Transcript Council of Supply Chain Presentation on 9/24/13 6mb

Council of Supply Chain
Management Professionals
Raw Material
Purchasing
Factory
Manufacturer’s DC
Customer’s DC
Rick D. Blasgen
President & CEO
CSCMP
September 24, 2013
Consumer
History: Constantly Evolving
1963
Established as the National Council
of Physical Distribution
Management
1985
Council of Logistics
Management
2004
Council of Supply Chain
Management Professionals
2
CSCMP Members Are…
• Individual members
• Corporate members
• Young Professional members
• Student members
• And from more than 60 countries
The most successful supply chain management
leaders in the world have connections.
So do we.
A CSCMP membership delivers all the connections
you need to succeed.
• Connect with your peers.
• Connect to the latest supply chain
management knowledge, research,
and industry developments.
• Connect to the global marketplace.
CSCMP: Educating and Connecting the
World's Supply Chain Professionals
cscmp.org
CSCMP’s Annual Global Conference isn’t just
an event—it’s an end-to-end supply chain
experience created just for you.
One conference—hundreds of opportunities
October 20-23, 2013 • Denver, Colorado, USA
• Reconnect with your customers.
• Reenergize your career.
• Renew your commitment to
your company.
• Rediscover what you love to do!
Don’t miss Keynote Speaker,
Felipe Calderón, former
President of Mexico
Expansion, Innovation, and
Transformation: What It
Takes to Lead
Register today at
cscmpconference.org.
CSCMP’s Evolving Role
• Goal
 Better deliver intellectual capital and
educational resources to corporate
training/education and SCM personnel
through greater collaboration and more
formal relationships.
 Supply Chain Concierge Service
What is a Supply Chain?
SCM = Seed to Table
A Typical Supply Chain
Product
Sourcing
Processes
Technologies
People
Supplier
Storage
Storage
Manufacture
Manufacturer
Storage
Storage
Distributor
Retailer
Distributor
Retailer
Customer
Order
Receipt
End User
US State of Logistics
Metric
Logistics Costs
2010
2011
2012
%
$1.204 t
$1.287 t
$1.331 t
8.3%
8.5%
8.5%
Trans Costs
$769 b
$821 b
$846 b
3.0%
Inv. Carrying
$387 b
$417 b
$434 b
4.1%
% of GDP
3.4%
Flat
Since 1990…
Logistics Costs have risen 102%
Average annual increase = $30b
2012 increase was $44b
Also….
As a % of GDP, Logistics expense went from
11.4% to 8.5%, a reduction of 25%
Global Comparison of Logistics
Expenditures
Economy
Higher Output--GDP
Better use of resources
Multi-use Infrastructure
Businesses
Market Access
Market Integration
Cost Efficiency
Consumers
More Goods and Services
Wider Availability
Lower Prices/Income
U.S.
8.5% GDP
Asia 17% GDP
China 15% GDP
Europe 13% GDP
India 13% GDP
Japan 11% GDP
Mexico 14% GDP
Some Magnitudes
The cost of logistics in the US was $1.331
trillion in 2012, 8.5% of the US GDP. It was
17.9% in 1980.
US expenditures on logistics is larger than the
national GDP of all but 12 countries.
Total domestic business inventories are
valued at $2.2 trillion.
When Supply Chains Work Well
Wal-Mart's supply chain management success is
improving productivity in the United States:
The effects of the company's supply chain
innovations on the retail industry led to a 3.1
percent decline in overall consumer prices
between 1985 and 2004.
In 2004, consumers spent $263 billion LESS than
they would have if Wal-Mart were not around!
That translates to $895 per person, or $2,329 per
household.
When Supply Chains Don’t Work So Well
SCM Has Strategic Profit Impact
A study by Georgia Tech showed that a company’s stock price drops 8%
when the company experiences a glitch in its supply chain.
A study at Miami University of Ohio showed that when a company adopts
a new supply chain innovation the company’s stock price increases.
A study by Bain & Company showed that companies employing
sophisticated supply chain methods enjoyed 12 times greater profit
than companies with unsophisticated methods.
Wall Street: New found respect for SCM. In one SCM MBA
program in the US, 21/32 grads received job offers from Investment
Banking firms because of the importance of SCM to their clients.
Top management is interested
in what we do!
But we must communicate
more effectively.
Transparency!
$30
Decisions
$145
Different
Decisions?
The US needs a national
transportation policy
By 2020:
• Freight volume = 25 billion tons, $30 trillion
• Trucks will account for 75%
• Rail volume = 888 million tons, up 44% from today
• Distribution Centers are at both ends!
The US needs a national
transportation policy
•Demand will exceed capacity of many US ports by 200 %
• Interstate highways:
•
Carry an average of 10,500 trucks per day
• By 2035, this figure will increase to 22,700 trucks.
• The infrastructure needs repair – Increased focus on real
estate’s role!
Expected Impact of New Hours
of Service Rules
• Most estimates are between 2 and 10 percent
productivity hit
• Shortage of 30,000 drivers right now
• 100,000 drivers that are expected to be needed
as a result of the HOS rules
• Bureau of Labor Statistics estimate that 116,000
drivers will be needed by 2016
The Workforce Challenge
• Logistics jobs are growing
• Qualified applicants are not
– Labor
– Management
• There are labor shortages in key
areas
• New regulations create new
workforce requirements
Annual rates of labor force growth, 1950-2025
2.6
1.7
1.6
1.2
1.1
1.0
0.2
1950-60
1960-70
1970-80
1980-90
19902000
20002015
2015-2025
Projected
Real Estate and Supply Chain
• The two are inextricably linked
• Real estate is critically important to the
success of a company’s supply chain
• “Buildings” should be viewed as assets
that contribute to supply chain value
Skechers consolidated its distribution operations which was
spread out among six warehouses in Ontario, into a new 1.82million-square-foot $250 million facility in Moreno Valley.
It's big enough to hold 40 football fields!
The 40-member Advisory Committee on Supply Chain Competitiveness
was formed to provide the Secretary of Commerce with detailed advice on
the elements of a comprehensive national freight infrastructure and freight
policy to support U.S. supply chain and export competitiveness. The
Committee’s work is intended to further the Administration’s export,
economic, and job growth goals.
Per the charter, the Committee advises the Secretary on the necessary
elements of a comprehensive, holistic national freight infrastructure, and a
national freight policy designed to support U.S. export growth, foster
national economic competitiveness, and improve U.S. supply chain
competitiveness in the domestic and global economy.
What does this all mean?
 CEO / CFO’s - discovered the power of Supply
Chain Management.
 Wall Street
• Watching industry dynamics
• Logistics industry represents almost 10% of the
economy
 Supply Chain Risk Management is critical – think
about recent events, middle eastern uprisings, Suez
Canal, Japan, Thailand, Sandy, etc.
 3PL’s – Significant growth
U.S. Third Party Logistics Market
160
141.8
140
133.8
120
113.6
$ Billions
103.7
100
80
127.3
127.0
119.0
107.1
89.4
76.9
60
40
20
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Armstrong and Associates
31
Supply Chain Trends and Challenges
 Globalization. Growing complexity and pressure of dealing with
global partners, suppliers and competition. Culture and geopolitical
issues
 Renewed focus on minimizing NA border delays and inefficiencies
 Panama Canal expansion - May provide more economies of scale
and port diversification options to major US population centers
 Regulation: CSA 2010, 2011, 2012, 2013….forever?
 “Progressive” Shippers and Carriers are strengthening their
relationships
Supply Chain Trends and Challenges
 Consumer Attitudes and Demographics.
• Aging population.
• Growing demand for environmentally sustainable
and socially responsible products by younger
consumers.
• How to meet needs and maintain loyalty of the
consumer?
 Information Technology will continue to
revolutionize the discipline.
 Big Data! How big’s too big? How do we
scale?
Top 5 Trends
• Rise of Amazon
• 30% Revenue increases, approaching $60B
• Added 18 New Distribution Centers
• Technology merger mania
• Increasing hope for US Manufacturing
• Caterpillar chooses Georgia
• Apple and Lenovo announce they will start building PC’s in
the US
• GE CEO Immelt says they will not chase low labor rates
around the globe
• Natural Gas reaches a tipping point
• Multi Channel Madness!
• Macy’s, FedEx, UPS, Wal-Mart, etc.
By the end of 2013, there
will be more mobile
devices on Earth than
people.
Mobile internet usage
is projected to
overtake desktop
internet usage by
2014.
65% of U.S. shoppers
research products and
services on a PC and
make a purchase instore
Retailers’ apps take up the
Talk about ubermost of consumers’ time at
connected: 75% of
Americans bring their Nearly 40% of U.S. mobile 27%, followed by online
marketplace at 20%,
phones to the bathroom. phone owners will become
purchase assistant at 17%,
mobile phone shoppers by
price comparison at 14%,
2017.
and daily deals at 13%.
71% of mobile browsers
40% of shoppers
consult 3 or more
channels before
purchase, compared to
10% in 2002.
expect web pages to load
almost as quickly or faster
as web pages on their
desktop computers.
74% of consumers will
wait 5 seconds for a web
page to load on their
mobile device before
abandoning the site.
46% of consumers are
unlikely to return to a
mobile site if it didn’t work
property during their last
visit.
U.S., total retail sales vs. e-commerce sales
(in billions)
annual percentage change
27.0%
23.8%
16.2%
16.2%
5.3%
7.5%
5.5%
2.4%
3.5%
0%
$25
-4%
$0
-8%
-7.1%
$144.6
16.4%
20.2%
6.5%
6.1%
5.4%
3.3%
4%
2.4%
8%
4.4%
12%
-1.2%
$45.0
$34.5
$27.6
$75
$58.0
$74.0
$100
16%
2.9%
$92.6
$125
20%
$126.5
$114.5
$150
$142.5
$137.5
$175
$50
24%
$168.3
$200
Retail sales, annual change
E-commerce sales, annual change
25.6%
$193.7
28%
28.0%
$225
24.0%
32%
$224.6
$250
30.2%
U.S., e-commerce sales
Source: U.S. Department of Commerce: Census Bureau
Brick and Mortar
Stores
Web Site
Tablet/Mobile
Catalogs
Order from Anywhere
Call Center
Flash Sales
Customer
Fulfill from Anywhere
Retail DC(s)
Kiosk
eCommerce
DC(s)
Outlet Locations
Brick and Mortar
Stores
Pop-Up Stores
To Succeed in Today’s Multi Channel
Marketplace, You Will Need to…
• Ensure separate P & L's do not drive
separate supply chains
• Allow common inventory piles and agile
DC's to serve multiple channels
• Best of big, best of small – Scale where it
makes sense, customization when
necessary
So, what do we do?
• Examine the infrastructure – Distribution has
become more complex
• Number/location of DCs to optimize costs
• Designed for complexity & flexibility to meet
increasing customer demands
• New requirements for order from anywhere,
fulfill from anywhere
Emerging (Emerged?)
Supply Chain Trend
Collaboration
Emerging (Emerged?)
Supply Chain Trend
Collaboration – “To cooperate with
an enemy that has invaded your
country”
Relationships are critical
The essence of SCM is collaboration – it is not
an option.
 involves all key participants
 working toward common goals.
Absent collaboration, the supply chain will
be nothing more than a collection of firms, each
following their own pathways.
Supply Chain as a Revenue
Generator
Distribution Operations can be a Revenue Generator
•
Design to optimize efficiency & cost saving
• Use supply chain for competitive advantage
• Increase customer service
• Enable same day fulfillment & delivery
• Reinvest savings into building your brand
Summary
• Distribution is becoming more complex
and strategic
• If done right, and distribution operations
can be a driver to gain competitive
advantage
• Don’t be afraid to market that value!
• All initiatives need to start from a strong
business case
Summary
 This discipline is a corporate necessity, yet can be a
growth vehicle – a revenue generating engine.
 We improve the financial position of companies and
economies.
 Our stature and credibility is increasing.
 Supply chain professionals need to develop cross
functional skills and a global mindset to maximize
opportunities in the Multi Channel world.
 To prosper, to tackle these challenges, to take advantage
of the opportunities, we need to work closely together!
“If people are committed to
maintaining yesterday, they are
not available to create tomorrow”
Peter Drucker
Sometimes, we
have to learn to
forget
Innovation!
Be Creative in your Response to
Supply Chain Problems
Thank you!
Rick Blasgen
630-645-3458
[email protected]