ISM Chemical Group

2006 Mid-Winter Conference

February 24, 2006
Friday
9:45a.m.

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 Next Stage
SUPPLY CHAIN MANAGEMENT
Presenter:
Marilyn Gettinger, C.P.M.
New Directions Consulting Group
908-709-0656
mgettinger@aol.com

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 Next Stage
SUPPLY CHAIN MANAGEMENT
Define Supply Chain
Management
Historical view
Next Stage Here
New-School Supply Chains
The Four Pillars of SCM
Excellence
Supply Chain Drivers
The Resilient Supply
The New Language
The Global Supply Chain
SCM Models
SCM Benchmarking A
Better Way
18 Best Practices for Risk
Management
Winning Supply Chain
Strategies
The Ten Rules of SCM
Excellence
Eight Key SCM Processes
The Top Ten Mistakes
Excellence in Procurement
SCM and the Future
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 Supply Chain Management
SCM considers all interdependent functions
within an organization and all external
organizations involved in the process of
making a product or service available for use
or consumption. It is an orchestrated
network that creates value for the consumer
through the streamlining of the process that
purchases, stores, converts, and ships to the
customer and meets required expectations of
the customer
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 Supply Chain Management
Identifies the processes necessary to
meet customer expectations
Engineers SCM processes as the core
of the business
Moves from silo to a team philosophy
Integrates internal processes
Integrates external processes
Defines metrics
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 More Than A Decade
1992

Lean Manufacturing/JIT Exchanges

Third-Party Logistics Integrated Products and Process Development

Integrated SC
MRP II Product Data Management

Supplier Integration CRM CPC

Manufacturing e-Procurement
ERP PLM
Outsourcing
Warehouse Management e-Fulfillment
Advanced Planning and
TQM Scheduling
Manufacturing Execution Systems Collaboration
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 Supply Chain Staircase

Full Network
Connectivity
Total Business
Value Chain System
Collaboration
Partner
External
Collaboration

Corporate Inter-Enterprise
Excellence

Enterprise Intra-Enterprise
Integration
Functional/Process Unit 7
 Supply Chain Barrier Breakers
Those who used the Supply chain
supply chain to initiatives
change the game Cut costs
Those who Improve efficiencies
partnered with the Enhance customer
unusual service and revenue
generation
Those who changed
Improve
the cost structure to competitiveness
cut costs

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 Next Stage Here 1

The front end of the supply chain will

become as important as the back end
in maximizing total economic yield.

3 Buying Customer
2 Tier 1 Organization Tiers

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 2 Next Stage Here 3

As companies Assets and

migrate from functions not core
internal-only to to value delivery will
extended supply be divested to
chains, specialists that can
collaboration will make more money
become the most on them.
strategic capability. Profit-sharing

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 4 Next Stage Here 5

The greatest margin The ability to integrate

potential will occur after new and innovative
the product ships, as capabilities with
service and support corporate business
become as important as models will drive higher
the product itself. levels of value creation.
Bundling great products Rapid and virtual
with strong service partnering
offerings
Total cost of ownership
focus
Delivery of the initial
product but also an
ongoing stream of
products and services to
the customer
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 Next Stage Here
Target emerging to exploit new
customer and revenue
channel needs opportunities
Integrate the front
and back end of the to maximize long-
supply chain term customer
Achieve real revenues
collaboration with to create many more
partners business model
options

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 Next Stage Here
Deploy supply chain to those most
assets qualified to make
Tie new service money on them
offerings to the to capture
product increasing revenues
Integrate needed to create the most
capabilities from compelling value
multiple parties proposition

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New-School Supply Chains
Use the Supply Chain to
Grow revenue
Increase market share
Create competitive
advantage
Target opportunities for
New value-added
service
Invest in very specific
opportunities
Create a distinct
business model

Use new capabilities to

change
the customer relationship

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 The Four Pillars of SCM
Excellence

Human Organizational Information Organizational

Resources Design Technology Measurement

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 Pillar of Excellence
Supply chain professionals
who:
View the supply chain
holistically in terms of linked
processes
Manage critical relationships
Understand the business model
Engage in statistical analysis
and fact-based decision making
Practice advanced cost
management
Understand electronic business
systems
Organizational design includes:
Centrally coordinated supply
teams
Executive responsibility for
coordinating supply chain
activities
Co-location of supply chain
personnel with internal
customers
Cross-functional teams to
manage supply chain
processes
Supply chain strategy
coordination session between
business units
Executive buyer-supplier
council to coordinate supply
chain activities
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 Pillar of Excellence
Real-time and shared Supply chain measures that:
information technology
systems that support:
Demand planning, order
commitment, and
scheduling
Distribution and
transportation planning
Order management
Material replenishment
Production management
Use data from sources
visible throughout the
organization
Quantify what creates
supply chain value
Use targets that change
over time
Rely on benchmarking to
establish performance goals
Link to business goals and
objectives
Feature efficiency and
effectiveness
Include assigned ownership
and accountability
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 Supply Chain Drivers
Growing by reaching new markets
Improving customer service
Differentiating from competitors
Improving cash position
Enhancing productivity

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 The Resilient Supply Chain
Transportation channel management
Multiple supply bases
Strong management of trade-off areas

Awareness, Prevention, Remediation, Knowledge Management

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 The New Language
Event Management
Monitoring, notifying, simulating,
controlling, measuring
Portfolio Management
Enablers
Dashboard

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 The Global Supply Chain
Travel + communication + inventory +
unit cost + inland transportation+ pier
costs + documentation + inspection +
ocean freight + insurance + C-TPAT+
CSI + Letter of Credit + Documentation
+ Customs duties + import licensing +
training and developing + harbor fees +
customs inspection fees + bonded
warehousing
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 SCM Models
DMAIC Define, Measure, Analyze,
Improve, Control
SCPM Supply Chain Process
Management Solutions
SCOR - Supply Chain Operations
Reference
DDSN - Demand-driven supply
network
DODSC -Dynamic On-Demand Supply Chain
Map
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 SCM Models
Scor Model
Plan plan how to use supply chain resources
over a period of time
Source Procurement, delivery, receipt, and
transfer of raw material items, submissions,
product, or services
Make Adding value through mixing, separating,
forming, machining, and chemical processes
Deliver Finalizing the product prior to the receipt
of a firm customer order

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 SCM Models
SCOR Model
Top Level scope and content
Configuration level 19 process
categories
Process Element Level Decompose
processes, identify standards, best
practices, and software suppliers, etc.
Define and implement new supply chain
processes
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 SCM Models
DDSN Demand-driven supply network
A system of technologies and
processes that sense and react to real-
time demand across a network of
customers, suppliers, and employers
Demand forecast accuracy, perfect
order fulfillment, supply chain costs,
cash-to-cash cycle time
S&OP, RFID, CRM
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 SCM Benchmarking
A Better Way
Top 20 KPIs
Logistics
Manufacturing
Procurement
New Product Development
Customer Order Management
Supply Chain Diagnostics

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 18 Best Practices for
Risk Management
Suppliers and SCM Critical supply
risks relationships
Suppliers Global inventory
visibility
disruption plan in
Major disruption
place debriefing
Disruption costs Early warning
and resolution in systems
cost factor SC intelligence and
supply base
locations

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 18 Best Practices for
Risk Management
Inventory buffers in Predictive analysis
distribution channels systems
Buffer material by level Damage-control plans
of criticality Cost trade-offs of risk
Decision-making decisions
capabilities Near real-time
Electronic sharing of databases
information and
visibility of material
flows

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Winning Supply Chain Strategies
Top management Rigorous execution
commitment and adaptation
Supply chains and Innovation into
business strategies operating models
Integrated operating Outsourcing,
models internal/external
integration
Supply to Demand

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 The Ten Rules of
SCM Excellence
1. Be visible - 4. Metrics that Matter
on-demand, real time data as to SCOR
exactly what is happening in the Customer order fulfillment
supply chain
Internal (warehouse costs)
2. Lets get lean Shareholder revenue
The lean supply chain produces and profit
just what and how much is Balanced Scorecard
needed, when it is needed, and
where it is needed Financial costs
3. The Metric Reloaded Customer fill rate, on-
time delivery
Measure the right things Internal Forecast error
Training Training hours
Certifications

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 The Ten Rules of
SCM Excellence
5. Managing the Measure
Define, collect, create
Data collection processes
and tools
6. Know Where You Stand
Benchmarking
7 Planning: Putting Strategy
Before Technology
Companies with best in class
planning systems have supply
chains that are up to 40 percent
more efficient than those with
poorer planning.
The Performance Measurement
Group
8. Managing Risk
Long, medium, and
short-term
Decision maker roles
identified
Data decision systems
Supplier relationships
Contingency planning
9. Take advantage of
technology
Select the correct
technology

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 The Ten Rules of
SCM Excellence
10. Control Costs
Fewer suppliers
Collaboration with suppliers
Hidden costs
Improve velocity, visibility, and product
development cycles and reduce
inventories

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 Eight Key SCM Processes
1. Customer Relationship Management
2. Customer Service Management
3. Demand Management
4. Order Fulfillment
5. Manufacturing Flow Management
6. Supplier Relationship Management
7. Product Development and
Commercialization
8. Returns Management

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 The Top Ten Mistakes
Managing a chain Thinking of
belief transformation
Doing business as enabling technology
usual but calling it Pursuing real time
supply chain visibility at all costs
Having the wrong Failing to
idea about control synchronize the
supply chain

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 The Top Ten Mistakes
Practicing supply chain monotheism
Misreading the level of employees
skills
Confusing globalization with global
brands and cross-border trade
Thinking that supply chain
transformation is a simple process

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 Excellence in Procurement
Value Creation
Innovation and growth
Value chain optimization
Core competencies
External partners for non-core competencies
Risk management and supply continuity
Advanced cost management techniques
Complexity reduction, tiered sourcing, supplier
tiering, design to cost, target costing,
collaborative cost reduction, best shoring, value-
based sourcing
A.T. Kearney

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 SCM and the Future
Manage the supply chain flow
Paperless and near laborless
Artificial Intelligence
Robotics
The Learning Organization
Two types of carriers line haul and
last mile
Transportation infrastructure
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 Thank You
Best wishes for your supply chain
success
Marilyn Gettinger, C.P.M.
President,
New Directions Consulting Group
908-709-0656
mgettinger@aol.com

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