7. Looking at Supply Chain as a Complex
System
Profitable Growth
Revenue Cost of Goods
Corporate
Trade-offs Working Capital
Corporate Social Responsibility
Investment
Trade-offs R&D Strategy and Investment Asset Strategy and Investment
Forecast Accuracy Customer Service Inventory
Supply Chain
Trade-offs Channel Strategy Product and Supplier Strategy
Service Portfolio
Sales Distribution Manufacturing Logistics Procurement
Supply Chain Policies Policies Policies Policies Policies
Waste
Returns Backorders First Pass Yield Empty Miles Material Yield
8. Developing the Supply Chain Strategy
Business strategy
What are the right things to do to increase company value?
Value-network strategy
What are the right ways to support the business strategy?
Align demand right trade-offs betweenthe
What are the Right product Design value drivers for each value network?
Build Align supply
relationships platforms supply organizational relationships
response systems and
Supply chain strategy manage talent
Effective Supply
Demand Networks Design Networks Continuous Networks
Improvement
Joint Value Innovation Supply Chain Execution of buy-
Creation Strategies Methodologies Network Design Capabilities Required side strategies
Business Process
How do I do the right things right?
16. Food Value Chain Working Capital
Inventory and Costs
Retail Store Retail
Consumer Warehouse Manufacturing Suppliers
Sales
Sales
Sales
Sales
Demand
Time
Time Time Time
Days of Working Capital
60
55
50
2009
45
40 2008
35
2007
30
25 2006
20
15 2005
10 2004
Retailers Food Manufacturers Containers and Packaging
Inventory data source: CFO Magazine September 2010-2004
17. The Bullwhip Effect.
Retailer DC Manufacturer DC Suppliers
Store
Demand
Signal
Accurate
Difficult Almost Weekly
Trivial Easy Impossible Forecasting
is ...
Instant 3-10 Days 10-20 Days Delay from
20-50 Days
7-20 Days 20-45 Days Purchase to
Variable 45-80 Days Signal
Red Represents Emerging Economies with
Distributor Trade
18. Traditional Supply Chains do not Respond Fast
Enough with Market Data
Production
POS store
Shipments to DC
Kraft Foods Presentation MIT
Supply Chain Forum, November
2011