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Michigan State University, 2016 - 1 - Beyond the Horizon: Next Generation Supply Chain Presented to: Grand Rapids Joint PDM w/ISM, SCMC, and CSCMP January 11, 2017 David J. Closs, Ph.D. Chairperson, Department of Supply Chain Management

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 Michigan State University, 2016

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Beyond the Horizon: Next Generation Supply Chain

Presented to: Grand Rapids Joint PDM w/ISM, SCMC, and CSCMP January 11, 2017

David J. Closs, Ph.D. Chairperson, Department of Supply Chain Management The Eli Broad College of Business Michigan State University

closs@msu.edu

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 Michigan State University, 2016

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  • David J. Closs, Ph.D.
  • M. Bixby Cooper, Ph.D.
  • Patricia J. Daugherty, Ph.D.
  • David J. Frayer, Ph.D.
  • Stanley E. Griffis, Ph.D.
  • Nick Little, MCIPS
  • Steven A. Melnyk, Ph.D.
  • Gary L. Ragatz, Ph.D.
  • Judy M. Whipple, Ph.D.

Michigan State University Team

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 Michigan State University, 2016

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Overarching Research Questions

“What emerging trends or developments will shape the future of supply chain management?” “Why are some firms more successful with strategic supply chain management than

  • thers?”

(even when they possess similar tools, systems and practices)?”

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Major Traits of the New Supply Chain

  • Increasing rate of technological advances that are rooted

in the supply chain.

  • Acceptance of complexity as a business driver.
  • New competitive pressures.

– Amazon Effect

  • New methods of accommodating customers.

– Omnichannel

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Project Outline

  • Phase I: In-depth interviews with 50+ medium and large

firms

– Manufacturers, retailers, and service providers across North and South America, Europe, Asia, and Africa – Enabled broad understanding of strategic initiatives being undertaken and capabilities firms were developing

  • Phase II: Online survey

– Predominantly manufacturer and North American based – Examines linkages between competencies, capabilities and performance

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Online Survey Research Process

  • Survey development
  • Overall survey response (336 total responses)

– APICS/MSU – Market research firms

  • Various demographic information

– Respondent job title and scope of responsibility – Type of firm

  • 70% manufacturers

– Size of firm (sales and employee)

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Insomnia

  • Integrated solutions
  • Talent and leadership
  • Complexity and risk
  • Threats/challenges
  • Compliance
  • Cost/purchasing issues
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Insomnia

  • Integrated solutions
  • Talent and leadership
  • Complexity and risk
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Omni Channel Supply Chain

10

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OMNI-CHANNEL – UNDERSTANDING THE DIMENSIONS Order Fulfillment On-Site Delivery Direct to Person Order Placement In Person Traditional Retail Showroom On-line Local Delivery E-tailing

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Omni-Channel Network Strategy

  • Typically begin as single network
  • Moving toward separate network for D2C
  • Focus on growing regional markets
  • Delivery requirements?
  • Role of Amazon in D2C
  • Growing percent of business
  • Ecommerce packaging

– Bags vs. boxes – Brand requirements – Plastic not good from a sustainability point

  • Hassle free returns process
  • Time to credit card
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Insomnia

  • Integrated solutions
  • Talent and leadership
  • Complexity and risk
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TALENT OBSERVATIONS

  • In the minds of today’s SCM executives, talent and

resource management are the primary drivers of SC performance.

  • Firms are beginning to use different employment models

as a means to develop a talent competitive advantage.

  • Increase SCM collaboration with sales to understand

cross-functional requirements and to provide increased value to customers.

  • Increase consideration of T-shaped skills for

employment acquisition and development.

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TALENT OBSERVATIONS

  • Increase cross-functional collaboration (ex. SCM with

sales) to understand requirements.

  • Sell benefits of S&OP beyond planners to understand

the requirements for integration

  • Firms’ real talent needs must become top-of-mind to

students and primary suppliers (universities and training programs).

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TALENT LESSIONS LEARNED

  • Create a solid college recruitment strategy that builds on

multiple level relationships with key talent suppliers.

  • Develop a formalized talent show and networking.
  • Measure senior management for their performance as a

talent developer and a scout.

  • Apply a formal structured process to evaluate candidate

capabilities currently and likely for the future. Using structured assessments and evaluations, high performing firms are able to define education and experiential plans to elevate the candidates up the ladder and across the lattice.

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The Future Outlook for SC Talent

  • Demand
  • Supply
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Insomnia

  • Integrated solutions
  • Talent and leadership
  • Complexity and risk
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MANAGING THE COMPLEXITY PARADIGM

  • Complexity sources
  • Approaches to managing complexity
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COMPLEXITY SOURCES

  • Customer accommodation

– Speed – Visibility – Product/service assortment – Product customization

  • Operational globalization

– Localized variety – Location complexity – Legal & regulatory

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COMPLEXITY SOURCES

  • Supplier complexity

– Local sourcing complexity – Cultural complexity – Global operations

  • General business and supply chain trends

– Process customization – Technology turnover – Increasing SCM scope – Mergers & acquisitions – Collateral complexity

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APPROACHES TO MANAGING COMPLEXITY

  • Avoidance
  • Good partners
  • Information technology
  • Flexible workforce
  • Supplier collaboration
  • Access to leadership
  • Supplier/customer understanding
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Respondent Information

43% 18% 39%

Level of Respondent

President SVP Director 30% 15% 34% 21%

Scope of Responsibility

Logistics Purchasing Production/Mfg SCM

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Firm Information

30% 41% 29%

Annual Sales

Under $250m $250m-1B Over $1B 27% 27% 31% 15%

  • No. of Employees

Under 250 250-1000 1001-10,000

  • ver 10,000
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Corporate Strategy

18% 35% 47% Cost Differentiated Mixed

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Organizational Reporting Structure

  • Centralized – SCM

function reports to CEO

  • Decentralized – each unit

has its own SCM function

  • r several units share a

SCM function

  • Matrix – SCM function

has unit and corporate responsibility

29% 36% 35%

Reporting Structure

Centralized Decentralized Matrix

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Practices, Capabilities & Competencies

Practices: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Capability A Capability B Capability C Competency 1 Competency 2 Capability D Capability E 17 18

  • Competency –the broad set of skills, knowledge, and aptitude that create

and sustain a supply chain

  • Capability – the infrastructure, processes, systems, assets, and resources

That contribute to a specific competency

  • Practice– the specific activities engaged in by the organization to achieve

supply chain goals and objectives

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Practices & Capabilities (An Example)

Practices:

Firm’s senior management views supply chain risk management as necessary for protecting our brand or reputation Firm has a corporate level strategy to address risk management concerns Firm’s senior management views supply chain risk management as a competitive advantage Firm’s senior management supports supply chain risk management initiatives

Risk Management

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Capabilities

  • Complexity Simplification
  • Corporate Strategic

Integration

  • Customer Segmental Focus
  • Information Connectivity
  • Information Management
  • Internal Process

Connectivity

  • Internal Process

Simplification

  • Customer Communication
  • Customer Relevancy
  • Customer Responsiveness
  • Risk Management
  • Structural Adaptation
  • Supply Chain Planning

Responsiveness

  • Supplier Collaboration
  • Supplier Management
  • Supplier Strategic

Alignment

  • Talent Management
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Competencies

Corporate Strategic Integration

  • Set of abilities of the organization to promote senior

management support and ensure compliance with strategic vision Customer Integration

  • Set of abilities of the organization to segment and

communicate with customers, while promoting relevancy and responsiveness Internal Integration

  • Set of abilities of the organization to adapt structure,

reduce complexity, and increase internal process connectivity

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Competencies (continued)

Resource Management

  • Set of abilities of the organization to secure and

manage critical resources, including materials, services, and talent Supplier Integration

  • Set of abilities of the organization to manage the

supply base, collaborate and strategically align with important suppliers Technology/Planning Integration

  • Set of abilities of the organization to manage

information, promote technologic connectivity, and plan the supply chain

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IMPLICATIONS

  • Sales

Growth Profit ROI Customer Satisfaction Competency 3-year Growth Mkt Share Asset Inv. Turns Overall Perform SCM Strength Resource Mgmt 1 2 2

  • 3

2 1 2 2 2 2 Internal Integration

  • 1

2

  • 1

1

  • Supplier

Integration 2

  • 1
  • Customer

Integration

  • 1
  • 1

2 1 2

  • 3

1

  • Tech/Plan

Integration

  • 1

Corporation Strategic Integration

  • 3
  • 3
  • 3
  • R2

.50 .55 .57 .52 .58 .51 .53 .56 .56 .68 .34

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Supply Chain Performance Drivers

Resource Management

  • includes risk mgmt and talent

development/recruit

Internal Integration

  • includes structural adaptation,

complexity simplification, internal process connectivity, internal process implication

Supplier integration

  • includes suppler strategic

alignment, supplier collaboration (operational fusion), and supplier management

Customer integration

  • includes segmentation,

relevancy, responsiveness, customer communication

Technology/Planning Integration

  • includes info mgmt,

connectivity, and SC planning

Corporate Strategic Integration

  • includes 2 items of top

management and 1 item of compliance

  • Sales Growth
  • Profit
  • ROI
  • Customer Satisfaction
  • Competency
  • 3 year growth
  • Market Share
  • Asset
  • Inventory Turns
  • Overall Performance
  • SCM Strength

Drivers Performance R2=0.68

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WEIGHTED AVERAGE COMPETENCIES

COMPETENCY WEIGHTED AVERAGE Resource management 1.91 Customer integration 1.55 Internal integration 1.00 Supplier integration 0.45 Technology/planning integration 0.27 Corporate strategic integration 0.27

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LESSONS LEARNED

  • Strategic connectivity – Ability to effectively connect

with value chain partners.

  • Strategic simplification – Ability to effectively make

decisions regarding process and product complexity.

  • Strategic resource and talent management – Ability to

effectively manage hard assets as well as talent.

  • Strategic compliance management – Ability to

effectively handle changes in compliance and regulatory constraints.

  • Strategic risk and threat management – Ability to

effectively identify, mitigate, and respond to various dimensions of risk.

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Questions?!?!