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Debrief 1 1
Debrief 1
1
Did you join the management team or the fire brigade?
2
Debrief after round 1
• Your first experience with The Fresh Connection– What went well?– What did not go so well?– Was everything clear?
• Please give us your reflection in headlines
• Review team results– Team ranking– Individual rankings– KPI benchmarks
3
Maturity scan:Strategy
Stage of evolution
Characteristics
Stage I:Ad hoc
Ad hoc decisions, fire fighting problems, no clear strategy
Stage II:Functional
Functional organization with each function making separate decisions in its own silo, based on a functional vision and policy
Stage III:Integral
Shared cross functional strategy and vision, translation to all functional areas not yet implemented on tactical level
Stage IV:Visionary
Shared cross functional strategy and vision, clear translation to all functional areas, guideline for all tactical measures
4
Strategy &
Strategy into Action
5
A Supply Chain and its traditional conflicts
• Lowest purchase price
• Full truckloads
• High utilization %• Long runs – minimize
changeovers• Low unit costs
• High service level• Safety stocks
• High inventory turns• Maximum flexibility
Finished productComponents
Supply Production Distribution
VP Supply Chain
VP Purchasing VP Operations VP Sales
6
Competitive strategy
What must your supply chain excel at?
Benefit driven by customer value
Flexibility• customization• variety• volume
Quality : • top quality• consistent quality
Time• delivery speed• on-time delivery• development speed
Cost:• low cost
7
Companies should know their Order Winners (and Order Qualifiers)
8
Competitive factors:If customers value these
Performance objectives:Then we need to excel at these
Low price CostHigh quality QualityFast delivery Speed
Reliable delivery DependabilityInnovative products and services Flexibility (product/service)
Wide range of products and services Flexibility (mix)The ability to change the timing or quantity of products and services Flexibility (volume and/or delivery)
• An order winner is a characteristic that will win the bid or customer's purchase. To provide order winners, firms must be better than their competitors.
• An order qualifier is a characteristic that is required for a product or service to be considered by a customer. Firms must provide the qualifiers to get into or stay in a market. To provide qualifiers, they need only to be as good as their competitors.
Source: Hill, 2000
The relation between competitive strategy and supply chain strategy
• Value is created through a chain of value adding processes/functions that must be performed for a successful sale. Other process/functions support and facilitate
• Supply chain strategy: determines the nature of material procurement, transportation of materials, manufacture of product or creation of service, distribution of product
• Consistency and support between supply chain strategy, competitive strategy, and other functional strategies is important
New productdevelopment
Marketingand
SalesOperations Distribution Service
Finance, Accounting, IT and HR
Value Chain
Supply Chain
Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007 9
Supply Chain strategy
• Supply chain strategy must fit with competitive strategy
Supply Chain Strategy
Resources Processes
Competencies
Cost
Flexibility
Quality
Time
CompetitiveStrategy
Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007 10
Achieving strategic fit
• Step 1: Understanding the customer and the company’s value proposition
• Step 2: Understanding the supply chain capabilities
• Step 3: Achieving strategic fit
Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007 11
A one-dimensional world
• Fisher (1997) distinguishes two product types• … and just two relevant supply chain strategies
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Functional products
Stable, predictable demand
Innovative products
Dynamic, unpredictable demand
responsivenessefficiency
Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 1997
Differences in demand
Functional products
Innovative products
Product life cycle More than 2 years 3 months to 1 yearContribution margin 5% to 20% 20% to 60%
Product variety Low HighAvg. forecast error 10% 40% to100%Avg. stockout rate 1% to 2% 10% to 40%
Avg. forced season-end markdown 0% 10% to 25%
Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 199713
Different supply chains
Physically efficient supply Chain
Market responsive supply chain
Primary goal Supply efficiently a lowest possible cost
Quickest possible response
Manufacturing focus High utilization Capacity flexibility
Inventory strategy
High inventory turns, minimize inventory Buffer stocks
Lead time focus Reduce but not at expense of higher costs
Invest aggressively to reduce lead time
Supplier selection Cost and quality Speed, flexibility and
quality
Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 199714
Match products and supply chain
product
resp
onsi
vene
ss
innovative
effic
ienc
y
functional
Stra
tegy
standardize
innovate
refo
cus
on e
ffici
ency
refo
cus
on re
spon
sive
ness
Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 199715
Achieving a strategic fit: Choose your ‘right’ supply chain
Demand uncertainty spectrum
Responsive supply chain
Efficient supply chain
Functional products
Innovative products
Responsiveness spectrum Zone of
Strategic Fit
Low shelflife
%
High shelflife
%
Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007 16
Supply Chain Performance
• Two key points– there is no right supply chain strategy independent of
competitive strategy– there is a right supply chain strategy for a given
competitive strategy
• All functions in the value chain must support the competitive strategy to achieve strategic fit
Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007 17
Company Mission
Key Strategies& Objectives
Actions by Per Role
Measures / scorecard / dashboard
Strategy exercise
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Strategy into actionLevels in version 2013
Theme Sales SCM Operations Purchasing
Level 1 ReliabilityService level
Order deadlineShortage rule
Safety stocks# Shifts
# Pallet locations# FTE
Delivery windowDelivery reliability
Level 2 Batches and frequencies
Shelf lifeTrade unit
Lotsizing in production and purchasing
SMEDIncrease speed Trade unit
Level 3 Speed and quality Payment terms Frozen period
Intake timePreventive
maintenanceSolve breakdowns
trainingRaw materials
inspection
Supplier selectionPayment terms
QualityTransport mode
Extensionsin version 2013
Theme Sales SCM Operations Purchasing
Extension a S&OPPromotional pressureCategory management
ForecastingProduction interval
toolResource selection Dual sourcing
Extension b External collaboration
Promotion horizonVMI
Outsourcing warehouse (MCC)
Inflate PETVMI
Supplier development
Extension c CO2 footprintSustainabilty
CO2 sla Decrease of water usage
Decrease of energy usage
Decrease of start up productivity loss
Extension d KPIs and targets KPI selection KPI selection KPI selection KPI selection
Extension e Supply chain risk management
Risk eventsRelaunch (horizon) Scenarioplanner
Tracking & tracingQuarantineRisk events
Pooling warehouse FTE
Contract durationSupplier development
Dual sourcingRisk events
