Sweeney, Edward

Wagner, Claudia-Maria

English

Arrow@TUDublin

Technological University Dublin ARROW@TU Dublin Other Resources National Institute for Transport and Logistics 2008-01-01 An Analysis of Supply Chain Management and Competitive Solutions for the Island of Ireland Edward Sweeney Technological University Dublin, edward.sweeney@tudublin.ie Claudia-Maria Wagner Technological University Dublin, claudia.wagner@tudublin.ie Follow this and additional works at: https://arrow.tudublin.ie/nitlotr  Part of the Business Administration, Management, and Operations Commons Recommended Citation Sweeney, E.:An Analysis of Supply Chain Management and Competitive Solutions for the Island of Ireland. Invited Lecture, Queens University Belfast, October 2008. This Presentation is brought to you for free and open access by the National Institute for Transport and Logistics at ARROW@TU Dublin. It has been accepted for inclusion in Other Resources by an authorized administrator of ARROW@TU Dublin. For more information, please contact yvonne.desmond@tudublin.ie, arrow.admin@tudublin.ie, brian.widdis@tudublin.ie. This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 License An Analysis of Supply Chain Management and Competitive Solutions for the Island of IrelandEdward Sweeney Claudia WagnerDirector of Learning Senior ResearcherAgenda• NITL• Introduction - What is SCM?• SCM Excellence• Diffusion of SCM in Ireland• Re-engineering Supply Chains• Some Concluding CommentsAgenda• NITL• Introduction - What is SCM?• SCM Excellence• Diffusion of SCM in Ireland• Re-engineering Supply Chains• Some Concluding CommentsHistory of NITL• Report “World Class to Serve the World”• National Centre for Supply Chain Excellence• Supported by the National Development Plan, managed by the Department of Enterprise, Trade and Employment, set up at the DIT • April 1998NITL Structure / ActivitiesAgenda• NITL• Introduction - What is SCM?• SCM Excellence• Diffusion of SCM in Ireland• Re-engineering Supply Chains• Some Concluding CommentsSCM provides the end customer with the right                 product at the right time, priced at the right level, in the right quantity and qualitySCM as a major source of competitive advantageNITL’s Four Fundamentals of SCMWhat is SCM? Supply Chain Management aims to achievecompetitive advantage through: Enhanced Customer Service Optimised Costs and InvestmentsFundamental 1 - The Objectives of Supply Chain ManagementSource Processors RetailersSuppliers Distributors ConsumerProducts & ServicesInformation FlowFunds FlowA product reaches the final consumer through achain of companies which will typically includesuppliers, processors, distributors and retailers.Fundamental 2 - Supply Chain PhilosophyThe Weakest Link• Without the right companies across the supply chain to work with, a company will never achieve true competitive advantage. In other words • The supply chain is only as strong as its weakest  link.Buy Make Store Move SellTraditionally these functions are managed in isolation and often operate at cross purposes.What is Supply Chain Management?Supply chain management integrates these functions by holistically managing the information, material and financial flows.What is Supply Chain Management?Buy Make StoreInformation and MoneyInformation and MaterialsMove SellWhat is Supply Chain Management?Fundamental 3 - Management of the FlowsSupply chain management integrates these functions by holistically managing the information, material and financial flows.Buy Make StoreInformation and MoneyInformation and MaterialsMove SellRe-assessment of internal and external customer/supplier relationships.SCM is not a “zero-sum game” based on adversarial relationshipsSCM is a “win-win” game based on partnership relationships?Fundamental 4 - Management of the FlowsWhy is SCM Important?“Effective supply chain management can cut costs, improve service and enhance revenues and that’s just the beginning”        Prof. P. Metz,  MITMIT Survey: Implementation of ‘supply chain management’ in US resulted in:50% reduction in inventory40% improvement in on-time deliveries27% reduction in order cycle timeNine-fold reduction in out of stocksWhy is SCM Important?“Supply chain management lies at the heart of the Dell Direct model and, therefore, at the heart of Dell’s business performance” Michael DellAgenda• NITL• Introduction - What is SCM?• SCM Excellence• Diffusion of SCM in Ireland• Re-engineering Supply Chains• Some Concluding CommentsCharacteristics of SCM ExcellenceCharacteristics of SCM Excellence• Identification and measurement of customer serviceCharacteristics of SCM Excellence• Identification and measurement of customer service because customer service ‘sets the spec’ for SC designCharacteristics of SCM Excellence• Identification and measurement of customer service because customer service ‘sets the spec’ for SC design• Integration of supply chain activities and informationCharacteristics of SCM Excellence• Identification and measurement of customer service because customer service ‘sets the spec’ for SC design• Integration of supply chain activities and information because many supply chain NVAs are caused by fragmented supply chain configurationsCharacteristics of SCM Excellence• Identification and measurement of customer service because customer service ‘sets the spec’ for SC design• Integration of supply chain activities and information because many supply chain NVAs are caused by fragmented supply chain configurations• SCM a senior management functionCharacteristics of SCM Excellence• Identification and measurement of customer service because customer service ‘sets the spec’ for SC design• Integration of supply chain activities and information because many supply chain NVAs are caused by fragmented supply chain configurations• SCM a senior management function because SCM is a strategic activityCharacteristics of SCM Excellence• Identification and measurement of customer service because customer service ‘sets the spec’ for SC design• Integration of supply chain activities and information because many supply chain NVAs are caused by fragmented supply chain configurations• SCM a senior management function because SCM is a strategic activity• Establishment and measurement of supply chain KPI’sCharacteristics of SCM Excellence• Identification and measurement of customer service because customer service ‘sets the spec’ for SC design• Integration of supply chain activities and information because many supply chain NVAs are caused by fragmented supply chain configurations• SCM a senior management function because SCM is a strategic activity• Establishment and measurement of supply chain KPI’s because what gets measured gets done!Agenda• NITL• Introduction - What is SCM?• SCM Excellence• Diffusion of SCM in Ireland• Re-engineering Supply Chains• Some Concluding CommentsThe Evolving Strategic Context• Internationalisation (or globalisation) of supply chains• Vertical disintegration• Changing role of the SC in strategic differentiationContext: importance of SCM in Ireland• Potential operational benefits (supply chain economics and customer service)• Open economy (imports/exports proportion of GDP)• Transport only one, and not most important cost, therefore location not a significant disadvantage• Relatively small companies often part of a global supply chain• Can manage ‘virtual’ supply chains from IrelandHow Do Irish Companies Measure Up?• Less than 50% measure customer service formally and those have very limited measurements• Companies score low in relation to having the latest supply chain IT and having them integrated across the supply chain• Less than 20% have a formal logistics position and in less than 4% is it at Board Level• Few companies had clearly defined SCM KPI’s(Source: NITL SCM Barometer, 2004)SCM Bar meter - Methodology 85% of the sample are small and medium size enterprises;  75% are indigenous firms;  The food and consumer sector represents 25% of the total sample;  Industrial products represent 47%; International services represent 25%.Sample characteristics:Survey instrument sent to sample frame of 1,655 companies across all sectors in Ireland; Response rate is 65% (1073 organisations).How Do Irish Companies Measure Up?• Less than 50% measure customer service formally and those have very limited measurements• Companies score low in relation to having the latest supply chain IT and having them integrated across the supply chain• Less than 20% have a formal logistics position and in less than 4% is it at Board Level• Few companies had clearly defined SCM KPI’s(Source: NITL SCM Barometer, 2004)Some Key Findings• ess t a  57  eas re c st er service f r ally a  t se ave very li ite  eas re e ts• a ies sc re l  i  relati  t  avi  t e latest s ly c ai  ICT and having them integrated across the supply chainHow Do Irish Companies Measure Up?• Less than 50% measure customer service formally and those have very limited measurements• Companies score low in relation to having the latest supply chain IT and having them integrated across the supply chain• Less than 20% have a formal logistics position and in less than 4% is it at Board Level• Few companies had clearly defined SCM KPI’s(Source: NITL SCM Barometer, 2004)Some Key Findings: integration of SCM activities1 - not atallintegrated2345 - fullyintegrated0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100.0%Customer ServiceSales Order ProcessingProcurement/PurchasingProduction Planning and ControlAfter Sales ServiceCustomer Relationship ManagementOutbound TransportInventory ManagementWarehousingInbound TransportNew  Product IntroductionDemand ForecastingTotalHow Do Irish Companies Measure Up?• Less than 50% measure customer service formally and those have very limited measurements• Companies score low in relation to having the latest supply chain IT and having them integrated across the supply chain• Less than 20% have a formal logistics position and in less than 4% is it at Board Level• Few companies had clearly defined SCM KPI’s(Source: NITL SCM Barometer, 2004)Some Key Findings• ess t a  57  eas re c st er service f r ally a  t se ave very li ite  eas re e ts• a ies sc re l  i  relati  t  avi  t e latest s ly c ai  ICT and having them integrated across the supply chain• 9% have a formal SCM position• Few companies had clearly defined SCM KPI’s (e.g. 59% of companies do not know their total supply chain costs)How Do Irish Companies Measure Up?• Less than 50% measure customer service formally and those have very limited measurements• Companies score low in relation to having the latest supply chain IT and having them integrated across the supply chain• Less than 20% have a formal logistics position and in less than 4% is it at Board Level• Few companies had clearly defined SCM KPI’s(Source: NITL SCM Barometer, 2004)Some Key Findings• Overall: SCM positively related to overall company performance• P ckets of SCM excellence but much room for improvement• Excellent or good SCM practice: <10%; Reasonable: ~30%; yet to establish SCM programme: ~60% • Large MNC vs. Indigenous SME• Future plans?Some Barriers to SCM Excellence• Inefficiencies are often built into the supply chain• Communication structures ineffective and exchange of information poor• Culture inappropriate• Excessive reliance on forecasting and stockholding• Managing problems, rather than eliminating their causes• Ireland moving into 2nd Generation SCM• SCM moving “up the value hierarchy”• Supply chain: becoming more virtual and international• Need for robust supply chain design/re-engineeringFuture ChallengesAgenda• NITL• Introduction - What is SCM?• SCM Excellence• Diffusion of SCM in Ireland• Re-engineering Supply Chains• Some Concluding CommentsRe-engineering Supply Chains• Re-engineering = analysing + planning improvement + implementing improvement• There is no “magic” solution• Beware of copying inappropriate solutions• BUT!• There is a logical and systematic way of addressing the issueUnderstanding Customer ServiceMarket Driven Customer Service StrategyPerformance Specification for Integrated Supply Chain ManagementThe basis of effective re-engineering and changeSupply Chain OrganisationThe organisational shape of the future?Internal network arrangementsExternal network arrangementsShared ServicesThink process and effectiveness NOT function and efficiencyTechnology: the great enabler?• Key role as an integration enabler• Piecemeal and tactical approach to integration and to IT/IS development• Multiple standards, processes and platforms– Internally – Across the supply chain  Does IT Matter?Information Enablers and DriversMost IT solutions are no longer likely to provide strategic advantage, but simply the business basics (IT is imitable)The competitive advantage for companies will originate from developing creative information technology strategies and implementing them superblyFocus on process and people NOT on systems and hardwareSupply Chain KPIs in World Class Companies• relates to company strategy (and stakeholders)• incorporates non-financial measures• limit the number of measures• measures change over time• measures simple and easy to use• fast feedback to staff• “learning” experienceKPIs: the only rational basis for continuous improvementMarket Driven Customer Service StrategyPerformance Specification for Integrated Supply Chain ManagementInternal network arrangementsExternal network arrangementsShared ServicesDevelopment and implementation of creative ICT strategiesIntegrated SC Process KPIsTowards A Supply Chain Re-engineering RoadmapThe only rational basis for continuous improvementFocus on pr cess and peopleThink process and effectivenessAgenda• NITL• Introduction - What is SCM?• SCM Excellence• Diffusion of SCM in Ireland• Re-engineering Supply Chains• Some Concluding CommentsSome Concluding Thoughts • Standing still = falling behind• Innovation in all aspects is the key to survival• Remember that most innovation is a series of small steps• Re-engineering must focus on service delivery, integration, organisation and performance measurement• People and learning are critical success factors 

An Analysis of Supply Chain Management and Competitive Solutions for the Island of Ireland

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An Analysis of Supply Chain Management and Competitive Solutions for the Island of Ireland

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