PwCSupplyChainManagementAcceleratingCostEffectivenessPricewaterhouseCoopers2SupplyChainManagement•Thesupplychainusedtobeasimpleserialprocesswithrawmaterialsslowlymovinginonedirectionthroughmanufacturingproductionandonwardviaadistributionsystemtoretailersandcustomers.•Today,thetalkisofsupplynetworks,parallelchains,enhancedconcurrentactivities,and“customercentric”withnewinformationplatformsandtechnologysettocutbothinventoryandlead-timesthroughoutthedeliverypipelinefurther.PricewaterhouseCoopers3TopIssuesFacingSCMProfessionalsInarecentquantitativesurvey,SCMprofessionalswereaskedaopen-endedsubjectivequestion,“Whatarethethreebiggestissuesfacingyoupersonallyindevelopingyourlogisticsstrategy?”Source:AMRResearch2000Thetopthreeresponseswere;Cost(21%),SystemsApplications(20%)andIntegration(19%)21%20%18%14%13%13%12%12%11%0%5%10%15%20%25%CostSystemsApplicationIntegrationQualifiedAssociatesSupportManagementE-BusinessOrganisationStructureGlobalManagementFundingPricewaterhouseCoopers4SCMBenefitsManufacturerDistributors/WholesalersCustomersSuppliersRetailersMaterialsFlowsInformationFlowsCashFlowsUScompaniesexpecttoreap$3-400Bofsavingsthroughavarietyofbenefits(3–5%ofrevenues)Source:PRTMPricewaterhouseCoopers5MoveFromPushToPullManufacturersDistributors/WholesalersCustomerSuppliersRetailersManufacturersDistributors/WholesalersCustomerSuppliersRetailersMakewhatwesell,notsellwhatwemake!PricewaterhouseCoopers6MovetoCross-FunctionalBusinessProcessesPurchasingManufacturingDistributionInstall/MaintenanceSalesSourceMakeDeliverInstallSellOrderFulfillmentAvailable-to-PromiseSales&OperationsPlanningDepartmentPerformancePricewaterhouseCoopers7SupplyChainOptimizationSynchronized,SequentialPlanningForecastingDistributionPlanningManufacturingPlanningProcurementPlanningSupplyChainOptimizationSynchronized,ConcurrentPlanningDemandPlanningDistributionPlanningManufacturingPlanningProcurementPlanningPricewaterhouseCoopers8PurchasingManufacturingDistributionInstall/MaintenanceSalesCross-FunctionalSupplyChainMetricsSourceMakeDeliverInstallSellPerfectOrderProcessLSLUSLLSLUSLLSLUSLLSLUSLLSLUSLPricewaterhouseCoopers9SharingandCollaborationManufacturerDistributors/WholesalersSuppliersRetailersSynchronizedProductionSchedulingCollaborativeProductDevelopmentCollaborativeDemandPlanningCollaborativeLogisticsPlanning•Transportationservices•DistributioncenterservicesPricewaterhouseCoopers10FullValueProcurementObjectiveLowesttotalcostofownership•Qualitymeetingcustomerneeds•On-timedelivery•Acceptablesupplyrisk•Processefficiency•DemandreductionUnderpinnedbyprocurementinfrastructureexcellencePurchasePriceAcquisitionInstallationMaintenanceDisposalPriceisoftenjustthetipoftheiceberg!PricewaterhouseCoopers11StrategicSouringTraditionalProgressive•TacticalEmphasis•AcquisitionCostFocus•StaffFunction•CostCenter•Reactive•StrategicEmphasis•TotalCostFocus•ProfitCenter•ProactiveTacticalStrategicTacticalStrategicEvolvingModelofProcurementPricewaterhouseCoopers12LogisticandTransportation•Logisticsaccountsfor8-12%ofsales.In1998,itaccountedforover10%oftheUSGDP•Logisticisoneofthegluesthatholdsthesupplychaintogether.Thetechniquesthatmostmanufacturersemploytoincreasespeedandreducingcostisoutsourcing•Averagecostreductionsfromoutsourcingis32%•The3PLmarkethasenjoyedexplosivegrowthoverthepast5years.Most3PLshavereportedannualgrowthrateof25-50%Source:industryweekPricewaterhouseCoopers13ManufacturingMaterial.....BOMPRTCustomerorderDocumentWorkcenterRoutingetc.•Manufacturingmanagersviewefficiencyandflexibilityastwoobjectiveswhichmustbebalancedinordertoarrivethelowesttotalcost•World-classcompaniesadoptstrategiesandtacticssuchaspullsystem,JITreplenishment,andcycletimereductionsthatenablesacompanytohavelowerlevelsofinventorywhilestilldrivingreductionsinproductionunitcost•Companiesfrequentlyunderestimatethecommitmentrequiredtoachieveaneffectivequalityimprovementwhichresultinoperationcostincreases.PricewaterhouseCoopers14StrategicBusinessPlanningForecastingandPlanninghoursdaysweeksmonthsyear+OperationalTacticalStrategicSchedulingRollingForecastDemandPlanningManufacturingPlanningSchedulingDistributionPlanningTransportationOrderPromiseSourceMakeMoveStoreSellPricewaterhouseCoopers15TopIssuesFacingSCMProfessionalse-Businessisarelativelylowpriority,cominginsixthofthetopissuesfacingSCMprofessionals.However,thisdoesnotreflecttheimpactthate-BusinesswillhaveonSupplyChainManagementSource:AMRResearch2000e-BusinesswillfundamentallychangeSCM21%20%18%14%13%13%12%12%11%0%5%10%15%20%25%CostSystemsApplicationIntegrationQualifiedAssociatesSupportManagemente-BusinessOrganisationStructureGlobalManagementFundingPricewaterhouseCoopers16ENTERPRISEOPTIMIZATIONProcureProduceProductsManageLogisticsForecastDemandOptimizeNETWORKOPTIMIZATIONAFDGCEBCompanyCompanyCompanyCompanyCompanyCompanye-BusinessIsDrivingaFundamentalTransformationinSCMThelargerthenetworkofcompaniesthegreaterthepowerofthenetworktoreducecostforitsmembers•Increasedleveragewithsuppliers•Broadermarketaccessforsuppliers•Expandedcommunityandcollaborationoppor