NZPICS Spring Magazine 2016

  1. NZPICS Spring Magazine 2016 – After a gap of 3 years, NZPICS is proud to bring you an informative magazine, full of knowledge and information along with some light reading. For a printable PDF version, please click here NZPICS_Spring_Mag2016.pdf.

 

Supply Chain Excellence: Series 4 – Supply Chain Strategy by Vishnu Rayapeddi

Supply Chain Strategy – what is it?

Many might think that there is no distinction in perception between supply chain management and supply chain strategy in their organizations.

Supply chain management is defined by the APICS Dictionary, 13th Edition, as “The design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally.”

According to the APICS Operations Management Body of Knowledge (OMBOK) Framework, supply chain strategy considers all the elements of operations strategy, in addition to building strategic partnerships, in-sourcing and outsourcing, drivers of supply chain performance, synchronization, integration of suppliers, internal supply chains, and customer systems, breadth of activities (designing, planning, and controlling), reverse logistics, product sustainability, regulatory compliance, and global considerations.

In simple terms, a supply chain strategy is a forward-looking document, which anticipates changing customer needs and defines how the supply chain is going to evolve to meet those new requirements.

The 4 elements of supply chain strategy:

1. The industry framework (the marketplace)
2. The organization's unique value proposition (its competitive positioning)
3. The organization's internal processes (supply chain processes) and
4. The organization's managerial focus (the linkage among supply chain processes and business strategy).

Align the Supply Chain Strategy with the Business Strategy

Most companies develop a supply chain strategy after the business strategy has been defined. While this approach can deliver some value, it does not support the infusion into the business strategy development of very powerful supply chain model options, which could significantly improve the business strategy. A supply chain strategy should always support the intent of the business strategy

Developing a Supply Chain Strategy

In his book, Supply Chain Transformation: Building and Executing an integrated supply chain strategy, J Paul Dittmann lays out a nine-step plan for building a supply chain strategy as below:
1. Start with customers' current and future needs
2. Assess current supply chain capabilities relative to best in class
3. Evaluate supply chain "game changers" (what megatrends will impact customers and the supply chain?)
4. Analyze the competition
5. Survey technology - what is new in the market and would it help if deployed?
6. Deal with supply chain risk - risk management needs to be part of the strategy document
7. Develop new supply chain capability requirements and create a plan to get there
8. Evaluate current supply chain organizational structure, people, and metrics
9. Develop a business case and get buy-in

Executing Supply Chain Strategy

Fortune Magazine reported in a study that CEO strategy failures (estimated 70%) occurred primarily because of failure in execution, not with the vision and strategy development. “The real problem isn’t the high-concept boners the boffins love to talk about. It’s bad execution. As simple as that: not getting things done, being indecisive, not delivering on commitments.”

Performance Management

Execution involves closely following your implementation plan and applying good project governance. You can improve your chances of success by managing performance throughout implementation and beyond. Tracking performance allows an organization to measure how successful it is in realizing the goals of a strategy. It also makes people understand their contribution and responsibilities, creating a more cohesive, in tune, organization.

Performance management works best when people are rewarded for their performance and reporting is conducted on a regular basis. Moreover, performance goals should be used to communicate business expectations to outside entities as well. The more the extended supply chain is involved, the more the supply chain strategy is supported and reinforced.

Iterate the Cost – Benefit Evaluation Process

On a periodic basis (annually) you should formally revisit your supply chain strategy. Did you meet the goals of the business strategy? Have the needs of your supply chain partners changed? How has the industry changed i.e., new competitors, business practices, products, technology? At this time, you may even want to reassess your supply chain organization, if the changes are significant enough to warrant it. Also, use this effort to look for new opportunities to further position your organization for success.

Keep Communicating with Your Partners

Executing a supply chain strategy means dealing with many different entities, both internally and externally. Just as it is crucial to align the supply chain strategy with the business strategy, it is equally important to execute in a manner consistent with these different groups or stakeholders.

The goals of your supply chain components and those that you deal with must be similar and conducted at the same speed. Your organization may be able to move at speeds other supply chain entities are unable to maintain, resulting in misalignment and poor efficiencies. And some of your supply chain partners may not have the resources to commit to realizing these goals. Good communication can keep the extended supply chain in sync.

This article is written by Vishnu Rayapeddi, a Lean Manufacturing & Supply Chain Operations Specialist, who works as a volunteer Executive Committee Member of NZPICS, the only Premier Channel Partner of APICS in New Zealand. NZPICS Offers the following courses in Supply Chain in affiliation with APICS: CPIM (Certified in Production & Inventory Management, CSCP (Certified Supply Chain Professional) and Principles of Operations Management, which is a fully customisable solution to businesses. For further information, please visit www.nzpics.org.nz or call on 09-525 1525.

 

 

 

Supply Chain Excellence: Series 3 – Sales & Operations Planning by Vishnu Rayapeddi

Do the following represent a typical day in your work life?
• Nothing goes right
• Everything seems to be a mess
• Materials are late
• Customers are unhappy
• Too much inventory
• Too many shortages
• Too many dumps
• Crisis Management is the order of the day!

If you answered YES to any of the above, then you need a robust Sales & Operations Planning.

A number of businesses do a very good job of having business plan and also day to day production scheduling. But not many realise that, there is a missing link, which is Sales & Operations Planning. S&OP integrates all the different plans for a business and also ensures that every functional department is on the same page.

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Supply Chain Excellence: Series 2 – Excellence through Lean Thinking! by Vishnu Rayapeddi

In the previous article, I briefly introduced the concept of Lean as part of the definition of Supply Chain Excellence, which is “......while minimising waste and being open to embrace change”.

So, why is it important that we minimise waste? In today’s world, supply chain management has become more global, more complicated, more demanding, and less forgiving. Also, the trade barriers are down, competition is up, stakes are higher and margins are lower.

Lean Thinking is a business philosophy that has been widely applied in Toyota and many other businesses and industries world-wide and is designed to, improve the value proposition to customers, reduce waste, smooth out peaks and troughs of activity and make individual’s work life easier.  The benefits of a “Lean supply chain” are,  a) Speed and responsiveness to customers, b) Reduced inventories, c) Reduced Costs, and d) Improved Customer Satisfaction

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Supply Chain Excellence: Series 1 - Understanding The Supply Chain by Vishnu Rayapeddi

Whenever we ask what supply chain is, we get different answers depending who we ask. Some say it is planning & purchasing or procurement and some say inventory management and some others may say it is logistics management. Yes all these correct answers. But there is much more!

According to APICS (Association for Operations & Supply Chain Professionals, USA) dictionary, “Supply Chain Operations Reference (SCOR®) model” is “A process reference model developed and endorsed by the Supply Chain Council as the cross-industry, standard diagnostic tool for supply chain management. The SCOR model describes the business activities associated with satisfying a customer’s demand, which include plan, source, make, deliver, and return. Use of the model includes analyzing the current state of a company’s processes and goals, quantifying operational performance, and comparing company performance to benchmark data. SCOR has developed a set of metrics for supply chain performance, and Supply Chain Council members have formed industry groups to collect best practices information that companies can use to evaluate their supply chain performance”.

In essence, the SCOR Framework is the world’s leading supply chain framework, linking business processes, performance metrics, practices and people skills into a unified structure. By deplyoing the SCOR framework at your organization you can: 1) Increase the speed of system, 2) Implement Support organizational learning goals, and 3) Improve inventory turns.

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