer orientation

Buyer sophistication

components

Availability of financial services

Affordability of financial services

Financing through local equity

market

Ease of access to loans

Venture capital availability

Restriction on capital flows

Soundness of banks

Regulation of securities exchanges

Legal rights index

Institutions

Infrastructure

Market size

Innovation

Business sophistication components

Local supplier quantity

Local supplier quality

State of cluster development

Nature of competitive advantage

Value chain breadth

Control of international distribution

Production process sophistication

Extent of marketing

Willingness to delegate authority

Reliance on professional management

Institutions

Infrastructure

Market size

Innovation

Global Competitiveness Index areas for improvement

Innovation components

Capacity for innovation

Quality of scientific research institutions

Company spending on R&D

University-industry collaboration in R&D

Government procurement of advanced technology products

Availability of scientists and engineers

Utility patents per million population

Institutions

Infrastructure

Market size

Innovation

Implications of GCR..

Various activities in SCM can enhance competitiveness: Example: Infrastructure, Penetration of ICT, Business sophistication, Innovation etc.tor

Competitiveness can be visualized at

Industry level

Sectorial level

National level

Global level

Closing remarks..

Digital environment and IT has made

SC a challenging task

Merging of product and service supply chains

Several issues in SCM

Framework of Global Competitiveness report provides an opportunity for improvement in SC

Well Known Conferences for Practitioners in SCM

Council of SCM Professionals Conference

POMS Conference

Gartner Supply Chain Executive Conference (17-18 Sep , 2012 at London, UK)

Useful web resources …

http://www.theferrarigroup.com/supply-chain-matters/

http://blog.kinaxis.com/

http://www.scmr.com/blogs

Thank you & stay in touch..

deshmukh.sg@gmail.com

http://www.slideshare.net/SanjeevDeshmukh

http://sgdeshmuk.blogspot.in/