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DELIVER
in
AsiaRegional
Supply
Chain
courseOctober
3rd,
2001Today
...z
Contextz
The
basicsz
The
opportunitiesy
Visiony
Outsourcing,
VMI,
inventory
planningz
DELIVER
CoPz
The
future??First,
some
pictures
of
a
supplychainSupply
ManagementIngredients
&packagingsuppliersManufacturerproductionlinesManufacturerdistributioncenterRetail
storeroom)Retailerdistribution
(shelf
+
backcenterConsumersDemand
ManagementPlanSourceMakeDeliverLeadership
&
StrategyBrand
DevelopmentChannel
&CustomerDevelopmentSuppliersConsumers&CustomersInformationHuman
ResourcesFinanceTechnologyDistributionManagementPlanSourceMakeDeliverSupplyPlanningDemandPlanningProcessingPackingCustomer
ServiceManagementCustomer
ServiceManagementis
the
satisfaction
of
customers’
requirementsof
the
Supply
Chain.
This
includes
ordermanagement
from
capture/creation
throughinvoicing
and
collection,
the
implementation
ofa
differentiated
customer
service
policy
andcustomer
integration
activities
that
improveservice
and
reduce
extended
supply
chain
costs.SupplierManagementIn-boundLogisticsCustomer
ServiceManagementPlanSourceMakeDeliverSupplyPlanningDemandPlanningProcessingDistributionManagementPackingDistribution
Managementis
the
movement
andcare
of
finished
productfrom
manufacturing,
usually
through
intermediatewarehousing
to
customers/consumers.SupplierManagementIn-boundLogisticsAdvice
on
DELIVERz
Get
the
basics
righty
Ordering,
Delivery,
Billingz
Do
the
sexy
stuffy
Integration
and
synchronisationx
VMI,
e-Business,
CPFRThe
basics
have
to
be
in
placez
Customer
Servicey
Cost:
%Overduey
Service:
lead
time,
ease
of
orderingy
Quality:#CNs
due
to
error,
invoicing
accuracyz
Warehousing/Distributiony
Cost:
%NPSyService:%case
fill,
%order
fill,
IRAyQuality:%rejects,
%returns,
%damagesKPIs
are
the
keyKPIs
are
the
keyThe
Opportunities
in
DELIVERThe
SEA
VCA
2000
study
-LaundryCost
saving4
M
EuroThe
SEA
VCA
2000
study
-LaundryInventory
reduction8
M
EuroWorld
Class
Supply
ChainFunctional
ExcellenceKey
:Red
Arrow
=
Product
Flow
BlueArrow
=
Information
FlowRDC
=
Regional
Distribution
Centresz
Organisation
focused
on
functional
excellencez
Information
optimised
to
facilitate
functional
excellencez
Many
small
customers
and
suppliersPlanSourceMakeDeliverFactoryConsumerRDCRDCRDCSupplier’sSupplierSupplier’sSupplierSupplier’sSupplierSupplier’sSupplierCustomerCustomerCustomerCustomerSupplierSupplierSupplierSupplierCopyright@2000.
Corporate
MaST
Group,
Unilever
Research
plc.
All
rights
reserved.Service
and
Integrationz
Organisation
manages
business
through
multi-functionalteams,exploiting
functional
excellence
whilst
focusing
on
immediateupstream
and
downstream
customersz
Information
requirements
optimised
for
management
of
internalorganisationz
Customer
base
predominantly
key
account
(>60%
Volume
weighted)z
Key
supplier
consolidation
-
relationship
managementPlanSource
Make
DeliverSupplier’sSupplierSupplier’sSupplierSupplier’sSupplierSupplierSupplierSupplierFactoryRDCRDCKeyAccountWholesalerRetailerConsumerCopyright@2000.
Corporate
MaST
Group,
Unilever
Research
plc.
All
rights
reserved.Integrated
Network
and
Collaborationz
Organisation
focus
on
extendedSupply
Chain
(Customers
andSuppliers)z
Information
shared
with
all
parties
in
the
extended
Supply
Chainz
High
percentage
of
business
in
a
few
key
accountsz
Supplier
base
consolidated
-
partnership
managementPlanSource
Make
DeliverSupplier’sSupplierSupplier’sSupplierFactorySupplierSupplierKeyAccountWholesalerRetailerConsumerStockHoldingLocationCopyright@2000.
Corporate
MaST
Group,
Unilever
Research
plc.
All
rights
reserved.199619982000Phase
III
(Integrated
Networkand
Collaboration)IFocus
onInternalintegration
&improvementIIFocus
onOutboundimprovementIIIFocus
onexternal
integrationandimprovementPLANDELIVERMAKESOURCEDELIVERMAKEDELIVER
SOURCESOURCEMAKE
DELIVER
SOURCEECRSome
quoted
benefitsz
Cisco,
Intel,
TNT,
Kodak,
Nestle,
P&G:z
Cost
savings:y
"75%
reduction
in
errors”y
"12,000
engineers
saved”y
"45%
inventory
reductions”z
Growth
opportunities:y
"40%
more
orders
in
same
time”y
"1
week
product
development
cycle
reduction”y
"reduce
product
lead
times
by
50-70%”y
"order
cycle
times
cut
from
6-8
weeks
to
1-3
weeks"Source:
Logicon
2001One
way
of
looking
at
DELIVERWays
of
workingProcessInfrastructureSynchronisedProductionCRPOptimumInventoryCRPSMIS&OPMPSInventoryVMICPFRRDSMRPplanningDemandWPSWMSPlanningEDIXMLInventorytarget
modelsEDIXMLEFTAPS
(SAPAPO)
and
ERP
(BPCS)Reliable
operations,
palletsKPIsIngredients
&packagingsuppliersManufacturerproductionlinesManufacturerdistributioncenterRetail
store(shelf
+backroom)RetailerdistributioncenterConsumersDifferent
categories,different
demand
strategiesDELIVER
focusz
Outsourcing
warehousesz
Inventory
target
planningz
VMIOutsourcingz
Third
party
logistics
providers
haveability
to
accelerate
and
drive
changey
Focus
-
It
is
their
core
businessy
Resources
-
Availability
of
“resource
pool”y
Expertise
-
Core
competencyy
Experience
-
Did
it
beforey
Funds
-
Willingness
to
investSupply
chain
outsourcingcriteria
for
choosingSupply
chain
outsourcingactions
for
choosingSupply
Chain
outsourcingz
Advantagesy
Allows
you
to
concentrateon
core
competenciesy
Allows
experts
to
manageand
develop
processes,technology
and
peoplex
accelerate
changey
Allows
experts
toleverage
synergies
withintheir
industryy
Provides
improvedcustomer
servicey
Free
up/generate
capitalz
Disadvantagesy
hand-over
can
bemismanagedy
potential
for
cultureclashy
unlikely
to
save
youmoney
in
the
short-termy
potential
for
‘us
andthem’Outsourcing
-
the
milestonesDeterminestrategyLearn
frompreviousexperiencesSelectpartnerProjectkick-offTeamplanCommunicateNegotiatedetailsTransferoperationsTransferpeopleManageperformanceOutsourcing
lessons
learntz
Partnership
essentialz
Communicate
at
all
levelsz
HR
Issues
by
far
the
mostz
Contract
issuesOutsourcing
partnershipz
DOy
encourage
an
open
environment,
sharing
risks
and
rewardsy
understand
YOUR
performance
BEFORE
you
hand
overy
continue
to
measure
cost,
service,
qualityy
COMMUNICATE:
treat
them
as
a
departmentz
DON’Ty
move
the
goal-postsy
do
their
job
for
themy
expect
them
to
do
things
they
do
not
have
as
their
corecompetencey
expect
the
3PL
to
tell
you
when
you’re
wrongInventory
target
planningSupply
Chain
Variablesz
Supplier
Reliabilityy
SSQR
programz
Delivery
frequencyz
Production
Reliablilityy
TPM
/
5Sz
Forecast
Reliabilityy
Demand
Plan
Forecastingz
Understand
Safety
StockSC
Variable
-
Safety
Stockz
Used
for
hedging
against
uncertainty
iny
Supplier
Reliabilityy
Production
Breakdowny
Stock
Inaccuracyy
Forecasting
Errorto
achieve
Stock
Availability
targetz
Systematic
understanding
of
how
muchSafety
Stock
is
requiredInventory
Planningz
Understand
the
Inventory
Componentsy
Forecast
Accuracyy
Sale
Fluctuationy
Production
Cycley
Production
Reliabilityy
Supplier
Reliabilityy
Service
Level
targetz
Understand
the
nature
of
each
productsandhow
to
set
appropriateInventory
policyz
Use
simulation
tool
to
model
the
effect
each
component
has
on
theinventory
level
and
service
levelz
Set
inventory
level
accordinglyVMIWhy
bother
doing
VMI?z
Objective
is
to
efficiently
replenishshelvesz
Forecasting
is
ALWAYS
wrongz
Buyers
can
get
in
the
wayy
Bull-whip
effectz
Poor
data
gets
in
the
wayUnileversupplierCustomerDCCustomerStoreUnileverfactoryIntegratedsuppliersSynchronisedProductionAutomatedStore
OrderingCrossDockingContinuousReplenishmentUnileverDCReliableOperationSupply
Chain
improvementsContinuous
ReplenishmentMembers
of
the
supply
chain
working
together
toreplenish
products
based
on
actual
sales
andforecasted
product
demandy
VMI
(VendorManaged
Inventory)
is
one
of
the
meansto
continuous
replenishmentx
vendor
maintaining
customer’s
stock
according
to
targetlevels
and
service
levelx
transfer
of
ownership
in
ordering
process
so
to
vendorE-
INFORMATIONUnileversupplierzUnileverDCCustomerDCCustomerStoreUnileverfactoryVMI
Daily
Process
FlowCustomer
DCOrderproposalStock
ReplenishmentData
sent
to
ULT
at
6amULT
to
generate
orderULT
to
sent
Order
Proposal
by
afternoonProduct
Delivery
that
nightInventory
data
/DC
offtakeDespatchAdviceEDI
MessagesCust3
promotional
itemForecast
AccuracyStock
reduction
of
10
Million
BahtApril
01:
Build
up
stock
for
Songkran
holidayCust1
scorecardCust1
scorecardFeb-Mar
01:
Capped
demand
and
capped
supplyCust1
scorecardDemand
-
the
Bullwhip
effectDemand
-
reduce
the
bullwhipDELIVER
CoPRCSEstablishing
RCS
organisation,
Roles
and
responsibilities
and
KPIsEnsuring
operation
matches
ECR
requirements
as
much
as
possibleTHAILANDz
Prioritiesy
Building
new
warehousey
CRP/VMI
roll-outy
CPFR
pilot/sy
EFT
roll-outy
Regional
Planning/SAP
APOy
‘Phoenix’
replacement
for
distributor
systemz
Opportunitiesy
Regional
Customer
Servicey
Regional
DELIVER
best
practiceINDONESIAz
Prioritiesy
Outsourcing
and
building
warehouse
with
MNL
y
Balanced
KPI
scorecardy
VMI
with
distributorsy
Working
capitalreductionz
Opportunitiesy
Regional
Customer
Servicey
Regional
DELIVER
best
practicey
SCD,
CD,
TD,
SD
organisation
complexityOUTSOURCINGNewCDC
to
be
built
in
9-12
m,
to
include
BestFoods.MOA
signedNow
in
details
of
contractOwn
CDC
will
Xferto
LFDby
Q3,
‘to
practice’ECRSc
Diagnostics
-
DIFOT
and
drill
down
to
root
cause,
on
weekly
basisSAP
-
focuson
demand
planning.
Wil
lhaveto
change
way
workat
present.
Issue
on
whether
use
secondary
sales(as
at
present)
or
primarysales
for
demand
pullVMI
-
taking
experience
from
Thailand
VMI
workshopSynchronised
production
-
all
NSD
and
hairCash
flow
-
pioneered
EFT,
using
‘Citibank’
model
with
local
bank
(UnionBank
Philippines)PHILIPPINESz
Prioritiesy
Outsourcing
and
building
warehousewith
Li
&
Fung
Distributiony
SDIS
for
GT/
Electronic
Call
Sheet
for
SST
--
Secondary
SalesCapture
for
Demand
Signaly
ECR
SC
Diagnostics
tooly
ECR
VMI
pilotsy
ECR
EDI
leadershipy
ECR
Synchronised
production
(“Everything,
Everyweek”)y
ECR
Cash
flow/EFTy
Regional
Planning
(SAP
APO)y
Customer
Service
Help
Deskz
Opportunitiesy
Regional
customer
servicey
Regional
SC
organisationx
MUs
separate
from
profit
responsible
SUsRegional
CoP
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