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Fall Seminar ISM

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  1. Fall SeminarISM Joe Walden CFPIM, DML Director, Supply Chain Leadership Institute

  2. Today’s Agenda • Background • Back to the Basics – • Supply Chain Leadership – setting the conditions for excellence • Decision Making Model and Supplier Selection • Benchmarking Supply Chains – Benchmarking background/foundation and supply chain metrics • Supplier Scorecards – what and why • Forecasting and Collaboration • Reverse Logistics • Supply Chain Security – the tie to homeland security

  3. Back to the Basics Supply Chain Management, SCOR, You and the Supplier

  4. Supply Chain Management • First appearance – Financial Times • Importance - → Inventory ~ 14% of GDP → GDP ~ $12 trillion → Warehousing/Trans ~ 9% of GDP → Rule of Thumb - $12 increase in sales to = $1 savings in Supply Chain • 1982 Peter Drucker – last frontier • Supply Chain problems can cause ≤ 11% drop in stock price – Hershey’s; Toys-r-us; FEMA • Customer perception of company

  5. SCOR Reference: www.supply-chain.org

  6. Supply Chain • All activities associated with the flow and transformation of goods and services from raw materials to the end user, the customer • A sequence of business activities from suppliers through customers that provide the products, services, and information to achieve customer satisfaction

  7. Supply Chain “The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash.” APICS Dictionary, 10th ed. Dell, USPS

  8. Supply Chain Management • Synchronization of activities required to achieve maximum competitive benefits • Coordination, cooperation, and communication • Rapid flow of information – Wal-Mart • Vertical integration - Anheuser Busch, Wal-Mart • Core Competency

  9. Supply Chain Uncertainty • Forecasting, lead times, batch ordering, price fluctuations, and inflated orders contribute to variability • Inventory is a form of insurance – process maps; does wrong look right? • Distorted information is one of the main causes of uncertainty Bullwhip effect • Example – info, insurance, customer service

  10. Information in the Supply Chain • Centralized coordination of information flows • Integration of transportation, distribution, ordering, and production • Direct access to domestic and global transportation and distribution channels • Locating and tracking the movement of every item in the supply chain - RFID

  11. Information in the Supply Chain • Consolidation of purchasing from all suppliers • Intercompany and intracompany information access • Electronic Data Interchange • Data acquisition at the point of origin and point of sale • Instantaneous updating of inventory levels • Visibility

  12. Electronic Business In Theory: • Replacement of physical processes with electronic ones • Cost and price reductions • Reduction or elimination of intermediaries • Shortening transaction times for ordering and delivery • Wider presence and increased visibility

  13. Electronic Business • Greater choices and more information for customers • Improved service • Collection and analysis of customer data and preferences • Virtual companies with lower prices • Leveling the playing field for smaller companies • Gain global access to markets & customers

  14. IT Issues • Increased benefits and sophistication come with increased costs • Efficient web sites do not necessarily mean the rest of the supply chain will be as efficient • Security problems are very real – camera phones, cell phones, thumb drives • Collaboration and trust are important elements that may be new to business relationships

  15. Suppliers • Purchased materials account for about half of manufacturing costs • Materials, parts, and service must be delivered on time, of high quality, and low cost • Suppliers should be integrated into their customers’ supply chains • Partnerships should be established • On-demand delivery (JIT) is a frequent requirement - what is JIT and does it work?

  16. Sourcing • Relationship between customers and suppliers focuses on collaboration and cooperation • Outsourcing has become a long-term strategic decision • Organizations focus on core competencies • Single-sourcing is increasingly a part of supplier relations How does single source differ from sole source?

  17. Distribution Centers and Warehousing • DCs are some of the largest business facilities in the United States • Trend is for more frequent orders in smaller quantities • Flow-through facilities and automated material handling • Final assembly and product configuration (postponement) may be done at the DC – example – Toyota Staging Centers

  18. Warehouse Management Systems • Highly automated systems • A good system will control item slotting, pick lists, packing, and shipping • Most newer systems include transportation management (load management/configuration), order management, yard management, labor management, warehouse optimization

  19. Vendor-Managed Inventory • Not a new concept – same process used by bread deliveries to stores for decades • Reduces need for warehousing • Increased speed, reduced errors, and improved service • Onus is on the supplier to keep the shelves full or assembly lines running • variation of JIT • Proctor & Gamble - Wal-Mart

  20. Collaborative Distribution and Outsourcing • Collaborative planning, forecasting, and replenishment (CPFR) started by Nabisco • Allows suppliers to know what is really needed and when • Electronic-based exchange of data and information • Significant decrease in inventory levels and more efficient logistics - maybe not! • Companies work together for benefit of all of the supply chain

  21. Supply Chain Reference Model • Supply Chain Council organized in 1996 • By the release of SCOR 8.0 - 800 members worldwide • Version 9.0 of the SCOR-model is the eleventh revision since the Model’s introduction in 1996 • SCOR-model has been developed to describe the business activities associated with all phases of satisfying a customer’s demand

  22. The SCOR Model

  23. SCOR 9.0 • the Model is designed and maintained to support supply chains of various complexities and across multiple industries • The Model is silent in the areas of human resources, training, and quality assurance • The metrics are used in conjunction with performance attributes. • The Performance Attributes are characteristics of the supply chain that permit it to be analyzed and evaluated against other supply chains with competing strategies.

  24. SCOR Model

  25. SCOR Performance Attributes and Level 1 Metrics

  26. Key – original commitment made to the customer is met through the supply chain

  27. SCOR 9.0 • New process elements have been added in SCOR 9.0 to manage WASTE DISPOSAL processes as part of the GreenSCOR integration. • New process added - Risk Management

  28. SCOR and You • Applicable for any operation • Metrics and Benchmarks established for common supply chain processes • Customer Chain Operations Model • Demand Chain Operations Model

  29. Six Sigma • Define • Measure • Analyze • Improve • Control

  30. Summary • Supply Chain vs. Logistics • Electronic business • Suppliers and the supply chain • SCOR – and six sigma – similar or different?

  31. Back to the Basics Questions?

  32. Next Session • Background • Back to the Basics – • Supply Chain Leadership – setting the conditions for excellence • Decision Making Model and Supplier Selection • Benchmarking Supply Chains – Benchmarking background/foundation and supply chain metrics • Supplier Scorecards – what and why • Forecasting and Collaboration • Reverse Logistics • Supply Chain Security – the tie to homeland security

  33. Benchmarking Supply Chain Leadership – Setting the Conditions for Success! Joe Walden Director, Supply Chain Leadership Institute

  34. “Leadership is not taught. It is modeled.” -Dr. Emily Taylor, former Dean of Women at the University of Kansas

  35. Session Agenda • Motivational Dysfunction ???? • What is leadership? • What is supply chain leadership • What are the attributes of leadership that can be benchmarked? • Can you really benchmark leadership? • If so, what are the benchmarks? • Final thoughts and conclusions

  36. Motivational Dysfunction and Leadership • What is motivational dysfunction? • What are the symptoms? • What are the cures?

  37. The Attributes of World Class Leaders • Loyalty • Ethics and Honesty • Attitude, Aptitude and Accountability • Devotion, Dedication, Determination, and Discipline • Equality, Expectations, Example, and Enthusiasm • Respect, Responsibility, and Reliability • Service and Self Development • Humor, Humility, Health, Happiness and Heart • Initiative, Interest in Employees, Supply Chain Intelligence • Passion, Professional Pride, Perseverance and People

  38. The Leader’s Scorecard • Scorecards and box scores • Who are your leadership customers? • What metrics measure leadership? • How do you measure up? • What’s Next?

  39. Leadership Metrics for Benchmarking • Employee Retention – leading for the future not just the recession • Employee Morale – what is it and how do you measure it? General Ridgeway • Employee productivity – is it more than output/input? • The “Climate of Command” survey – what and why? Simply a military tool? Punctuality – part of the climate? Do people want to work in my department/section/company?

  40. Benchmarking (Cont) • Promotion Rates – internal and external • On time delivery • Perfect Order Fulfillment – “too hard to do?” • Employee courtesy • Employee burnout • Distribution Center Cleanliness • Customer Retention Rates • Employee Recognition • Dedicated Training • Employee Pride

  41. Benchmarking (Cont) • Routines – “do the routine things routinely” • Leading from the Front

  42. Conclusion • Leadership • Supply Chain Leadership • Attributes • Benchmarking • Scorecards

  43. The most important thing in leadership is truly caring.” - Coach Dean Smith

  44. Next Session • Background • Back to the Basics – • Supply Chain Leadership – setting the conditions for excellence • Decision Making Model and Supplier Selection • Benchmarking Supply Chains – Benchmarking background/foundation and supply chain metrics • Supplier Scorecards – what and why • Forecasting and Collaboration • Reverse Logistics • Supply Chain Security – the tie to homeland security