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SCM needs to be looked at from competitiveness point of view. SC can be made competitive by investing rightly into various priorities.
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Supply Chain
Management for Global
Competitiveness
S G Deshmukh ABV-Indian Institute of Information Technology & Management , Gwalior
Int Conference on Managing Supply Chain for Global Competitiveness
IIIE and RCOEM Nagpur 25 Oct 2013 1
Acknowledgement This presentation is based on extensive
information sharing sessions with Prof R P Mohanty (VC, SOA)
Prof Manoj Tiwari (IIT Kgp), Prof Ravi Shanker(IITD), Dr Jitesh Thakkar (IITKgp)
Thankful to numerous research scholars and faculty members from various institutes for making us realize the importance of SCM in today's competitive scenario.
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Before I begin..
You may look at some of my presentations
available at
http://www.slideshare.net/SanjeevDeshmukh/presentations
3
Speaking points.. About SCM.
Imperatives & Implications
1: Shelf life
2: Digital environment everywhere
3: Sharing & Connectivity
Global competitiveness report
Implications for SCM
Closing remarks..
4
IT is making world flatter ! (Thanks to Friedman)
Outsourcing dominated paradigm Team work and leadership assumes new meaning Geography has become history: Time and distance are no
longer the important variables Mobile dense and multimedia rich environment has accelerated
digital environment. Connectivity has made the global village possible Working on-line, flexi-time, tele/videoconferencing, and
continuous learning are changing the traditional notions of how work gets done.
Internet is changing the way we communicate with –
Source : Fridman, T L, The World is flat: Farrar, Straus & Giroux , 2005
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Observations..
Transformation taking place
The way we communicate has changed. SCM is no exception to this !
Traditional way of conducting business has drastically changed.
Demanding customers and changing technology
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Supply Chain Management..
..a network of facilities and
distribution options that performs
the functions of procurement of
materials, transformation of these
materials into intermediate and
finished products and the
distribution of these finished
products to customers…..
Mohanty R P & Deshmukh S G,(ed,) 2011, Handbook of Supply Chain Management, Excel Books
Today's market..
increasingly competitive markets with new entrants providing superior products and services
visible shift from seller to a buyer's market with increasing consumer emphasis on price and quality
the necessity for an industry to succeed in globalised economy.
Today's customer
Very much enlightened ?
Guided /influenced by web/mobile/media
Short attention/retention span ?
Has now options, as he can choose, what he would like to buy from various alternatives, and also he can dictate terms.
Youthful? Energetic? Ready to spend ?
Observations.. Supply Chain Management has matured as a
discipline
Developments in IT have made integration possible
Basic issues in SCM : Management of Material Flow, Information Flow and Money Flow
Basic principles can be applied to a variety of contexts
Goal of SCM…
“to manage upstream and downstream relationships with suppliers and customers
in order to create enhanced value in the final market place at less cost to the supply chain as a whole”
M Christopher
Typical key words in SCM..
Integration
Interfaces
Sharing
Collaboration
Inventory
Information
IT
Insights..
Inventory manifests in various forms
Inventory and information can be exchanged
Managing lead time helps in management of inventory
Modelling helps in understanding issues from a different perspective
Performance needs to be measured on various dimensions (hence BSC, SCOR etc.)
Imperative 1: Shortened product shelf life
Web enabled world: Number of ideas getting generated, developed and produced
Faster product life cycle
Shelf life has shortened considerably (example: mobile phones, tablets)
Pressure on manufacturing
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Implications
You have to update continuously and must know the state-of-the-art
You have to innovate continuously
Continuous up gradation about customer feedback
Proper synchronization between design, operations and supply chain
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Imperative 2: Digital environment everywhere !
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Implications
You can not afford to be invisible in the digital world
Someone is going to measure you and make you visible !
You and your products/services are constantly indexed, searched
You are also under constant onslaught of new and emerging ideas !
Your availability 24x 7 basis ! 18
Imperative 3 : Sharing & connectivity !
Connecting with suppliers and customers
Sharing of information
Professional networks
Social networks
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Implications
Sharing of information/Knowledge made easy through IT
You must share and connect
Your collaborator may be anywhere in the globe available 24 x 7 basis
Power & influence of social media as a binder!
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Example: Apple vs Amazon ?
http://blog.kinaxis.com/2012/12/apples-and-oranges-well-actually-apple-and-amazon/ Miles Trevor Blog 13 Dec 2012
Comparison on…
Agility – the ability to quickly and cost-effectively shift
amounts and/or types of production and delivery to
improve operational performance in volatile conditions
Collaboration – the ability to work across organizational
boundaries to solve systemic operational problems and
create new value for both customers and partners
Execution – the consistent and reliable delivery against
commitments and within budgeted expenses
Innovation- http://blog.kinaxis.com/2012/12/apples-and-oranges-well-actually-apple-and-amazon/ Miles Trevor Blog 13 Dec 2012
Why talk about competitiveness?
Traditional thinking: competition is driven by the 4P’s Today: supply chain capabilities determine competitiveness!
Wal-Mart versus K-Mart
Compaq/HP versus Dell
A final product is not the sole goal
Customer experience is determined by supply chain: quality, cost, delivery
Significant proportion of value sourced from suppliers!
Supply chains are connected systems enabled by IT
Competitiveness of one tier is a function of the supply and distribution functions,
i.e. surrounding tiers.
“Value Chains compete, not individual companies!” (Christopher 1992)
Creating a competitive supply chain
1. Develop strategic objectives and tactics, decide competitive priorities
2. Integrate and coordinate various activities in the internal supply chain through IT
3. Coordinate activities with suppliers with customers in a collaborative manner
4. Coordinate planning and execution across the supply chain in a digital environment
5. Form strategic partnerships
Supply Chain : Competitive priorities
1. Quality
2. Cost
3. Flexibility
4. Velocity
5. Customer service
Velocity
Inventory velocity
The rate at which inventory(material) goes through the supply chain
Information velocity
The rate at which information is communicated in a supply chain
Competitive priorities : Sand Cone Model
Quality
Flexibility & Velocity
Customer service
Cost
Barriers to integration of organizations
Getting top management on board
Dealing with trade-offs
Small businesses
Variability and uncertainty
Long lead times
Challenges
Supply Chain Issues
Production planning and control
Inventory policies Purchasing policies Production policies Transportation policies
Design of the supply chain, partnering
Operating Issues Tactical Issues Strategic Issues
Long term strategy
Enhance focus on competitiveness Creating conditions for investment in and growth of the
manufacturing sector Lowering the cost of manufacturing Investing in innovations Strengthening education and training at all levels Adoption of global best practices in SCM Right market framework, competition and regulation Issues relating to competitiveness in small and medium
industries Infrastructure development
Perspectives on competitiveness Competitiveness is a concept comprising of the potential, the process and the performance.
GMR (2001)
To be competitive, several factors must exist: the desire to win, commitment or perseverance and the availability of certain resources.
Khalil (2000)
Competitiveness is defined in terms of ‘helping business to win’, ‘price’, product range and quality and ‘distribution and marketing’.
Dou and Hardwick(1998)
Competitiveness arises or results from firm-specific initiatives like: better management, leveraging and stretching of resources.
Hamel and Prahlad (1993)
Ability to design, produce and /or market products or services superior to those offered by competitors, considering the price and non-price qualities.
Cruz and Rugman(1992)
Competitiveness is synonymous with productivity and is assumed To capture quality feature as well as efficiency feature.
Porter (1990)
Competitiveness is the ability to raise income as rapidly as competitors and to make investments necessary to keep up with Them in the future.
Scott (1989)
Extent to which a business sector offers potential for growth and attractive return on investment
WCR(1994)
Competitiveness..
Extent to which a business sector satisfies the needs of customers from the appropriate combination of the following product/service characteristics: price, quality, innovation , and satisfies the needs of its constituents; for example, workers in terms of involvement, benefit programmes, training, and safe workplace; offers attractive return on investment and also offers the potential for profitable growth.
Company competitiveness is defined as "the ability to design, produce and/or market products superior to those offered by competitors, considering the price and non-price qualities" (WCR, 1991).
Global Competitiveness..
The Global Competitiveness Report 2012-13, published 5th. Sept 2012
Ranking of 144 countries on 12 selected criteria
http://www.weforum.org/issues/global-competitiveness
The Global Competitiveness Report
Launched in 1979 covering 112 countries
Goal: to provide a benchmarking tool for policymakers and business leaders
Today 144 countries in the gambit
Definition of competitiveness
“The set of institutions, policies, and factors that determine the level of productivity of a country”
The level of productivity, in turn, sets the sustainable level of prosperity that can be
earned by an economy.
Source: GCR, 2011
Global Competitiveness Index framework
A. Basic Requirements B. Efficiency Enhancers C. Innovation & Sophistication Factors
5. Higher education and training
6. Goods market efficiency
7. Labor market efficiency
8. Financial market development
9. Technological readiness
10. Market Size
11. Business sophistication
12. Innovation
3. Macroeconomic environment
2. Infrastructure
4. Health and primary education
1. Institutions
Key for efficiency-driven
economies
Key for innovation-driven
economies
Key for factor-driven
economies
The Global Competitiveness Index
Global Competitiveness Index 2012-13
select economies ranking http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf
Rank
(Out of 144) Economy Score
1 Switzerland 5.72 2 Singapore 5.67 3 Finland 5.67 7 United States 5.47 8 United Kingdom 5.45 10 Japan 5.40 13 Taiwan 5.28 20 Australia 5.12 29 China 4.83 32 Oman 4.62 37 Kuwait 4.56 59 India 4.32
65 Philippines 4.26
The Global Competitiveness Report 12 Pillars of competitiveness
•Institutions •Infrastructure •Macro-economic environnent. •Health & basic education
•Higher education & training •Market efficiency – goods •Market efficiency – labour •Market efficiency –finance •Technological readiness •Market size
•Business sophistication •Innovation
factor-driven
economies
efficiency-driven
economies
innovation-driven
economies
GCR economies.. Source: http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf
Stage Labeled as No Examples
Stage 1 Factor driven economy 38 Countries
India, Kenya, Ghana
Transition from Stage 1 to 2 17 Countries
Egypt, Libya, Srilanka
Stage 2 Efficiency driven economy 33 countries
China,Indonesia,Thailand
Transition from Stage 2 to 3 21 countries
Argentina, Chile, Malaysia
Stage 3 Innovation driven economy 35 Countries
Australia, UK, USA
Total 144 countries
Institutions
Infrastructure
Macroeconomic environment
Health and primary education
Higher education and training
Goods market efficiency
Labor market efficiency
Financial market development
Technological readiness
Market size
Business sophistication
Innovation
Global Competitiveness Index
Goods market efficiency components
Intensity of local competition
Extent of market dominance
Effectiveness of anti-monopoly policy
Extent and effect of taxation
Total tax rate Number of procedures required to start a business
Time required to start a business
Agricultural policy costs
Prevalence of trade barriers
Trade tariffs
Prevalence of foreign ownership
Business impact of rules on FDI
Burden of customs procedures
Imports as a percentage of GDP
Degree of customer orientation
Buyer sophistication
Financial market development
components
Availability of financial services
Affordability of financial services
Financing through local equity
market
Ease of access to loans
Venture capital availability
Restriction on capital flows
Soundness of banks
Regulation of securities exchanges
Legal rights index
Institutions
Infrastructure
Macroeconomic environment
Health and primary education
Higher education and training
Goods market efficiency
Labor market efficiency
Financial market development
Technological readiness
Market size
Business sophistication
Innovation
Global Competitiveness Index
Business sophistication components
Local supplier quantity
Local supplier quality
State of cluster development
Nature of competitive advantage
Value chain breadth
Control of international distribution
Production process sophistication
Extent of marketing
Willingness to delegate authority
Reliance on professional management
Institutions
Infrastructure
Macroeconomic environment
Health and primary education
Higher education and training
Goods market efficiency
Labor market efficiency
Financial market development
Technological readiness
Market size
Business sophistication
Innovation
Global Competitiveness Index areas for improvement
Innovation components
Capacity for innovation
Quality of scientific research institutions
Company spending on R&D
University-industry collaboration in R&D
Government procurement of advanced technology products
Availability of scientists and engineers
Utility patents per million population
Institutions
Infrastructure
Macroeconomic environment
Health and primary education
Higher education and training
Goods market efficiency
Labor market efficiency
Financial market development
Technological readiness
Market size
Business sophistication
Innovation
Global Competitiveness Index
Implications of GCR..
Various activities in SCM can enhance competitiveness: Example: Infrastructure, Penetration of ICT, Business sophistication, Innovation etc.tor
Competitiveness can be visualized at
Industry level
Sectorial level
National level
Global level
Closing remarks..
Digital environment and IT has made
SC a challenging task
Merging of product and service supply chains
Several issues in SCM
Framework of Global Competitiveness report provides an opportunity for improvement in SC
Well Known Conferences for Practitioners in SCM
Council of SCM Professionals Conference
POMS Conference
Gartner Supply Chain Executive Conference (17-18 Sep , 2012 at London, UK)
Useful web resources …
http://www.theferrarigroup.com/supply-chain-matters/
http://blog.kinaxis.com/
http://www.scmr.com/blogs
Thank you & stay in touch..
http://www.slideshare.net/SanjeevDeshmukh
http://sgdeshmuk.blogspot.in/
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