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© GRA 2015 1
SUPERIOR SUPPLY CHAINSLEAD TO BUSINESS
IMPROVEMENT
GRA Supply Chain Presentation
How your supply chain can be a source of competitive advantage
© GRA 2015 2© 2
18 year history
35 supply chain
professionals
Australia & Asia
Turn Supply Chains into a Competitive Advantage
ConsultingProfessional
ServicesSystems
Training & Education
Benchmarking
• Supply chain strategy, planning & execution specialists
• Australia’s premier specialist supply chain firm
• Work at strategic, operational & implementation levels
• Sophisticated yet practical
• Consistent track record of delivering sustainable capital, cost & service results
GRA Overview…
© GRA 2015 3
Ap
pa
rel
Au
tom
oti
ve
/A
ero
sp
ace
He
alt
h &
Ph
arm
a
Co
nstr
ucti
on
& B
uil
din
gM
inin
g &
Re
so
urc
es
De
fen
ce
Se
rvic
es &
Te
ch
no
log
y
Re
tail
Ma
nu
factu
rin
g &
Dis
trib
uti
on
Fo
od
& B
eve
rag
e
Supply Chains Today…
Evolution of Supply Chain over the last two decades…
• Over the last 10-15 years the view of supply chain has matured from a necessary evil to a strategic function.
– Even the role of the supply chain manager has evolved from back-room cost centre manager to boardroom executive. We are even seeing a higher proportion of CEO’s from supply chain roots - Tim Cook, CEO Apple being a great example.
© GRA 2015 5
The opportunity and the resultant substantial improvements in working capital, cost and service levels, improved profitability, asset turnover and key financial ratios, already exist in the company; the key is to
release what is already yours.
The reason for this evolution from cost centre to competitive advantage is because driving performance out of an organisation’s
supply chain remains one of the most significant and accessible step-change opportunities that a company can undertake.
The opportunity in Supply Chain - from cost centre to competitive advantage.
Supply chains look to balance storage
& flows
Asset utilisation (Trucks/DC’s) vs.
Inventory holdings/cost
What do we mean when we talk about ‘Supply Chains’?
• Not just…
• But also…
© GRA 2015 6
Warehouses Trucks
Demand Planning
ReplenishmentInventory
Optimisation
We see supply chains as the storage and flow of inventory from source through to destination.
Operations
Strategy
Supply Chain Excellence…
Supply chains are a highly interdependent system responsible for delivering a company’s customer value proposition in alignment with the Business Strategy.
© GRA 2015 7
Business Strategy
Supply Chain Strategy Customer Value Proposition
ProcessPeople DataSystems
Organisational Capability
Informed Supply Chain
Decisions
Results Delivery
Warehouse & Logistics
Sales & Operations Planning (S&OP) or (IBP)
Demand Planning
Supply Planning
Inventory Optimisation
KPIs, Policies & Structures
Australian Supply Chain Challenges
Australian Supply Chain Challenges
© GRA 2015 9
PopulationEurope = 743m
PopulationAustralia = 23m
Large Country. Low Population Density.
GER
How are Supply Chains Changing?
11
The emergence of the internet, low cost communications and ‘big data’ is rapidly increasing customer expectations – for supply chains this is being manifested in the desire for greater agility
Customer expectations
increasing……driving supply chain design
considerations…
…mostly to balance
agility/responsiveness with
cost
Internet
Low Cost
Communicatio
ns
Information
Processing
Expectations
Price
sensitivity in
supply chain
Product
proliferation
Shorter lead
times
Balance will be dependant on
industry and company value
proposition
Cost
Sensitivit
y
Availabilit
y of
range
Responsi
ve-ness
Consumer Led Industry Led
EG. Grocery,
electronics, whitegoods,
furniture
E.G. Auto, Auto Aftermarket,
components etc
HIGH
HIGH HIGH
HIGH
LOW
LOW
EFFECIENT RESPONSIVEBUSINESS
MODEL
Efficiency
Responsiven
ess
Costs
High
Low
Short Long
Current
Strategy
Source: GRA (2015)
When it goes wrong…
When it goes well…
Some key attributes of what works and what can go wrong online …
OrderStock Out
Partial Pick
Shipment
Incorrect
Shipment
Contact
Customer
Partial Pick
Delayed
Shipment
Return
Logistics
Re-stock
Unsatisfie
d
Customer
Re-pick
Re-ship
OrderStock
Available
Single Pick
and Pack
Speedy
Shipment
Happy
Customer
The difference in number of transactions involved, cost and ultimately customer satisfaction can be significant…
The Opportunity Today…
Global Entrants
Rise of Private Label
Increasing Product Range & Discounting. Shift to EDLP
Online Transformatio
n
Pressure on
profitability
How are Supply Chains Changing? – Macro view
© GRA 2015 14
Costco Wholesale
Australia's revenue
surged in 2015 to
$878.5 million.
Private label groceries now
account for 23 % of packaged
grocery sales in Australia and
household penetration has
reached 98 %.
As consumer expectation are increasing,
price strategies are becoming more
strategic and frequent. Every Day Low
Price is similarly becoming increasingly
common on the staple items to get
consumers in the door’.
Online is a game-changer - with multiple channels to interact & service
consumers, mobile technologies and a massive data opportunity – this is one
to watch closely! Already we are seeing click & collect via Woolworths as well
as Kogan pantry and Amazon fresh looking to disrupt supply chain norms.
Aldi has approximately
370 stores and could
reach 15 % market
share nationwide as it
opens in WA and SA
and adds approximately
20 stores a year in
eastern Australia.
What impact will a
new entrant have
on the market?
Macro Forces
Networks are being re-designed to provide competitive lead-
time responsiveness, primarily driven by online competition
Imports are becoming more prominent to reduce costs by
increasing margins via sourcing low cost goods and labour
overseas
Balancing Responsiveness and Cost
© GRA 2015 15
Cost Efficiency
Lead-time Responsiveness
High
Low
Short Long
Current
Strategy
A step change is occurring in the supply chain for all industries to reduce costs and increase responsiveness.
Supply Chain Investments Today…
• Today, we are seeing a considerable amount of investment in new supply chain systems, better collaboration (with customers & suppliers) and new infrastructure (warehousing, rail, etc.). We have also seen the rise of optimisation, just in time, lean and agile supply chains.
© GRA 2015 16
Organisation (e.g. Retailer, Manufacturer,
FMCG, etc.)Supplier Customer
Supply Chains are expanding
This missing link in Supply Chains…
© GRA 2015 17
Despite the rise of investment in supply chains only a handful of organisations have experienced astep-change improvement in business performance.
In our experience we have noted three key attributes of company’s who hold their supply chain as asource of competitive advantage:
Business Strategy
Supply Chain Strategy Customer Value Proposition
Demand Planning
Supply Planning
Inventory Optimisation
1
2
3
• A clearly defined supply chain strategy that is linked to the business strategy and responsible for delivery of the customer value proposition.
• Framework such as S&OP or IBP to bridge the strategic and operational ends of the business – effectively operationalising the strategy.
• Effective Planning capability as the core foundation, ensuring visibility and forward looking decision-making. This planning capability is driven by the people, process, systems & data.
• This is often what we find to be the missing link.
OperationsStrategy S&OP
Po
rtfo
lio
Re
vie
w
Opportunities & Threats (Market/Portfolio)
New Product Development
De-Ranging Products
De
ma
nd
Re
vie
w
Identify Unconstrained Demand
Measure Sales Forecast vs. Actual
Identify activities to close gaps
Su
pp
ly R
evie
w
Identify Constrained Response to Unconstrained Demand
Measure Operational, Plant & Supply Performance
Identify activities to close gaps
Inte
rgra
ted
R
evie
w
Resolve Imbalances between Supply and Demand
Determine agenda items for Executive S&OP
Ex
ecu
tive
S&
OP
Review & Approve Demand and Supply plans, Financial plans, Strategic Business goals and any unresolved issues
Set Strategic Direction and filter to functional groups
ProcessPeople DataSystems
The Opportunity Tomorrow…
Amazon – Anticipatory Shipping
Amazon Wants to Ship Your Package Before You Buy It.
1. Today, Amazon receives an order, then labels packages with addresses at its warehouses and loads them onto waiting UPS, USPS or other trucks, which may take them directly to customers’ homes or load them onto other trucks for final delivery.
2. Amazon are looking to box and ship products it expects customers in a specific area will want – based on previous orders and other factors — but haven’t yet ordered.
3. The key is predictive analytics. Leveraging browsing and transactional information captured during online interactions, Amazon can model likely customer behaviour and send products to the customer before the order.
© GRA 2015 19
Click and Collect
• Companies are forming partnerships to enable “Click and Collect”
– And the “collect” location is changing…
• Today = Your local Woolworths
• Tomorrow = The boot of your car? Mobile technology can enable this. Or your local train station?
© GRA 2015 20
Last Mile Fulfilment
• Can we leverage a sharing economy to connect consumer and build a distribution network?
– Today Uber Black has transition into Uber X – where random people, drive random people around….
– So what about… random people driving random packages around? This would solve many online last mile fulfilment challenges – significantly reducing costs… Say you put into Google maps you want to travel from A to B.
• A package needs to be delivered by A to B…
– You are then prompted and given the incentivised option to deliver this package
© GRA 2015 21
Agile Supply Chains: Additive Manufacturing – 3D Printing
© GRA 2015 22
Cash
Generation
Market
Position
Now
• Production Prototypes • Small MFG runs of High Value/High Complexity products • Dental/Aural healthcare forms/aids
Soon
• Almost all service parts • Complex high volume/high value forms • Products related to fashion/trends that have a high volume/short lifespan profile
Later
• Mass produced fast moving consumer goods
3D Printing is likely to have the following impact on the supply chain:• Realise lower component costs by eliminating supplier margins• Reduce cost of carry by holding more optimal levels of inventory• Improve assembly cycle times, and reduce risk and impact of part/component stock outs• Reduced transport/logistics costs by sourcing components/parts locally & assembling finished goods locally
What's the key message…?
It is an exciting time in Supply Chain …
© GRA 2015 24
• We need to drive improvements within our business to harness the opportunities within our control
– Strategy, Customer Value Proposition and Supply Chain Strategy
– Supply chain planning and execution
• New technologies continue to provide new business opportunities and ways to engage with our customers …
• There is potential for disruption … do we ignore, engage or lead?
Video Presentation
You can view James Allt-Graham deliver this presentation at the Supply Chain Forum 2015 in Sydney at the following link:
http://www.gra.net.au/resources/insights-and-publications/2015/08/97-video-
superior-supply-chains-lead-to-business-improvement
Or click Supply Chain Forum presentation.
Take action
GRA is Australia’s premier, expert consulting firm specialising in supply chain & logistics strategy, planning and
execution. We offer consulting, professional services, supply chain systems, training & education and
benchmarking across a broad range of industries.
At GRA we understand the complexity of Supply Chain Management
We are Australia’s premier expert consulting firm specialising in supply chain and
logistics strategy, planning and execution.
We offer Consulting, Professional Services, Systems, Training & Education and Benc
hmarking across a broad range of industries.
To find out more, call (03) 9421 4611 or visit www.gra.net.au
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