1. Copyright © DRK Research 2014 The Future of a Networked Supply Chain Dr. Kevin McCormack March 2014 Advanced Analytics for Business Solutions

2. Copyright © DRK Research 2014 Managing the Extended Enterprise: The Future of the Networked Supply Chain The supply chain world is more connected than ever before. Social media and collaborative-networked applications are commonplace. Mobile apps make the office “everywhere”. How do you use this connectivity to improve supply chain performance? What are the best practices currently being used and under consideration? This presentation presents recent research suggesting the future and what is needed to be successful.

3. DRK Percipio Profit Point 17 th Floor iCognitive PhD. Program Shanghai Consulting Northwood University SAS Other Vlerick Leuven Gent Management School Belgium Independents Associates ISM University Of Maryland U of ES Brazil Supply Chain Council ISM China Neurametrics Singapore Shanghai Europe Portland, OR Phil. PA TX TBD BPM Network University of Ljubljana Slovenia UMFG Brazil Data Top Orion NJ NIPE Advanced Analytics for Business Solutions On Demand Analysis University of Zagreb, Croatia JK Data Analytics Skema France Business Process Knowledge Global BPM Research Network

4. Dr. Kevin McCormack is President of DRK Research and a professor at Skema Business School (France) and Northwood University. Dr. McCormack has over 30 years of business leadership, teaching, research and consulting experience. His experience covers many national and international industry segments and a broad range of business processes. He has been a member of or has successfully conducted engagements with several government agencies and major companies in the food, forest products, pharmaceutical, chemical, consumer products, high tech and the plastics industry. Some of his clients have been Kraft, Philip Morris, CPC International, Cargill, Texas Instruments, USMC, Phillips Petroleum, Chevron-Phillips, Columbia Forest Products, Dow Chemical, Warner-Lambert, Standard Charter Bank, Microsoft, Intel, Tektronix, several state governments, Borden Chemical, California Public Employees Retirement System (CalPERS), Wal-Mart, Campbell’s, General Mills, Fairchild Industries and PepsiCo. He has written six books and over 100 articles on business process, Supply Chain Management and business strategy.

5. Time Supply Base Performanc e/Capability Higher TOTAL QUALITY MANAGEMEN T SUPPLY BASE ASSESSMENT SUPPLY BASE REDUCTION REACTIVE SUPPLIER DEVELOPMENT STRATEGIC SUPPLIER DEVELOPMENT Lower Evolutionary Strategies Evolution of Supplier Development Supply Network Management

6. Connectivity, Capability and Friction (Interaction Costs) Capability Friction High Low People to People Post Radio Internet Wireless Internet Phone Telephone Telegraph Internet Broadband Connectivity High Low Interaction costs: The money and time expended whenever people and companies exchange goods, services or ideas. Interaction costs Mobile Wireless

7. Copyright © DRK Research 2007 P2P View - Constraining

8. Copyright © DRK Research 2014 P2P “Networked” View

9. DRK Confidential Do not Distribute without Permission 9 SC Network Units of Analysis s s s s s s s SC Network Organizer Commodity Category Interactions and Relationship Supplier Attributes Supplier Environment

10. s s s s s s s SC Network Organizer Interactions and Relationship Supplier Attributes Supplier Environment SC Network Components Copyright© 2007 DRK Research, LLC Performance Human Resources Supply Chain Disruption Supply Chain Disruption Financial Health Relationship Environmental The customer’s reputation with suppliers is also a critical factor. Customer of choice Geographic, market, transportation, etc.

11. Interactions and Relationships Copyright © DRK Research 2014 The basics - Orders / goods / money – do this in a self service, efficient way. Communications (two way) – not just orders! Face to Face meetings – still important. Proximity is Important (Geographic, Organizational, Institutional, Cognitive, Social) The Goal: to be the customer of choice of your suppliers and build and benefit from a relationship.

12. DRK Confidential Do not Distribute without Permission 12 SC Network “Amazon” Like Hub s s s s s s s SC Network Organizer Commodity Category Interactions and Relationship Supplier Attributes Supplier Environment Other Networks HubHub HubHub From $250/PO to <$5

13. Customer of Choice Copyright © DRK Research 2014 “A customer of choice consistently receives competitive preference for scarce resources across a critical mass of suppliers in its database,” A Procurement Strategy Council report found that suppliers rated only 5% of customers as “customers of choice.” A customer of choice also receives a performance preference of 5-10% (price, delivery, quality, etc.) The network organizer has control of this!

14. Network Performance Relationship Industry Focus Customer Leverage ReputationCritical Info Sharing 30% improvement in relationship factors leads to an 8-10% improvement in network performance Relationships to Performance

15. Network Performance Freq. of Critical Info Sharing Cost Structure Process / Material Change Production Schedule Inventory Status AccreditationsEPA Violations Other Gov. Validations Information Sharing is critical to network performance

16. Network Performance Financial Indicators Perf. v. Competition Perf. of Business Unit Cust. Sat. of Business Unit Profitability of Business Unit AR v. Payable Cycle Time Financial Performance of each member is critical to network performance

17. Building Network Copyright © DRK Research 2014 The Web (Internet enablement) – over 20 years old! An Amazon type hub. Social Networks (Facebook, LinkedIn, etc.) – building linkages with a purpose. Mobile Apps – (iPad, Phone, etc.) - easy connections from anywhere. BYOD – bring your own device. What are the issues? No longer are you tied to a desk and device!

18. Building Network Copyright © DRK Research 2014 Issues: Who pays for the Amazon hub? Competitiveness – suppliers connect to many networks with many different formats Confidentiality – who controls? Who sets the rules? Big data – analytics! Trust – is this getting better or worse? Opportunistic Behaviors (cheating) – better or worse?

19. Actions Copyright © DRK Research 2014 Build key relationships with your suppliers. Become customer of choice. Build YOUR network (Amazon, LinkedIn, etc.) Big data – Self service analytics! Make things visible, actionable. Trust – make it better Opportunistic Behaviors (cheating) – enforce the rules BYOD and Mobile – it is here, deal with it or leverage it

20. Copyright © DRK Research 2014 Questions? Dr. Kevin McCormack March 2014 Advanced Analytics for Business Solutions