B. Mktg. 880

Spring 1999

“Perspective 2000

and Beyond”

The Enterprise Stakes

What would happen to the future of your firm if a competitor could:– deliver an equivalent value faster or more consistently to

your customer– provide the same level of service with half of your inventory– provide the same level of service with a significantly lower

asset investment– reduce transaction cost by 50% or more– provide customize product, shipments and transactions and

turn on a dime– develop an off-shore partner that can provide equivalent

value at 60% of your cost

What if your competitor could do all of these things???

368

Factors that will Affect the Growth and

Development of Logistics

34%

21%

12%

9%

8%

6%Senior mgmt.Recognition

Customer service

Globalization

Cost/Financial impact

Supply chain mgmt

Information tech

Source: 1998 OSU Career Patterns 244

Challenges for the 21st Century

Challenge No. 1:

Identifying, monitoring & responding

to rapidly changing customer

value requirements.

70

50

30

12.5

0

10

20

30

40

50

60

70

80

1996 1998 2000 2002

Best Practices in SCM and Logistics:Customize an Approach for Each Key Account

(median percentage)

Source: 1998 OSU Career Patterns 206

8075

50

20

0

10

20

30

40

50

60

70

80

90

1996 1998 2000 2002

Best Practices in SCM and Logistics:EDI with all Key Accounts

(median percentage)

Source: 1998 OSU Career Patterns 207

• Identifying value

• Monitoring value

• Responding to value

• Implement key partner strategy

• Move closer to demand point

• Agile mfg., product design & devel., process, custom.

Implications Actions

Customer Value

Challenge No. 2:

Develop new supply chain global metrics

reflecting shared vision & values between

customer, supplier, & third party.

Challenges for the 21st Century

50

40

22.5

10

0

10

20

30

40

50

60

1996 1998 2000 2002

Best Practices in SCM and Logistics:Co-design of Products with Key Suppliers

(median percentage)

Source: 1998 OSU Career Patterns 203

• Importance of metrics

• Broaden view of metrics

• Expand customer value

• Develop SC metrics

• To develop macro metrics

• To the balanced scorecard

Implications Actions

Share Supply Chain Vision/ Values/ Metrics

Challenge No. 3:

Develop the capability to collaborate in

forecasting, value metrics & other

value creating operational activities

Challenges for the 21st Century

65

50

32.5

20

0

10

20

30

40

50

60

70

1996 1998 2000 2002

Best Practices in SCM and Logistics:Strategic Partnership with Key Customers

(median percentage)

Source: 1998 OSU Career Patterns 201

75

60

40

20

0

10

20

30

40

50

60

70

80

1996 1998 2000 2002

Best Practices in SCM and Logistics:Strategic Partnership with Key Suppliers

(median percentage)

Source: 1998 OSU Career Patterns 200

5050

30

10

0

10

20

30

40

50

60

1996 1998 2000 2002

Best Practices in SCM and Logistics:Strategic Partnership with Key 3rd Party Providers

(median percentage)

Source: 1998 OSU Career Patterns 202

• Develop focused cost

• SC anticipation

• Postponement strategy

• Shared visions/ values

• Implement ABC or related

• Collaborative forecasting

full pipeline visibility

• To demand visibility

• To strategic partnership

with key SC partners

Implications Actions

Supply Chain Collaboration

Challenge No. 4:

Create a business process which

leverages EDI/Internet & related

technology to reduce transaction

costs & increase information/

inventory velocity.

Challenges for the 21st Century

0 0

10

20

60

50

30

10

0

10

20

30

40

50

60

70

1996 1998 2000 2002

EDI Internet

Percentage of Domestic Customer Orders which are

Transmitted via Electronic Commerce

(median percentage)

Source: 1998 OSU Career Patterns 214

0 0

10

20

70

50

20

50

10

20

30

40

50

60

70

80

1996 1998 2000 2002

EDI Internet

Percentage of Total Orders to Vendors which are

Transmitted via Electronic Commerce

(median percentage)

Source: 1998 OSU Career Patterns 213

• Transactional Relationships

• Manufacturing cost

• Inventory Level

• To contractual relationships

• To total cost to serve

• Inventory Velocity

Implications Actions

Leverage Information

Challenge No. 5:

Find new organizational alternatives &

learning tools that mirror the results

of supply chain wide

process reengineering.

Challenges for the 21st Century

70

60

50

22.5

0

10

20

30

40

50

60

70

80

1996 1998 2000 2002

Best Practices in SCM and Logistics:Cross Functional Teams

(median percentage)

Source: 1998 OSU Career Patterns 205

• From traditional c/c vertical organization

• From traditional learning media & methods

• To strategies for horizontal SC management

• To new & efficient learning delivery systems

Implications Actions

Organizational Alignment

Challenge No. 6:

Create a corporate environment where

change management is a positive

value & “thinking out of the box”

is an accepted option.

Challenges for the 21st Century

• From risk adverse

decision making

• From traditional

logistics processes

• From long term

resource allocation

• To entrepreneurial

decision making

• To new processes

for delivery value

• To long run

resource utilization

Implications Actions

Vision

New Metrics for the 21st Century

Today 21st Century

Functional Costs Total Costs

Cycle Time Time Definite

Inventory Level Inventory Velocity

Turnover Cash to Cash Cycle

Domestic Global

Firm Metrics Shared SC Metrics853

Principles of SCM

1. Engineer by account demand visibility as close to source of demand as possible

2. Allow SCM to manage (and intervene) in inventory flows the can’t see and don’t own

3. Develop collaborative vision, metric, & processes with key accounts

4. Develop costing systems that reflect

horizontal S.C. processes

870

Principles of SCM(continued)

5. Think “horizontally” rather than “vertically.”

6. Reduce transaction cost by trading information technology for transaction processing

7. Align the firms internal & external business processes to focus on “customer value” delivery

8. Utilize information technology as a learning/ teaching medium for all supply chain partners

871