Supply chain Evolution How to successfully outsource – partnership not antagonism © The Delos...

Supply chain EvolutionSupply chain Evolution

How to successfully outsource – partnership not antagonism

© The Delos Partnership 2008 page 1

Traditional Supply Chain ManagementTraditional Supply Chain Management


Our business

Supply Chain visibility

Pur

chas

ing

Sal

esSupplierTier Two

SupplierTier One

CustomerTier One

Manufacturing

CustomerTier Two

Operation

Inventory

Features of “Traditional” supply chan Features of “Traditional” supply chan managementmanagement1. Each company works to their own Vision and Strategy,

plans and management processes2. Our company’s visibility of customer requirements is poor,

determined by inaccurate forecasts3. Demand swings are amplified across the supply chain as

each level attempts to destock or restock4. Purchasing is done with sales on the basis of minimum

purchase price, with little acknowledgement of true cost/value

5. Multiple suppliers are used in order to manage risk of lack of source of supply

6. Inventory used at each step of the supply chain to buffer against failure of supply [made or bought].


We are now operating in a Global We are now operating in a Global market for both supply and demandmarket for both supply and demandThis brings new challenges

“Think global, act local” Optimise global resource React to demand swings across the globe Outsource our non-core business to suppliers

Brings New risks• Longer-lead times across the globe• Failure to supply means need to switch production “at a

moment’s notice”• We are committed to suppliers on low-cost product in low-cost

countries who do not necessarily have to supply us


We also choose to focus on our core We also choose to focus on our core business – Pareto analysisbusiness – Pareto analysis

1. We review our product portfolio, and decide that 20 % of products account for 90 % of our margin – we eliminate many products, much to the resistance of Marketing

2. 20 % of our purchased parts account for 80 % of our spend, so we seek to outsource our supply base


““Focussed” Supply Chain Focussed” Supply Chain ManagementManagement


Our business


Pur

chas

ing

Sal

esSupplierTier Three

SupplierTier Two

CustomerTier Two

Manufacturing

CustomerTier Three

Operation

Inventory

Cust-omerTier One

SupplierTier one

Key featuresKey features

• Suppliers have responsibility for management of inventory – reorder point system used

• Relationship is contractual – long-term blanket orders, and call-offs against blanket orders

• Some electronic messaging of orders, and use of internet portals to download information

• Rigorous use of performance measures on time in full to quality.

• Large suppliers dominant force in relationship with small to medium size suppliers


Focussed Supply Chain ManagementFocussed Supply Chain Management

POSITIVE OUTCOMES•Reduced Cash Flow as inventory responsibility rests with suppliers/customers•Reduced administrative requirement and purchasing overheads and order entry overheads•Ability to have one or few suppliers handle multiple materials - less risk of failure to deliver

RISKS TO FACE•Lack of visibility•Issues with quality of plan – particularly if e-enabled•Development of New Products becomes difficult over a number of suppliers [used to be all in-house]•Greater risk of supply chain failure – longer chain, more people involved•Buffers get bigger..




Our business


Pur

chas

ing

Sal

esSupplierTier Three

SupplierTier Two

CustomerTier Two

Manufacturing

CustomerTier Three

Operation

Inventory

Cust-omerTier One

SupplierTier one

•More Inventory•Less Satisfaction•More Demand Volatility

The choices to solve the problemsThe choices to solve the problems

ARMS LENGTH Enforce contractual clauses

on: Delivery Quality – send back product Insist on more safety stock Manage your customers’

processes

Build in risk-management by having more suppliers

TRUE PARTNERSHIP•Share vision and strategy•Share true demand information across the whole of the supply chain

Flowcasting at the consumer end

Replenishment planning replaces forecasting at every level of supply chain

•Help customers and suppliers develop their processes•Have fewer suppliers to you who manage effectively


Are you always that strong opposite all keySuppliers ? Requires trust and real

partnership

Delos PartnershipDelos Partnership

• The Delos Partnership supports the development of systems, processes and behaviour that generate real partnerships.

• Where processes are not in line with our platinum standards, then we will educate and facilitate the development of these between companies and more importantly across company boundaries.

• Successful implementation is not just about e-enablement, but about common-sense integration of people processes and tools

• It is also about sharing vision and strategy and having mutually beneficial measures of performance.

• We also support the development of a single set of numbers across the supply chain to reduce demand volatility and inventory – it is more about having inventory at the right place and at the right time to support the end-consumer, and not about offloading the risk to everyone else.


The Delos Partnership solutionThe Delos Partnership solutionPartnership along extended supply Partnership along extended supply chainchain


InnovationInnovation

VisionVision

StrategyStrategy

PrioritisationPrioritisation

DemandDemand

SupportSupport

SupplySupply


VisionVision

StrategyStrategy


DemandDemand

SupportSupport

SupplySupply


VisionVision

StrategyStrategy

PrioritidsationPrioritidsation

DemandDemand

SupportSupport

SupplySupply

Prime/Supply ChainLeader

Prime/Supply ChainLeader

© The Delos Partnership 2007page 13

Extended Enterprise Leadership – shared process, aims Extended Enterprise Leadership – shared process, aims measures, improvement programmes …..measures, improvement programmes …..


VisionVision

StrategyStrategy


DemandDemand

SupportSupport

SupplySupply


VisionVision

StrategyStrategy


DemandDemand

SupportSupport

SupplySupply


VisionVision

StrategyStrategy


DemandDemand

SupportSupport

SupplySupply

Principles of Supply Chain partnershipPrinciples of Supply Chain partnership

1. Share Vision and Strategy as well as data and information2. Promise only what you can realistically deliver3. Communicate when you have a problem. Tell it as it is and

not how you would like your partner to think it is.4. Measure performance openly and transparently, and work

to continuously improve.5. Improve the processes, and don’t blame the people.6. Systems are only as good as the quality of the data. Make

sure data is 100 % accurate. Accuracy is an attitude of mind and not the product of audits.

7. Relationships are based on openness, honesty and trust, and don’t enter into a partnership unless these foundations are there.




Our business


Ope

ratio

nsT

eam

Cu

sto

me

rT

eam

SupplierTier Three

SupplierTier Two

CustomerTier Two

ManufacturingTeam

CustomerTier Three

Operation

Inventory

Cust-omerTier One

SupplierTier one

•Less Inventory•More Satisfaction•Less Demand Volatility

The Delos Partnership solution - The Delos Partnership solution - Benefits and prerequisitesBenefits and prerequisites

Key BenefitsImproved visibility Reduction of riskIncreased flexibility

Joint Lean programmes Co-managed inventories Improved New product

IntroductionRisk ReductionCost reductionLower working capital requirementLower cash flow requirementBetter Management of change

Prerequisites•Understanding of benefits of partnership rather than antagonism

•Shared benefits and costs

•Understanding of Vision and Strategy across the supply chain

•Common strategy

•Common measures

•Understanding of how and where to optimise the supply chain

•Education


Date post:	29-Dec-2015
Category:	Documents
Upload:	erika-carroll
View:	218 times
Download:	3 times

Supply chain Evolution How to successfully outsource – partnership not antagonism © The Delos...

Documents