Description
The PPT includes the SCM in a very comprehensive way.
Building Competitive advantage Through LEAN & AGILE Supply chain
What do we do - Our Consulting offerings and Industry focus…
Consumer Consumer Goods Goods
Pharma Pharma
Discrete Auto Discrete Mfg Mfg
Cement & Cement & Cement & Process Process Process Industries Ind Ind
> M&A
Banking & Banking & Financial Financial services services services
Hospitality
Strategy
(delivered through SDG)
>Corporate Strategy
> Product Portfolio
Operations
> Six Sigma
> Lean manufacturing
> TPM
> BPR
> Sales & CRM
Supply Chain & FVS
> Supply chain Mgt
>Logistics
> Full Value Spend
> Network Optimization
HR & Change Management
> Restructuring > Competency > Change Management > HR systems
Discussion points
• • • •
Business environment changes - context Supply Chain imperatives Supply chain strategies for competitive advantage Current challenges and improvement initiatives
Discussion points
• • • •
Business environment changes - context Supply Chain imperatives Supply chain strategies for competitive advantage Current challenges and improvement initiatives
New emerging realities are the triggers for supply chain Transformation
•
Retail Customers
• Look for more value for money
• Look for superior quality • Look for new features • Prefer “one stop shop” type of solution
• Want value added services
• Industrial customers • Reliability in deliveries • Flexibility in dealings • Run extra mile during contingencies • Quick in response
Supply Chain needs to align itself to the new realities
•
Rapid globalization of markets and products
• Trade boundaries are disappearing
• New products and services available from cheaper source • Indian companies are going global thus facing logistics challenges
• Concept of manufacturing in one factory or from one country is seriously challenged
• Regulatory and economic changes – world wide & local • Tax/ Duty free zones
• VAT
• WTO agreement
Supply Chain needs to align itself to the new realities
•
Innovative practices by competition
• Company owned retail stores
• Forward and backward integration to leverage synergy • RFID • Increasing trends of Cooptition ( Competition coming together )
•
•
Proliferation of new products and new channels
• Modern retail format Technological changes
Discussion points
• • • •
Business environment changes - context Supply Chain imperatives Supply chain strategies for competitive advantage Current challenges and improvement initiatives
These translates in to a few critical success factors for business to remain competitive
•
Speed to market
•
• •
Quick and successful launch of new products
Value added & superior service Containing ( in fact reducing) cost of goods sold
•
•
Managing un predictability in demand
Managing short product life cycle
Supply Chain excellence parameters
Supply chain improvement efforts are therefore directed at
Integration Flow –
How well different entities of supply chain are integrated How quickly ( velocity) the material, goods and information move thro Supply Chain to & fro the customers
Flexibility Synchronization – Efficiency -
How well it can adopt to changing demand scenario
How well different stages / processes are synchronized How well the costs are managed
Service
-
How well are SLAs met and how much are they better than
competition
Discussion points
• • • •
Business environment changes - context Supply Chain imperatives Supply chain strategies for competitive advantage Current challenges and improvement initiatives
Points that need to be considered while creating a competitive Supply Chain
•
Maximize benefits of Supply Chain Tripod
•
• •
Building Differentiators in cost and service
Managing demand variability – Deciding Points of commit Leveraging Supply Chain cost transformers
•
• •
Deciding on most appropriate Supply Chain web
Optimize Push – Pull Boundaries Appropriate to demand un certainty spectrum
A good Supply Chain strategy maximizes benefits along the virtual Tripod
Value Enhancement
Cost Reduction
Cash Liberation
SCM strategy aims for Building Differentiators
? Differentiate service and cost to build
value
Plant 1 or 2 Plant 1
? Look at the supply chain as a portfolio of assets that need to be assembled
uniquely for individual customers
? Build and forge competitive advantage through the SCM differentiators
Large Batch Size
Service
Small batch Size
Arms length
Demand variability
100 Units
Demand Variability Inventory Drift Transport & Logistics Variability Plan Adherence Batch Size Adjustment Procurement quality lead-time Batch Size Forecast Accuracy
Supply Chain Cost Transformer
Assesses and reduces overall supply chain costs ? Full value procurement ? Cost of ownership ? Cost of reach ? Cost of network and fiscal chain ? Make Vs Buy ? Vendor Management
The evolution of a supply chain web brought forward some paradigm shifts in the supply chain perspective
.
? Organizations do not compete on the basis of their “traditional supply chain efficiencies” instead they compete on “supply chain web effectiveness” In configuring their supply chains organizations have a choice regarding their level of participation in each segment of the web; organizations however, do not have a choice about “managing the entire web”. Within an industry “organization supply chain competencies” do not compete with one another; “organization supply chain web competencies” do. A supply chain web is more than a “physical flow of goods”. The flow of goods is accompanied by complex “interdependent fiscal and information flow”. To build supply chain effectiveness all these flows need to be comprehensively managed. Finally, supply chain webs are a “portfolio of supply chain assets” (such as capacities; inventories; WIP; people etc.) This portfolio needs to be uniquely crafted for individual groups of customers to maximize value in the business.
?
?
?
?
The definition of the “push / pull boundary” is a critical Supply Chain Configuration decision
Supply Chain process / cycle – initiated by customer event pull
Supply Chain process / cycle – initiated in anticipation of customer event push
Decision on Push- Pull boundaries is critical for both efficiency and effectiveness
Customer Customer Order Cycle
Customer Order Cycle
PULL PROCESSES
Customer Order Arrives Replenishment, Manufacturing, procurement Cycle
L L Bean
Replenishment & Manufacturing Cycle
Manufacturer
PUSH PROCESSES
Procurement Cycle
Supplier
The Uncertainty Spectrum
High implied demand uncertainty
Somewhat uncertain demand
Entirely New Products: the introduction of the palm pilot
New models of existing goods: New Ford Taurus
Established goods: Crest toothpaste Purely functional products: gasoline Highly efficient Integrated steel mills: production scheduled weeks or months in advance with little variety or flexibility Somewhat efficient Hanes apparel : A traditional make-tostock manufacturer with production lead time of several weeks Somewhat responsive Most automotive production : Delivering a large variety of products in a couple of weeks
Somewh at certain demand Low implied demand uncertainty
Highly Responsive Dell : Custom-made PCs and servers in a few days
The Supply Chain Strategy Choices
Supply Chain Strategy choices
? ? ?
Supply Chain Structure Supply Chain participation Supply Chain configuration (tailoring the supply chain)
Supply Chain Structure
? ? ? ?
Time to market (3M – from idea to communication) Responsiveness Flexibility and product configuration (Dell) Efficiency (Wal-Mart; Levers etc.)
Supply Chain Structure
? Determined by product / industry
Made to order heavy engineering
? Design manufacturing coordination ? Cycle time
Man Customization electronics
? Supplier partnerships
? Product Aggregates ? Service networking plan
? Delivery reliability
Consumer durables
FMCG Pharmaceuticals
? Efficiency ? Inventory Service trade offs
Strategic Supply Chain Alignment
Sourcing Strategy
Demand Flow Strategy
Product / Customer Service Strategy
Supply Chain Integration Strategy Four Dimensions of Strategic Supply Chain Management
Strategic Supply Chain Management
Revenue Management
How should we respond to customer expectations to maximize market share and / or pricing margins? Customer Service Segmentation What levels of service does each customer segment expect ?
Product / Customer Service Strategy
Cost-to-serve
What is the cost of responding to the service expectations of each customer segment?
Three Elements of the customer service strategy
Strategic Supply Chain Management
Demand Planning
What level of production and inventory should be maintained to meet customer demand?
Demand Flow Strategy
Channel Design What channel structure(s) meets customer expectations more profitably?
Supply Chain Configuration
What is the optimal number, role, location and linkage of each supply chain participant?
Three Elements of the demand flow strategy
Sourcing Strategy
Manufacturing Management
How should production be organized and managed?
Demand Flow Strategy
Make or buy Which products / components should be manufactured and which should be purchased ?
Capacity Management
Where should plants and suppliers be geographically located and what capacity should exist at each?
Three Elements of the Sourcing Strategy
Supply Chain “Pyramid of Opportunity”
Supply Chain Strategy Supply Chain planning, process & processes
Supply Chain points of commit
Supply Chain execution Full value procurement & Cost transformer
Network Optimization & Fiscal Supply Chain
Supply Chain Organization Structure
Supply Chain optimizers & technology foot print
Supply Chain “Pyramid of Opportunity”
Products & costs decisions Portfolio of SCM assets
Supply Chain Strategy
Push – pull boundaries Make or buy decisions Inventory mix
Supply Chain planning, process & processes
Supply Chain points of commit
Capacity, variety flexibility Plant market choice Logistics footprint Fiscal velocity
Value , Flexibility responsiveness TCO, Cost of skew Collaboration
Supply Chain execution Full value procurement & Cost transformer
Network Optimization & Fiscal Supply Chain
Supply Chain Organization Structure
Technology MIS
Roles , KRA
Supply Chain optimizers & technology foot print
Discussion points
• • • •
Business environment changes - context Supply Chain imperatives Supply chain strategies for competitive advantage Current challenges and improvement initiatives
Challenges in getting copious & quality supplies is forcing organizations to re look at their sourcing strategy
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Challenges
Un reliable supplies
Causes
Too many vendors
Legacy costing methods Treating buying as a commercial activity Not managing vendor capacity bottleneck
Escalating material cost
Delayed & Missed supplies Skewed supplies Failure to cope with fluctuating demand Rejections and reworks Increasing buying complexity
Lean manufacturing drives
Supplier
Inbound Logistics
Manufacturer
Outbound Logistics
Customers
Improvement Initiatives
Tierization of vendors ( Kitting supplies)
Rationalization of vendors – Reducing No of Vendors / Component
Categorization to differentiate focus Pay and lock capacities Integrated planning with available vendor capacity
Global sourcing
Reverse auctioning / e procurement ERP / IT integration with vendors Implementing Lean manufacturing at Vendors
Success of these initiatives call for significant paradigm shift
Supplier
Inbound Logistics
Manufacturer
Outbound Logistics
Customers
Current Paradigm
Cost of purchase Transaction Meeting monthly schedule Capability to meet demand Creating vendor capacity Multiple vendors Reacting to Vendor Risks
New Paradigm
Total Cost of Ownership Partnership Flow rate Capability to ramp up Ensuring elasticity of Vendor Capacity Rationalization of Vendor base managing & mitigating vendor risks
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Challenges
Un reliable delivery schedule Batch determined by Truck load Lack of movement tracking visibility Damages & Pilferages
Causes
Despatch not under control
Frequency of despatch depends on
truck availability Suppliers may wait for cheaper but not safer transporter to cut cost
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Improvement initiatives
Reverse milk run for pick up on a daily basis Combine & optimize supply lots of various suppliers Exploit return empty load of FG deliveries Pull Supplies of small lot size using “Kanban”
Success of these initiatives call for significant paradigm shift
Supplier
Inbound Logistics
Manufacturer
Outbound Logistics
Customers
Current Paradigm
Truck load determines lot size Suppliers to manage transport Reducing Cost of transport
New Paradigm
Customer order determines lot size Organization to take control of transport Reducing TCO
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Challenges
Long lead time Low productivity Excess WIP Low capacity utilization Skewed production Fire fighting on quality & re work Sub Optimization
Causes
Status quo mindset
Legacy lay out
Stagnated material Huge lot size Excess Machine break down Wasted time in set up Lack of problem solving approach
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Improvement initiatives
Product lay out Lean manufacturing JIT , Single piece flow LP based Integrated planning to maximize bottle neck utilization Six sigma TPM,SMED,
Success of these initiatives call for significant paradigm shift
Supplier
Inbound Logistics
Manufacturer
Outbound Logistics
Customers
Current Paradigm
We are doing good EOQ is the best way to optimize Set up time is un avoidable Problems are nuisance Variations is natural
New Paradigm
Good is the enemy of “Great” Problems provide opportunities Variability can be eliminated
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Challenges
Stock out at Depot Inter depot transfer Higher primary and secondary freight Higher & mismatched inventory Too many depots Inaccurate forecasting Poor logistics Legacy depot location Improper mix of transport mode
Causes
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Improvement initiatives
Net work optimization Optimization on owned and leased transport 3 PL and 4 PL RFID Replenishment based on “ Pull” at depot Dealer servicing based on secondary sales
Success of these initiatives call for significant paradigm shift
Supplier
Inbound Logistics
Manufacturer
Outbound Logistics
Customers
Current Paradigm
Reduce logistics cost Push material to down stream Logistics as an activity
New Paradigm
optimize between cost and service Look for pull opportunities Logistics as service differentiator
Final Thoughts
• There will be more changes in the business environment
• Competition is likely to intensify both locally and globally
• New internal and external challenges will keep appearing • No strategy whether business or supply chain can afford to be
static
The success is in adopting the new learning and re aligning faster
than competition
doc_875914067.ppt
The PPT includes the SCM in a very comprehensive way.
Building Competitive advantage Through LEAN & AGILE Supply chain
What do we do - Our Consulting offerings and Industry focus…
Consumer Consumer Goods Goods
Pharma Pharma
Discrete Auto Discrete Mfg Mfg
Cement & Cement & Cement & Process Process Process Industries Ind Ind
> M&A
Banking & Banking & Financial Financial services services services
Hospitality
Strategy
(delivered through SDG)
>Corporate Strategy
> Product Portfolio
Operations
> Six Sigma
> Lean manufacturing
> TPM
> BPR
> Sales & CRM
Supply Chain & FVS
> Supply chain Mgt
>Logistics
> Full Value Spend
> Network Optimization
HR & Change Management
> Restructuring > Competency > Change Management > HR systems
Discussion points
• • • •
Business environment changes - context Supply Chain imperatives Supply chain strategies for competitive advantage Current challenges and improvement initiatives
Discussion points
• • • •
Business environment changes - context Supply Chain imperatives Supply chain strategies for competitive advantage Current challenges and improvement initiatives
New emerging realities are the triggers for supply chain Transformation
•
Retail Customers
• Look for more value for money
• Look for superior quality • Look for new features • Prefer “one stop shop” type of solution
• Want value added services
• Industrial customers • Reliability in deliveries • Flexibility in dealings • Run extra mile during contingencies • Quick in response
Supply Chain needs to align itself to the new realities
•
Rapid globalization of markets and products
• Trade boundaries are disappearing
• New products and services available from cheaper source • Indian companies are going global thus facing logistics challenges
• Concept of manufacturing in one factory or from one country is seriously challenged
• Regulatory and economic changes – world wide & local • Tax/ Duty free zones
• VAT
• WTO agreement
Supply Chain needs to align itself to the new realities
•
Innovative practices by competition
• Company owned retail stores
• Forward and backward integration to leverage synergy • RFID • Increasing trends of Cooptition ( Competition coming together )
•
•
Proliferation of new products and new channels
• Modern retail format Technological changes
Discussion points
• • • •
Business environment changes - context Supply Chain imperatives Supply chain strategies for competitive advantage Current challenges and improvement initiatives
These translates in to a few critical success factors for business to remain competitive
•
Speed to market
•
• •
Quick and successful launch of new products
Value added & superior service Containing ( in fact reducing) cost of goods sold
•
•
Managing un predictability in demand
Managing short product life cycle
Supply Chain excellence parameters
Supply chain improvement efforts are therefore directed at
Integration Flow –
How well different entities of supply chain are integrated How quickly ( velocity) the material, goods and information move thro Supply Chain to & fro the customers
Flexibility Synchronization – Efficiency -
How well it can adopt to changing demand scenario
How well different stages / processes are synchronized How well the costs are managed
Service
-
How well are SLAs met and how much are they better than
competition
Discussion points
• • • •
Business environment changes - context Supply Chain imperatives Supply chain strategies for competitive advantage Current challenges and improvement initiatives
Points that need to be considered while creating a competitive Supply Chain
•
Maximize benefits of Supply Chain Tripod
•
• •
Building Differentiators in cost and service
Managing demand variability – Deciding Points of commit Leveraging Supply Chain cost transformers
•
• •
Deciding on most appropriate Supply Chain web
Optimize Push – Pull Boundaries Appropriate to demand un certainty spectrum
A good Supply Chain strategy maximizes benefits along the virtual Tripod
Value Enhancement
Cost Reduction
Cash Liberation
SCM strategy aims for Building Differentiators
? Differentiate service and cost to build
value
Plant 1 or 2 Plant 1
? Look at the supply chain as a portfolio of assets that need to be assembled
uniquely for individual customers
? Build and forge competitive advantage through the SCM differentiators
Large Batch Size
Service
Small batch Size
Arms length
Demand variability
100 Units
Demand Variability Inventory Drift Transport & Logistics Variability Plan Adherence Batch Size Adjustment Procurement quality lead-time Batch Size Forecast Accuracy
Supply Chain Cost Transformer
Assesses and reduces overall supply chain costs ? Full value procurement ? Cost of ownership ? Cost of reach ? Cost of network and fiscal chain ? Make Vs Buy ? Vendor Management
The evolution of a supply chain web brought forward some paradigm shifts in the supply chain perspective
.
? Organizations do not compete on the basis of their “traditional supply chain efficiencies” instead they compete on “supply chain web effectiveness” In configuring their supply chains organizations have a choice regarding their level of participation in each segment of the web; organizations however, do not have a choice about “managing the entire web”. Within an industry “organization supply chain competencies” do not compete with one another; “organization supply chain web competencies” do. A supply chain web is more than a “physical flow of goods”. The flow of goods is accompanied by complex “interdependent fiscal and information flow”. To build supply chain effectiveness all these flows need to be comprehensively managed. Finally, supply chain webs are a “portfolio of supply chain assets” (such as capacities; inventories; WIP; people etc.) This portfolio needs to be uniquely crafted for individual groups of customers to maximize value in the business.
?
?
?
?
The definition of the “push / pull boundary” is a critical Supply Chain Configuration decision
Supply Chain process / cycle – initiated by customer event pull
Supply Chain process / cycle – initiated in anticipation of customer event push
Decision on Push- Pull boundaries is critical for both efficiency and effectiveness
Customer Customer Order Cycle
Customer Order Cycle
PULL PROCESSES
Customer Order Arrives Replenishment, Manufacturing, procurement Cycle
L L Bean
Replenishment & Manufacturing Cycle
Manufacturer
PUSH PROCESSES
Procurement Cycle
Supplier
The Uncertainty Spectrum
High implied demand uncertainty
Somewhat uncertain demand
Entirely New Products: the introduction of the palm pilot
New models of existing goods: New Ford Taurus
Established goods: Crest toothpaste Purely functional products: gasoline Highly efficient Integrated steel mills: production scheduled weeks or months in advance with little variety or flexibility Somewhat efficient Hanes apparel : A traditional make-tostock manufacturer with production lead time of several weeks Somewhat responsive Most automotive production : Delivering a large variety of products in a couple of weeks
Somewh at certain demand Low implied demand uncertainty
Highly Responsive Dell : Custom-made PCs and servers in a few days
The Supply Chain Strategy Choices
Supply Chain Strategy choices
? ? ?
Supply Chain Structure Supply Chain participation Supply Chain configuration (tailoring the supply chain)
Supply Chain Structure
? ? ? ?
Time to market (3M – from idea to communication) Responsiveness Flexibility and product configuration (Dell) Efficiency (Wal-Mart; Levers etc.)
Supply Chain Structure
? Determined by product / industry
Made to order heavy engineering
? Design manufacturing coordination ? Cycle time
Man Customization electronics
? Supplier partnerships
? Product Aggregates ? Service networking plan
? Delivery reliability
Consumer durables
FMCG Pharmaceuticals
? Efficiency ? Inventory Service trade offs
Strategic Supply Chain Alignment
Sourcing Strategy
Demand Flow Strategy
Product / Customer Service Strategy
Supply Chain Integration Strategy Four Dimensions of Strategic Supply Chain Management
Strategic Supply Chain Management
Revenue Management
How should we respond to customer expectations to maximize market share and / or pricing margins? Customer Service Segmentation What levels of service does each customer segment expect ?
Product / Customer Service Strategy
Cost-to-serve
What is the cost of responding to the service expectations of each customer segment?
Three Elements of the customer service strategy
Strategic Supply Chain Management
Demand Planning
What level of production and inventory should be maintained to meet customer demand?
Demand Flow Strategy
Channel Design What channel structure(s) meets customer expectations more profitably?
Supply Chain Configuration
What is the optimal number, role, location and linkage of each supply chain participant?
Three Elements of the demand flow strategy
Sourcing Strategy
Manufacturing Management
How should production be organized and managed?
Demand Flow Strategy
Make or buy Which products / components should be manufactured and which should be purchased ?
Capacity Management
Where should plants and suppliers be geographically located and what capacity should exist at each?
Three Elements of the Sourcing Strategy
Supply Chain “Pyramid of Opportunity”
Supply Chain Strategy Supply Chain planning, process & processes
Supply Chain points of commit
Supply Chain execution Full value procurement & Cost transformer
Network Optimization & Fiscal Supply Chain
Supply Chain Organization Structure
Supply Chain optimizers & technology foot print
Supply Chain “Pyramid of Opportunity”
Products & costs decisions Portfolio of SCM assets
Supply Chain Strategy
Push – pull boundaries Make or buy decisions Inventory mix
Supply Chain planning, process & processes
Supply Chain points of commit
Capacity, variety flexibility Plant market choice Logistics footprint Fiscal velocity
Value , Flexibility responsiveness TCO, Cost of skew Collaboration
Supply Chain execution Full value procurement & Cost transformer
Network Optimization & Fiscal Supply Chain
Supply Chain Organization Structure
Technology MIS
Roles , KRA
Supply Chain optimizers & technology foot print
Discussion points
• • • •
Business environment changes - context Supply Chain imperatives Supply chain strategies for competitive advantage Current challenges and improvement initiatives
Challenges in getting copious & quality supplies is forcing organizations to re look at their sourcing strategy
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Challenges
Un reliable supplies
Causes
Too many vendors
Legacy costing methods Treating buying as a commercial activity Not managing vendor capacity bottleneck
Escalating material cost
Delayed & Missed supplies Skewed supplies Failure to cope with fluctuating demand Rejections and reworks Increasing buying complexity
Lean manufacturing drives
Supplier
Inbound Logistics
Manufacturer
Outbound Logistics
Customers
Improvement Initiatives
Tierization of vendors ( Kitting supplies)
Rationalization of vendors – Reducing No of Vendors / Component
Categorization to differentiate focus Pay and lock capacities Integrated planning with available vendor capacity
Global sourcing
Reverse auctioning / e procurement ERP / IT integration with vendors Implementing Lean manufacturing at Vendors
Success of these initiatives call for significant paradigm shift
Supplier
Inbound Logistics
Manufacturer
Outbound Logistics
Customers
Current Paradigm
Cost of purchase Transaction Meeting monthly schedule Capability to meet demand Creating vendor capacity Multiple vendors Reacting to Vendor Risks
New Paradigm
Total Cost of Ownership Partnership Flow rate Capability to ramp up Ensuring elasticity of Vendor Capacity Rationalization of Vendor base managing & mitigating vendor risks
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Challenges
Un reliable delivery schedule Batch determined by Truck load Lack of movement tracking visibility Damages & Pilferages
Causes
Despatch not under control
Frequency of despatch depends on
truck availability Suppliers may wait for cheaper but not safer transporter to cut cost
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Improvement initiatives
Reverse milk run for pick up on a daily basis Combine & optimize supply lots of various suppliers Exploit return empty load of FG deliveries Pull Supplies of small lot size using “Kanban”
Success of these initiatives call for significant paradigm shift
Supplier
Inbound Logistics
Manufacturer
Outbound Logistics
Customers
Current Paradigm
Truck load determines lot size Suppliers to manage transport Reducing Cost of transport
New Paradigm
Customer order determines lot size Organization to take control of transport Reducing TCO
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Challenges
Long lead time Low productivity Excess WIP Low capacity utilization Skewed production Fire fighting on quality & re work Sub Optimization
Causes
Status quo mindset
Legacy lay out
Stagnated material Huge lot size Excess Machine break down Wasted time in set up Lack of problem solving approach
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Improvement initiatives
Product lay out Lean manufacturing JIT , Single piece flow LP based Integrated planning to maximize bottle neck utilization Six sigma TPM,SMED,
Success of these initiatives call for significant paradigm shift
Supplier
Inbound Logistics
Manufacturer
Outbound Logistics
Customers
Current Paradigm
We are doing good EOQ is the best way to optimize Set up time is un avoidable Problems are nuisance Variations is natural
New Paradigm
Good is the enemy of “Great” Problems provide opportunities Variability can be eliminated
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Challenges
Stock out at Depot Inter depot transfer Higher primary and secondary freight Higher & mismatched inventory Too many depots Inaccurate forecasting Poor logistics Legacy depot location Improper mix of transport mode
Causes
In bound logistics - Taking control of inbound logistics is becoming a must for increasing reliability of supplies
Inbound Logistics Outbound Logistics
Supplier
Manufacturer
Customers
Improvement initiatives
Net work optimization Optimization on owned and leased transport 3 PL and 4 PL RFID Replenishment based on “ Pull” at depot Dealer servicing based on secondary sales
Success of these initiatives call for significant paradigm shift
Supplier
Inbound Logistics
Manufacturer
Outbound Logistics
Customers
Current Paradigm
Reduce logistics cost Push material to down stream Logistics as an activity
New Paradigm
optimize between cost and service Look for pull opportunities Logistics as service differentiator
Final Thoughts
• There will be more changes in the business environment
• Competition is likely to intensify both locally and globally
• New internal and external challenges will keep appearing • No strategy whether business or supply chain can afford to be
static
The success is in adopting the new learning and re aligning faster
than competition
doc_875914067.ppt