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CMTC-CAMemberofUSManufacturingExtensionPartnershipSupplyChainManagementStrategiesCMTC-CAMemberofUSManufacturingExtensionPartnershipSupply-ChainManagementStrategies•Supply-ChainManagementDefined•UnderstandingYourIndustryModel•BusinessAlignment•DefiningSupplyChainExcellence•SCMGroundRules•AMulti-DisciplinaryApproach¾Operations,Finance,IT&eOPSCMTC-CAMemberofUSManufacturingExtensionPartnershipWhatisSupply-ChainManagement?•Supply-chainisatermthatdescribeshoworganizations(suppliers,manufacturers,distributors,andcustomers)arelinkedtogether.•Supply-chainmanagementisatotalsystemapproachtomanagingtheentireflowofinformation,materials,andservicesfromraw-materialsuppliersthroughfactoriesandwarehousestotheendcustomer.CMTC-CAMemberofUSManufacturingExtensionPartnershipSupplyChainManagementEvolution■Historicaloperationalstages:–Fromdisconnected.■Exclusivelyfocusongrowth/cost.■Separatelymanagedfunctions.■Internalperformancemeasurements.–Tointegrated.■End-to-endprocessapproach.■Customerfocus,profitablegrowth,liquidity,functionalintegration.CMTC-CAMemberofUSManufacturingExtensionPartnershipT3T3T3T3T3T3T2T1T2T2T1T2T3T2T1OEM1RetailerWebSiteDirectSalesForceDistributor/RetailerDistributorWarehouseConsumerConsumerConsumerConsumerConsumerConsumerConsumerConsumerConsumerTier2and3SuppliersRetailerTier1supplierRetailerSupplyChainofaTypicalOriginalEquipmentManufacturerOEM2CMTC-CAMemberofUSManufacturingExtensionPartnershipOverallStrategy■ASupplyChainisfullyoptimizedwhen:–Bundlesofwell-pricedproducts/servicescreateunassailablelevelsofcustomerattachment(acquisitionandretention).–Totalsupplychaincostsareatthelowestlevel.–Thesupplychaincontributestoprofitablesalesgrowthbycreatingcost/serviceadvantages.–Worldwideeffectivetaxratesareatthelowestlevel.–Capitalefficiencyisatthelowestlevel.–Thesupplychainismadeflexibletorespondtochangesfasterthancompetitorsandtostratifyservicelevelsbyproduct,customer,andgeography.CMTC-CAMemberofUSManufacturingExtensionPartnershipSupplyChainIssues■Themainpurposeofthelevelsinanysupplychainistoaddprocessestotheproduct/service.■Anotherpurposeistoabsorbthedifferencesbetweenthestablesupplyontheupstreamsideandtheerraticdemandonthedownstream(consumer)side.■Thesynchronizationofthesupplychainwilloptimizeefficiencyalongthechain.CMTC-CAMemberofUSManufacturingExtensionPartnershipMatchingSupply-ChainswithProductsEfficientSupply-ChainResponsiveSupply-ChainFunctionalProductsInnovativeProductsMatchMatchMismatchMismatchCMTC-CAMemberofUSManufacturingExtensionPartnershipIV.ContinuousFlowIII.AssemblyLineII.BatchI.JobShopLowVolume,OneofaKindMultipleProducts,LowVolumeFewMajorProducts,HigherVolumeHighVolume,HighStandard-izationCommercialPrinterFrenchRestaurantHeavyEquipmentCoffeeShopAutomobileAssemblyBurgerKingSugarRefineryFlexibility(High)UnitCost(High)Flexibility(Low)UnitCost(Low)CMTC-CAMemberofUSManufacturingExtensionPartnershipSupplyChainExcellence■Newcorporatestateofbeing:–Supplychainexcellencerequireseffectivestrategies,sustainedmanagementcommitment,andchangesinattitude,culture,andorganization.Moreimportantly,itrequiressuperiorexecution.CMTC-CAMemberofUSManufacturingExtensionPartnershipPrinciplesForSupplyChainExcellence■Formulateadifferentiatedsupplychainstrategybychannel.■Forproductcategories,productchannels,andtargetcustomers,developanoperatingstrategythat,whenexecuted,makesyoursupplychaindifferentfromtherest.■Focusonlong-andshort-termprofitability,liquidity,andgrowth.CMTC-CAMemberofUSManufacturingExtensionPartnershipPrinciplesForSupplyChainExcellence■Organizeyourbusinessunitaroundmajorprocessesorchannels,notfunctions.Traditional“silos”separatesworkandinterruptsflowswhichleadstoinefficiency.■Workcollaborativelywithcustomers,suppliers,partners,andthirdpartiestochangethewayoperationsperform,viewed,andmeasured.Extendedsupplychain.CMTC-CAMemberofUSManufacturingExtensionPartnershipPrinciplesForSupplyChainExcellence■Invest/reinvestinsupplychaininformationtechnologytomanageflowsend-to-end.ITshouldsupportbothplanning,analysis,andexecution.■Invest/reinvestinsupplychainknowledge,people,skills,andlearning.Supplychainpracticeisrelativelynew.Changeisaconstant,withinnovationsandproblemsalwaysoccurring.Organizationsmustinvestinongoingtraining,mentoring,education,andfeedbacksystems.CMTC-CAMemberofUSManufacturingExtensionPartnershipPrinciplesForSupplyChainExcellence■Operate/managebyproduct/channel.Thinkintermsofproduct/servicebundlesthataresoldthroughpotentiallydifferentchannels.Supplychainsshouldbesetupanddrivenbythecharacteristicsofeachchannel.■Outsourcepartsofthechainforflexibilityandbetterassetmanagement.Inmanycases,functionscanbeperformedbetterbythirdparties.CMTC-CAMemberofUSManufacturingExtensionPartnershipPrinciplesForSupplyChainExcellence■Thinkglobally…buildregionally…operatelocally.Thebestperformingsupplychainsaremanagedwithcentralizedplanning,regionalapproaches,andlocaloperations.■Themostcriticalprinciple:Execution!!!Focusonit,measureitdailyorrealtime,andgivepeopletheauthorityandaccountabilitytoexcelatit.CMTC-CAMemberofUSManufacturingEx