Richard J. Sherman from Emeritus Supply Chain Council; Chairman’s Day Two Kick-Off

Richard J. Sherman from Emeritus Supply Chain Council; Chairman’s Day Two Kick-Off

• 1.
  Building Supply Chains for Competing  Against Uncertainty  Rich Sherman, Director of North America  Supply Chain Council  www.supply‐chain.org 
• 2.
  2009 Was a Tough Year 
• 3.
  Companies Must Respond to the Challenge  • Increased need to differentiate in a global market  • Time compression – global sourcing & delivery  • Customers expect perfect accuracy, information, and  service (RFID, Customization, etc.)  • Competition for capital is intense – pressure to  optimize material flow and inventory increases  • Companies will seek to leverage more outsourced  business, manufacturing & logistics processes  • Companies must be more agile responding to change  faster and managing more inventory locations  Companies Must Transform Their Operations to Meet Growing Business Challenges through New Process Improvement Initiatives!
• 4.
  SCM is Paramount in Times of Economic Uncertainty   • In 2009, US business logistics costs fell to $1.1 trillion3 – good news?  • Bad News – Orders for new goods dropped substantially and  downturn in each sector translated to lower shipping volume 3  • Supply‐chain generally accounts for between 60% and 90% of all  company costs1  • A 2% improvement in process efficiency for supply‐chain processes  has 3000‐5000% the impact of a 2% improvement in efficiency for…  IT… HR… Sales… & Finance1    1 Exclusive of Financial Services companies 2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 SCM Benchmark data on SCM cost for discrete & process industries 3 CSCMP 21st Annual State of the Logistics Industry Focused initiatives in Supply Chain Management can result in 30-35% cost reductions, liberation of working capital, and revenue increases of 3-5%!
• 5.
  And SCM Improvement Creates Shareholder Value  The Supply Chain All Financial & Shareholder Impacts . . . Metrics . . . Value • Improve customer service and Liberate Working response Capital • Optimize inventory flow, Improve utilization & productivity Capital Reduce Efficiency Fixed • Best-in-class customer Capital relationships Increase • Differentiated service Increase Shareholder capabilities Revenue Value and Margin • Best-in-class strategic supplier Increase partnerships Profit • Leverage of outsourcing of Optimize business processes Cost Model • Unique supply chain models Effective Supply Chain Management can increase a Return on Invested Capital (ROIC) by 30% and More! 5  AMR 2009 ‐ SCC & SCOR Executive Overview 
• 6.
  Supply Chain Council Member Companies Outperform  the Market – 14 of AMR Top 25 are Members  • Comparison of Fortune‐1000  Council  member company share  price aggregate growth from  2003 – present to S&P 500 and  DOW indices.  • Growth inflected after 2 years,  and the spread between SCOR  index companies and other  industrials has grown to almost  30 points.  • Growth is increasing  exponentially: Compound  interest on SC performance.  • Correlates SCC  Membership/SCOR investments  with Shareholder value.  • Same pattern evident in FTSE‐ Realtime: www.scorlabs.org/scor/scorindex 100, DAX, NIKKEI and other  indices.  6 AMR 2009 ‐ SCC & SCOR Executive Overview 
• 7.
  Enterprises Are Changing How They Plan,  Source, Make and Deliver Product  • Product Strategies • Customer Speed & Enterprises are Strategies Granularity discovering new value • Time Strategies in operations • Visibility & management. Collaboration • New Channels Reach & There is a GAP • Transportation Execution between traditional • Logistics Strategies ERP and day to day operations decision support! • Demand Integrated Sales & Management Operations Planning, Integration • Supply Management to Ops Decision Support Tools • Performance Planning & SC Collaboration are imperatives! Management • Business Process Outsourcing Companies Must Transform Their Operations to a Demand Responsive Supply Network to Meet Growing Business Challenges!
• 8.
  Companies Are Reinventing Their Supply Chains 
• 9.
  The Supply Chain is Evolving to a   Collaborative Demand Responsive Network  Wholesale Suppliers Distributors Retailers Manufacturers Interne Customer t/ Interne Demand Portals t/ Interne Portals t/ Portals Virtual Manufacturers Logistics Providers Info A Technological Infrastructure is Emerging to Enable Real Time Contract Goods Communication and Data for Integrated Demand – Supply Manufacturer Planning, Execution, and Decision Support to Synchronize Supply s in Response to Demand Change!
• 10.
  What’s The Next Big Thing?  • Cloud Computing  – Supply Chain Visibility  – Software as a Service (SaaS)/On Demand  – Location Based Technology/Mobility/Telematics  – Business Intelligence/Decision Support  • Auto Id/Info  – Beyond RFID  – Voice Recognition/Response  – Intelligent Sensors, Monitors, Devices  • Robotics  – Picking, Packing, Putaway  – Load, Unload  • Internet Transparency &Social Media for Business  – LinkedIn, Twitter, Blogging, Search  – Offers, Location, Orders, Navigation, Behavior 
• 11.
  Technology Breakthrough:   The Smart Supply Network   • Optimization for Visibility & Global Flow Control  • Smart Transactions (Telematics/RFID) Convey Information in Real  Time Across the Supply Network  • Convergence of Planning & Execution ‐ Basis for Demand  Planning/Crossdocking/Outbound Consolidation  • Optimum Supply Network Material Flow through Collaborative,  Synchronized Activity Planning & Scheduling  Smart Smart Transactions Transactions Vendor Crossdock & Customer Custom Pack Distribution A New ParadigmLabel & in Supply Chain Management is Emerging Center Outbound that is Consolidation Opening a Window of Opportunity to Gain Market Leadership!
• 12.
  The SCOR® model – a cross‐industry open standard   • The five integrated processes provide a boundary‐free view of the true end‐ to‐end Extended Supply Chain  • SCOR provides process definitions, metrics, benchmarks, best practices  including environmental and risk management, and HR skills requirements  • Utilized by members as an organizational engagement model for operations  excellence supporting all methodologies such as Lean Six Sigma  • An Unbiased foundation for Performance and Value Based Outsourcing  Plan Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source Return Return Return Return Return Return Return Return Your Company Customer’s Suppliers’ Supplier Customer Customer Supplier Internal or External Internal or External 12 AMR 2009 ‐ SCC & SCOR Executive Overview 
• 13.
  Changing the Game!  Transform From To Supply Chain  Supply Network  Long and slow  Fast and flexible  Forecast‐based  Demand responsive  Manufacturer‐driven  Customer‐driven  Internal focus  External focus  Designed from product  Designed from usage back  forward    Cost‐reduction  Value creation  Linear, sequential Processes  Dynamic, synchronized    processes 
• 14.
  Welcome to Day Two!  • Another Outstanding Line Up of Speakers  • More Case Studies, Thought Provoking Panels –  • Please Ask Questions, Ask Questions…  • Text Me Your Questions – 512‐294‐6558   • Network, Introduce Yourself, Share Experience  • Take Away New Ideas and Approaches  • Share with your Colleagues when you return  • Have a great Day 2 at the Conference!   
• 15.
  Thank You!  www.supply-chain.org Rich Sherman, Director of North America Email: [email protected] Direct: +1 512-266-9041 Mobile: +1 512-294-6558