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Are you the weakest link in your companys supply chain?

Group 4 Monica & Artur 2011/Dec./12

OUTLINE

Why SCM matters?


7 key areas for self-evaluation.

7 questions.

Supply-Chain

What is SCM?
Manage supply and demand Source raw material and parts Manufacture and Assemble Warehouse and track inventory Take and Manager Order Distribution and Delivery

The ultimate goal of SCM


INPUT OUTPUT

To minimize system wide costs while satisfying service level requirements. To make profitable and sustainable operation.

Why SCM matters? With poor SCM, the company might

Alienate customers and suppliers. Erode shareholders value.

Lose control of fixed costs.

Poor SCM might in the end

Put you out of business!


PinYin: an1 nei4 rang2 wai4 BoPoMoFe:

to maintain internal security and resist/repel foreign/external invasion;

7 key areas for self-evaluation

1. Picking the right leaders.

Picking the right leaders


Supply Chain Manager for Daikin / Giant
Requirements Accountabilities Qualifications, Skills

Picking the right leaders


Right leaders = Experienced leaders 50% SCMs without formal education Supply chain failures Hire SC professionals from top-schools for senior level positions and lower level as well

7 key areas for self-evaluation.

2. Initiating benchmarking and devising metrics.

Measuring Supply Chain Performance


Specifying goals for improvement requires knowing where you stand now Internal VS External Benchmarking Unrevealing Metrics

Measuring Supply Chain Performance


Firms measure only what they can assess easily Service performance to be evaluated from customers point of view Goals should be based on benchmarks of best practices and shared cross-functionally

Measuring Supply Chain Performance


Financial
Strategic decisions and external reporting

Non-financial
Distribution operations Day-to-day control of manufacturing

Lack of balanced approach


Number of metrics

Kaplan (1992), Harvard Business Review

Measuring Supply Chain Performance


Lack of a clear distinction between metrics at strategic, tactical, and operational level

Stewart (1995), Logistics Information Management

Measuring Supply Chain Performance

4 links of integrated supply chain:


Plan Source Make / Assemble Delivery / Customer
Gunasekaran et al.,(2001), International Journal of Operations & Production Management

Measuring Performance Framework

7 key areas for self-evaluation.

3. Setting incentives for supportive behavior.

7 key areas for self-evaluation.

4. Keeping up with supply chain technologies and trends .

Keeping up with supply chain technologies and trends


RFID, Bar Codes, Lean, Six Sigma CEO as a devils advocate Adapt technology to support supply chain CEO should be updated with IT trends and create values for company

7 key areas for self-evaluation.

5. Eliminating cross-functional crossed wires.

Eliminating cross-functional crossed wires


Share objectives and aims Stock-keeping unit CEO should understand supply chain operations and be personally involved in process

7 key areas for self-evaluation.


Business plan Supply-Chain insight

6. Adding supply chain insight to business planning .

7 key areas for self-evaluation.

7. Resisting the tyranny of short-term thinking .

Seven questions

1. Is supply chain leadership a valued career path in your company?

Seven questions
2. Do you have a program of customerfocused metrics and best-practice benchmarking that drives crossfunctional alignment?

Seven questions
3. Do employee and customer behavior reflect your supply chain strategies? Are the strategies clearly articulated? Are strong reward and incentive plans in place?

Seven questions

4. Do you understand important supply chain technologies and IT-powered trends?

Seven questions
5. Do you play a constructive role in resolving cross-functional disjunctions, including those that influence the ability to sell inventory at market price?

Seven questions
6. Do you demand that supply chain expertise be factored into business initiatives and planning, promotional programs, and customer-contract discussions?

Seven questions
7. Do you ensure that short-term thinking doesnt sabotage supply chain management strategies and opportunities?

Conclusion
Although this article is more about supply chain management than supply chain risk, no supply chain is stronger than its weakest link, and weak links are a risk that can and should be avoided. This article is a step towards eliminating these weak links, at least the internal links.

References
1. Kaplan, R.S. and Norton, P.D. (1992), The balanced scoreboardmeasures that drives Performance, Harvard Business Review 2. Stewart, G. (1995), Supply chain performance benchmarking study reveals keys to supply chain Excellence, Logistics Information Management

3. Gunasekaran et al.,(2001), Performance measures and metrics in a supply chain environment, International Journal of Operations & Production Management

Lean?
Lean software development is a translation of Lean manufacturing and Lean IT principles and practices to the software development domain. Adapted from the Toyota Production System, a pro-lean subculture is emerging from within the Agile community.

AREA 4
http://en.wikipedia.org/wiki/Lean_software_development

Six Sigma?
Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization ("Black Belts", "Green Belts", etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction and/or profit increase). The term Six Sigma originated from terminology associated with manufacturing, specifically terms associated with statistical modeling of manufacturing processes. The maturity of a manufacturing process can be described by a sigma rating indicating its yield, or the percentage of defectfree products it creates. A six sigma process is one in which 99.99966% of the products manufactured are statistically expected to be free of defects (3.4 defects per million). Motorola set a goal of "six sigma" for all of its manufacturing operations, and this goal became a byword for the management and engineering practices used to achieve it.

SKU?
A stock-keeping unit is a number or code used to identify each unique product or item for sale in a store or other business.

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