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1 278. O you who believe! Be afraid of Allâh and give up what remains (due to you) from Ribâ (usury) (from now onward), if you are (really) believers.

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Presentation on theme: "1 278. O you who believe! Be afraid of Allâh and give up what remains (due to you) from Ribâ (usury) (from now onward), if you are (really) believers."— Presentation transcript:

1 O you who believe! Be afraid of Allâh and give up what remains (due to you) from Ribâ (usury) (from now onward), if you are (really) believers And if you do not do it, then take a notice of war from Allâh and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums) And if the debtor is in a hard time (has no money), then grant him time till it is easy for him to repay, but if you remit it by way of charity, hat is better for you if you did but know.

2 2 Supply Chain Strategies

3 3 Supply-Chain Strategies Supply-Chain Management Defined Understanding Your Industry Model Business Alignment Defining Supply Chain Excellence SCM Ground Rules A Multi-Disciplinary Approach Operations, Finance, IT & eOPS

4 4 What is Supply-Chain Management? Supply-chain is a term that describes how organizations (suppliers, manufacturers, distributors, and customers) are linked together. Supply-chain management is a total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer.

5 5 Supply Chain Management Evolution Historical operational stages: Historical operational stages: From disconnected. From disconnected. Exclusively focus on growth/cost. Exclusively focus on growth/cost. Separately managed functions. Separately managed functions. Internal performance measurements. Internal performance measurements. To integrated. To integrated. End-to-end process approach. End-to-end process approach. Customer focus, profitable growth, liquidity, functional integration. Customer focus, profitable growth, liquidity, functional integration.

6 6 T3 T2 T1T2 T1 T2T3 T2 T1 OEM 1 Retailer Web Site Direct Sales Force Distributor/Retailer Distributor Warehouse Consumer Tier2 and 3 Suppliers Retailer Tier 1 supplier Retailer Supply Chain of a Typical Original Equipment Manufacturer OEM 2

7 7 Overall Strategy A Supply Chain is fully optimized when: A Supply Chain is fully optimized when: Bundles of well-priced products/services create unassailable levels of customer attachment (acquisition and retention). Bundles of well-priced products/services create unassailable levels of customer attachment (acquisition and retention). Total supply chain costs are at the lowest level. Total supply chain costs are at the lowest level. The supply chain contributes to profitable sales growth by creating cost/service advantages. The supply chain contributes to profitable sales growth by creating cost/service advantages. Worldwide effective tax rates are at the lowest level. Worldwide effective tax rates are at the lowest level. Capital efficiency is at the lowest level. Capital efficiency is at the lowest level. The supply chain is made flexible to respond to changes faster than competitors and to stratify service levels by product, customer, and geography. The supply chain is made flexible to respond to changes faster than competitors and to stratify service levels by product, customer, and geography.

8 8 Supply Chain Issues The main purpose of the levels in any supply chain is to add processes to the product/service. The main purpose of the levels in any supply chain is to add processes to the product/service. Another purpose is to absorb the differences between the stable supply on the upstream side and the erratic demand on the downstream(consumer) side. Another purpose is to absorb the differences between the stable supply on the upstream side and the erratic demand on the downstream(consumer) side. The synchronization of the supply chain will optimize efficiency along the chain. The synchronization of the supply chain will optimize efficiency along the chain.

9 9 Matching Supply-Chains with Products Efficient Supply-Chain Responsive Supply-Chain Functional Products Innovative Products Match Mismatch

10 10 Supply Chain Excellence New corporate state of being: New corporate state of being: Supply chain excellence requires effective strategies, sustained management commitment, and changes in attitude, culture, and organization. More importantly, it requires superior execution. Supply chain excellence requires effective strategies, sustained management commitment, and changes in attitude, culture, and organization. More importantly, it requires superior execution.

11 11 Principles For Supply Chain Excellence Formulate a differentiated supply chain strategy by channel. Formulate a differentiated supply chain strategy by channel. For product categories, product channels, and target customers, develop an operating strategy that, when executed, makes your supply chain different from the rest. For product categories, product channels, and target customers, develop an operating strategy that, when executed, makes your supply chain different from the rest. Focus on long- and short-term profitability, liquidity, and growth. Focus on long- and short-term profitability, liquidity, and growth.

12 12 Principles For Supply Chain Excellence Organize your business unit around major processes or channels, not functions. Traditional silos separates work and interrupts flows which leads to inefficiency. Organize your business unit around major processes or channels, not functions. Traditional silos separates work and interrupts flows which leads to inefficiency. Work collaboratively with customers, suppliers, partners, and third parties to change the way operations perform, viewed, and measured. Extended supply chain. Work collaboratively with customers, suppliers, partners, and third parties to change the way operations perform, viewed, and measured. Extended supply chain.

13 13 Principles For Supply Chain Excellence Invest/reinvest in supply chain information technology to manage flows end-to-end. IT should support both planning, analysis, and execution. Invest/reinvest in supply chain information technology to manage flows end-to-end. IT should support both planning, analysis, and execution. Invest/reinvest in supply chain knowledge, people, skills, and learning. Supply chain practice is relatively new. Change is a constant, with innovations and problems always occurring. Organizations must invest in ongoing training, mentoring, education, and feedback systems. Invest/reinvest in supply chain knowledge, people, skills, and learning. Supply chain practice is relatively new. Change is a constant, with innovations and problems always occurring. Organizations must invest in ongoing training, mentoring, education, and feedback systems.

14 14 Principles For Supply Chain Excellence Operate/manage by product/channel. Think in terms of product/service bundles that are sold through potentially different channels. Supply chains should be set up and driven by the characteristics of each channel. Operate/manage by product/channel. Think in terms of product/service bundles that are sold through potentially different channels. Supply chains should be set up and driven by the characteristics of each channel. Outsource parts of the chain for flexibility and better asset management. In many cases, functions can be performed better by third parties. Outsource parts of the chain for flexibility and better asset management. In many cases, functions can be performed better by third parties.

15 15 Principles For Supply Chain Excellence Think globally…build regionally…operate locally. The best performing supply chains are managed with centralized planning, regional approaches, and local operations. Think globally…build regionally…operate locally. The best performing supply chains are managed with centralized planning, regional approaches, and local operations. The most critical principle: Execution!!! Focus on it, measure it daily or real time, and give people the authority and accountability to excel at it. The most critical principle: Execution!!! Focus on it, measure it daily or real time, and give people the authority and accountability to excel at it.

16 16 Supply Chain Management Approach Three items that flow through the supply chain: Three items that flow through the supply chain: Information Information Money Money Materials Materials Three areas of decision-making: Three areas of decision-making: Materials Materials Processes Processes Logistics Logistics Two types of tools: Two types of tools: Information Technology Information Technology Operational Analysis Operational Analysis

17 17 12 SCM Ground Rules 1. Build in flexibility. 1. Build in flexibility. Supply chain capacity(push things off your books). Supply chain capacity(push things off your books). Move fixed to variable costs. Move fixed to variable costs. More flexible production methods. More flexible production methods. Improved information flows. Improved information flows. Use subcontractors, co-packing, outsourcing. Use subcontractors, co-packing, outsourcing. Operations capability. Operations capability. Managements will to change. Managements will to change.

18 18 12 SCM Ground Rules - continued 2. Plan and measure accurately. 2. Plan and measure accurately. Total cost approach – true margins, profitability by customer segment. Total cost approach – true margins, profitability by customer segment. Enterprise-wide planning – demand-driven and supply-aware; reduce cycle times; respond quickly(for high material cost industries). Enterprise-wide planning – demand-driven and supply-aware; reduce cycle times; respond quickly(for high material cost industries). Dashboard concept – 5 to 7 metrics in operational cost, time and response, margins, customer service. Dashboard concept – 5 to 7 metrics in operational cost, time and response, margins, customer service. Benchmark 1 st internally, then expand Benchmark 1 st internally, then expand

19 19 12 SCM Ground Rules - continued 3. Develop logistically separate operations /supply chains where appropriate. 3. Develop logistically separate operations /supply chains where appropriate. Entities: suppliers, manufacturers, distributors, freight forwarders, contract carriers, 3 rd -party warehousing, 3 rd -party logistics partners, 3 rd -party maintenance, financing companies, import/export/customs brokers. Entities: suppliers, manufacturers, distributors, freight forwarders, contract carriers, 3 rd -party warehousing, 3 rd -party logistics partners, 3 rd -party maintenance, financing companies, import/export/customs brokers. Fulfillment channels: direct-home, direct- business, retailers, value-added resellers, mass merchandisers, OEMs, service centers, integrators. Fulfillment channels: direct-home, direct- business, retailers, value-added resellers, mass merchandisers, OEMs, service centers, integrators. Order conduits that impact process: fax, Internet, phone, sales force, POS orders, EDI, . Order conduits that impact process: fax, Internet, phone, sales force, POS orders, EDI, .

20 20 12 SCM Ground Rules - continued 4.Get lean by emphasizing simplicity and speed. Value Stream Map Current & Future States 4.Get lean by emphasizing simplicity and speed. Value Stream Map Current & Future States Reduce uniqueness (parts, designs, suppliers, processes) and variety(transportation resources, parts suppliers). Reduce uniqueness (parts, designs, suppliers, processes) and variety(transportation resources, parts suppliers). Reduce cycle times and maximize inventory velocity. Key: information. Reduce cycle times and maximize inventory velocity. Key: information. Understand where value is captured and eliminate non-value Understand where value is captured and eliminate non-value

21 21 12 SCM Ground Rules - continued 5. Optimize Information. 5. Optimize Information. Focus on Time to Benefit and Decision Support. ERP? Multiple smaller systems? Focus on Time to Benefit and Decision Support. ERP? Multiple smaller systems? Take ownership of Customer Information. Most untapped: not articulated needs. Take ownership of Customer Information. Most untapped: not articulated needs. Replace assets with Information. E.g. inventory are moved several times before reaching final destination. Replace physical movement with digital movement of customer and product information. Replace assets with Information. E.g. inventory are moved several times before reaching final destination. Replace physical movement with digital movement of customer and product information.

22 22 12 SCM Ground Rules - continued 6. Treat customers unequally: Segment and Stratify. No unnecessary excellence. 6. Treat customers unequally: Segment and Stratify. No unnecessary excellence. 7. Operate Globally. 7. Operate Globally. Economic, time, tax differences. Economic, time, tax differences. 8. Practice Virtuality (partnering) and Collaborative Manufacturing/Management. 8. Practice Virtuality (partnering) and Collaborative Manufacturing/Management. Virtuality – attempt to gain scale. Virtuality – attempt to gain scale. Requires more management, not less. Requires more management, not less.

23 23 12 SCM Ground Rules - continued 9. Exploit Electronic Commerce. 9. Exploit Electronic Commerce. Collapsing supply chain levels. E.g. distribution channel. Collapsing supply chain levels. E.g. distribution channel. New channel: many-to-many. Supply Web – key customers can have communities of suppliers; collaboratively plan, forecast, replenish on a real-time(or near real-time) basis. New channel: many-to-many. Supply Web – key customers can have communities of suppliers; collaboratively plan, forecast, replenish on a real-time(or near real-time) basis. Valued-based differentiation – add value along product, information, process. master channel managers. Valued-based differentiation – add value along product, information, process. master channel managers.

24 24 12 SCM Ground Rules - continued 10. Leverage People. 10. Leverage People. 11. Operationalize New Product Introductions and Phaseouts. 11. Operationalize New Product Introductions and Phaseouts. 12. Mass Customize and Postpone. 12. Mass Customize and Postpone. Commodities vs. highly customizable products. Commodities vs. highly customizable products. Downstream flexibility. Downstream flexibility. E.g. HP printers. Automobile. Amazon. E.g. HP printers. Automobile. Amazon.

25 25 Performance Measurement: Operational 1. Throughput 1. Throughput the rate at which money is generated by the system through sales: O2C the rate at which money is generated by the system through sales: O2C 2. Inventory 2. Inventory all the money that the system has invested in purchasing things it intends to sell all the money that the system has invested in purchasing things it intends to sell 3. Operating Expenses 3. Operating Expenses all the money that the system spends to turn inventory into throughput all the money that the system spends to turn inventory into throughput


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