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Resilience, Technology, SustainabilityCompeting in the age of disruption, big data and ecological overshoot
Michael D’heur | shared.value.chainLogitrans 2015 Conference | Porto | 13 May 2015
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shared.value.chain is a think tank andmanagement advisory firm. We help companiesto embed sustainable value creation in theircore business (products and supply chains).
We believe that there is significant potential for globally operating corporations to bring together ecological, economic and societalvalue creation.
Sustainable products, flexible and resilientsupply chains as well as collaboration are thebackbone of companies‘ core business andsubsequently the platform for sustainablegrowth.
Michael D‘heurFounder & Managing
Directorshared.value.chainMunich, Germany
Advisor, Author, Architect
shared.value.chain: We are Advisors, Authors and Archit ects forSustainable Value Creation
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Value Chain Realities Accelerators
Market Volatility
Natural Disasters
Key Questions
Source: Adapted from Sustainable Value Chain Management (D’heur et al., Springer, 2015)
The ‚new realities‘ of value creation, put the curr ent business models under pressure
Global Value Chains
ScarceResources
Profit versus Purpose
TechnicalInnovation
Man madecrises
x
What value do we want to
create?
How viable isthe current
model?
How do webuild the
capabilities tocope?
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Volatility in the Market
Global Value Chains
Ecological Crisis (Storms, Draughts, ...)
Profit versus Purpose?
Constrained ResourcesFinancial Crisis(Lehmann, Euro, ...)
Technology
Supply Chain ‘Scandals’ & Trust Issues
“How shall we cope and create value in this environm ent ?”
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Companies need to master customer and internal expe ctations to stay ahead of the competition
„I want it today“„We need to know
upfront“„Make it faster & cheaper, please“
• Superior serviceexperience
• Instantly availableoffering acrossmultiple channelsand customergroups
• Expectations of a growing global middle class
• Full value chainvisibility (fromsource to store)
• Anticipatechanges in demand
• Timely productfeedback /service
• Manage thesupply networkfor performance
• Effective andefficient setup
• Trimmed forincreasedperformance
• Continuous costreduction in product & supply chain
• Management ofComplexity
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Challenges to master service, visibility and effici ency are coming from multiple areas
How do we protect, respond, recover?
How do we becomeproactive and
predictive?
How do we build a sustainable model?
SUPERIOR SERVICE
VALUE CHAIN VISIBILITY
EFFECTIVE & EFFICIENT
• Technical, weather and supplier disruptions
• Increasing product proliferation
• Fast changing demand patterns
• End-to-end value chain visibility
• New/disruptive business models
• Longer and more interdependent value chains (n-tier networks)
• Scalability of the operations
• Increasing cost
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RESILIENT TECH SAVVY SUSTAINABLE
COLLABORATIVE
CAPABILITIES OF A FUTURE PROOF OPERATING MODEL
A new set of capabilities is required, to be able t o respond to the challenges
How do we protect, respond, recover?
How do we becomeproactive and
predictive?
How do we build a sustainable model?
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Resilience is important to keep the momentum
The ability to absorb the impact of a business interruption, and continue to provide a minimum acceptable level of service. It requires a business culture that encourages resilience building as an ongoing practice, aimed to strengthen processes & plans
RESILIENT Definition
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Source: Dobbs, Manika and Woetzel: No ordinary disruption; McKinsey Global Institute, May 2015
Our global economy is interconnected, like never be fore – and the pace is accelerating
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Source: ‘Global Outsourcing & Supply Chain Risk’ Survey (Demand Chain Executive Magazine, 2014)
Companies are operating in a high risk and volatile environment
7%
6-9
3-5 27%
1-2
10+
4%
12%
39%
0
88% of companies surveyed experienced more than 1 disruption with material impact on the ability to operate since 2011
Number ofsupply chaindisruptions
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Source: BCI Supply Chain Risk Report, November 2013 (n=519) / Other: Energy scarcity, Cyber attacks, Environmental incidents, Industrial disputes, healt & Safety, Civil unrest
IT/Telecom disruptions and adverse weather are the main disruptors across many industries
Unplanned IT / Telecom outage
Outsourced service failure
Adverse weather
Product Quality
Transport network disruption
Loss of talent / Skills
Financial Services 64% 38% 21% 20%
Professional Services
70% 68% 47% 43% 35%
Public Administration
50% 24% 36% 22% 28%
IT & Telecom 48% 25% 33% 25%
Manufacturing 35% 33% 42% 43%
Energy & Utility 44%
Retail & Wholesale 40% 71% 31% 39%
Health Care 43% 50% 43% 50%
Transport & Storage
44% 56% 67% 56%
Engineering & Construction
57% 57% 57% 43%
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1. Understand the risks in your end-to-end value chain
2. Collaborate and engage with key partners to limit/share the risks
3. Develop business continuity plans, that are practical and enable you to predict, respond, recover
3 recommendations to build resilient capabilities
RESILIENT Recommendations
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Being ‘Tech Savvy’ means to be clever in using the right technologies and data to compete
The ability to use emerging technologies, including big amounts of data to make the end-to-end value chain transparent and to understand/capture market opportunities
TECH SAVVY Definition
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The world is changing at a rate at which the systems, structures and cultures built over the past century
can no longer keep up.
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Mobile technologies, the Internet of Things and Big Data are already changing the game
Source: Dobbs, Manika and Woetzel: No ordinary disruption; McKinsey Global Institute, May 2015
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Source: Supply Chain Insights, Big Data Study 2014/2015
Mobile technologies and big data will be key driver s for supply chain excellence in the years to come
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3 recommendations to build tech savvy capabilities
1. Understand the opportunity that big dataoffers for your company (based on yourindustry needs and competitiveposition)
2. Use partnerships to share infrastructurecost
3. Don’t be a slave to the data – usecommon sense and manage the risks(privacy)
TECH SAVVY Recommendations
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Being sustainable means to have a business model, t hat delivers economic, ecologic and societal benefits
The ability to structure all aspects of a companies core business (ie. products and supply chains) in ways that deliver economic, ecologic and societal value at the same time
SUSTAINABLE Definition
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Source: United Nations Environment Program, Footprint Network
Mankind is already exceeding the limits of the plan et. Where do we get the all the Planets from, to survive in the fut ure?
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Source: Ellen MacArthur Foundation, Circular Economy, 2012
Implementing the vision of a circular economy is al ready driving transformative change
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3 recommendations to implement a sustainable value chain
1. Question the Status Quo of valuecreation in your company andcollaborate across productdevelopment, supply chain andcustomers to find more sustainablesolutions
2. Reduce the resource intensity of thevalue chain system (Actions mightinclude asset sharing, multi-modaltransports, Cradle-to-Cradle products,Closed-loop value chains)
3. Measure a balance set economic,ecologic and societal metrics
SUSTAINABLE Recommendations
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The ability to collaborate across the boundaries of the value chain is the key to success
The ability to managing all internal and external stakeholders in a collaborative manner, to allow the organization to manage risks, change and to capture opportunities
COLLABORATIVE Definition
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Many people drive important change
Action that is head & heart driven
More leadership, not just management
Partnership of hierarchy and network
Constant flow of information
Not a project: A “get-to” mindset,
not “have-to”
Collaborating in a Network Model, helps to adapt fa ster to changing needs than traditional models
Source: Adapted from John Kotter, Accelerating Change, 2014
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3 recommendations to drive a culture of collaborati on
1. Use the experience of your team andexpand it with external experience ->overcome internal boundaries
2. Define internal and externalrelationships in a new way – you winand lose together
3. Test the network model as operatingmodel for accelerated change
COLLABORATIVE Recommendations
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2nd tier Suppliers
1st tier Suppliers
1st tier Customers
2nd tier Customers
SOURCE MAKE DELIVER
PLAN
RETURN
Value Creation Strategy(Product, Value Chain, Communication)
Enterprise Architecture(Organisation, Reporting,
Systems)
Stakeholder Collaboration
Sustainable Business Planning
Supplier & Partner Networks
Sustainable Cost Reduction
© shared.value.chain
Cradle-to-CradleCo-Creation
Sustainable Operations
Sustainable Products
RESILIENT
TECH SAVVYSUSTAINABLE
COLLABORATIVE
The new platform for sustainable value creation is built on value chain and collaboration capabilities
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Economic, ecological and societal value
Economic value
Ecological value
Societalvalue
Revenue growth
Reduced costs
Reduced use of primary materials
Improved societal value of the product
Reduced impact of products on the environment
Reduced negative social impact of value creation
• Reduced working capital• Fewer fixed assets• Improved use of capital• Reliable supplier base
• Sustainable innovation• Improved brand image• Premium prices via segmented
customer offerings
• New business models for solving social problems
• Improved localisation and income opportunities
• Avoidance of child labour• Alleviation of poverty
• Substitution and simplification of materials
• Reduced environmental impact and costs
• Closed material cycles• Internalisation of environmental
costs• Habitat regeneration• Preservation of biodiversity
Source: Sustainable Value Chain Management (D’heur et al., Springer, 2015)
Thriving for sustainable value creation, is deliver ing several economic, ecologic and societal benefits
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Resilient
Tech savvy
Collaborative
Sustainable
“Are you ready for the race?”
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Muito obrigado - Please join the conversation and dis cover how you can make your value chain more sustainable
@SharedxValue
https://www.facebook.com/sharedvaluechain
https://plus.google.com/+sharedvaluechain/
https://www.linkedin.com/company/shared-value-chain-management-consultants
CSR und Value Chain Management (Springer, 2013)
Corporate Social Responsibility(Springer, 2015)
Sustainable Value Chain Management (Springer, 2015)
Publications: https://sharedvaluechain.com/publications/