What the best companies are doing with cycle time compession, omnichannel / multichannel, supply chain segmentation, risk mitigation

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Supply Chain Hot Topics
by
Tom Craig
tomc@ltdmgmt.com

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Is This Your Supply
Chain?
What do you know about your SC
performance?
Do much fire-fighting (reactive vs proactive)
Have little/no metrics, beyond complaints or
charge backs or costs

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Yours?
Monolithic supply chain operation
Little / no service differentiation beyond
customer order requirements
Defined by costs, tasks, and/or functions?

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Is This Your Supply
Chain?

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Perfect Order
Delivered / Complete / Accurate / On-
Time
How well do—
you do with customer orders?
your suppliers do with your POs?

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Benefits of Real SCM
Customer advantage -- IT’S ABOUT THE
CUSTOMER!!!!!
Competitive differentiation
Translates into better revenue and
margins

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Are You Happy with the
Supply Chain that You
Built?

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How Do You View
Global Logistics?

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SCM—Hot Topics
Time Compression
Omnichannel / MultiChannel
Segmentation
Risk Mitigation

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Cycle Time Compression

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Cycle Time
Cycle time--time from recognize need
(before PO is issued) until product delivered
to you--and sold, and paid by customer
(funds availability affects procurement)
Not just length, includes variance
Time—important for business

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Cycle Time
Inventory-factor of uncertainty (buffer)—
longer the cycle time, more the
uncertainty, more the inventory
Key factor for responsiveness and agility
In Lean, extra time is waste

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Cycle Time Compression
Identify and assess each sub-cycle
Look for gaps, redundancies, and
meaningless
External and internal (especially)
Streamline practices & operations

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SC Omnichannel /
Multichannel

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What It Is
Selling through multiple channels
For B2C and B2B
Sell 24/7 from anywhere in the world
From any device (e-commerce and m-
commerce)

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Omni
Think Amazon and more
Home Depot
building 3 e-commerce fulfillment centers
100,000 products (vs 35,000 for stores)

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SCM Omnichannel Issues
Speed and accuracy of order shipment
How to position inventory
Where to position inventory
What inventory to position
Technology— integrated visibility for
inventory and orders in all channels

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Multi/Omni Channel
Direct shipping of gloves “from/for” other
party’s ecommerce site
E-tailer does not have to hold inventory
Can your suppliers ship to customers
elsewhere in world for you?

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Supply Chain
Segmentation

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What Segmentation Is
Superior best practice
Dividing business into discrete groups
(not based on business units) based on
similar characteristics
Address important company issues
Serves strategic purpose

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Key Issues for
Segmenting
 Differing markets
 Product portfolios
 Customer portfolios
 Inventory yield
 Omnichannel sales

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More Issues for
Segmenting
 Global operations
 Channel partners
 Customer attrition
 Suppliers
 Supply chain risk

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Why Segment
Stop one-size-fits-all “service” approach
Reduce internal and external noise that
creates chaos & diverts resources
Design & align operations for different
sectors
Build competitive differentiation

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How to Segment
1) Identify segments
2) Profile sectors--and customers in them
3) Determine how customers in each
segment differ for SC services
4) Evaluate supply chain services,
including ones not met, and
performance for each segment

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Segment Approaches
Cost—good concept—allocating and
assigning costs—not direct costs
Value—economic—not good to identify
segment characteristics
Need—drivers that segments have for
specific service(s)

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What To Do with Results
--Have Actionable Info--
1) Prioritize segments
2) Be specific
3) Evaluate the quality of service
4) Implement services for each segment
5) Develop metrics for each segment’s
service and measure

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Example
Order Size and Annual Volume
Order Requirements

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Large Orders Segment

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Special Preparation Segment

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Direct to Store Segment

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Redesigned Supply Chain

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Supply Chain Risk
Mitigation

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What Risk Is
About business continuity
Concept traction—Fukushima
Insurance focus—assets
Plus contingency planning

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Supply Chain Risk
Complexity
Geographic scope
offshoring/sourcing
outsourcing
Low inventory
lean manufacturing
JIT manufacturing

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Supply Chain Risks
Deloitte global survey
45% say SC risk program only somewhat
effective or not effective
53% say SC disruptions have become more
costly
48% say frequency of risk disruptions with
negative outcomes have increased

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More Deloitte
Technology, industrial products,
diversified manufacturing most likely to
say SC disruptions have become more
costly
Most costly outcome—margin erosion
71% say SC risk is important in strategic
decision-making

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More
Top challenges to risk management (RM)
lack of cross-functional collaboration (32%)
cost of implementing RM strategies (26%)
SC RM is organized around silos (75%)
leads to lack of visibility and collaboration
makes difficult to assess and manage
risk on holistic basis

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Threat Sources
 Natural disasters
 Geopolitical
 Pandemics
 Technological
 Terrorists
 Commodity prices

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Sources
 Labor costs
 Currency
 Ports
 Markets
 Suppliers
 Execution

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Intl Country Risk Guide
39 China, Peoples' Rep.
62 Thailand
86 Indonesia
114 Sri Lanka
129 Pakistan
Rank in
06/12 Country
1 Norway
2 Brunei
3 Luxembourg
4 Switzerland
5 Singapore
6 Sweden
7 Oman
8 United Arab Emirates
9 Germany
10 Canada
11 Hong Kong
12 Taiwan
13 Qatar
13 Saudi Arabia
15 Denmark
16 New Zealand
17 Japan
18 Kuwait
19 Finland
20 Korea, Republic
21 Trinidad & Tobago
22 Netherlands
23 Australia
24 Austria
24 Malaysia
54 Mexico
Source: PRS Group

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Suppliers
Tier 1 Suppliers and More

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Risk
Measure risk—
Financial Impact
Time to Recover
Identification and mitigation—not just for
MNCs
Cannot mitigate what you do not identify

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Where Will Your
Supply Chain Take You?