17542547 the importance of supply chain bench marking

8/8/2019 17542547 the Importance of Supply Chain Bench Marking

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Copyright 2009 AutoDiversity Management, Inc. (ADMi) - All Rights Reserved. Do Not Remove This Notice

Importance of Supply Chain

Benchmarking

Automotive Case

Marc A. Brazeau

PrincipalADMi Supply Chain Consulting

Spring 2009


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Overview

Benchmarking and the Automotive Supply Chain

Types of Benchmarking

Integrating Benchmarking Activities

Applying the Results

Promoting Visibility, Collaboration, and Industry

Standardization

Key Take Away Points


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Benchmarking and the Supply Chain

Be globally competitive in quality, technology, systemscost and capacity

Have expert knowledge of opportunities and competition,specifically in relation to emerging markets

Adhere to principles of innovation and collaboration as thebasis for sustained business relationships

Provide supply chain transparency

Global supply chain performance is challenged by a variety of important client demands

OEMs require the automotive supply chain to:


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Traditional domestic supply chain: US Market


Static supplier baseEstablished logistics

networks

Limited bordercrossings

Coordinated customsprocesses

Established carrier baseExisting infrastructureEffective regulatory

agencies

Regional plant locationsIntegrated logisticscenters and cross-docks

Nationaldistributioncapacity

Specialized

equipment

Stabledistances


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SupplierLocations

Plants

Dynamic supplierbase

Increased numberof supplier options

Multiple sourcecountries

Multiple Internationalborder crossings

Complicated customsregulations

Various datarequirements

Multiple mode requirementsBroad and diverse carrier

baseMultiple language

requirements

Regional customsHigh level of coordination

Multiple plantlocations

Flexiblemanufacturing

Parts commonization

Increasedmileage

Internationaldealershipnetwork

Extended Global supply chain: US Market


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NAFTA commercial bordercrossings have increased192% since 1996

Increase in imports from Asia

to U.S. grew from $45 Billionin 1995 to $243 Billion in2005

Security complianceprograms:

FAST

CTPAT

NBEST

and border congestion, and the increased security measures, require better shipment planningcoordination

Sources: Journal of Commerce, Port Import/Export Reporting Service, Bureau of Labor Statistics, Association of American Railroads, AASHTO, CIAFact Book


Increased border security and customs requirements
http://www.time.com/time/magazine/0,9263,7601040920,00.html


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Impact of natural disasters and pandemics


Regional disruptions in keycomponent supplies

Reduced productivity

Capacity re-directed toemergency causes

Reduced manpower availability

Need for robust contingencyplans

Supply chain transparency and collaboration is more and more important
http://www.time.com/time/magazine/0,9263,7601051003,00.htmlhttp://www.time.com/time/magazine/0,9263,7601051003,00.htmlhttp://www.time.com/time/magazine/0,9263,7601980223,00.html



Need for infrastructure investment


North American highways, portsand bridge infrastructure requiresan incremental $32 billion/yearthrough 2020

Rail network requires $10 billion/year of incremental investment

East Asia will have to spend $165billion/year over the next 5 yearsto be in line with current needs

Increased port volume since 1994: 251% West Coast

284% East Coast

Investment decisions will be more difficult to make requiring potential innovation trade-offs


http://www.time.com/time/magazine/0,9263,7601880912,00.html




Global oil demand and theimpact on fuel prices

Raw materials costs

OEM and suppliereconomic health

Global automotive demandfluctuations

Impact on transportation

industry capacityAbility to re-invest intransportation equipment

eismic volume fluctuations and market uncertainty stress the supply chains ability to re-inves

Economic Volatility
http://www.time.com/time/covers/0,16641,20090309,00.htmlhttp://www.time.com/time/covers/0,16641,20090330,00.htmlhttp://www.time.com/time/covers/0,16641,20081215,00.html




Dynamic ever-growingsupplier base

Multiple countries,

languages, and customsDiverse transportationmodes and infrastructure

Complex data coordinationrequirements

Disaster recovery planning

Expanding mileage factors

orating benchmarking activities into the strategic planning process will enable effective best pdevelopment and adoption

Summary challenges and tactical requirements:

Improve volume forecastingand data transparency

Develop coordinated supply

chain contingency plansPromote collaborative supplychain networks (OEMs andsuppliers)

Support industry best-

practice commonization andproductivity improvementinitiatives




Financial analysis comparison withother targets to assess overall

competitiveness and productivity

Process of designing new products orupgrades to current ones, includingreverse engineering of competitive

products

Comparison of peer or targetcompanies market performance inconsidering corporate investment

alternatives




Process of observing common oruncommon groups competitiveadvantages or disadvantages

Identifies and observes specificbusiness processes with a goal of

identifying best practices

Focuses on a single function in order toimprove the operation of that particular

function.




Helps companies assess theircompetitive position by comparingspecific performance dimensions

Used to develop yardstick comparisons,allowing outsiders to evaluate the

performance of operators in an industry

ply chain benchmarking generally revolves around Strategic, Process, Function, and Performanbenchmarkingthus promoting more effective performance metrics




enchmarking relies on the collection of both qualitative and quantitative data, depending on thchosen process



External affairs

Systems

Cost management

Network designand operation

Organization

Strategy

Logistics scorecard

Strategic involvement inkey issues

Limited involvement inkey issues

Lack of awareness ofkey issues

LeadingLagging

Internally managed andstrategic integration

Internally managed, butprimarily tactical

Externally developedand managed

Full control of costdrivers; significantcompetitive advantage

Internal / external costsmanaged moderatelywell

Lack of control of costdrivers; Significant costdisadvantage

Flexible, optimal networkFlexibleRigid network; definedby third party

Centralized andintegrated

Specific functions /groupsare centralized

Fully decentralized

Retain critical strategylogistics resources andcapabilities

Some internal logisticscapabilities

Outsource all logisticsfunctions

1

2

5

3

4

6


Supply chain benchmarking contains 6 performance and structural elements.




enchmarking is often treated as a one-off event, but should be treated as a continuous proces

in which organizations continually seek to challenge their practices

OrganizationalCommitment

Results

Va

lue

Method Options:




Operational gap analysis provides insight into immediate improvement opportunities

Data details should beanalyzed at a variety of levelsand granularities

Transit comparison has a directimpact on inventory carrying

costs, equipment utilization andoverall strategy




Cost level analysis identifies longer term improvement opportunities

All identifiedgaps should

becategorized

anddollarized in

order todevelopstrategicplans toaddress




verall benchmarking activities should form the basis for 1-3-5 year long term strategic plannin




Customer (Client) Surveys are the most used (77%) of 20improvement tools, followed by SWOT (72%), and InformalBenchmarking (68%). Performance Benchmarking was used

by (49%) and Best Practice Benchmarking by (39%)

60% of organizations indicated that the tools that are likelyto increase in popularity the most over the next three yearsare Performance Benchmarking, Informal Benchmarking,SWOT, and Best Practice Benchmarking

en Best Practice Benchmarking is done well significant benefits are obtained with 20% of speci

Projects resulting in benefits worth over US$250,000 each

Source: Global Benchmarking NetworkSource: Global Benchmarking Network

In a 2008 survey on benchmarking, results showedthat:



Key Points

1. Participate in benchmarking opportunities

2. Identify and formalize a corporate

benchmarking plan

3. Promote collaboration and supportindustry standards


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Contact Us

[email protected]

AutoDiversity Management inc. (ADMi)1259 Cadieux

Grosse Pointe Park, MI48230313.530.8088
mailto:[email protected]:[email protected]

17542547 the importance of supply chain bench marking

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