Dr. Steven A. Melnyk Professor of Operations & Supply Chain Management The Eli Broad Graduate School of Management Michigan State University East Lansing, MI Integrated Supply Chain Management Insights for Today’s Turbulent Economy and Tomorrow WEATHERING THE STORM

 Steven A. Melnyk, THE FUTURE BELONGS TO THOSE WHO PREPARE FOR IT TODAY. Malcolm X

 Steven A. Melnyk, New Reality GM and Chrysler – bankrupt Major automotive suppliers seeing volume of business fall –Some have filed bankruptcy Visteon Dura Automotive Systems New reality –Automotive will recover –New automotive less than old

 Steven A. Melnyk, Today’s Environment

 Steven A. Melnyk, SUPPLY CHAIN OPTIONS Weathering the Storm

 Steven A. Melnyk, Source: Supply Chain Faculty, Michigan State University The Integrated Supply Chain SUPPLIERNETWORK INTEGRATEDENTERPRISE DISTRIBUTIVENETWORK Information, Product, Service, Financial and Knowledge Flows MATERIALS Capacity, Information, Core Competencies, Capital and Human Resources Relationship Management Sourcing Operations Logistics ENDCONSUMERS

 Steven A. Melnyk, Diversify Source:

 Steven A. Melnyk, Types of Integration New related markets –Defense –Aerospace –Medical New geographic related markets Unrelated markets Change in emphasis –Broaden –Diminish –Abandon

 Steven A. Melnyk, DIVERSIFICATION HAS RISKS FEW SUCCEED! Reality

 Steven A. Melnyk, Integrate Source: Expand Solutions as well as products

 Steven A. Melnyk, Improve Source: “The idea Generator by Norman Bodek

 Steven A. Melnyk, EnhanceEnhance Source: digitalcarversguild.com Broaden Product Offerings

 Steven A. Melnyk, Comparing Supply Chains Today’s supply chain –Strategically-Decoupled, Price-Driven –Focused Driven by the supply chain disruptions/risk, leadership within the supply chain, managing the timely delivery of goods and services. –Measured by three critical indicators Price Delivery Quality –Not linked to strategic objectives

 Steven A. Melnyk, Tomorrow’ Supply Chain Strategically-Coupled, Value-Driven Highly adaptive More complex performance measurement –Cost savings –Cost avoidance –Revenue growth –Asset utilization Strategic in nature –A corporate capability and asset –A necessity and an opportunity.

 Steven A. Melnyk, Emerging Shift The emerging challenge for supply chains –Creating, delivering, and maintaining value –The “challenge” of abundance American homes Growth of the Self-storage industry –Increasing response INNOVATION –Product –Process –Supply Chain –Service

 Steven A. Melnyk,

 Steven A. Melnyk, The Goal of Strategic Supply Chain Management

 Steven A. Melnyk, What Outcomes Do You Want Your Supply Chain To Achieve? Six Major Outcomes –Efficiency –Responsiveness –Security –Sustainability –Resiliency –Innovation Blending outcomes requires trade-offs Performance measurement is more complex. Outcome not enough; focus on solution.

 Steven A. Melnyk, Blending Supply Chain Outcomes

 Steven A. Melnyk, Assessing Opportunities AerospaceMilitaryMedicalGreen/ Renewable Efficiency ✔✔✔✔✔ Responsiveness ✔✔✔✔✔✔✔✔✔✔ Security ✔✔✔✔✔ ✔✔ Resilience ✔✔✔✔✔✔✔✔ Sustainability ✔✔ ✔✔✔ Innovation ✔✔✔✔✔ ✔✔✔ ✔✔✔ = Critical; ✔✔ = Important; ✔ = Nice

 Steven A. Melnyk, Major Lessons Diversifying is more than changing customers –It will involve changing your supply chain –New certification standards AS9100 Understand the problem that your system is good at solving and the problem that your customer wants you to solve –Efficiency and effectiveness may not mix Understand your critical customer

 Steven A. Melnyk, Major Lessons - 2 Understand your value proposition Recognize the impact of culture –Culture – what people do when the boss is not around –Six sigma/lean and Radical innovation –Culture takes time to change Change takes time, resources, and commitment

 Steven A. Melnyk, Success in Today’s Market Success is more than identifying a market where your skills seem to apply. Success is dependent on making sure that what you offer and how you offer it fits the needs of the customer. Success is dependent on speed and understanding.

 Steven A. Melnyk, A Request Weathering the Storm Research Initiative A Study to understand how small to medium sized firms are responding to this period of market instability. Focus on options being pursued, factors influencing the choice of options, and obstacles/enhancers. Your involvement is needed. Help us help you!

 Steven A. Melnyk, QUESTIONS