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Supply-Chain Council, Inc.1997 Fall Conference & Meeting

S.H. (Steve !acho"#$i

Supply Chain Co-Chair%an

eneral Manager & '), *ortel

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Optimizing Supply-Chain

Performance Internally as well aswith your Customers & Suppliers

Utilizing the SCOR model

Supply-Chain Manage%entfor the +1#t Century

© Copyright 1997 Supply-Chain Council

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'gena

Supply-Chain Council Mi##ion State%ent SCC Highlight#

Supply-Chain Council - Future irection#

hy Shoul Co%panie# /oin the SCC 0e#t-In-Cla## Supply-Chain Manage%ent

'pplication of SC2 "ithin *ortel

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Supply-Chain Council Mi##ion State%ent

3he Supply Chain peration# 2eference-%oel (SC2enco%pa##e# – ' co%%on, cro##-inu#try #upply-chain %anage%ent fra%e"or$

– Stanar proce## efinition#

– Stanar ter%inology

– Stanar #upply-chain %etric#

SC2 can 4e enhance through lin$age# to – 0ench%ar$ perfor%ance infor%ation

– 0e#t %anage%ent practice#

– Supply-chain application #oft"are

SC2 facilitate# 5ne6t generation #upply-chain %anage%entfor SCC %e%4er#, #upplier#, cu#to%er# – Inter-enterpri#e integrate #upply chain

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Supply-Chain Council Mi##ion State%ent

3he Supply-Chain Council i# co%po#e of leaing – Inu#trial co%panie#

– !ogi#tic# an i#tri4ution co%panie#

– Supply chain application #oft"are co%panie#

*e" SCC %e%4er# an SC2 u#er# are "elco%e

Supply-Chain Council (SCC %e%4er# #upport SC2 a#the #tanar proce## reference %oel for #upply-chain%anage%ent

SCC %e%4er# #ee$ to #trengthen SC2 through %e%4er-to-%e%4er interaction – 3echnical Co%%ittee %eeting#

– Internet i#cu##ion foru%#

Continued

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Supply-Chain Council Highlight#

SC2 %oel launche in *ove%4er 1998 follo"ingactive participation of 7 co%panie#

3he SCC i# a trae organi:ation, a# of /une 1997, fune4y %e%4er ue#, eicate to the evelop%ent,

pro%otion an #upport of SC2

3he SCC gratefully ac$no"lege# the contri4ution# ofthe original SCC %e%4er# in #upporting theevelop%ent of the SC2 %oel acro##

)!'*, S;2C<, M'=< & <!I<2

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Supply-Chain Council > Future irection#

ue#-paying %e%4er# are the 5o"ner# of theorgani:ation, repre#ente 4y an electe 0oar ofirector# an a full-ti%e <6ecutive irector

3he Fall Conference, "ith e%pha#i# on SC2 or$#hop#e##ion# an 3echnical Co%%ittee#, repre#ent# atre%enou# opportunity to enrich uner#taning?u#ageof the SC2 %oel

'ctive involve%ent 4y SCC %e%4er# i# critical to thefuture evolution of SC2 an it# "ie#prea aoption a#

an inu#try #tanar SCC %e%4er# are encourage to apply SC2 in )ilot

I%ple%entation# an to #hare their re#pective learning#through foru%# #uch a# the Conference#, e4#ite, an3echnical Co%%ittee#

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hy /oin the SCC an ;tili:e SC2@

3he SC2 %oel, "hen lin$e "ith a##ociate4ench%ar$# an 4e#t practice#, provie# a #tanar tool$it forA – Buic$ly e#cri4ing #upply-chain configuration# fro% your

#upplier# #upplier to your cu#to%er# cu#to%er

– <valuating your re#pective #upply-chain configuration fro% a0e#t-In-Cla## per#pective

– <na4ling co%panie# to ientify #pecific action# "hich "heni%ple%ente "ill facilitate opti%i:ation of #upply-chainperfor%ance

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elivery to Co%%it 78 97 Cu#to%er (E Co%plete on 3i%e Sati#faction

rer Fill !ea 3i%e 8 - 7+ +-1 Co%petitive(ay# )o#ition

0illing 'ccuracy 98 99 Cu#to%er (E <rror Free Invoice# Sati#faction

ay# Sale# ut#taning 89 GG rer Manage%ent Co#t# .9 1.G

(E of 2ev.

Ca#h to Ca#h (ay# 11 +

Inu#try'verageJ

0e#t inCla##J !everage

J )23M 1998 0ench%ar$ Stuy

0e#t-In-Cla##Supply-Chain )erfor%ance

Sample Range of Opportunities

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)23M 0ench%ar$ing Stuy Conclu#ionA S0; )erfor%anceSuperior Co%panie# follo" a 5)roce##-Centere 'pproachto Supply-Chain Manage%ent

'll of 3he#e <le%ent# Mu#t 0e 'ligne to 'chieve & Su#tain Superior )erfor%ance'll of 3he#e <le%ent# Mu#t 0e 'ligne to 'chieve & Su#tain Superior )erfor%ance

• Shareholer alue (2'• Cu#to%er !oyalty• Core Co%petencie#• Ma$e?0uy eci#ion#

perating )lan Strategy

)erfor%ance 3arget# & 0ench%ar$#

Cycle3i%e

Cu#to%er Sati#faction

Buality Co#t

Sy#te%# & 3ool# rgani:ation & eci#ion-Ma$ing

)olicie# & )roceure#

Infor%ation

Cro##-Functional Colla4oration

0illing?Collect

Supply-Chain Manage%ent )roce##e#

Supply Chain 0e#t )ractice Manage%ent )roce##e#

rer Mg%t. rer eliverySale# & M$tg. In#tallation

)lanning

St#. ata'rchitecture

666666ata arehou#e

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SC2 > )otential I%ple%entation 0enefit#

rer Fulfill%ent

E Mfg. Cycle 3i%e

E !ogi#tic# 3i%e

elivery

+-30% Cycle 3i%e

0i & rer Mg%t

E Cycle 3i%e

GE Change Mg%t.

Ca#h-to-Ca#h 1-1E 2?S

)ipeline )roce##e#

0iManage%ent

rer <ntry

rer Manage%ent

rer Fulfill%ent

In#tallation Collection

Bualitative?Buantitative I%pact of SC2 Can 0e SignificantBualitative?Buantitative I%pact of SC2 Can 0e Significant

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*ortel <6perience ;tili:ing

3he SC2 Moel


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*ortel at a lance

8K, <%ployee# – +E in 2&

1 Countrie# – Corporate HeaDuarter# in 0ra%pton, ntario

1998 2evenue L ;S 1+.K 0illion – up +E

1998 *et <arning# L ;S 819 Million – up +GE

2& Spening L ;S 1.K 0illion – 1GE of annual revenue reinve#te in 2&

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3he )erfor%ance Mea#ure%ent Moel

elivery )erfor%ance to 2eDue#t Faultle## In#tall# elivery )erfor%ance to Co%%it

0i Manage%ent Cycle 3i%erer Fulfill%ent !ea 3i%e (verall ;p#ie )rouct Fle6i4ility (verall

3otal Supply-Chain Manage%ent Co#trer Manage%ent

Inventory ay# of Supply Ca#h-to-Ca#h (ay#

=< M<32ICS

*23<! C!!'02'3I< )<2F2M'*C<

Cu#to%er Cu#to%er

I*IC<S

3i%eA(ay#

BualityA

rer eliveryrer Mg%t.Sale# &M$tg

rer Mg%t.!ogi#tic#

Co#tA(E of 2evenue

'##et#A

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'n S0; )rofile

Financial )erfor%ance Cu#to%er Sati#faction <%ployee Sati#faction <volving %ar$et yna%ic# reDuire #ignificant changeA

– Mar$et pre##ure# increa#ing ? cu#to%er e%an# increa#ing – 0u#ine## co%ple6ity increa#ing (%ultiple prouct# an glo4ali:ation

– Continue increa#e# in cu#to%er an e%ployee #ati#faction reDuire

' co%prehen#ive, fact 4a#e 5iagno#tic "a#perfor%eA

– 0ench%ar$e our operation# perfor%ance again#t co%para4le co%panie#

– 0oth Duantitatively an Dualitatively

– Fining# allo"e u# to ientify area# "ith greate#t opportunity for i%prove%ent

– )inpoint the 0e#t-in-cla## perfor%ance target#

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As Is

Supply-ChainConfiguration

Assessment

Supply-Chain

Benchmarking

Performance

Gaps,pportunities,

an! "o-

"ifferently

Possi#ilities

$unctionality of na#ling

Information

Systems

$act-Base!

Supply-Chain

Impro&ements

P'() *++P'() *++

**

33

..

(he Process


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3here "ere %any challenge# in theevelop%ent of a #ta4le elivery proce##

)rouct i# a technology #y#te% 2evenue gro"th target# "ere aggre##ive, repre#enting a -fol increa#e

Co#t# neee to 4e containe to achieve current fi#cal year profita4ility

elivery proce## "a# proNect 4a#e an relie on a-hoc elivery planning

– More than 9E of the %aterial ollar value "a# #ource fro% a #ingle #upplier

"ith lea ti%e# of %ore than %onth# on #o%e part#

– elivery relie on evelop%ent organi:ation# for infor%ation flo"# "ith loo#ely

efine infor%ation interface#

– 3he 4i %anage%ent proce## lac$e #tructure. !ittle infor%ation "a# capture

uring the 4i proce## "hich le to %uch re"or$ o"n#trea% in the elivery

Sy#te% integration "a# 4rought in-hou#e to reuce integration co#t# to a#

E of prouct co#t# – Infor%ation interface "a# %i##ing 4et"een evelop%ent, proNect %anage%ent

an %anufacturing

– )roce## i%prove%ent# in the factory reDuire fact-4a#e perfor%ance

%ea#ure%ent acro## the #upply chain

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<ach unit "ithin the organi:ation vie"e #upply-chain concept# a# le##than 5roc$et #cience 4ut coul not agree "ith other# on the right proce## – SC2 %oel provie the co%%on language "ith "hich to evelop co%%on vi#ion for the

proce##

– i#cu##ion# re%aine fact-4a#e "ith fe" political con#ieration#

– Metric# for #ucce## "ere ea#ily uner#too in their i%pact to the entire #upply chain

3he SC2 %oel highlighte the 5internal cu#to%er# "ithin the #upplychain – )roNect %anage%ent %oel of elivery provie fle6i4ility to 4e co%pletely cu#to%er

focu#e, 4ut re%ove attention fro% the ra%ification# acro## the #upply chain "ith la#t

%inute change#

– ;nit# "ith critical infor%ation uner#too their re#pon#i4ility to eliver infor%ation early in

the proce## Mapping the #upply-chain threa allo"e the organi:ation to thin$ in ter%#

of glo4al proce## opti%i:ation – )rovie all per#onnel "ith a tool to a4#tract a"ay fro% their o"n parochial vie" of #upply

chain

– 3he threa allo"e unit# to thin$ of funa%ental activitie# to achieve efficient proce##e#

3he SC2 fra%e"or$ helpe achieve a cohe#ive vie" of theappropriate #upply-chain %oel for the organi:ation

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<ucation "a# an i##ue in getting the "hole tea% to uner#tan the %oel#tructure

– 2eference %oel overvie" "a# tailore to reflect the actual circu%#tance# of the

organi:ation

– Ma$ing the eucation %ore concrete groune the tea% in real i#cu##ion a4out gap# in

proce## $no"lege

)lanning proce##e# "ere in place prior to u#e of SC2

– It "a# clear to #enior %anage%ent that planning acro## the #upply chain "oul 4egin to

i#cipline e6ecution proce##e#

– )lanning proce##e# ha to 4e %ar$et riven o"ing to #trong cu#to%er focu# of culture

an e6ecution proce##e#

– 3ea% agree to %oify the planning proce## an aapt to infor%ation nee# of the

e6ecution activitie# a# "e %ove along

SC2 %ap# 4eca%e the e facto #tarting point to 4egin i#cu##ion#

– Supply-chain threa, Supply, Ma$e an eliver proce## type "a# u#e to uner#tan

lin$age# 4et"een organi:ation#

– 3ea% %e%4er# "ere not afrai to aapt the %oel to their purpo#e#

;#ing the SC2 fra%e"or$ #tructure the preparationan allo"e the tea% to focu# on re#ult#

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1

1

Internal )rouctelivery

Supplier ', o%e#tican 3hir )arty

S1

)1

)G)

M +

)rouctrgani:ation

Integration Facility

)urcha#ing Integration )urcha#ing,Integration& Shipping

)G

S1

)roNect Mgt.

SS+

)1

)+

Supplier#

Supplier ' ver#ea#

Cu#to%er#

S1

S1

S+

+M

MG

Sale#,M$ting p#,)roNect Mgt.an In#tall.

)G )+S1 Process existed

S1

S1

Process type

changed

Process is new

!egen

3he re#ulting #upply chain i# %ore ro4u#t anco#t efficient than the previou# proce##e#

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3otal ti%e to ra%p-up ne" proce## + %onth# prior to large#t volu%e#ale#?prouction cycle uring the year

2e#ult# are recogni:e throughout organi:ation

– reater re#pon#ivene## a%ong unit# "ith %ore #tanar proce##e# than e6ception#

– More co%%unication throughout the organi:ation o"ing to clear elineation of role# an

re#pon#i4ilitie#

0u#ine## re#ult# are in line "ith targete goal#A

Business Result Contributing Factors

Considerablesavings in productcosts

Lower levels of inventory in pipeline

Ability to integrate systems in house

Significant

reductionin delivery cycle

Planning function allows for more short

term inventory flexibility More efficient delivery execution

Beginning to seefew problems post-installation

More complete customer requirementsidentification in bid process

Fewer exceptions to the process leads toless rework

3he SC2 fra%e"or$ "a# in#tru%ental in achievinggroun4rea$ing re#ult# in a rapi fa#hion

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