how to grow revenues through supply chain relationship management bill burke president, ceo eplains,...
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How to Grow RevenuesHow to Grow RevenuesThrough Supply Chain Through Supply Chain
Relationship Management Relationship Management
Bill BurkeBill Burke
President, CEOPresident, CEO
ePlains, Inc.ePlains, Inc.
Strategy PerspectiveStrategy Perspective
Companies across industries are deploying pull-based Companies across industries are deploying pull-based systems that require closer collaboration with fewer suppliers systems that require closer collaboration with fewer suppliers to be successful.to be successful.
Relationship management, including process performance Relationship management, including process performance surrounding collaboration, is a key driver for establishing and surrounding collaboration, is a key driver for establishing and sustaining competitive advantage in this business model.sustaining competitive advantage in this business model.
FocusFocus
Factors Driving Vendor RationalizationFactors Driving Vendor Rationalization Supplier’s Perspective – Why You WinSupplier’s Perspective – Why You Win Operational Model – What Does It Look LikeOperational Model – What Does It Look Like Point of Operational Relationship LeveragePoint of Operational Relationship Leverage The 360 Degree Trading Partner RelationshipThe 360 Degree Trading Partner Relationship Enabling TechnologiesEnabling Technologies Framework for ImprovementFramework for Improvement
CPFR AdoptersCPFR Adopters HenkelHenkel
– Lowered Distribution cost 28%Lowered Distribution cost 28%– Reduced Freight cost by 18%Reduced Freight cost by 18%– Increased Annual Sales 9% in Flat categoryIncreased Annual Sales 9% in Flat category– Improved Forecast Accuracy by 10%Improved Forecast Accuracy by 10%– Increased employee productivity by 20%Increased employee productivity by 20%
CPFR AdoptersCPFR Adopters Rite AidRite Aid
– Reduced “Out of Stock” by 65%Reduced “Out of Stock” by 65%– Reduced Weeks of Supply by 6% Reduced Weeks of Supply by 6%
Increase in Customer Service Levels of 4.2%Increase in Customer Service Levels of 4.2%
Factors Driving Vendor Factors Driving Vendor RationalizationRationalization
Mergers and Acquisitions – Darryl HunterMergers and Acquisitions – Darryl Hunter
Getting CloseGetting Close– 16% of Retailers currently have formal Collaborative 16% of Retailers currently have formal Collaborative
Planning, Forecasting and Replenishment (CPFR) Planning, Forecasting and Replenishment (CPFR) Programs in place todayPrograms in place today
– This will grow to 32% within one yearThis will grow to 32% within one year
– Gartner Group, 12Gartner Group, 12thth Annual Retail IT Survey, June 2002 Annual Retail IT Survey, June 2002
Factors Driving Vendor Factors Driving Vendor RationalizationRationalization
Need to respondNeed to respond– Lowest price was the top priority. Now it is number six. Lowest price was the top priority. Now it is number six. – The need for speed to market to hit demand is the The need for speed to market to hit demand is the
dominant reason now.dominant reason now. Ready for Commitment Ready for Commitment
– 30% of Retailers surveyed for CPFR programs said the 30% of Retailers surveyed for CPFR programs said the only thing preventing them is their own ability to produce only thing preventing them is their own ability to produce the ‘one forecast’. the ‘one forecast’.
– Retailers with advanced planning systems in place will Retailers with advanced planning systems in place will triple from 18% to 59% by the end of 2003.triple from 18% to 59% by the end of 2003.
– Gartner Group, 12Gartner Group, 12thth Annual Retail IT Survey, June 2002 Annual Retail IT Survey, June 2002
There is good news and bad newsThere is good news and bad news
Good news, one or two of your customer’s Good news, one or two of your customer’s suppliers per item/category will have the suppliers per item/category will have the ability to dramatically increase revenues. It ability to dramatically increase revenues. It is winner takes allis winner takes all
Bad news, it is winner takes allBad news, it is winner takes all
If you are selected…If you are selected…
Good news, you have the opportunity to increase Good news, you have the opportunity to increase cash flow, reduce risk and maintain or increase cash flow, reduce risk and maintain or increase profits, all on the back of increasing revenueprofits, all on the back of increasing revenue
Bad news, for most manufacturing companies, Bad news, for most manufacturing companies, success involves significant organizational success involves significant organizational changeschanges– Culture Culture – Structure Structure – Business processesBusiness processes– Enabling systemsEnabling systems– RewardsRewards
Then, there is more good newsThen, there is more good news
You will likely need to move to a pull You will likely need to move to a pull based, closely coupled trading partner based, closely coupled trading partner relationship with your suppliers in order to relationship with your suppliers in order to deliver on the commitments you will need deliver on the commitments you will need to make.to make.
Supplier’s Perspective – Why Supplier’s Perspective – Why You WinYou Win
VICS CPFR Assessment Model criteriaVICS CPFR Assessment Model criteria– Joint Business Planning CapabilityJoint Business Planning Capability– Partnering and Trust RelationshipPartnering and Trust Relationship– Business Process Reengineering CapabilityBusiness Process Reengineering Capability– Information Technology UtilizationInformation Technology Utilization
Would you be selected today?Would you be selected today?
Objective Selection SystemObjective Selection System
Weighted Summary
0
10
20
30
40
50
60Mgmt. Philosophy & Customer Focus
Quality Records
Process Controls/ Documentation
Logisitics
Financial Stability
Warranty 3yr. Participation
Cost Effectiveness
Supplier Quality Management Process
Capacity
Proven Technologies
Reliability/Durability
Document Control
Design Verification Capabilities
Pro-E Capabilities
Prototype Lead Time
Design Expense
0 0 0 0 0 0
Darryl Hunter, APICS Presentation, October, 2002
Relationship Management Determinants Relationship Management Determinants of Success - Selectionof Success - Selection
Service level assessment and expectationsService level assessment and expectations Process enabling and assuranceProcess enabling and assurance Tracking and measurement capabilityTracking and measurement capability Team interaction proficiency recognizedTeam interaction proficiency recognized
Operational Model – What It Looks Like Operational Model – What It Looks Like
CPFR Nine-Step ModelCPFR Nine-Step Model *VICS*VICS
Determinants of Trading Partner Determinants of Trading Partner AgreementsAgreements
Formal agreement to work together to reduce Formal agreement to work together to reduce costs, reduce cycle time, improve end customer costs, reduce cycle time, improve end customer service and create flexibility by collaboratingservice and create flexibility by collaborating– Goals defined with timelines and definition of gain Goals defined with timelines and definition of gain
sharingsharing
– Blanket order agreements with release termsBlanket order agreements with release terms
– Exception definitionException definition
– Pricing according to conditionsPricing according to conditions
Determinants of Trading Partner Determinants of Trading Partner AgreementsAgreements
Information sharing definedInformation sharing defined– Single customer forecast with frozen order periodSingle customer forecast with frozen order period
Close collaboration of forecast updates and Close collaboration of forecast updates and exceptions resolutionexceptions resolution– Weekly communications and updates, responsibilities Weekly communications and updates, responsibilities
assignedassigned– Monthly program evaluations Monthly program evaluations
Systems and processes defined to support Systems and processes defined to support information sharing and collaborationinformation sharing and collaboration
Resources, responsibilities and process owners Resources, responsibilities and process owners defined and committeddefined and committed
Relationship Management Relationship Management Determinants of Success - Determinants of Success -
OperationalOperational Weekly single forecast definition discussionWeekly single forecast definition discussion Forecast exceptions discussionForecast exceptions discussion
– Buyer side exceptions versus trading agreementBuyer side exceptions versus trading agreement
– Seller constraintsSeller constraints
Promotions coordination for single forecast Promotions coordination for single forecast considerationconsideration
Monthly review and assessment interactionsMonthly review and assessment interactions Real time access to joint business plan and process Real time access to joint business plan and process
ownership definitionownership definition
Disjointed Partner RelationshipDisjointed Partner Relationship
Forecasting Forecasting and Order and Order SchedulingScheduling CustomerCustomer
ServiceService
Finance/Finance/AccountingAccountingRelationship Relationship
ManagementManagement
Engineering Engineering and Product and Product Life Cycle Life Cycle SupportSupport
TradingTradingPartnerPartnerTradingTradingPartnerPartner
ManagementManagement PromotionPromotion
Supply Chain Relationship Supply Chain Relationship ManagementManagement
Business processes and systems that address Business processes and systems that address the critical needs of capturing, leveraging the critical needs of capturing, leveraging and efficiently executing on trading partner and efficiently executing on trading partner relationship interactionsrelationship interactions
360 Degree Partner Relationship360 Degree Partner Relationship
Forecasting Forecasting and Order and Order SchedulingScheduling
ManagementManagement PromotionPromotion
CustomerCustomerServiceService
Accounting/Accounting/FinanceFinance
Engineering Engineering and Product and Product Life Cycle Life Cycle SupportSupport
TradingTradingPartnerPartner
(Yankee Group)
WebsitWebsitee
SCRM Key ProcessesSCRM Key Processes
-Agreement repository-Agreement repository
-Activities tracking and -Activities tracking and measurementmeasurement
-Workflow-Workflow
-Relationship history -Relationship history analysisanalysis
-Activity costing of -Activity costing of relationshiprelationship
-Exceptions and -Exceptions and overall relationship overall relationship assessmentassessment
What are companies using today?What are companies using today?
E-mail, fax, phoneE-mail, fax, phone
Network storage of key documentsNetwork storage of key documents
Independent components for:Independent components for:
-ERP-ERP
-Sales Force Automation-Sales Force Automation
-Internet access-Internet access
PortalPortal
ERP PortalERP Portal
Workflow Workflow
Messaging and Alerts EnablerMessaging and Alerts Enabler
Is your organization ready to Is your organization ready to support these relationship and support these relationship and
collaboration needs today?collaboration needs today?
Framework for improvementFramework for improvement
Organizational, Culture, Rewards, Selection Organizational, Culture, Rewards, Selection and Education, - McKinsey 7 Starsand Education, - McKinsey 7 Stars
Processes and Enabling systems – SCRM Processes and Enabling systems – SCRM platformplatform
Framework for improvementFramework for improvement
Organizational, Culture, Rewards, Selection Organizational, Culture, Rewards, Selection and Education, - McKinsey 7 Starsand Education, - McKinsey 7 Stars
Processes and Enabling systems – SCRM Processes and Enabling systems – SCRM platformplatform
Questions and DiscussionQuestions and Discussion
Bill BurkeBill Burke
ePlains, Inc.ePlains, Inc.
[email protected]@eplains.com
(630) 510-3238(630) 510-3238