council of supply chain management professionals · 2012-05-17 · india 13% gdp japan 11% gdp...
TRANSCRIPT
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Council of Supply ChainManagement Professionals
Raw MaterialPurchasing
Factory Manufacturer’s DC Customer’s DC Consumer
Rick D. BlasgenPresident & CEO
CSCMP
April 12, 2012
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Functional Orientation• Purchasing• Operations• Marketing• Package Engineering• Transportation• Inventory Mgt.• Warehousing• Manufacturing• Suppliers• Customers• etc.
Logistics
Supply ChainManagement
1950 1970 1980 1990 20001960 Beyond
Focus
More AttentionFrom SeniorManagement
More AttentionFrom SeniorManagement
Evolutionary Perspective
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Logistics Costs $1.343 t $1.097 t $1.211 t 10.4%
% of GDP 9.4% 7.8% 8.3% 6.4%
Trans Costs $872 b $695 b $768 b
10.5%
Inv. Carrying $419 b $359 b $396 b 10.3%
Metric 2008 2009 2010 %
US State of Logistics
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Logistics Costs have risen 184%
Average annual increase = $28b
2010 increase was $114b
Since 1990…
As a % of GDP, Logistics expense went from 11.4% to 8.3%, a reduction of 27%
Also….
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Global Comparison of Logistics Expenditures
Asia 13-20% GDPChina 15% GDP
Europe 12-14% GDPIndia 13% GDPJapan 11% GDPMexico 14% GDP
EconomyHigher Output--GDPBetter use of resourcesMulti-use InfrastructureBusinessesMarket AccessMarket IntegrationCost EfficiencyConsumersMore Goods and ServicesWider AvailabilityLower Prices/Income
U.S. 8.3% GDP
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Some Magnitudes
The cost of logistics in the US was $1.2 trillion in 2010, 8.3% of the US GDP. It was 17.9% in 1980.
US expenditures on logistics is larger than the national GDP of all but 12 countries.
Total domestic business inventories are valued at $2 trillion.
By comparison, estimated logistics costs represent 15% of China’s GDP and 13% in India.
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Wal-Mart's supply chain management success is improving productivity in the United States:
The effects of the company's supply chain innovations on the retail industry led to a 3.1 percent decline in overall consumer prices between 1985 and 2004.
In 2004, consumers spent $263 billion LESS than they would have if Wal-Mart were not around! That translates to $895 per person, or $2,329 per household.
When Supply Chains Work Well
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When Supply Chains Don’t Work So Well
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A study by Georgia Tech showed that a company’s stock price drops 8% when the company experiences a glitch in its supply chain.
A study at Miami University of Ohio showed that when a company adopts a new supply chain innovation the company’s stock price increases.
A study by Bain & Company showed that companies employing sophisticated supply chain methods enjoyed 12 times greater profit than companies with unsophisticated methods.
Wall Street: New found respect for SCM. In one SCM MBA program in the US, 21/32 grads received job offers from Investment Banking firms because of the importance of SCM to their clients.
SCM Has Strategic Profit Impact
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Top management is interestedin what we do!
But we must communicate more effectively.
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Transparency!
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Decisions
Different Decisions?
$30
$145
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•Revenue
•Cash Flow
•Profitability
•Market Share
What keeps the CEO up at night?
Shareholder Value
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The World Has Changed
Shrinking global marketplace
Information and visibility driven
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SustainabilityBetter use of capital
Profit contribution
Less inventory
New Boardroom Expectations of SCM
Reduce costs
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• CEO / CFO’s - discovered the power of Supply Chain Management.• Wall Street
– Watching industry dynamics– Logistics industry represents almost 10% of the
economy• 3PL’s – Significant growth• Supply Chain Risk Management is critical – think
about recent events, middle eastern uprisings, Suez Canal, Japan, Thailand, etc.
What does this all mean?
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Mega Trends – Shifting Demographics China’s middle class could grow from 20% to 40% by 2020
Today, 450 million Indianshave middle class incomes
In Brazil, 30 million have moved to the middle class – Income is up 67%
95% of the world populationgrowth through 2050 will occurin developing nations
Urban areas will produce nearly allof the population growth over the next 25 years
Graying population shifting to global youth
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Supply Chain Trends and ChallengesGlobalization. Growing complexity and pressure of dealing with global partners, suppliers and competition. Culture and geopolitical issues.
Emerging Asian countries such as China, India and Southeast Asia will become major centers of growth.
A lot of talk about manufacturing moving back to US or NA.
Lack of Predictability. Supply chain whiplash….oil prices, commodities, currency valuations.
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Supply Chain Trends and Challenges
Consumer Attitudes and Demographics. Aging population. Growing demand for environmentally sustainable and socially responsible products by younger consumers. How to meet needs and maintain loyalty of the consumer?
Information Technology will continue to revolutionize the discipline.
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Supply Chain Trends and Challenges
Current economic and political climate hinders free trade, Freer trade flows will still be the route to lift countries out of poverty.
CSA 2010, 2011, 2012, 2013….forever?
Panama Canal expansion - May provide more economies of scale and port diversification options to major US population centers
Supply Chain professionals have an important role to play in communicating with decision makers the value of collaboration and cross country business.
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Real Estate and Supply Chain
• The two are inextricably linked• Real estate is critically important to the
success of a company’s supply chain• “Buildings” should be viewed as assets
that contribute to supply chain value• Knowing fundamentals of SCM will help
you communicate to clients/potential clients
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Recent Warehouse & DC Operations Benchmark Study
• Inventory turns have increased after three years of continued decline
• More expansions are being planned to distribution operations
• Managers are re-installing incentive plans as company coffers are starting to slowly, but surely show signs of new life
• To realize transportation savings, many are adding satellite DCs and renegotiating freight rates
Source : Logistics Management’s 5th Annual Warehouse & Distribution Center (DC) Operations Survey
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Thoughts about 2012 and beyond…
• Shippers will continue to examine outsourcing opportunities
• Access to capacity will be a major factor• Transportation will drive network
changes• Transitioning to a “Trucker’s Market”• Let’s learn from the past! A nickel a
hundredweight never made anyone rich!
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Emerging (Emerged?) Supply Chain Trend
Collaboration
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Emerging (Emerged?) Supply Chain Trend
Collaboration – “To cooperate with an enemy that has invaded your country”
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Relationships are critical
The essence of SCM is collaboration – it is not an option.
involves all key participants working toward common goals.
Absent collaboration, the supply chain willbe nothing more than a collection of firms, eachfollowing their own pathways.
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Back to the Future?
“New Ideas?!”
Sales and Operations PlanningMulti Vendor ConsolidationForecasting – let’s include customer promotional activity Let’s connect supply to demand!Should we consider outsourcing?Manufacturing should produce what the customer wants ☺.Etc.!
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Traditional Supply ChainFunctional Career Path
Demand/SupplyPlanning
Global LogisticsManufacturingProcurement
Executive Level
Senior Level
Advisory Level
Staff Level
Entry Level
Fulfillment
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Corporate Executive
Level
Leading Edge SCM Career Path
Demand/SupplyPlanning
Global LogisticsManufacturingProcurement
SCMConsulting
Level
SCMSr. Level
SCMAdvisory
Level
ISC Staff Level
ISC Entry Level
Fulfillment Supply Chain Management
Expe
rienc
es o
utsi
de o
f ISC
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The Future of Supply Chain Professionals
Inventory Management
Transportation
Warehousing
Production Planning & Manufacturing
Customer Service
Proficient competenciesTechnicalManagerialLeadership
Must have excellent interpersonal skills
Materials Planning
Procurement
Ability to sustain collaborative relationships
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Supply Chain Concierge Service
CSCMP’s Evolving Role
• GoalBetter deliver intellectual capital and educational resources to corporate training/education and SCM personnel through greater collaboration and more formal relationships.
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CSCMP’s New Certification!
Become a Supply Chain Superstar
with SCProTM
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ADVANCE YOUR CAREER WITH CSCMP’S SCPRO™CERTIFICATION
Three (3) level certification includes:
Level One – Cornerstones of Supply Chain Management
Level Two – Analysis and Application of Supply Chain Challenges
Level Three – Initiation of Supply Chain Transformation
Visit cscmpcertification.org for more information or to apply today!
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It’s rigorous,It’s globally relevant,It tests a broad range of industry skills and mastery of end-to-end supply chain functions.
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Over 80 Current Corporate Members
Brazilian Army Commission
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Corporate Membership Benefits
• Individual corporate memberships –belong to company
• Exclusive bundle packages onlyavailable to corporate members
• Great company advantage by overall company savings realized
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SummaryThis discipline is a corporate necessity, yet can be a growth vehicle – a revenue generating engine.
We improve the financial position of companies and economies.
Our stature and credibility is increasing.
Supply chain professionals need to develop cross cultural skills and a global mindset to maximize opportunities in the increasingly globalized world.
To prosper, to tackle these challenges, to take advantage of the opportunities, we need to work closely together!
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ProcurementMarketing
Manufacturing
Information Tech
Suppliers Customers
SCM Pro
SCM Conducts a SymphonyWe matter!
Sales
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Peter Drucker
“If people are committed to maintaining yesterday, they are not available to create tomorrow”
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Sometimes, we have to learn to
forget
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Innovation!Be Creative in your Response to
Supply Chain Problems
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Warehou
sing
and Tr
anspor
tation
Physica
l
Distrib
ution
Logisti
cs
Incept
ion of
SCM Full Im
plement
ation
of Coll
aborat
ive
SCM
The Evolution of SCM
Prehistoric 2000
1950 1982
How long will it take??
2???