the seven t’s of highly effective supply chains · pdf file21/05/2012 · the...

The SEVEN T’s of Highly Effective Supply Chains.

Prof. Dr. Richard Wilding, Professor of Supply Chain Strategy.

Prof. Richard Wilding, Centre for Logistics & Supply Chain Management, Cranfield School of Management,

Cranfield, Bedford, England, MK43 0AL Tel:+44 (0)1234 751122 Web: www.richardwilding.info

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The SEVEN T’s of Highly Effective Supply Chains:

How surviving the future requires plenty of “T”!

Professor Richard WildingCranfield School of Management

www.cranfield.ac.uk/som

www.richardwilding.info

Prof. Dr. Richard WildingCentre for Logistics & Supply Chain ManagementCranfield School of Management, Cranfield, Bedford, England, MK43 0AL.Tel: +44 (0)1234 754170 Fax: +44 (0)1234 751712 Email: [email protected]

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Cranfield School of Management is…

Cranfield University …..

•Established 1946 - TO £136m

• 2,000 employees

• 3,000 postgraduate students:- 73% on taught degrees- 27% research

• Two 3*/4* hotels on campus

• Over 10,000 alumni in 110 countries

• 4th busiest airport in the UK!

One of the largest postgraduate management schools in Europe…





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The SEVEN “T’s” Agenda & Themes

1. The need for “Transparency” in the global Supply Chain.

2. The need for “Trust” to sustain the supply chain.

3. “Time” not cost becomes our primary focus.

4. Developing “Tshaped people”

5. “Touch” the customer through the supply chain.

6. Engineering “T shaped products” enable supply chain

postponement and agility.

7. Creating the “T shaped supply chain”.

4

Innovation

“Innovation is all about creating value, economic value, social value and/or environmental value through the application of ideas that are new to YOU.”





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Better Together! My Linkedin Network.

5

We live in a networked world!The Nespresso Coffee Supply Chain Network

Source: Alvarez, Pilbeam and Wilding 2009

Nespresso

Expocafé/Cafexport

Volcafé

Neumann

Ecom CRica

Ecom Mex

Ecom Guat

RFA CRica

SAN Guat

SAN Mex

Fundanatura

Fed NacCaféColb

NeumannColb?

Ecom Orosi

VolcaféCRica

Ecom LGiorgia

NeumannHuila?

VolcaféS Dgo

FNCNariño

FNCCauca

EC Jardín?

ECCaldas

EcomProj

IFC

EcomProj

Global

National

Local

NespressoCA

NespColombia

RFA

Processors and or exporter

NGOInternational development agency

Ecom

Cooxupé

EFICO

Cooxupé

Imaflora

Other?





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Corporate Strategy

Competitive Strategy

Supply Chain Objectives

Supply ChainProcess Design

Supply Chain NetworkDesign

Supply ChainInformation

System Design

Supply ChainOrgani-sation

DESIGNING THE SUPPLY CHAIN

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Cranfield School of Management -The Demand Chain Management Community

Demand Creation

Logistics & Supply Chain

ManagementMarketing

Demand Creation Demand Fulfilment

Demand Chain Management

Demand Fulfilment

The alignment of demand creation and fulfilment processes across functional and organisational boundaries





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Demand Chain Management as a value delivery system

CREATETHE

PRODUCT

MAKETHE

PRODUCTSELL THE PRODUCT

Product Design

ProcessDesign Procure Manu-

facture ServiceMarketing

Research Adver-tising Promotion Price

Sales&

Distribution

CHOOSETHE

VALUEPROVIDE THE VALUE

COMMUNICATETHE VALUE

Under-stand value

desires

Selecttarget

DefineBenefits/

price

Productprocessdesign

ProcureManu-facture

Distr-bute Service Price Sales

messageAdver-tising

Promo-tion, PR

Traditional product-oriented system

Value delivery system

Source: McKinseyCopyright: Prof Dr Richard Wilding 2008

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Linking customer value to supply chain strategy

Identifyvalue

segments

Develop thesupply chain

strategy

Identifythe market

winners

Define thevalue

proposition

What do our customers value?

How do we translate theserequirements into an offer?

What does it take to succeedIn this market?

How do we deliver againstthis proposition?

Identifyvalue

segments


strategy

Identifythe market

winners

Define thevalue

proposition





Identifyvalue

segments


strategy

Identifythe market

winners

Define thevalue

proposition





Copyright: Prof Dr Richard Wilding 2008





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The 3T’s of Highly Effective Supply Chains

Transparency

Agility

Time

Trust

Transparency

Time

Trust

2005 by Dr Richard Wilding

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The Wilding Hairdresser Rule of Transparency

“Any supply chain map or information must be easily understandable by your

local Hairdresser!”






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Time ScaleBusiness

Processes

Consumer

Delivery

Goods In

ManagementDecision

ValueAdding

QueueTime

Re-WorkTime

Production

Gaining Transparency of Process


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Gaining Transparency of Time and Inventory.

CommodityMarket

End User

(20)

(10)

(5) (5) (5)

(10) (10)

(15)(15)

(20)

Spinning (15) Knitting (10)Dyeing &

Finishing (7)

(2)

Sewing (18)

Fibre

Yarn finishedgoods store Yarn store

Grey stock Finishedfabric

Rawmaterial

store

Cut workbuffer

Finishedgoods

warehouseDistribution

centre

Store

Spinning Fabric Supplier Underwear Manufacturer Retailer

Length 60 Days Volume 175 Days

Componentcutting (5)


Source: Scott & Westbrook, IJPDLM Vol.21 No.1





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Transparency of Demand

Cas

es

Week

S Issues

RDC Iss

EPoS


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Transparency of Cost

“The total cost of sourcing, converting and delivering product is seldom the sum of the lowest functional

costs of each element in the supply chain”

Tier 1Supplier

Distributors customersManufacture DistributionTier 2Supplier

Cost centreBudgetKPI’s










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Transparency of Cost

0%

20%

40%

60%

80%

100%

120%C

os

t

New Process 97.3% 102.8% 115.6% 63.6% 100.0% 66.4% 71.5%

Total Transport ProductionFinished goods

Pick & dispatch

FG stock finance

Raw material


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Customer Channels

Source: Neil Ashworth, Supply Chain Director Tesco.com – Presentation at RedShiftInternational 2007





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The ‘Pareto’ or 80/20 rule & Cost to Serve

20% 50% 30%

15%

‘A’ ‘B’ ‘C’80%

5%

% S

ales

/pro

fits

% products/customers

20

% of Products

100%

100%

% of Customers

100%

100%

% of Characteristics

100%

100%

PRODUCTS

CUSTOMERS

‘CHARACTERISTICS’ CUBE, RETURNS, SPEED

100%

100%

% of total profit contribution

% of total product <> customers <> characteristics

Product / customer profitability as a result of the chain

Source: LCP Consulting Ltd, www.lcpconsulting.com





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Product profitability – an extreme case


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Customer profitability – an extreme case






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Within typical company situations

Value Adding Time = 5%


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They place emphasis on:

Responsiveness

Customer Focus

R&D and Innovation

Key features of organisations that are driven by Time





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Rapid innovation

Time is a Competitive Weapon

“ My job is to make our products/services

obsolete, before our competitors do”

Akio Morita, Chairman of Sony


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Analysis of case histories shows that a

change to TIME BASED policies, practices

and controls can bring:

Quality improvements 60% to 80 %

Productivity improvements 50%+

Inventory reduction 50% to 90%

Development time reduction 50% to 75%

Source: Professor Goran Persson, Norwegian School of Management2004 by Dr Richard Wilding





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Source: G Stalk, How Time-based Management Measures Performance

New Product Development Decision Making

Time from idea to market Decision cycle time

Rate of new product introduction Time lost waiting for decisions

Percent first competitor to market

Processing and Production Customer Service

Value added as percent of total Response Time

elapsed time. Quoted lead-time

Uptime x Yield Percent deliveries on time

Cycle time (per major phase of Time from customer’s recognition

main sequence). of need to delivery

Gaining Transparency of Time


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Jose María Castellanos, Former Inditex, CEO

“In fashion, stock is like food. It goes bad quick”





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“…Our in-house design and production capabilities enable us to offer fresh designs at our Zara stores twice a week throughout the year”…

From the IPO prospectus .

Mind to Market - 3 weeksMind to sell through - 8 weeks

Visits per YearZara - 17Competitors - 3-4

Time in Zara

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– The entire Zara’s Supply Chain has been engineered for a “drum beat” time of ½ weeks and delivers fresh clothes at the end of it twice a week.

Time in Zara





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The 4th Dimension: “T” shaped people.

• “I” shaped people only understand their own function.• “T” shaped people understand the process they are

part of and also their functional strengths.2000 by Dr Richard Wilding

C3 behaviour – an essential for supply chain success

Cooperation Coordination

Collaboration

C3

© 2010 Prof Richard Wilding32





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Multiplying the benefits: C3 behaviour and trust

High

Low

Low HighC3 behaviour

Trust

Win/Lose or Lose/Win [1+1=1 !]

Compromise [1+1=1.5 !]

Win/Win [1+1=8 !]

Adapted from: Covey, 1989 © 2010 Prof Richard Wilding33

Collaboration: Win/Lose or Lose/Win

John West and his Bear2005 by Dr Richard Wilding





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C3 behaviour and trust in 54 collaborative environments

20

30

40

50

60

70

80

90

100

110

20 30 40 50 60 70 80 90 100 110

C3 Behaviour

Tru

st

Highly Creative!

Total Disaster!


Unipart Logistics –Outsourcing Partnership Pyramid

Corporate Responsibility the Unipart Way, CSR Report 2009. www.unipartlogistics.com ‐The Unipart Partnership Pyramid.

Trust & C3





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Lord Kelvin( Sir William Thomson )

1824 - 1907

“If you can not measure it, you can not improve it”

To measure is to know….

How many business relationships do we have? Why are they important? Which ones are doing well and why? Which ones are NOT doing well and why? How do we identify hard targets for continuous

relationship improvement, and remove risk? How do we do all of this jointly with our business

partner? How do we do it with minimum effort and maximum

effectiveness?

Questions we all need to ask ...........






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Bandings

0 – 49 Poor

50 – 59 Moderate (2b)

60 – 74 Moderate (2a)

75 - 100 Good

SCCI©

Barometerwww.sccindex.com

Joint Firm A Firm B

Man Dimensions

Overall 63 66 60

Creativity 60 75 46

Stability 58 65 50

Communication 68 57 79

Reliability 63 63 63

Value 65 68 62

Additional Characteristics

Long Term Orientation 39 56

Interdependence 50 0

C3 Behaviour 74 63

Trust 63 33

Commitment 81 75

Adaption 64 71

Personal Relationships 69 67

‘Successful integrators’ Contain high levels of interdependence, co-operating, co-ordinating, collaborating (C3) behaviour, information sharing and innovation resulting in efficient, effective supply chains focused on customer requirements.

‘Stable pragmatists’ Characterised by co-operation based upon the pragmatic need to overcome normal supply chain operating difficulties. Culture-matching has taken, a sense of ‘being in the same boat’.

‘Evolving pessimists’ Operating problems such as complexity, difficulties in predicting customer requirements and either cultural or financial obstacles to process/facility improvements generally reduce relationship satisfaction.

‘No can dos’ Adversarial conditions with feelings of ‘imprisonment’ and ‘impotence’, a long term lack of co-operation and entrenched opposition to any form of innovation, efforts to improve or gain better equity are unrequited. Result is poor supply chain practices and processes and poor returns.

Cluster Map

20

30

40

50

60

70

80

90

100

0 1 2 3 4 5 6

Cluster Numbers

% M

ean

Rel

ati

on

sh

ips

Sat

isfa

cti

on

'no can dos'

'evolving pessimists'

'stablepragmatists'

'successfulintegrators'

Poor

Moderate2b

Moderate2a

Good

Firm AFirm B

Collaboration: success or failure?How do you compare?






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Farm Distributor Manufacturer Retailer Consumer

Collaboration: success and failureA poor relationship can be a source of risk

41

Arm’s Length Type I

Partnerships

Are truly collaborative relationships always appropriate in Outsourcing?

Joint Ventures

VerticalIntegration

Type IIIType II

Lambert et al, 1996

Do you want to marry everyone!





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Partnership Component Levels - Example

PLANNING

JOINT OPERATING CONTROLS

Partnership Component

Medium(Type 2)

High(Type 3)

•Style

•Level•Content

•On ad-hoc basis

•Focus on projects or

tasks

•Sharing of existing

plans

•Regularly Scheduled

•Focus on process

•Performed jointly,

eliminating conflicts

in strategies

•Systematic: Both scheduled and ad-hoc

•Focus is on relationship•Performed jointly and at multiple levels, including top management; objective is to mesh strategies; each party participants in other’s business planning

•Measurement

•Ability to make

changes

•Performance measures

are developed

independently and

results are shared

•Parties may suggest

changes to other’s

system

•Measures are jointly

developed and

shared; focused on

individual firm’s

performance

•Parties may make

changes to other’s

system after getting

approval

•Measures are jointly developed and shared; focused on relationship and joint performance•Parties may make changes to other’s system without getting approval

Low(Type 1)

Lambert et al, 1996

44

Zara broke the “functional” company by learning from Toyota!

“ The only thing we do is look at the time line from the moment a customer gives us an order until we get the cash. Our work is to reduce that time eliminating waste, actions with no value”

Taiichi Ohno (Founder of TPS)

“you must have 5 fingers touching your factory and 5 touching the customer”

Ortega (…since 1975), Inditex (Zara)





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Retailer example – How a customer Touches the business.

Channel

Buying process

Pre-transaction Transaction

Awareness Research Select Transact Receive

Store Visit store to see product

Collect from store

On lineOn line product chooserCheck in store availability

Compare productsRead customer reviews

Purchase on line

Phone Guidance from staff

CatalogueReceive buyer guideBrowse latest releases

46

T shaped Products and Supply Chain. The Power of Postponement

Zara - Postpone final production

Beneton - Postpone colour

Other examples– HP

– Microsoft

– Paints





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47

Decoupling points and strategic inventory

DrivenBy

DemandDriven

ByForecast

Plants DistributionCentres

Warehouses Depots

48

Postponement in Clothing

V T

V shaped to T shaped





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49

Lean Agile

• Forecast at generic level

• Economic batch quantities

• Maximise efficiencies

• Demand driven

• Localised Configuration

• Maximise effectivenessStrategic

Inventory

The de-coupling point

50

Factors contributing to Supply Chain Risk & Organisational Stability.

The adoption of Lean “anorexic” practices.

The globalisation of Supply Chains

Focussed Factories and Centralised Distribution

The trend to outsourcing

Reduction in the supplier base

Volatility of demand

Lack of transparency and control procedures





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51

How are the following related?

The Seven Valley Steam Railway

Leather Luxury Car Seat

Gilbert PresentationRugby Ball

How are the following related?

52





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Building the Resilient Supply Chain.

THE RESILIENT SUPPLY CHAIN

CONTINUOUS MONITORING AND INTELLIGENCE

SUPPLY CHAIN TRANSPARENCY

SU

PP

LY C

HA

IN

CO

LLA

BO

RA

TIO

N

AG

ILIT

Y

SU

PP

LY C

HA

IN R

ISK

MA

NA

GE

ME

NT

CU

LTU

RE

PRODUCT DESIGN FOR THE SUPPLY CHAIN

THE FOUNDATION OF EFFECTIVE SUPPLY CHAIN STRATEGY

SU

PP

LY C

HA

IND

ES

IGN

&

EN

GIN

EE

RIN

G

Copyright Professor Richard Wilding 2011

54

A key message on Risk within Supply Chains.

Accept uncertainty is inherent in supply chains…….

“If a man presumes certainty, he shall end with doubts,

but if he will be content with doubts, he will end with

certainties”.

Francis Bacon 1561-1626





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Becoming “T” shaped is up to YOU

Is YOUR organisation capable of collaboration?

Do YOU have the skill set required, IQ and EQ?

56

Conclusion

Transparency

Trust

Time

T shaped People

Touching the Customer

T shaped products

T shaped supply chains

Surviving the Future requires “T”





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Links and further information

Download the free online iTunesU course, join over 12000 subscribers.

www.richardwilding.info/online-supply-chain-course.html

Download the free “Podcasts” and “Videos” www.supplychainpodcast.info or visit iTunes.com

www.youtube.com/supplychainpodcast

Cranfield School of Management


Professor Richard Wilding

www.richardwilding.info www.linkedin.com/in/richardwilding

www.facebook.com/supplychainprofessor





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Cranfield School of Managementwww.cranfield.ac.uk/som

Download the free “The Supply Chain Podcast” www.supplychainpodcast.info or visit iTunes.com

View free Videos on www.yourtechtv.com and www.youtube.com/supplychainpodcast

Links & Further Information

Professor Richard Wildingwww.RichardWilding.infowww.linkedin.com/in/richardwildingwww.facebook.com/supplychainprofessor

A world-class business school

Financial Times Executive Education Rankings 2010

Ranked by clients as the top UK business school for customised executive development and amongst the world’s top 10.

In the top 3 business schools globally for international delivery

Ranked 1st in the UK for programme preparation; flexibility in programme design, contemporary and relevant teaching materials; the quality of faculty and level of programme follow-up.

Economist Ranking of MBA Programmes

1st in the UK, 4th in Europe

Europe's largest faculty specialising in the management of Logistics & Supply Chains

Globally recognised Centre of Excellence

Internationally recognised MSc in Logistics and Supply Chain Management.

Accreditations

One of an elite group of business schools worldwide to be triple AMBA, EQUIS and AACSB accredited






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Professor Richard WildingCranfield School of ManagementCranfield, Bedford, England, MK43 0AL.Tel: +44 (0)1234 754170 Fax: +44 (0)1234 752158 Email: [email protected]: www.cranfield.ac.uk/som/lscm

www.richardwilding.info

Please keep in touch!


If you would like further information on the techniques described in this presentation, for example,supporting journal articles, or would like to discussthe content further, please don’t hesitate to contact the author at the following address:

Professor Richard Wilding, BSc, PhD, CEng, Eur Ing, FIET, FCILT. Full Professor and Chair in Supply Chain Strategy.

As Chair (Full Professor) in Supply Chain Strategy at the Centre for Logistics and Supply Chain Management, Cranfield School of Management U.K. Richard works with European and International companies on logistics and supply chain projects in all sectors including pharmaceutical, retail, automotive, high technology, food drink and professional services to name a few. He is a highly acclaimed presenter and regularly speaks at Industrial Conferences and has undertaken lecture tours of Europe and Asia at the invitation of local Universities & Confederations of Industry. He has published widely in the area of supply chain management and is Editorial Advisor to a number of top journals in the area.

Professor Wilding was winner of the “Individual Contribution Award” at the “European Supply Chain Excellence Awards 2010” this is presented to the individual who has made an outstanding contribution to supply chain excellence. In 2009 his biography was entered into the 162nd edition of “Who’s Who” described as "Britain's most famous reference book" for those who have "reached the pinnacle of excellence in their field". At the European Supply Chain Distinction Awards 2008, received the `Distinguished Service Award for Thought Leadership and Service to Supply Chain Management`. Richard was appointed in 2005 as the first ever Full Professor and Chair of "Supply Chain Risk Management" in the World. This was in recognition of his significant contribution to this subject area. Supply chain risk is still a key focus of his research within the context of an organisations overall Supply Chain Strategy, thus enabling companies to create sustainable and resilient competitive advantage. His Doctoral research, undertaken while employed at the University of Warwick, applied chaos and complexity science to logistics and supply chain management and resulted in the development of new management guidelines for supply chain re-engineering to mitigate risk. This innovative research received international media coverage including features on the BBC World Service and articles in the Times, Financial Times and New Scientist. More recently his research into inventory policies of organisations in times of risk & uncertainty resulted in international media coverage including live interviews on BBC1 television news, BBC News 24, BBC Television’s “The Money Programme”, BBC 5 live and Independent Radio News. The research was also covered by the print media including the Financial Times, Sunday Times, The Guardian, and The Independent newspapers. Richard is both a European and Chartered Engineer, he is a chartered fellow of both the Institute of Engineering and Technology (Manufacturing Division) and the Chartered Institute of Logistics & Transport (CILT). Professor Wilding was elected by the 20,000 members of the CILT U.K. to the Board, and is a Director and Trustee of the institute. He is a founder & steering Committee Member of the CILT "Logistics Research Network", a global network of academics and practitioners involved in state-of-the-art logistics and supply chain research. He is also Co-Chairman of the CILT "Leaders in Supply Chain" Forum, a group limited to the top 120 Logistics and Supply Chain Directors from Europe. Richard is also a Member of The Higher Education Academy in recognition of his innovative approaches to teaching and course design. Richard’s special areas of interest include the creation of collaborative business environments, reducing supply chain vulnerability & risk, time compression and techniques for aligning supply chains to maximise customer value and reduce cost.

Web: www.richardwilding.info and www.cranfield.ac.uk/scm

LinkedIn Profile www.linkedIn.com/in/richardwilding

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