Transcript BVL Presentation Draft

TRB Symposium
Embracing Global Complexity to Drive
Competitive Advantage in a Networked
Economy
October 21, 2013
Robert Handfield, PhD
Director, Supply Chain Resource Cooperative
Bank of America Distinguished Professor
Agenda
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•
•
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The study
How is complexity increasing?
Strategies to deal with complexity
Final Thoughts
Trends and Strategies in Logistics and Supply Chain Management:
Creating End to End Strategies for a Networked Economy
Prof. Dr.
Robert B. Handfield
Prof. Dr.
Hans-Christian Pfohl
Partners
Prof. Sidong Zhang, Prof. Jiazhen Huo (Tongji University)
Prof. Paulo Fleury, Prof. Cesar Lavalle (Univ. Rio),
Prof. Ravi Shankar (IIT Delhi)
Prof. Victor Sergeev (HSE Moskau)
Jos Marinus (ELA, President)
Prof. Paulo Resende (FDC Cabral, Brazil)
Professor Hauzhe Chen, (ECU, USA)
Professor Meng Lu, (DinaLog, The Netherlands)
Prof. Dr.-Ing.
Frank Straube
Dr.
Andreas Wieland
We began by interviewing 60 global
Supply Chain Officers….
4
4
Then completed a multi-lingual survey of 1700
executives across the global …
3%
13%
12%
4%
USA
Brazil
6%
Western Europe
Eastern Europe
28%
Asia (except China)
China
Africa/Middle East
34%
We found the world is becoming a
very complex place indeed!
6
#1 TREND: INCREASED CUSTOMER EXPECTATIONS
Customer Expectations
Networked Economy
Cost Pressure
Globalization and Complexity
Talent Shortfalls
Volatility
Today
Five Years
Sustainability
Increased Risk and Disruption
Emergence of New Technologies
Lack of Reliable Logistics Infrastructure
Increased Government Regulation
Cultural Challenges
1
low
1.5
2
2.5
3
high
Complexity is Occurring in Many Forms
•
•
•
•
•
Local content requirements are driving companies to work with new
suppliers and new manufacturing environments (e.g. complete knockdown
production in emerging countries)
Growth of markets in Brazil, Russia, India and China are also the most
complex to navigate due to unpredictable regulations, transportation
infrastructure, and risks
Part numbers and product designs offer more customized options driving
part proliferation and inventory control challenges
Greater concern over multi-tier network disruptions (Thailand floods,
Tsunami) as well as control over supply networks
Increasing volatility and unpredictability in demand combined with
currency, commodity, and financial risks
Synchromodality is a tool to give
your customers a very reliable
flow to allow you to decide at
the last minute to switch a
shipment and use the train,
barge or road, when there is a
hiccup.
8
#1 LOGISTICS OBJECTIVE - Meeting Customers
Requirements for Customized Logistics Solutions
Meet Customer Requirement
On-Time Delivery
Green Logistics
Delivery Time
Innovation
CSR
Logistics Cost
Logistics Quality
Schedule Flexibility
0%
5%
10%
15%
20%
25%
Cost pressures are also increasing!
Increase
37%
Stay Constant
32%
Decrease
17%
Do Not Know
14%
0%
10%
20%
30%
40%
50%
Network Innovation Complexity
• Product networks are becoming more complex, as organizations
need to create more diverse sets of product/service bundles
customized to local market requirements.
• Explosion of new channels, fragmenting existing sales channels and
distribution requirements
• E-commerce is driving smaller packages to more customers
• Customized inbound logistics requirements that are customerspecific, and which vary by region and country
• Product bundling with other channel participants to create
innovative new market opportunities
It is not just growth of production volumes, but
the doubling or tripling of volumes in existing
plants, new production plants in BRIC”s, a
dramatic increase in the number of models,
,more part numbers, and diverse channels….
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How are companies embracing complexity?
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Talent Management, End to End
Integration and Integrated Planning is the focus
Talent Management
End-to-End Integration
Integrated Planning
Global Network Visibility
Technology Investments
Cost-to-Serve Models
Governance and Process Standards
Today
Rapid Decision-Making
Five Years
Corporate Social Responsibility
Horizontal/Vertical Cooperation
Frequent Network Adaption
Green Logistics
Outsourcing/Insourcing
Government Cooperation
1
low
1.5
2
2.5
3
high
Aligning People, Process, Technology and
Network Strategies to Embrace Complexity
NETWORK
Horizontal/Vertical Cooperation
Outsourcing/Insourcing
TECHNOLOGY
Technology Investments
PROCESS
Governance Process Standards
Integrated Planning
PEOPLE
Talent Management
Rapid Decision-Making
PEOPLE: Having the Right People Empowered to Act and Deal with
Logistics Complexity, Corporate Sustainability, and Ability to Learn New
Technologies is Fundamental.
NETWORK
Horizontal/Vertical Cooperation
Outsourcing/Insourcing
Globalization &
complexity
.20
.18
Customer
Expectations
.18
.20
Increased Risk
and Disruption
.23
.25
Cost
Pressure
.11
.19
Sustainability
Pressure
.36
.25
New
Technologies
.36
.26
Talent
Shortfalls
.38
.27
TECHNOLOGY
Technology Investments
PROCESS
Governance Process Standards
Integrated Planning
P1 – Talent Management
P2 – Rapid Decision-Making
Correlation with TM
Correlation with RDM
PEOPLE
Talent Management
Rapid Decision-Making
Talent Management
Employee Training
University Recruiting Events
Today
Social Media Recruiting
Five Years
Print Media Recruiting
Marketing of Logistics
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Top Performers Engage More
with Universities
University Investments
(1 = Yes, 2 = No)
1.65
1.6
1.55
1.5
1.45
Top Performers
1.4
Other Companies
1.35
1.3
1.25
1.2
Funding of Research Projects
Involvement in Research
Wanted: Rational, Long-term, Global Specialists
Employee Characteristics Sought
1.85
1.8
1.75
1.7
1.65
Top Performers
1.6
Other Companies
1.55
1.5
1.45
1.4
Emotional - Rational
Short-term - Long- Generalists-Specialists
term
Local - Intern'l
Thinkers
PROCESS: Globally Integrated Adaptable Processes
With Technology Embrace Volatile Environments
NETWORK
Horizontal/Vertical Cooperation
Outsourcing/Insourcing
New
Technologies
.32
.37
.42
Networked
Economy
.23
.25
.20
Increased Risk
and Disruption
.34
.35
.28
Volatility
.19
.22
.18
Poor Logistics
Infrastructure
.34
.26
.26
Talent
Shortfalls
.34
.26
.28
Globalization &
Complexity
.22
.25
.21
TECHNOLOGY
Technology Investments
PROCESS
Governance Process Standards
Integrated Planning
PR1 - Global Process Standards
PR2 - Integrated Planning
PR3 - Network Adaptation
Correlation with PS
Correlation with IP
Correlation with NA
PEOPLE
Talent Management
Rapid Decision-Making
Driving Decision Agility
One of the biggest challenges is how to balance consistency in execution
yet still tapping into the creativity and flexibility that I’d want if I was
running that operation. And so we have been in search of that right
balance and there is no easy answer to it. If we get our minds right on how
things should work and how they work best and we teach that across our
enterprise, our leaders will be more apt to approach similar problems from
a similar mindset.
We define the processes that must be in place, and the policies that must be
followed, and finally the playbooks that act almost as a user guide on how to
think through the overall requirements and get them done! We then have a
global SIOP function to optimize global requirements across regional
requirements, especially around our global product lines. But we recognize
that they will be interpreted and acted on differently at a regional level. So we
are structured regionally to drive the deployment of our global strategies, to
optimize freight flows, and deal with regionally-specific issues.
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Growth in New Technology
RFID
Inventory Optimization Software
Network Redesign Software/Systems
Advanced Planning Systems
Business Analytics Platforms as a Service
Analytics Data Collection Planning
Smart Sensors
Object Recognition Technologies
Social Networks (Internally, B2B)
Product Life Cycle Management
Transport Management Systems
2D Code Technologies (e.g. Barcode, Data Matrix Code)
Warehouse Management Systems
IT Security / Cyber Protection Technologies
Enterprise Resource Planning Systems
0%
5%
10%
15%
20%
25%
30%
35%
Analytics and Big Data Investments
Social Networks (Internally, B2B)
Business Analytics Platforms as a Service
Today
Five Years
Network Redesign Software/Systems
Product Life Cycle Management
-10%
0%
10%
20%
30%
40%
50%
60%
70%
NETWORK: End to End Integration and Adaptation Enables
Aligned Actions Across Your Global Business Partners
NETWORK
Sustainability
Pressure
Government
Regulation
.59
.44
.37
Correlation with CR
Correlation with GL
Correlation with GC
.47
.23
.39
Networked
Economy
.38
.18
.27
Increased Risk
and Disruption
.32
.22
.27
Cultural
Issues
.27
.24
.28
Talent
Shortfalls
.29
.15
.30
Sustainability
Pressure
.32
.21
.32
TECHNOLOGY
Technology Investments
.33
.22
.39
New
Technologies
Horizontal/Vertical Cooperation
Outsourcing/Insourcing
PROCESS
Governance Process Standards
Integrated Planning
PEOPLE
Talent Management
Rapid Decision-Making
Correlation with E2E
Correlation with OS
Correlation with HVC
Sustainable Footprints Remain Critical
Sustainability is part of our product roadmap from product
development to green logistics and customer application.
We don’t view it as a trend, we view it as a right to operate,
just like safety.
Crop
Cultivation
Blending
Chemicals
Production
Printing
Packing
Transportation
Environmental Footprint
of a Product
The environmental footprint of a product accumulates all carbon emissions along the supply chain.
Warehousing
Disposal
Final Thoughts: People are the Foundation
for Agile and Resilient Supply Chains
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“…most important thing is to work on the capability of our people and increase
competencies…”
“…put a lot of importance on continuous training….and we see a high regional
variation in turnover…”
“….education is high in India, but practical application of knowledge to daily
situations and problems in the workplace is not good…”
“….we can’t afford to lose good people, so we try to take care of them as they
are in demand in Brazil…”
“…strengthened ties to elite Chinese universities and a selective hiring
process…”
“…in Russia we hire for their mindset and willingness to learn, not their supply
chain experience. Then we bring them to our Western locations and train
them how to do business….”
“….we have to move people out of traditional functional silos so that they are
able to speak to people outside of supply chain…”
“…you need a backbone cadre of B players who are solid but who have low
turnover…they will deliver reliably 90% performance. Once you have that
base, you can deal with the volatility of human capital.”
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