1 278. O you who believe! Be afraid of 278. O you who believe! Be afraid of Allâh and give up what remains (due to Allâh and give up what remains (due to you) from you) from Ribâ Ribâ (usury) (from now onward), (usury) (from now onward), if you are (really) believers. if you are (really) believers. 279. And if you do not do it, then take a 279. And if you do not do it, then take a notice of war from Allâh and His notice of war from Allâh and His Messenger but if you repent, you shall Messenger but if you repent, you shall have your capital sums. Deal not unjustly have your capital sums. Deal not unjustly (by asking more than your capital sums), (by asking more than your capital sums), and you shall not be dealt with unjustly and you shall not be dealt with unjustly (by receiving less than your capital (by receiving less than your capital sums). sums). 280. And if the debtor is in a hard time 280. And if the debtor is in a hard time (has no money), then grant him time till (has no money), then grant him time till it is easy for him to repay, but if you it is easy for him to repay, but if you remit it by way of charity, hat is better remit it by way of charity, hat is better for you if you did but know. for you if you did but know.
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278. O you who believe! Be afraid of Allâh and give up 278. O you who believe! Be afraid of Allâh and give up what remains (due to you) from what remains (due to you) from Ribâ Ribâ (usury) (from now (usury) (from now onward), if you are (really) believers. onward), if you are (really) believers. 279. And if you do not do it, then take a notice of war 279. And if you do not do it, then take a notice of war from Allâh and His Messenger but if you repent, you shall from Allâh and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly (by asking more have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums). unjustly (by receiving less than your capital sums). 280. And if the debtor is in a hard time (has no money), 280. And if the debtor is in a hard time (has no money), then grant him time till it is easy for him to repay, but if then grant him time till it is easy for him to repay, but if you remit it by way of charity, hat is better for you if you you remit it by way of charity, hat is better for you if you did but know. did but know.
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Supply Chain Supply Chain StrategiesStrategies
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Supply-Chain Strategies• Supply-Chain Management Defined• Understanding Your Industry Model• Business Alignment• Defining Supply Chain Excellence• SCM Ground Rules• A Multi-Disciplinary Approach
Operations, Finance, IT & eOPS
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What is Supply-Chain Management?
• Supply-chain is a term that describes how organizations (suppliers, manufacturers, distributors, and customers) are linked together.
• Supply-chain management is a total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer.
Supply Chain of a Typical Original Equipment Manufacturer
OEM 2
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Overall StrategyOverall Strategy
A Supply Chain is fully optimized when:A Supply Chain is fully optimized when: Bundles of well-priced products/services create Bundles of well-priced products/services create
unassailable levels of customer attachment unassailable levels of customer attachment (acquisition and retention).(acquisition and retention).
Total supply chain costs are at the lowest level.Total supply chain costs are at the lowest level. The supply chain contributes to profitable sales The supply chain contributes to profitable sales
growth by creating cost/service advantages.growth by creating cost/service advantages. Worldwide effective tax rates are at the lowest Worldwide effective tax rates are at the lowest
level.level. Capital efficiency is at the lowest level.Capital efficiency is at the lowest level. The supply chain is made flexible to respond to The supply chain is made flexible to respond to
changes faster than competitors and to stratify changes faster than competitors and to stratify service levels by product, customer, and geography.service levels by product, customer, and geography.
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Supply Chain IssuesSupply Chain Issues
The main purpose of the levels in any supply The main purpose of the levels in any supply chain is to add processes to the chain is to add processes to the product/service.product/service.
Another purpose is to absorb the differences Another purpose is to absorb the differences between the stable supply on the upstream side between the stable supply on the upstream side and the erratic demand on the and the erratic demand on the downstream(consumer) side.downstream(consumer) side.
The synchronization of the supply chain will The synchronization of the supply chain will optimize efficiency along the chain.optimize efficiency along the chain.
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Matching Supply-Chains with Products
Efficient
Supply-Chain
Responsive
Supply-Chain
Functional
Products
Innovative
Products
Match
MatchMismatch
Mismatch
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Supply Chain ExcellenceSupply Chain Excellence
New corporate state of being:New corporate state of being: Supply chain excellence requires effective Supply chain excellence requires effective
strategies, sustained management commitment, strategies, sustained management commitment, and changes in attitude, culture, and organization. and changes in attitude, culture, and organization. More importantly, it requires superior execution.More importantly, it requires superior execution.
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Principles For Supply Chain Principles For Supply Chain ExcellenceExcellence
Formulate a differentiated supply chain Formulate a differentiated supply chain strategy by channel. strategy by channel.
For product categories, product channels, and For product categories, product channels, and target customers, develop an operating target customers, develop an operating strategy that, when executed, makes your strategy that, when executed, makes your supply chain different from the rest. supply chain different from the rest.
Focus on long- Focus on long- andand short-term profitability, short-term profitability, liquidity, and growth.liquidity, and growth.
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Principles For Supply Chain Principles For Supply Chain ExcellenceExcellence
Organize your business unit around major Organize your business unit around major processes or channels, not functions. processes or channels, not functions. Traditional “silos” separates work and Traditional “silos” separates work and interrupts flows which leads to inefficiency.interrupts flows which leads to inefficiency.
Work collaboratively with customers, Work collaboratively with customers, suppliers, partners, and third parties to suppliers, partners, and third parties to change the way operations perform, change the way operations perform, viewed, and measured. Extended supply viewed, and measured. Extended supply chain.chain.
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Principles For Supply Chain Principles For Supply Chain ExcellenceExcellence
Invest/reinvest in supply chain Invest/reinvest in supply chain information technology to manage flows information technology to manage flows end-to-end. IT should support both end-to-end. IT should support both planning, analysis, and execution. planning, analysis, and execution.
Invest/reinvest in supply chain knowledge, Invest/reinvest in supply chain knowledge, people, skills, and learning. Supply chain people, skills, and learning. Supply chain practice is relatively new. Change is a practice is relatively new. Change is a constant, with innovations and problems constant, with innovations and problems always occurring. Organizations must always occurring. Organizations must invest in ongoing training, mentoring, invest in ongoing training, mentoring, education, and feedback systems.education, and feedback systems.
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Principles For Supply Chain Principles For Supply Chain ExcellenceExcellence
Operate/manage by product/channel. Operate/manage by product/channel. Think in terms of product/service Think in terms of product/service bundles that are sold through potentially bundles that are sold through potentially different channels. Supply chains different channels. Supply chains should be set up and driven by the should be set up and driven by the characteristics of each channel.characteristics of each channel.
Outsource parts of the chain for Outsource parts of the chain for flexibility and better asset management. flexibility and better asset management. In many cases, functions can be In many cases, functions can be performed better by third parties.performed better by third parties.
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Principles For Supply Chain Principles For Supply Chain ExcellenceExcellence
Think globally…build regionally…operate Think globally…build regionally…operate locally. The best performing supply chains locally. The best performing supply chains are managed with centralized planning, are managed with centralized planning, regional approaches, and local operations.regional approaches, and local operations.
The most critical principle: Execution!!! The most critical principle: Execution!!! Focus on it, measure it daily or real time, Focus on it, measure it daily or real time, and give people the authority and and give people the authority and accountability to excel at it.accountability to excel at it.
Three items that flow through the Three items that flow through the supply chain:supply chain: InformationInformation MoneyMoney MaterialsMaterials
Three areas of decision-making:Three areas of decision-making: MaterialsMaterials ProcessesProcesses LogisticsLogistics
Two types of tools:Two types of tools: Information TechnologyInformation Technology Operational AnalysisOperational Analysis
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12 SCM Ground Rules12 SCM Ground Rules
1. Build in flexibility.1. Build in flexibility. Supply chain capacity(push things off your books).Supply chain capacity(push things off your books).
Move fixed to variable costs.Move fixed to variable costs. More flexible production methods.More flexible production methods. Improved information flows.Improved information flows. Use subcontractors, co-packing, outsourcing.Use subcontractors, co-packing, outsourcing.
Operations capability.Operations capability. Management’s will to change.Management’s will to change.
2. Plan and measure accurately.2. Plan and measure accurately. Total cost approach – true margins, Total cost approach – true margins,
profitability by customer segment.profitability by customer segment. Enterprise-wide planning – demand-Enterprise-wide planning – demand-
driven and supply-aware; reduce cycle driven and supply-aware; reduce cycle times; respond quickly(for high material times; respond quickly(for high material cost industries).cost industries).
Dashboard concept – 5 to 7 metrics in Dashboard concept – 5 to 7 metrics in operational cost, time and response, operational cost, time and response, margins, customer service.margins, customer service.
Benchmark 1Benchmark 1stst internally, then expand internally, then expand
Fulfillment channels: direct-home, direct-Fulfillment channels: direct-home, direct-business, retailers, value-added resellers, mass business, retailers, value-added resellers, mass merchandisers, OEMs, service centers, merchandisers, OEMs, service centers, integrators.integrators.
Order conduits that impact process: fax, Order conduits that impact process: fax, Internet, phone, sales force, POS orders, EDI, Internet, phone, sales force, POS orders, EDI, e-mail.e-mail.
4.4. Get lean by emphasizing simplicity and Get lean by emphasizing simplicity and speed. Value Stream Map Current & Future speed. Value Stream Map Current & Future StatesStates Reduce uniqueness (parts, designs, suppliers, Reduce uniqueness (parts, designs, suppliers,
processes) and variety(transportation resources, processes) and variety(transportation resources, parts suppliers).parts suppliers).
Reduce cycle times and maximize inventory Reduce cycle times and maximize inventory velocity. Key: information.velocity. Key: information.
Understand where value is captured and eliminate Understand where value is captured and eliminate non-valuenon-value
5. Optimize Information.5. Optimize Information. Focus on Time to Benefit and Decision Focus on Time to Benefit and Decision
Support. ERP? Multiple smaller systems?Support. ERP? Multiple smaller systems? Take ownership of Customer Information. Take ownership of Customer Information.
Most untapped: not articulated needs.Most untapped: not articulated needs. Replace assets with Information. E.g. Replace assets with Information. E.g.
inventory are moved several times before inventory are moved several times before reaching final destination. Replace physical reaching final destination. Replace physical movement with digital movement of movement with digital movement of customer and product information.customer and product information.
6. Treat customers unequally: 6. Treat customers unequally: Segment and Stratify. No unnecessary Segment and Stratify. No unnecessary excellence.excellence.
7. Operate Globally.7. Operate Globally. Economic, time, tax differences.Economic, time, tax differences.
8. Practice Virtuality (partnering) and 8. Practice Virtuality (partnering) and Collaborative Collaborative Manufacturing/Management.Manufacturing/Management. Virtuality – attempt to gain scale.Virtuality – attempt to gain scale. Requires more management, not less.Requires more management, not less.
9. Exploit Electronic Commerce.9. Exploit Electronic Commerce. Collapsing supply chain levels. E.g. Collapsing supply chain levels. E.g.
distribution channel.distribution channel. New channel: many-to-many. Supply New channel: many-to-many. Supply
Web – key customers can have Web – key customers can have communities of suppliers; communities of suppliers; collaboratively plan, forecast, replenish collaboratively plan, forecast, replenish on a real-time(or near real-time) basis.on a real-time(or near real-time) basis.
Valued-based differentiation – add Valued-based differentiation – add value along product, information, value along product, information, process. master channel managers.process. master channel managers.
10. Leverage People.10. Leverage People. 11. Operationalize New Product Introductions 11. Operationalize New Product Introductions
and Phaseouts.and Phaseouts. 12. Mass Customize and Postpone.12. Mass Customize and Postpone.
Commodities vs. highly customizable products.Commodities vs. highly customizable products. Downstream flexibility.Downstream flexibility. E.g. HP printers. Automobile. Amazon.E.g. HP printers. Automobile. Amazon.
1. Throughput1. Throughput the rate at which money is generated by the system the rate at which money is generated by the system
through sales: O2Cthrough sales: O2C 2. Inventory2. Inventory
all the money that the system has invested in all the money that the system has invested in purchasing things it intends to sellpurchasing things it intends to sell
3. Operating Expenses3. Operating Expenses all the money that the system spends to turn all the money that the system spends to turn
inventory into throughput inventory into throughput
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