Supply Chain Dr. Lai Ving Kam , Associate Professor Logistics and - - PowerPoint PPT Presentation

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

1

Continuous Cost Reduction Resilience in Adaptive Responsive Supply Chain

• Dr. Lai Ving Kam, Associate Professor

Logistics and Supply Chain Management Berjaya University College of Hospitality, Kuala Lumpur, Malaysia Email: lai.vingkam@berjaya.edu.my www.berjaya.edu.my

Manufacturing Distribution X-Dock/ Retail DC Sales Channel Component Assembly Material Suppliers International Transport Outbound Transport

Client

T3 Supplier T1 Supplier T4 Supplier N Supplier

Multi- Echelon Supply Chain

Supply Chain Macro Process

48

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Stage 1

Correct the Worst problems

Stage 2

Adopt Best Practice

Stage 3

Link strategy with operations

Stage 4

Give an Operations advantage Internally Neutrality Externally Neutrality Internally Supportive Externally Supportive

Increasing Operations Capabilities

Redefine Industry expectation Clearly the Best in The Industry As good as competition Holding the Organization Back

Increasing Strategic Impacts The four-stage model of Supply Chains contributions

Roles of Supply Chain functions :-

 Implementing business strategy  Supporting business strategy  Driving business strategy

W her e ar e y ou?

Roles of Supply Chain

Who has the capacity to lead?

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Rapid fall in prices

Technological products rapidly becoming mass market commodity products with increasingly shorter lifecycle,

Increase in the usages

• f open standards-

based technologies supported by rapid advancing multi-technologies interface application technologies

Fashionable products

• chic appeal and trendy in technology and aesthetic design
• combining quick response product introduction capacities with enhanced

product design capabilities to both design fashionable products that capture the latest consumer trends and exploit minimal product launching lead times for better connectivity to match supply with uncertain demand.

Global Trends

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

• 1. Products become more

fashionable

• 2. Products & Technology

lifecycle continuously shortening

• 3. Prices cascading

downward rapidly and continuously

• 4. Constant change of

consumer preferences

• 5. Technology Mutations-

Non proprietary towards Open technology & multi technology interfacing

• 6. Products commoditization

4

Global Market Changes

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Manufacturing Distribution X-Dock/ Retail DC Sales Channel Component Assembly Material Suppliers International Transport Outbound Transport

Client

T3 Supplier T1 Supplier T4 Supplier N SupplierMulti- Echelon

Supply Chain

Supply Chain Macro Process

Adaptive Responsive Supply Chain

New Trends:

• 5G
• 3D Printing
• Robotic / Autonomous

Vehicles

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

Managing Uncertainty in a Supply Chain Connectivity

Centrality of Connectivity in Adaptive Responsive Supply Chain in Volatile Environment

Industries are facing greater pressures from market volatility with shorter interval of new add-ons product introductions made easy by

• pen-technology platform proliferation and

greater connectivity of supply chain. Consequently, responsive supply chain needs to be much more adaptive and agile in sustaining business and market share to be resilience. Need to looks at the repercussions of rapid product and technology mutations; higher market volatilities, and the criticality of appropriate systems and methodologies in delivering market resilience and sustainability. While the rest of world is speeding up, what can you do to catch up or attain the leadership position?

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Development Introduction Growth Saturation Decline Research R&D Promotion Rapid Expansion Market Saturation Changing Customer Preference Cost1 Sales1 Profit 1 Add-On product Introduction ‘n’ Changing Customer Preference ‘n’ Price1

Potential Cannibalization Source: Lai VK (2015). “Comparative Study on Continuous Cost Reductions between Electronics and Non Electronics sub sectors in”

Cost N Cost 3 Cost 2 Extended Product Sales Price 2 Price 3 Price N Profit Sales 2 Sales 3 Sales N

What business must do !

9

Extended Product Lifecycle Management

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

2015 CCR Fig & Table

Development Introduction Growth Maturity Decline

Cost Sales Profit Research Market Saturation Rapid Expansion Promotion Changing Customer Preference Development Development Development Development Sales Sales Sales Sales End-Of-Line End-Of-Line End-Of-Line End-Of-Line

1st Generation Product Lifecycle 2nd Generation Product Lifecycle 3rd Generation Product Lifecycle ‘N’ Generation Product Lifecycle

Cost Sales Profit Dollars Dollars

A B

3 stage Lifecycle curve Standard 5 stage Lifecycle curve

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011 Supply Chain Strategy

Facilities Information Sourcing Pricing Trans portation

Supply Chain Structure

Efficiency

Responsiveness

Inventory

Logistics Drivers Cross-Functional Drivers

Adopted from Chopra , M eindl (200 7) Supply Chain M anag ement –Strategy , plan ning & Operations

Continuous Cos t Reduction framework COST CSV, CM, PPM,PDD, PL M

Ad hoc Reactionary

• r

Predetermined process

Supply Chain Decision Framework

Traditional Cost Reduction Processes

Competitive Strategy

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011 Efficiency Adaptive

Responsiveness

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

Core Strategic Vision (CSV) Cost Management (CM) Product Portfolio Management (PPM) Product Design & Development (PDD) Product Lifecycle Management (PLM)

CSV Reliability CSV Organization Alignment & Communication CSV Framework platform CSV Adaptability & Agility CM Tools & Techniques / Management Control Critical CM Capability Cost Reduction Maturity level CM Agility & Flexibility PPM Critical Competencies PPM Strategic Management Risks & Intelligence Adaptability & Agility Product & Technology Strategic Management Product Platform Design Strategy Product Cost Optimization PDD strategic Alliance Strategic Management & Planning Aptitude & Capacity Agility & Flexibility Product Balancing Out Management

Critical Elements Business Architecture component Theoretical framework

Manufacturing Distribution X-Dock/ Retail DC Sales Channel Component Assembly Material Suppliers International Transport Outbound Transport

Client

T2 Supplier T1 Supplier T3 Supplier N Supplier

Adaptive Responsive Supply Chain Macro Process

Source: Lai VK (2015). “Comparative Study on Continuous Cost Reductions between Electronics and Non Electronics sub sectors in Fashionable Products”

Production Management

Critical Elements

Capacities Productivity Automation Agility & Quality

20

Adaptive Responsive Supply Chain Framework /Model

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

Continuous Cost Reduction Framework

Continuous Cost Reduction (CCR)

Core Strategic Vision (CSV) Cost Management (CM) Product Portfolio Management (PPM) Product Design & Development (PDD) Product Lifecycle Management (PLM)

CSV Reliability CSV Organization Alignment & Communication CSV Framework platform CSV Adaptability & Agility CM Tools & Techniques / Management Control Critical CM Capability Cost Reduction Maturity level CM Agility & Flexibility PPM Critical Competencies PPM Strategic Management Risks & Intelligence Adaptability & Agility Product & Technology Strategic Management Product Platform Design Strategy Product Cost Optimization PDD strategic Alliance Strategic Management & Planning Aptitude & Capacity Agility & Flexibility Product Balancing Out Management

Critical Elements

CCR Architecture component

CCR= 0+1CSV+2CM+3PPM+  4PDD+5PLM+.

CCR is the sum of product of CSV, CM, PPM, PDD, PLM

Theoretical framework Dependent Variable Independent Variable Ref: Researcher’s own analysis

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

Competitive Strategy

Facilities

Supply Chain Structure

Efficiency Responsiveness

Cor Continuous Cost Reduction framework Cross – architectural Component Drivers

Product Portfolio Management Product Design and Development

Core Strategic Vision

Cost Management Product Lifecycle Management

Centrality of Continuous Cost Reduction in Adaptive Responsive Supply Chain

Source: Lai VK (2015). “Comparative Study on Continuous Cost Reductions between Electronics and Non Electronics sub sectors in Fashionable Products”

Predetermined and adaptive processes ?

What we need ?

13

• Dr. VK Lai Associate Professor - India Supply Chain Summit 19-

20, May 2016

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Product Portfolio Management Product Design and Development

Core Strategic Vision

Cost Management

Product Lifecycle Management

A-RSC Platform design A-RSC prediction Strengths Isolated / Stand Alone A-RSC predictor Contribution of Critical element Guiding Principle

• -identify
• Assess
• -appraise
• -associate

Develop A-RSC framework Formulate A-RSC system and process Ref: Lai VK’s own analysis

Adaptive Responsive Supply Chain Framework

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

Product Portfolio Management Product Design and Development

Core Strategic Vision

Cost Management

Product Lifecycle Management

Adaptive Responsive Supply Chain

Consumer Retailer Distributor Manufacturer Supplier

Guides and Directs

• Integrate
• cooperate

Coordinate

Phenomenon Observed in Supply Chain

Order Size Time

Customer Demand Retailer Orders Distributor Orders Production Plan

Distributor Order Production Plan Customer Demand Retailer Order

Bullwhip Effect Adaptive Responsive Supply Chain

Deterministic Business strategies Technology & Product Strategies

Product Strategies & Policies Cost-price relationship Management

Competitiveness

• Sustainability
• Responsiveness
• Cost Efficiencies
• Robustness
• Agility
• Flexibility
• Survival
• Quality

Sustainable Profits Uncertainty / Volatility

Structured A-RSC Framework

• Dr. VK Lai Associate Professor - India Supply Chain Summit 19-20,

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Product Portfolio Management Product Design and Development

Core Strategic Vision

Cost Management

Product Lifecycle Management

Adaptive Responsive Supply Chain

Consumer Retailer Distributor Manufacturer Supplier

Adaptiveness Supply Chain Efficiency Responsive Technology Product Market Production

22

Centrality of Connectivity in Adaptive Responsive Supply Chain

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Accelerated Flying Wild Geese Industries Migration

Japan 1950s

Korea Taiwan Hong Kong Mid 1950sg

Malaysia Singapore 1960s

China

Thailand

Philippines

Indonesia Vietnam Rest of ASEAN 1990s India

USA Europe 1980s Africa 2014-5

?

South America 2025 China Manufacturing 2025

Germany Manufacturing 4.04.0

ASEAN Reintegration

USA Re-shoring

Africa 2020

How about these ?

One Belt One Road

Japan?

Central Asia Eastern Europe

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Reactive

Move from Reactive to Adaptive

Logistics Costs Agile manufacturing Logistics Connectivity Responsive marketing system / process Supply Chain Management Customer satisfaction Intelligence Efficiency Logistics Management

Adaptive

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Basic Requirements for a Adaptive Responsive Supply Chain

• 1. Working and updated

sustainable Core Strategic Vision (CSV) to guide and direct the business, technology and product strategies

• 2. Supply Chain efficiency

is insufficient, adaptive responsive and scalability are equally critical

• 3. Develop and maintain

strategic business partnership with all stakeholders.

• 4. Must be agile and
• proactive. Not ad hoc

reactionary programme

A-RSC

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

The Adaptive Responsive Enterprise

Ability to react on real time changes to sustain flexible market demand profitably

Create insights based on complete and timely information and intelligence throughout the value chain. Agile and Rapid respond to changing market, business, and supply and demand conditions.

Intelligence

Adaptive Respond

Supply Chain Strategies Extended Supply Chain Market Intimacy

A-RSC

43

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

MARKET

 Rapid Change: consumer preference  Increased product configurations  Shortening product lifecycle  Service bundled with products

COMPETITION

 Technology / Product innovation  Process / Service innovation  Commoditization  Price cascading

TECHNOLOGY

 Proliferation of Open Standard technology  Multi-technology interfacing technologies advancement  Incoming 5G Mobile and cloud computing platforms  Continuous and disruptive process and product innovation

ECONOMY

 Trend toward regionalization  Global slow down  Shrinking margins  Shrinking consumption

GOVERNMENT REGULATIONS

 Environmental control  Legal compliance / polarized Trade policies  Competitive Industry standards

Adaptability in a Responsive Supply Chain is the key to succeed in today’s volatile business environment

Forces Driving Adaptability

A-RSC

44

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Adaptability in a Responsive Supply Chain is the key to succeed in today’s volatile business environment

Rapid Change Is Constant In Current World!

You have to be ready for the unexpected often disruptive !

Supply Chain

Responsive Efficiency

Adaptive

A-RSC

45

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Managing the Supply Chain - Conflicting Goals

Efficiency Responsive

Supply Chain

Adaptive

As low cost as possible Satisfy customer at all cost

Balancing between low cost and making customer happy profitably

A-RSC

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Managing the Supply Chain - Conflicting Goals

Efficiency Responsive

Supply Chain

Adaptive

As low cost as possible Satisfy customer at all cost

Balancing between low cost and making customer happy profitably Higher cost Low Responsiveness

X X

Is this your current situation?

A-RSC

47

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Managing the Supply Chain - Conflicting Goals

Efficiency Responsive

Supply Chain

Adaptive

Very low cost High customer satisfaction

Balancing between low cost and making customer happy profitably

Higher Higher

Most Optimum Position !

48

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

1

Supply Management Networks/ Ecosystem Extended Enterprise T

• tal

Enterprise Broader Definition of Supply Chains that create value

Components, Products And Services Function performance Discrete Capabilities for Value creation New Business Opportunities Value Chain Leverage Strategies

Fig 3.1 Creating More V alue and Dimension of innovation & Supply Chains

Developing SC Strategy In support of Innovation

Create the most value for the enterprise by leveraging external resources and capabilities through supply chain optimization

Incremental Radical

New to enterprises New to the world Doing what we do better

Innovation

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Old & New R&D Models

Closed innovation

 Firms select desired technologies  Firms perform R&D in house  Firms put technologies in products  Product revenues fund additional R&D  Globalization (1): adjusting products to markets

Open innovation

• Strategic R&D – integral to business

strategy

• Technology acquisition (licensing,

corporate venturing, alliances)

• Externalization of R&D

(outsourcing, firms research institute, university centres of excellence)

• Globalization (2): tapping global

talent pools

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Volatility in Supply and Demand Pressures to deliver “More with Less” Talents availability, skill gaps

• Risk management
• Scenario planning
• Continuous Efficiency focus
• Balance customization vs.

consolidation

• Selective automation
• Capability development
• Better work environment

The constants Imperatives

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Global Supply Chain Risk Increasing

Beginning of the CHANGE to new world order

• Global Supply chain risk especially in Asia Pacific continued to rise due to

worsening economic conditions in China, USA, Europe, and rest of world.

• Donald Trump President Elect. gives more uncertainty to world trade for next

6-12 months.

• China One Belt One Road (OBOR) and Asian Infrastructure Investment Bank

create more superior connectivity to the world.

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

China’s One Belt One Road China Supply Chain Connectivity Strategies

"Just waiting for higher Chinese wages to push jobs

their way is a recipe for failure,”

16 Nov 2016

9th Global Supply Chain and Logistics Summit www.sclgsummit.org

Presentation Title Presented by:

Continuous Cost Reduction Resilience in Adaptive Responsive Supply Chain

• Dr. Lai Ving Kam, Associate Professor

–Logistics and Supply Chain Management Berjaya University College of Hospitality, Kuala Lumpur, Malaysia Email: lai.vingkam@berjaya.edu.my www.berjaya.edu.my