Improving your supply chain opportunities !

1. Improving your supply chain opportunities ! Kevin Ross Bakewell Agricultural Centre Friday June 12th 2015

2. What is the Supply Chain ? Supplier Manufacturer Distributor Retailer Customers

3. Supply Chain Management Supply Chain Management is the design and management of processes across organizational boundaries with the goal of matching supply and demand in the most cost effective way. Supply Demand Mission impossible?

4. Uncertainty in demand and/or supply Changing customer requirements Decreasing product life cycles Fragmentation of supply chain ownership Conflicting objectives in the supply chain Conflicting objectives even within a single firm Marketing/Sales wants: more FGI inventory, fast delivery, many package types, special wishes/promotions Production wants: bigger batch size, depots at factory, latest ship date, decrease changeovers, stable production plan Distribution wants: full truckload, low depot costs, low distribution costs, small # of SKUs, stable distribution plan Why so Difficult to match Supply and Demand?

5. Losing Sight of the Common Objective I'm glad that the hole is not on our side!

6. Supply Chain Story - 2005 US car man. “The big three US carmakers set annual cost-reduction targets for the parts they purchase. To realize those targets, they’ll do anything. They’ve unleashed a reign of terror, and it gets worse every year…….” -Director, interior systems supplier to Ford, GM, and Chrysler. Suppliers Arm’s Length “Toyota helped us dramatically improve our production system. We started by making one component, and as we improved, Toyota rewarded us with orders for more components. Toyota is our best customer.” -Senior executive, supplier to Ford, GM, Chrysler, and Toyota, Suppliers Toyota Partnership Source: Building Deep Supplier Relationships, HBR, December 2004

7. Total Supply Chain Cost is the sum of all supply chain costs for all products processed through a supply chain during a given period e.g. import/export – exchange rates etc…. Inventory Turnover is the ratio of the cost of goods sold to the value of average inventory…tells us how often orders are placed.. A high number says stock is not waiting around. Weeks of inventory is the ratio of average inventory to the average weekly sales…tells us how many weeks worth of stock…high value lot of stock waiting around Supply Chain Performance Measures

8. Inventory Turns example Cost of goods sold Inventory Turns= Value of Inventory Inventory Turns for two leading supermarket stores • Inventory Turns is a common benchmark in retailing • Inventory Turns≈10 for high street food retailers

9. DC’s functioned as the hubs in a hub-and-spoke network Distribution costs accounted for 2-3% revenues compared to 4-5% for other business’ Mastered large scale “Cross Docking” Automation of distribution: RFID technology Efficient S. Chain: Distribution

10. Traditional vertically channel WHOLESALER INFORMATION PRODUCT AMAZON INFORMATION PRODUCT CUSTOMER Supply Chain Design

11. Traditional vertically disintegrated channel Drop-shipping channel Wholesaler WHOLESALER INFORMATION INFORMATION PRODUCT Lifestyle.co.uk AMAZON.COM PRODUCT INFORMATION INFORMATION PRODUCT CUSTOMER CUSTOMER Supply Chain Design

12. Drop-Shipping in a Click World* *The state of eRetailing 2000. Supplement to “eRetailing World” March 2012.

13. Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Distributor Distributor Retailer Retailer Retailer Retailer Customer Customer Customer Customer Customer Borders Small Bookshops Direct Waterstones Amazon Amazon resellers Distributor’s margin Manufacturer’s margin Retailer’s margin Supply chain cost Customer acquisition cost

14. Business Growth Service – How can we help? • Review your supply chain • Develop and improve further ideas – manufacturers and service business’ • Help manufacturers with consultancy grant aid of ~ £1,700 and high growth service business with subsidised Business Strategy coaching.