The Leading Edge Group The Supply Chain Experts

1. The Leading Edge GroupThe Supply Chain Experts Strategic Importance of SCM to Irish Business

2. The Leading Edge Group • The Leading Edge Group formed in 1995 • Bases in Cork and Boston • Working in Europe, the UK and the USA • Using only experienced practitioners from industry • Currently 40 people…& growing • Centre of Excellence in Manufacturing & Supply Chain Management • Leaders in Supply Chain Training and e-learning

3. The Leading Edge Group Partner with our clients to provide speciality Manufacturing & Supply Chain Management Solutions through Consulting, Education & Training, Mentoring and Staffing

4. Our Clients • Main Industries • Electronics • Pharmaceutical • Healthcare • Food & Drink • Giftware • Heavy *Not Inclusive

5. Trends in Irish Industry

6. Challenges For Irish Industry • Very difficult time for the global industry • Ireland has performed better than could have been expected • Labour intensive manufacturing is difficult to justify due to increased costs • IDA want companies to move up the value chain • There are some good examples that need to be more widely emulated

7. Comparative Labour Rates $12 is a useful Labour reference rate: • Hourly rate in our Irish facility • Daily rate in our Malaysian facility • Weekly rate in our Chinese facility For Irish business ……… we will never be the low cost supplier …. but we do have the opportunity to be the high Value supplier Becoming the value provider …… particularly by driving improvements in the Supply Chain is a Key Element ……… is a key to survival & success

8. €4.96 / hr Currently 600 USD €3.28 / hr Currently 400 USD €2.50 / hr Currently 350 USD Currently 54 USD €0.33 / hr Eastern Europe labour rates

9. Moving Up The Value Chain Design >>>>>>>>>>>>>>Delivery Value Add • Research • Design • DFM/DFX • NPI • Localisation • Manufacturing • Supply Chain Management • Customer Response Management • Distribution Strategy • Mass Customisation • Information Integration ‘The greater the curve on either side the greater the value add for the Plant and a stronger foundation’

10. 21st Century Competitiveness Rapid New Product Development You only compete in two dimensions! Operational Excellence Source: Strategy and the Internet, Michael Porter, HBR, Mar, 2001.

11. It Used to Be, OE was described as: Factory Excellence Competing on COST With Supply Chains In a LOCAL Space Today OE is described as: Supply Network Integration Competing on TIME In a GLOBAL Space Operational Excellence in the 21st Century This requires: LOCAL Excellence! This requires: GLOBAL Excellence!

12. Achieving overall operational excellence, requires examination of all processes at a, global, tactical and integrated level Supply chain optimsation represents a variety of techniques to get more out of the supply chain Different levels of Operational Excellence

13. Need models and techniques to Evaluate strategy changes LeadingEdge, business modelling and analysis Appreciate tactical decisions Ilog, optimisation products Integrate whole supply chain Research at 4C Supply Chain Optimisation

14. The Leading Edge Experience • We are working with a broad spectrum of companies and they are struggling to develop their strategic direction. • Some of them have no concept of what moving up the value chain really means. • They will have difficulty making the transition.

15. The Leading Edge Experience • Irish based companies are under tremendous pressure on manufacturing costs but in some cases misssing the bigger picture • Many are driven by central groups based in Europe and or even in the US • Many are supplying into distribution centres without any control over demand/supply management or end customer service levels

16. The Leading Edge Experience • Many companies have little or no contact with the end customer/user of their products or services and as a result do not innovate on behalf of their customer. • They do not have ready access to the knowledge that will allow them to move up the value chain. • Many companies have not addressed the opportunities with their own supply base on joint cost reduction initiatives, Vendor managed inventory, hubbing etc etc

17. Some Real Examples • Low Tech manufacturing company - totally focussed on manufacturing but no control of the remainder of the supply chain • Contract manufacturing company - have inherited many bad practices from the OEM facilities they have acquired compounded by a business downturn • Bulk Pharmaceutical producer - totally focussed on producing massive batches and pushing them out to Distribution • Leading Healthcare producer with only 2 inventory turns per annum

18. Some Real Examples • Auto component manufacturer - no focus on inbound supply base programs such as Vendor Managed Inventory or Hubbing • Logistics company - lost their strategic leadership and capability has fallen way behind – Previously a world leader! • Leading Clinical Reagent Manufacturer - ideally positioned to replenish direct to point of use but can’t break the internal political log-jam • Etc. Etc.

19. Some Companies Have Engineered Excellent Supply Networks…

20. Supplier Clusters Reduced Order Lead Times Supply Chain Management Strategy Green Isle Rationalisation of Ingredients Reverse Auctions Operational Excellence Outsource FG Storage

21. ERP Integration Outsource High Volume Mfg. to China New Product Introductions GN Resound Low Volume Mfg. Corporate Purchasing Global Distribution Centre

22. Manufacturing Treasury Management Contact Centre Data Centre Telesales Logistics Management Niche PC maker maximising Irish resources to become invaluable core in Apple EMEA operations

23. Sole EMEA manufacturing site for Desktops, notebooks, enterprise & storage solutions EMEA Web hosting & Internet sales Customer Support x languages Lean Manufacturing <400,000 sq.ft Manufacturing space Outsource Kitting World’s No. 1 PC maker has exploited Ireland’s advantages to remainkey site within Dell Corporation...40% of all ICT Exports from Ireland

24. Shared Services Product Posponement Collaborative Planning Operational Excellence Web Based tools 4TH Party Logistics Services

25. Leading Edge View • There are companies in grave danger and some will inevitably fail. • Companies must get much greater control of their full supply chain and not just the manufacturing piece to ensure they have a chance of surviving over the long term. • Some good examples of companies who have re-invented themselves but these tend to be the exception. • The real trajedy is more will fail due to lack of knowledge and leadership than real competitive threats!

26. Overall Situation • Many good examples of companies that are pursuing a definite direction • Others are struggling to develop a plan • The current climate makes the situation even more difficult and volatile • Financial and Human resources are constrained • They need more direct intervention to accomplish the transition.

27. Government Action • IDA Strategic Competitiveness Programme (SCP) • Grant Rate of 50% for external training / consulting costs up to 50k Euro • Substantially deepen or expand an existing function e.g. Supply Chain Management, Manufacturing Excellence etc. • EI Competitiveness Fund for SME’s e.g. World Class Logistics, Supplier Development Programs

28. The Future • Design Centers • Research and Development • Supply Chain Management • Shared Services • E-Commerce Enabled Services • Automated Production/Logistics/Quality • Custom Manufacturing/Partnering

29. Q & A