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    Reflections on Supply Chain Excellence in the context of trends in the globalbusiness environmentJune 2016

  • Content

    Trends 3

    Supply Chain Concepts 14

    Supply Chain Excellence 26

    Syncronics Business Consulting Methodology 34

    Case descriptions 40

    2

  • Megatrends impacting our business environment towards 2025

    Trends

    1 billion+ new

    consumers

    Urbanization

    Demographic and social

    change

    Changing economic

    power balance

    Climate change &

    scarce resources

    Disrupting technology

    Sources: 1. PwC (2014). Global Annual Review 2014, PwC2. Sander, A. et al. (2010). Megatrends: Tailwinds for Growth in a Low-Growth Environment, Boston Consulting Group3. Chatterjee, I. et al. (2010). The decade ahead: Trends that will shape the consumer goods industry, McKinsey & Company 3

  • 1 billion+ new consumers

    By 2020, more than 1 billion new consumers are expected to spend between $10 and $100 per day

    Country growth opportunities versus riskSelected countries in top 50 for growth and risk

    Growth in consumer segment poses both potential and risk,hence Supply Chains must be agile and flexible.

    1. Karas, H (2010). The emerging middleclass in developing countries, OECD Development Center, Working paper no. 2852. OMarah, K. et al. (2014). The Chief Supply Chain Officer Report 2014, SCM World

    4

    Sources:

  • Urbanization

    In year 1800, 2% of the worlds population lived in cities. Currently, it is 50% and increasing by 1,5 million new urban people each week. By 2025, there could be nearly 40 cities, each with a population exceeding 10 million.

    Urbanization brings new market opportunities, while the Supply Chains serving those markets must adapt to the new infrastructural landscape.

    Infrastructure is under pressure; Increasing demands put pressure on roads, electricity, energy, water, wastewater and waste. Many cities are forced to make huge investments to cope with these changes.

    CNN January 30th 2014: New Delhi has outstripped Beijing and gained the inglorious title as the world's most polluted major city.

    New ways of living

    New social patterns

    Changing consumer needs

    Changing consumption habits

    1. PwC (2014). Global Annual Review 2014, PwC2. Sander, A. et al. (2010). Megatrends: Tailwinds for Growth in a Low-Growth Environment, Boston Consulting Group

    5

    Sources:

  • The centre of gravity of Supply Chains will shift towards emerging markets, hence the physical Supply Chain structure might need to change or as a minimum become significantly more flexible.

    An aging population represents new market opportunities for everything from medicine, housing, pleasure etc. Private labels put pressure on brand owners, forcing them to reduce operating costs.

    Demographic and social change

    The global financial crisis has driven consumers towards value offerings instead of branded goods

    The population in mature markets are shrinking whilst it is growing massively in emerging markets

    Immigration is widespread, i.e. in the US; the Hispanic population will make up 23% of the population in 2030

    Soaring health costs in Western Europe

    In 2050, the average age in Japan is expected to be 53 years, versus 21 years in Nigeria

    Sources: 1. PwC (2014). Global Annual Review 2014, PwC2. Sander, A et al (2010). Megatrends: Tailwinds for Growth in a Low-Growth Environment, Boston Consulting Group

    6

  • Changing economic power balance

    October 2014: China became the world's largest economy followed by the US (IMF)

    Annual infrastructure spending will more than double by 2025 previously, these spending were largest in Western Europe, but by 2025 60% will be in the Asia Pacific region

    Emerging markets will

    Challenge developed markets in producing high end products

    Have highly talented people leading global multinationals

    Developed countries will benefit from re-shoring (near shoring, in sourcing) as wage differentials will cancel out

    There is a big market potential to be explored, but the associated operating risks will force Supply Chains to cope with uncertainty by being agile and flexible.

    Sources: 1. PwC (2014). Global Annual Review 2014, PwC

    7

  • Climate change & scarce resources

    The worlds continuous growth in both population and consumption will, unless changed, empty our planets natural resources while changing our climate.

    50 years of supply left in proven oil resources

    CO2 emissions dramatically increased as a consequence of the industrial revolution

    Governments fight for domestic resources while failing to address global climate damage

    Businesses must adapt to green demand from the market, whilst ensuring a closer tie to strategic resource suppliers. Change in transportation cost might trigger changes in supply networks.

    The average global temperature rises, sea level rises

    Extreme weather events

    CSR demands for People & Planet

    Volatile input costs

    Subsidiaries for green energy/technology increases

    Focus on energy saving appliances

    Recycling and re-use

    Consumers going green

    Source: http://climate.nasa.gov/evidence/

    Sources: 1. PwC (2014). Global Annual Review 2014, PwC2. Sander, A et al (2010). Megatrends: Tailwinds for Growth in a Low-Growth Environment, Boston Consulting Group3. Chatterjee, I et al (2010). The decade ahead: Trends that will shape the consumer goods industry, McKinsey&Company 8

  • Disrupting technology

    Big data

    The internet of things (IoT)

    Cloud computing

    3D Printing

    Advanced robotics

    Autonomous vehicles & drones

    Digital Consumer

    Depending on what business you are in, the disruptive technologies are either an opportunity or threat Make sure to understand: What business are you really in?

    The widespread use of electronic devices (mobiles, cameras, RFIDs, sensors etc.) generates huge amounts of data that businesses can analyse to spot profit potentials, trends, correlations and future demand.

    IoT is the network of physical objects or "things" wirelessly connected through the internet used in many different fields. Examples are heart monitoring implants, biochip transponders on farm animals, electric clams in coastal waters, automobiles with built-in sensors and many more.

    Cloud computing enables data storage and online access to very advanced computer services or resources in the cloud. Cloud computing gives businesses and people access to very advanced computing technology to carry out big data analysis, advanced Supply Chain Planning, real-time simulations etc.

    A 3D printer is an industrial robot that sequentially deposit material onto a powder bed with inkjet printer heads based on a 3D model. It can produce almost everything as long as it is built from equal layers of material.

    Sensor-based robots that attempt to mimic human intelligence. They are used in a variety of fields ranging from manufacturing, nuclear, construction, space and health care.

    An autonomous vehicle is any kind of vehicle that does not require real-time instruction from a human operator to function. Making a vehicle autonomous employs a significant level of internal decision-making capability made possible by artificial intelligence and machine learning. Autonomous submarines and cars have been developed for a variety of purposes.

    As consumers increasingly utilize electronic devices for basically everything and that demand are often shaped through digital social medias, businesses must incorporate digital supply chains, social media strategies and Omni channel strategy into their services to the customers.

    Sources: 1. PwC (2014). Global Annual Review 2014, PwC2. OMarah, K. et al. ( 2014). The Chief Supply Chain Officer Report 2014, SCM World3. Alicke, K. (2014). SCM 2020 the new differentiator, McKinsey & Company at Den Danske Logistik konference October 28th 2014 9

  • What business are you really in?

    In such a chaotic world, stay true to your value proposition to customers

    Facebook is selling friends

    Nemlig.com is selling happy family time

    Nike is selling healthy lives

    Syncronic is selling value creation for our customers

    10

  • Depending on your business you face industry specific trends

    Pharma & HealthcareA. Changing from site stability to site agilityB. Increased regulatory pressure, e.g.

    serializationC. Growing pressure on reimbursement will

    impact marginsD. Increased need for flexibility in productionE. Better integration with quality

    management to ensure efficiency and compliance

    F. Consumers as decision-makers

    Consumer Goods and Food & BeverageA. Fragmented market, top and bottom is

    growing, while the middle-market is shrinking

    B. Major growth in internet shoppingC. Increased customer demands in terms of

    value and varietyD. Managing product-line complexity in a

    cost-efficient way can create a competitive advantage

    E. Need for effective handling of multichannel delivery and marketing

    RetailA. Increasing sales in online channelsB. Omni channel shopping creates new

    ways to purchase goodsC. Application of digital technologies

    enhance in-store experiencesD. Investments in digital capabilities, user-

    friendly web-sites, data collection and analytics

    E. Increased pressure on logistical performance and inventory management

    IndustrialsA. Profitable growth based on increased

    productivity and cost-efficient manufacturing techniques

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