Reaching Out to Industry ! Philip McCormack HEAD of RESEARCH NITL
Centre of Excellence for Logistics and Supply Chain Efficiency
BuyMakeStoreMoveSell Traditionally these functions are managed in isolation and often operate at cross purposes What is the Supply Chain ?
Supply chain management integrates these functions by managing the information, material and financial flows BuyMakeStore Information and Money Information and Materials What is Supply Chain Management? MoveSell
Final Customer The source of real money Retailer Wholesaler Assembler Component Manufacturer Raw Material Supplier Every link matters PROFITPROFIT Supply Chain Management is not a zero sum game based on adversarial relationships.
Why is Supply Chain Management Important? Effective supply chain management can cut costs, improve service and enhance revenues and thats just the beginning Prof. P. Metz, MIT MIT Survey: Implementation of supply chain management in US resulted in: –50% reduction in inventory –40% improvement in on-time deliveries –27% reduction in order cycle time –Nine-fold reduction in out of stocks
Why is Supply Chain Management Important to Companies in Ireland? World Class Best Practice companies have endorsed the concept of supply chain management. Companies in Ireland will have to do the same if they are be competitive in world markets. Given Irelands peripheral location, companies based here must be better at supply chain management than companies in more favourable locations. Supply chain management shows that transport is only one, and not even the most important, cost in the total supply chain. Distance from raw material sources and markets need not be a disadvantage if companies in Ireland can be world class in the other supply chain management elements.
Why is Supply Chain Management Important to Companies in Ireland? These supply chain management elements include, for example: Agile and lean manufacturing; development of supplier partnerships; just in time inventory management; effective use of 3 rd party distribution and logistics service providers. If companies in Ireland can be world class in these they can successfully compete in world markets. The entire supply chain does not have to be in one country, so supply chain management allows Irish based companies compete in the world market as part of a global supply chain. E-business creates virtual supply chains.
Market-driven Customer Service Strategy Optimum Supply Chain Cost and Investment Competitive Advantage Through Integrated SCM Implementing Supply Chain Management
Customer Service Sets the Spec for Integrated SCM Market Driven Customer Service Strategy Performance Specification for Integrated Supply Chain Management
Improved Financial Performance Measures the Success of SCM Optimum Supply Chain Cost & Investment Financial Impact of Effective Supply Chain Management
Education & Training ResearchConsultancy Three Inter-dependent Activities
Awareness & Support Logistics Solutions NITL Website [www.nitl.ie] Annual Conference Technical Factsheets/Self Audit Packs Logistics Roadshows Logistics Statistics and Indices Supply Chain Management Directory Benchmarking Club
Rationale: Reaching Out to Industry Recent Logistics Capabilities study indicating 60% of Irish companies significantly deficient. Globalisation and e-Commerce leading to increased vulnerability to new competitive forces.
Rationale: Reaching Out to Industry NITLs experience is that the delivery of training without on-site support, has the potential to be of little effect, as managers, due to business pressures, often revert to type when returning to their companies. The point of departure being that of the companys needs.
The Survey 300 companies across Directorates Face to Face and telephone interviews 600 companies contacted 169 interviews completed –International Services sector reviewed, but not relevant –80% response rate from Food Sector companies –Survey fatigue
Findings Irish companies recognise the strategic importance of the individual logistics activities Customer service rates second to quality, and more important than price as a reason for doing business from the customers perspective Customer service, procurement and inventory management ranked 1-3 in order of importance for strategic development
Findings Irish companies do not see logistics as a broad based senior management function 14% companies had a logistics manager 4% had a Logistics Director 72% companies had the logistics activities divided among 3 or more managers
Findings Companies do not know their logistics costs, nor do they include all relevant costs 35% did not know their logistics costs 100% included transport costs Less than 50% of companies included other relevant logistics cost elements
Findings Companies in Ireland need to make significant improvements in the application of IT to logistics management Systems are not well integrated across the company / supply chain Systems do not capture real time data, share information with customers or suppliers Not using latest logistics systems technology
Findings Few companies have clearly defined performance measures They do not know / measure competitors performance They do not have clearly defined KPIs for logistics activities –51% do not measure customer service
Findings Transport and procurement are better managed than the other logistics activities 44% of companies hold obsolete inventory 35% of companies do not produce forecasts Of the 65% who do, 70% have a forecast period of less than one year 68% of companies had not reviewed warehousing costs
Outreach Objective: Bring 60% of companies up to a score of 60+ Evaluation: 30 companies selected with Enterprise Ireland
Four Key Elements Targeted and tailored logistics improvement activities for each individual company Hands-on support in the company Measurement of the effectiveness of the initiatives in terms of movement up the logistics management staircase. The creation of regionally based pockets of logistics excellence which will enhance the ability of other companies in those regions to benefit from NITLs activities.
Regionally Based 2 year logistics improvement programme 10 smaller and weaker companies from each of the three areas of... Waterford Galway Cork
Company Requirements Costs the individual companies nothing. Key staff to be sent to a series of structured logistics training workshops held regionally and involving all participating companies. Company commitment obligatory. Agreement on 7 one day visits & weekly phone calls from an experienced logistics consultant/researcher to review progress and plan actions.
Workshop Topics General Introduction to Logistics and SCM Warehousing, Operations Management and Control, Inventory Management. Strengthening Supply Chain Relationships including Supplier Evaluation and Customer Service Management.
Action Research Interventions The collection of both qualitative and quantitative information in order to assess the effectiveness of specified interventions Interventions and integrated training aimed at improving the companies performance in the following areas …..
Interventions & Integrated Training Supplier management Inbound transport Warehousing of raw material Production Planning Warehousing of work in progress Warehousing of finished goods Inventory management Order processing Outbound transport Customer service management Demand forecasting IT use and integration
Performance Indicators Turnover % exports Inventory levels Inventory turns Average cumulative order cycle times % on-time deliveries % order fill Logistics costs improvement
Outreach Company Selection Process - Close collaboration with the DMs & DAs. Initial visits locating company on logistics staircase Company specific programme development. Outline exact real world potential benefits to be realised. Ensuring commitment of individual companies. Final selection of nominated companies First visits to all companies completed Company appropriate intervention design and implementation initiated
Project Planning – Define Performance Spec Customer Service to Support Business Strategy Determine Optimum Logistics System Design No. location and size of W/H and DCs Plant sources and markets served Location and mission of manufacturing Vendor sources Product assignments Capacity rationalisation Operating Strategies Inventory deployment Inbound/outbound transport Manufacturing/Distribution trade-offs Organisation Information Max return on SC Assets Revenue/Profit Contribution Operating Costs/Savings Assets Employed
Typical Management SCM Concerns Distribution Network Optimisation Transport Cost Review Materials Management Integration and Optimisation Sales Forecasting Master Production Planning Raw Material/Spare Parts/Finished Goods Inventory Management and Deployment Customer Service Levels SCM Organisation Structure SCM Performance SCM MIS
Project Briefing Listening Opportunity to impress Suss out the issues Establish the scope of the project Establish availability of data Understand expectations
Project Proposal What is the Problem? Contents –Title –Background –Challenges/Issues –Project Mission and Deliverables –Project Approach –Project Work-steps –Project Management –Costs and Timings
Project Title Action oriented e.g. –Managing Consulting Projects –Reviewing Transport Costs –Developing a Logistics Strategy –Controlling Inventory Levels –etc
Project Background Tell the story of how the project developed Simple, chronological, bullet points End up with …… the proposal below sets out how the project would be conducted.
Project Mission & Deliverables Project Mission: one sentence summarising what the project is about. Project Deliverables: what the client will get - they should be real i.e. capable of being written on a piece of paper e.g. –list of logistics options –a recommended option –an implementation plan
Project Approach This is the skill of the analyst - the analytical approach How are you going to do the project? Generally –model current situation and validate –identify and evaluate options –develop recommendations –Implementation plan with dates and responsibilities –Phased representing analytical approach
Project Management Specifies who will manage the project Establishes Project Review Team –how to pick the project review team Work-steps will include formal reporting to Review Team at end of each Phase
Project Cost and Timing Using work-steps estimate the man days to complete the task Also estimate the elapsed days i.e. allowing for delays in getting data etc Open ended v.specified deadlines Apply man day cost if necessary Do not underestimate timing Be aware of factors which cause delay
Managing the Project Proposal is the plan Stick to the timetable Be upfront about delays Rigour Clients premises versus own office Regular project meetings Continued reviewing of work-steps to check progress
Examples of Projects Embarked Upon Improving Spare Parts Delivery to the UK Implementing an automated route planning system Improving the management of our warehouse facility Developing supply chain relationships with suppliers and customers at [Company X] Identifying 4th Party logistics opportunities Developing a programme of improved process controls within the production environment Improving the management of customer returns Improving [Company Y]s delivery dates to our export customers and reducing our number of backorders on the Irish market Planning and implementing a new warehouse management system Improving customer service and satisfaction Testing forecasting systems for [Company Z]s Deli supplies
Expected Project Completion Oct. 2003 WATCH THIS SPACE!
Thank You !! For further details contact point … firstname.lastname@example.org