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Supply Chain Strategy Mind
Mapping De strategische klim naar
concurrentievoordeel
Martijn Lofvers Supply Chain Magazine Nieuwegein 24 juni 2014
© Martijn Lofvers, 2014
Dependency IT systems ↑
Costs fuel & raw materials ↑
Changing demographics
Financial volatility ↑
Outsourcing & cost-cutting ↑
Globalization
2
What’s on the CEO’s Mind?: Market Trends
Battle for talent
Financial risk management
New markets
Partners becoming competitors
New competitors
Aging customers Product life cycles ↓
Importance cash management ↑ Supply risks ↑
Sustainability importance ↑
© Martijn Lofvers, 2014
Shift from: Financial Forecasting to: Scenario Planning
Today
Divergent
Exploration
Convergent
Evaluation
Execution Decision
Analysis
ALTERNATIVES
Business and Supply
Chain Strategy
© Mahender Singh, MIT 2008
Feedback
Executio
n
Scenarioplanning: Forward Thinking
Shift from: Operations & Logistics to: Supply Chain Strategy
Open source software & IT ↑
Costs fuel & raw materials ↑
Sustainability importance ↑
Financial volatility ↑
Outsourcing & off-shoring↑
Global sales market
4
New: Supply chain finance
New markets & customization ↑
Dependency suppliers ↑
Frequent network redesign ↑
Trade barriers ↑
New competitors ↑
Global chain visibility ↑
RFID costs ↓
Longer supply chains
Bulk transport ↑
Inventory ↑
Insourcing & on-shoring ↑
3PL & contract manufacturing ↑
Chain competition ↑ Tax & customs impact ↑
Supply chain risk management ↑
Reverse chain management ↑
Carbon footprint ↓
New: Cradle to Cradle New: Trade lanes
The COO’s Agenda: Supply Chain Challenges
© Martijn Lofvers, 2014
‘A lot of companies have a mismatch between product type and supply chain strategy’,
according to professor David Simchi-Levi of MIT in Boston, USA.
A successful company strategy demands a corresponding operations strategy:
BEST PRACTICES
Customer value proposition example Supply chain strategy
• High fashion Zara speed to market
• Customer experience Dell Direct response by configure to order
• Product innovation Apple efficiency by outsourcing manufacturing & logistics
• Every day low prices Wal-Mart cost efficiency
• Available product selection Amazon efficient & reliable fulfillment
Source : Prof. David Simchi-Levi of MIT in Boston, USA (2010)
Company Strategy versus Supply Chains
© Martijn Lofvers, 2014
Many companies’ strategies are below-par*:
• Only 35% of the companies work with competitive strategy that is capable of beating the competition.
• Only 20% link their strategy to clear decisions about their product portfolio and allocation of required resources (=supply chain management).
• Companies with an effective approach to developing strategy place a lot of value on the macro trends.
• Strategic direction of healthy companies is unclear to 25% of the employees; almost 60% in unhealthy ones.
*McKinsey survey among > 2,000 decision-makers (2011)
McKinsey survey: Lack of making choices
© Martijn Lofvers, 2014
Company strategy: Which mountain to climb?
Three possible competitive strategies:
• Product Leadership (‘best product’) Apple
• Operational Excellence (‘best total costs’) Wal-Mart
• Customer Intimacy (‘best total solution’) Cisco Source : Treacy & Wiersema
Competitive strategy depends on Critical Success Factors:
Company Strategy: Critical Success Factors
Critical Succes Factors Operational Excellence Customer Intimacy Product Leadership
Low price Order Winner Non-issue Non-issue
Fast delivery Non-issue/Qualifier
Reliable delivery Order Qualifier
Quality compliance Order Qualifier Order Qualifier Order Qualifier
Quality level Non-issue Order Winner
Mix flexibility Order Winner Non-issue
Product flexibility Non-issue Order Winner Non-issue
Volume flexibility Non-issue/Qualifier Order Winner
Product innovation Non-issue Order Winner Order Winner
Service Order Winner
Source : PwC (2012) © Martijn Lofvers, 2014
Operational Excellence:
1. Continuous flow by synergy from collaborative partnerships;
2. Efficient, lowest costs supply chain;
Product Innovation:
3. Fast supply chain focused on competitive costs and continuous product innovation;
4. Agile supply chain for unpredictable demand;
Customer Intimacy:
5. Custom-configured supply chain;
6. Flexible supply chain focused on solving customer problems.
*Hernán David Pérez, lecturer supply chain management National University of Colombia (2013)
Supply chain design: 6 different models*
© Martijn Lofvers, 2014
6 Supply chain designs: Lean or Agile
© Martijn Lofvers, 2014
Fast focused on competitive costs
& innovation
Agile for unpredictable
demand
Flexible focused on customer
problems
Custom-configured
Continuous flow by collaborative
partnerships
Efficient, lowest costs
Lean
Lean Agile
Agile
Lean Agile
Supply Chain Processes: company view
Customers Suppliers
IT Human
Resources Finance
Materials
Money Manual labor
Makings Movements
Market
fulfillment
Market
innovations
Production Distribution Service Purchasing
Maintenances
Marketing
& Sales Research &
Development
Supply Chain
Management
Logistics
Support
Laws & regulations
Goods Goods
Management info
Market
needs
Market
needs
© Martijn Lofvers, 2014
Organizational functions: roles and en positions
Economic crisis: strategy, fielding and mind set
Offensive
Defensive
. . .
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. . . .
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. . . . . .
Normal
.
. .
.
. . .
. . . .
Dug in
Strategy execution: Choosing the right route
Right routes depend on:
• Cooperation (internally)
• Collaboration (externally)
• Competition (externally)
• Circumstances (externally)
Market Trends
Impact Company
Supply Chain Solutions
Supply Chain Challenges
Mind Mapping: Making Sense in 4 Steps
Diagnose
Execute
Review Plan
© Martijn Lofvers, 2014
Goal
Market Trends? Which market trends relate to the topic of the mind map? Impact Company? What impact do these trends have on the company? Challenges? What are the related supply challenges? Solutions? What are the required capabilities/processes?
External focus
Strategic
Execution
Internal focus
Market Trends Impact Company
Supply Chain Solutions Supply Chain Challenges
Mind Mapping: Making Sense in 4 Steps
© Martijn Lofvers, 2014
Goal
Market Trends? Which market trends relate to the topic of the mind map? Impact Company? What impact do these trends have on the company? Challenges? What are the related supply challenges? Solutions? What are the required capabilities/processes?
• Demographical trends
• Economic trends
• Sociological trends
• Technological trends
• Ecological trends
• Political trends
• Finance
• Marketing & Sales
• Supply Chain
• IT
• HR
• R&D
• Planning
• Sourcing
• Making
• Delivering
• Servicing
• Returning
• Sales & Operations Planning?
• Order to Cash optimization?
• Procure to Pay optimization?
• Supply chain collaboration?
• Customer collaboration?
• Et cetera…
Internal focus External focus
Strategic
Execution
Example mindmap: MedtechSupply Chains
Market Trends
Impact Company
Process Improvements
Process Challenges
Winners Cycle®: Beyond the Golden Circle*
Where? Why?
How? What?
Where? In which market is the company/division playing? Why? What is our right of existence? How? What are our core and unique processes? What? What are our products and services? © Martijn Lofvers, 2014
Diagnose
Plan
Execute
Review Goal
Execution
Strategic
Internal focus External focus
* By Simon Sinek
Challenges:
• No well defined competitive strategy for company and/or division and/or geography.
• No clear internal communication about competitive company strategy.
• No matching supply chains with competitive strategy.
• No evolving competitive strategy over time.
Solution:
• Structural use of mind maps for strategy and execution.
• Making strategic use of the Winners Cycle®.
Strategy, Supply Chains & Communication
© Martijn Lofvers, 2014
Martijn Lofvers
Owner & Publishing Director
Supply Chain Magazine
Mobile: +31 (0) 6 - 54 76 13 83
E-mail: [email protected]
LinkedIn: www.linkedin.com/in/supplychaineurope
www.supplychainmovement.com
Thank you for listening
© Martijn Lofvers, 2014