B. Mktg. 880 Spring 1999 “Perspective 2000 and Beyond ”

The Enterprise Stakes What would happen to the future of your firm if a competitor could: –deliver an equivalent value faster or more consistently to your customer –provide the same level of service with half of your inventory –provide the same level of service with a significantly lower asset investment –reduce transaction cost by 50% or more –provide customize product, shipments and transactions and turn on a dime –develop an off-shore partner that can provide equivalent value at 60% of your cost What if your competitor could do all of these things??? 368

Factors that will Affect the Growth and Development of Logistics Source: 1998 OSU Career Patterns 244

Challenges for the 21st Century Challenge No. 1: Identifying, monitoring & responding to rapidly changing customer value requirements.

Best Practices in SCM and Logistics: Customize an Approach for Each Key Account (median percentage) Source: 1998 OSU Career Patterns 206

Best Practices in SCM and Logistics: EDI with all Key Accounts (median percentage) Source: 1998 OSU Career Patterns 207

Identifying value Monitoring value Responding to value Implement key partner strategy Move closer to demand point Agile mfg., product design & devel., process, custom. ImplicationsActions Customer Value

Challenge No. 2: Develop new supply chain global metrics reflecting shared vision & values between customer, supplier, & third party. Challenges for the 21st Century

Best Practices in SCM and Logistics: Co-design of Products with Key Suppliers (median percentage) Source: 1998 OSU Career Patterns 203

Importance of metrics Broaden view of metrics Expand customer value Develop SC metrics To develop macro metrics To the balanced scorecard ImplicationsActions Share Supply Chain Vision/ Values/ Metrics

Challenge No. 3: Develop the capability to collaborate in forecasting, value metrics & other value creating operational activities Challenges for the 21st Century

Best Practices in SCM and Logistics: Strategic Partnership with Key Customers (median percentage) Source: 1998 OSU Career Patterns 201

Best Practices in SCM and Logistics: Strategic Partnership with Key Suppliers (median percentage) Source: 1998 OSU Career Patterns 200

Best Practices in SCM and Logistics: Strategic Partnership with Key 3rd Party Providers (median percentage) Source: 1998 OSU Career Patterns 202

Develop focused cost SC anticipation Postponement strategy Shared visions/ values Implement ABC or related Collaborative forecasting full pipeline visibility To demand visibility To strategic partnership with key SC partners ImplicationsActions Supply Chain Collaboration

Challenge No. 4: Create a business process which leverages EDI/Internet & related technology to reduce transaction costs & increase information/ inventory velocity. Challenges for the 21st Century

Percentage of Domestic Customer Orders which are Transmitted via Electronic Commerce (median percentage) Source: 1998 OSU Career Patterns 214

Percentage of Total Orders to Vendors which are Transmitted via Electronic Commerce (median percentage) Source: 1998 OSU Career Patterns 213

Transactional Relationships Manufacturing cost Inventory Level To contractual relationships To total cost to serve Inventory Velocity ImplicationsActions Leverage Information

Challenge No. 5: Find new organizational alternatives & learning tools that mirror the results of supply chain wide process reengineering. Challenges for the 21st Century

Best Practices in SCM and Logistics: Cross Functional Teams (median percentage) Source: 1998 OSU Career Patterns 205

From traditional c/c vertical organization From traditional learning media & methods To strategies for horizontal SC management To new & efficient learning delivery systems ImplicationsActions Organizational Alignment

Challenge No. 6: Create a corporate environment where change management is a positive value & “thinking out of the box” is an accepted option. Challenges for the 21st Century

From risk adverse decision making From traditional logistics processes From long term resource allocation To entrepreneurial decision making To new processes for delivery value To long run resource utilization ImplicationsActions Vision

New Metrics for the 21st Century Today 21st Century Functional Costs Total Costs Cycle TimeTime Definite Inventory LevelInventory Velocity TurnoverCash to Cash Cycle DomesticGlobal Firm MetricsShared SC Metrics 853

Principles of SCM 1.Engineer by account demand visibility as close to source of demand as possible 2.Allow SCM to manage (and intervene) in inventory flows the can’t see and don’t own 3.Develop collaborative vision, metric, & processes with key accounts 4.Develop costing systems that reflect horizontal S.C. processes 870

Principles of SCM (continued) 5.Think “horizontally” rather than “vertically.” 6.Reduce transaction cost by trading information technology for transaction processing 7.Align the firms internal & external business processes to focus on “customer value” delivery 8.Utilize information technology as a learning/ teaching medium for all supply chain partners 871