3-11-11 Supply Chain Challenges

Supply Chain ChallengesIjaz YusufDirector Center for Supply Chain ResearchSchool of Business and EconomicsUniversity of Management and Technology, LahoreEmail: [email protected] [email protected]

Cell: 03054440603 , 0333-4302970

Email: [email protected] Cell: 03054440603

Email: [email protected] Cell: 03054440603Logistical Performance Index (LPI)

Int LPI RankCountryLPICustomsInfra-structureInternational ShipmentsLogistics CompetenceTracking and tracingTimeliness1Germany4.114.004.343.664.144.184.487Japan3.973.794.193.554.004.134.2615USA3.863.684.153.213.924.174.1927China3.493.163.543.313.493.553.9139Malaysia3.443.113.503.503.343.323.8647India3.122.702.913.133.163.143.6179Bangladesh2.742.332.492.992.442.643.46110Pakistan2.532.052.082.912.282.643.08155Somalia1.341.331.501.331.331.171.38


GovernmentCustoms (Laws, SRO, Duties, Levies etc)Infrastructure (Road Density, Ports, etc)Implicit (Exchange Rate, Political Stability, Good Governance)

AcademiaTracking and Tracing (Systems, IT, Products etc)Timeliness (Systems, Attitude, Behaviour etc)Logistics Competence (Systems, KPI, LPI etc)

Corporate World International ShipmentsLogistics Competence Stakeholders of LPI

Email: [email protected] Cell: 03054440603InfrastructureInternational ShipmentsLogistics CompetenceTracking and TracingCustomsTimelinessLinkages among Govt, Academia & Corporate World


Implicit ChallengesExplicit ChallengesTypes of Challenges

Implicit ChallengesCustomer FocusOn time deliveryQuality as per agreed specificationsCollaborationWin-Win ApproachSupplier / Partnership Relationship Cost Control

Explicit ChallengesInnovation and CreativityGlobalizationSupply Chain VolatilityRisk ManagementJIT InventorySearching for Working Capital Intellectual Property Interchange StandardizationGlobal Eye for Consumer Product SafetyResurgence of LOCShortening Cycle TimeVolatility in Energy, Exchange RateFree Trade AgreementsCertifications like Legacy Act

Innovation and Creativity Quality Circles Idea Boxes Kaizen Teams Kaizen Blitz Small Group Activities Out of Box Thinking Awards Process Improvement Teams



GlobalizationKnow the cultures, languages, laws, customsLearn to optimize beyond the corporate and supply chain spheres of influenceExploit global efficienciesEnhance value with dynamic optimization.Optimize pipeline inventory, the global supply chain network and cost structures.Create cost-efficient sustainable products and practices while hedging risks with partners.



Supply Chain VolatilityOscillatory waveform of exchange rateMarket transparencyFluctuating price sensitivity LevelAffect of Global commoditiesAbsence of price regulatory bodies



Risk Management Risk and opportunity management should span the entire supply chain---From demand planning to expansion of manufacturing capacity--- Cash Coverage--- Disruption of Quality--- Financial uncertainties of the partner



JIT Inventories JIT inventory is the result ofJIT MindsetInformation integrationCo-ordinationResource sharingOrganizational relationship linkages



Searching for Working Capital

Buyers look to extend their payment terms whereas suppliers want receive- able quickly to manage the supply chain finance.To look their trade flows to derive to create additional liquidity To mitigate the brewing payables/receivables conflict


Intellectual Property Interchange Standardization Establish standards for generalized and industry specific solutionsDesign and develop taxonomies, terms, technical jargon and semantics generalized and industry specificNeed standardized syntax and schemes for expressing and interchanging intellectual property and another business information Email: [email protected] Cell: 03054440603

Global Eye for Consumer Product SafetyEstablish safety standards and regulations especially for children productsIn November 2008, representatives from China, the European Union and the United States met in Brussels for the first high-level trilateral summit on product safety to discuss key developments and further joint activities to improve cooperation and the exchange of information relating to consumer product safety. for generalized and industry specific solutionsEmail: [email protected] Cell: 03054440603

Resurgence in the use of letters of credit to facilitate the financing of international trade. With credit getting tighter in all sectors, the supply of letters of credit have been declining while the cost has risen dramatically

For the right borrower and the right transaction there are still deals to be done, but the market will remain tight for the near future." . Resurgence in letter of Credit

Customer FocusGuranteed delivery on mutual agreed dateDefect free suppliesNo inventory riskAbility to respond quickly to changes in market demand and competitorsA level playing field for constrained products


Supply Chain Risk Mitigation in economics downturn

Supplier Financial riskExtending the payment periodUnpredictable economic recoveriesVolatility in energy, currency exchange rate, world commodity, labour rates Email: [email protected] Cell: 03054440603


Shortening the Supply ChainManufacturing will continue to recongiure their supply chain by moving operations and sourcing points near to customers warehouse


The main objective of this paper is to understand scm and explore the various challenges and opportunities evolving day by day. Firms from established and mature economies are increasingly expanding into emerging markets. Globalization forced companies to change their competitive priorities and redesign the supply chain aggressively with a global focus. For some companies the driving factor is the new market for its products and for some other it is the access to new suppliers or raw materials from any where from the world at low cost, for a third it is about lowering the cost of manufacturing and services through outsourcing . Regardless of a galore of opportunities there are many common supply chain challenges as they enter or expand their business in emerging markets: new risk of disruption of quality, financial uncertainties of the partner, unfamiliar cultures, varied infrastructure, historical reasons and rapid growth and change. Globalization ,vertical disintegration, outsourcing and off-shoring, shorter product life cycles, lesser lead time, JIT inventory are also some factors which led to challenges like information integration, co-ordination and resource sharing, organisational relationship linkage. Information is the power of modern scm. A company with modern technology and having and effective supply chain management system with information integration as its foundation will have a definite edge over competitors and various scm challenges Email: [email protected] Cell: 03054440603


Main Challenges - Identify Right System Requirements Select Right Solution Depute Right Implementation Team Provide Right Time frame with Right Methodology Email: [email protected] Cell: 03054440603


Real-time, KPI-Driven, visibility across the extended supply chain 2. Purpose driven (composite) applications that can orchestrate transactional lifecycle in heterogeneous environments (Order-to-Cash: Order Fulfillment) 3. Ability to "fix" broken processes so that they can be routed through the normal path quickly and efficientlyEmail: [email protected] Cell: 03054440603


My biggest headaches in supply chain are as follows not in any particular order: 1) Training. We have the most educated people in the world but too few of them understand how to CONTROL our supply chain. Our team is empowered to make decisions e.g. delaying purchasing, holding outbound trucks, expediting parts, but too few of our people understand the impact to the complete supply chain and the risks to our customers and their end users. 2) Impact assessment. We deal with thousands of customer order changes per week. Each one of the changes cascades through the supply chain. Assessing cost impacts correctly so we can pass them on to our customers and vetting the costs against customer contracts is a non-trivial task. 3) Supply chain software. We do not need fancy programs to manage the supply chain effectively. What we do need is data. Trying to get a system set up that uses one data nomenclature for all countries, trade zones, suppliers, customers, warehouses, production facilites is a huge taskEmail: [email protected] Cell: 03054440603


Key challenges of supply chain management are First Challenge : Lack of Global supply chain view among stakeholders Making all stakeholders understand value of global optimization. Typically this is due to historic reasons. The integrated supply chain management systems provide opportunity for global optimization. But the silo based legacy supply chain management structures and processes had created a mindset of silo optimization. One of the key challenge is to generate this overall view to the stakeholders of supply chain management. Second challenge : Misalignment of organization structures Current organization structures do not help capitalize on the opportunities in managing supply chain more efficiently. These structures are supported by performance requirements that support silo thinking. Third challenge : Lack of suitable business models Supply chain business eco system is more fragmented and less streamlined. Participants in the eco system try to maximize value within their boundaries leaving overall supply chain efficiency for a toss. posted January 8,



This is the third in a series of Supply Chain Matters posts that responds to a challenge among the blogsphere community of supply chain bloggers to offer some thoughts on the seven grand challenges for supply chain management for the next ten to twenty years. The notion of seven challenges was motivated from a recent Gartner research theme that outlines The Seven Great Challenges for IT.In my part one and part two posts on this topic, I outlined what I believe to be the first five grand challenges, namely:-Ubiquity of Portable Computing Leading to Sensory Networks-True Supply Chain Business Intelligence and Decision Making Tools-Managing the Explosion of Data and Information Needs Involved in Global Based Value Chains- Managing Supply Chain Risk Management on a Global Basis- Resolving of Who Assumes Ownership for the Extended Supply Chain?



To understand the potential risks, one must understand the key ingredients which make C-Level Supply Chain Executives successful. A good white-paper written by William V. Fello and Peter Everaert for Korn/Ferry International, The New Supply Chain Executive: Using the Integrated Supply Chain as a Competitive Weapon lists five ingredients:1) A seat at the strategic decision-making table 2) Cross-functional expertise and relationships3) Strong customer and supplier relationships 4) A global mindset 5) Demonstrated success as a change-agentWhen you examine the list, two items stand out as the greatest potential risks: Cross-functional expertise and relationships and strong customer and supplier relationships



The study sets out a five point agenda for chief operating officers over the next two years: 1. Improve customer access and accuracy of supply chain planning2. Increase upstream and downstream supply chain flexibility 3. Focus on total supply chain cost engineering 4. Implement end-to-end supply chain risk management 5. Integrate and empower supply chain organisation Ultimately, the report said: The main challenge for many companies is not to redefine their organisation models, but to transition and manage the organisational change. To make a truly empowered supply chain organisation work, companies first must determine what their target models should look like and persuade senior management to make the required changes. To make an integrated supply chain work, it is essential to train and acquire top talent with end-to-end supply chain knowledge.



The five trends identified by the study are: 1: Supply chain volatility and uncertainty have permanently increased Market transparency and greater price sensitivity have led to lower customer loyalty. Product commoditisation reduces true differentiation in the consumer and business-to- business environments.2: Securing growth requires truly global customer and supplier networks Future market growth depends on international customers and customised products. Increased supply chain globalisation and complexity need to be managed effectively.3: Market dynamics demand regional, cost-optimised supply chain configurations Customer requirements and competitors necessitate regionally tailored supply chains and product offerings. End-to-end supply chain cost optimisation will be critical.4: Risk management involves the end-to-end supply chain Risk and opportunity management should span the entire supply chainfrom demand planning to expansion of manufacturing capacityand should include the supply chains of key partners.5: Existing supply chain organisation are not truly integrated and empowered The supply chain organisation needs to be treated as a single integrated organisation. To be effective, significant improvements require support across all supply chain functions.The survey found that many participants were driven by short-term exigencies and did not strengthen critical capabilities during the recession.



Using supply chain technology to reduce operating expenses Supply chain technology helps consumer goods companies reduce inventory investments while maintaining or improving customer service levels. Using supply chain applications, manufacturers can invest in inventory that has the potential to contribute greater profitability while meeting customer expectations. One way is by gaining insight into opportunities related to the tradeoffs of customer service and the corresponding inventory investment requirements. For example, companies can compare the cost of 98 per cent service levels to 97 per cent, or see the impact of leveraging time-phase inventory policies to deliver 99 per cent service levels during peak seasons versus 97 per cent during slower periods. Regardless of the final strategy, the optimal inventory plan is one that reduces inventory investments, avoids stock-outs, minimizes obsolete inventory and provides better visibility of procurement and product needs while improving customer service. Supply chain planning solutions analyse the tradeoffs of various inventory strategies across a wide spectrum of customers, products and distribution centres and consider market factors like seasonality, promotions and new product introductions.Second, technology helps synchronize and balance the two opposing business objectives of achieving ultimate customer service at a low cost. Most businesses want to have a very high customer service level, but they want to do so at the lowest total cost possible. Supply chain technology can help companies assess tradeoffs to meet their customer's needs, but in a way that allows them to make a profit. Supply chain planning helps dramatically increase forecast accuracy, streamline product introductions, assess promotions and create plans attuned to the market, and supply chain execution provides transportation, warehousing and inventory management to ensure cost-effective order fulfilment and on-time deliveries. production optimization starts with a good demand forecastThe third area where supply chain technology can favourably impact operating expense is through production optimization. Companies must make sure that their manufacturing resources are producing the products most likely to sell at the time the consumer wants to buy. Again, production optimization starts with a good demand forecastcompanies must know what products to make, when, how much and in what sequences to manufacture, and where they need to go.



Choosing between ERP and best-of-breed supply chain solutions Most consumer goods companies agree that supply chain responsiveness offers a competitive advantage. The key is time-to-benefit, and the questions a consumer goods manufacturer should ask both ERP and best-of-breed vendors are: Whats your average implementation time? Can the solution be easily integrated with my current ERP system? How many resources are needed to implement the system? And, once its up and running, how many people are required to maintain the solution? How well does the system satisfy my current business needs? How flexible is the system to adapt to my changing business needs over time? Do I have to upgrade the entire ERP system in order to take advantage of the latest innovations in supply chain technology?Email: [email protected] Cell: 03054440603


Creating a demand-driven supply chain Theres a new supply chain game in town. According to AMR Research, a demand-driven supply network is a system of technologies and processes that senses and responses to real-time demand signals across a network of customers, suppliers and employees.To support a demand-driven supply chain, consumer goods companies must employ performance-driven supply chain practices, such as continuous business monitoring and proactive alert notification, which give them complete global visibility across their supply networks to adapt to changes in demand and adjust accordingly based on real-time insight into worldwide operations. Additionally, a reliable global demand plan provides the foundation for sales and operations planning (S&OP) which helps consumer goods companies better align daily operational activities with strategic corporate objectives; more effectively balance supply and demand; and make better-informed decisions that impact both the top and bottom lines.supply chain responsiveness offers a competitive advantage



But lack of collaboration and integration between supply chain and product development partners continues to be a major concern, Butner said.Email: [email protected] Cell: 03054440603


According to Butner, global economic turmoil and uncertainty underlie the most significant challenges supply chain management executives identified in our study.Chief among these challenges are fluctuation in customer demand and variances in customer requirements. She also noted that as the number of supply chain partners increases, the need for accurate, time-sensitive information becomes more acute. Email: [email protected] Cell: 03054440603


There is, and seemingly always has been, constant pressure for supply chain management and operations to create enterprise value, the study noted. End-to-end supply chain cost and pipeline inventory optimization are predominant challenges, as well as the means for protecting margin and decreasing working capitalEmail: [email protected] Cell: 03054440603


Elements of QC FrameworkElements QC of FrameworkExecutives CommitteeOperating CommitteeQuality CirclesFacilitator and His team

Email: [email protected] Cell: 03054440603More Free Trade Agreements


Usage of encryption technology within their products must be banned to stop the product failure issues Useage of Encryption technology within their products

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3-11-11 Supply Chain Challenges