Supply Chain Maturity

The supply “blogosphere” is currently blogging on “Critical Supply Strategies for Succeeding in a Dynamic World“. It’s the cover story of the current issue of Inside Supply Management and is mentioned for example on Michael G. Lamoureux’s Sourcinginnovation Blog.

I like the article – it’s similar to IBM’s CPO study I’ve mentioned in of my previous blogs especially the critical supply strategies. I like this kind of studies because they provide directions for longterm objectives and lot of things to consider designing a supply (chain) strategy.

The real challenge from my point of view is not the strategy design process itself- it’s the movement from one maturity level to the next level and the transforming the strategy in real life. Additionally these types of strategies don’t fit for all companies. Their maturity level is different. All companies are equal, some are more equal (adopted from George Orwell’s Animal Farm).

One recommended critical supply strategy is to manage and enable the supply management organization. An indicator of procurement performance is “maverick buying” as a percentage of annual purchases. A low maverick buying rate indicates good performance and at least how procurement manages the spend – that’s spend management. Excellent explained on Jason Busch Spend Management Blog.

You see there’s a huge gap between leading procurement organizations and followers.

Another critical supply strategy is to develop and manage suppliers to deliver a competitive advantage in cost, quality, delivery/responsiveness, technology, and innovation achieved in a balanced way. Based on our research this is another area for different maturity levels. The maturity level of all companies is low by varying degrees on this strategy. Only Australian firms have a more balanced approach. See slide below.

Based on my experiences to define critical supply strategy aligned to current market environment is easier to do, but the next step of transformation (“do the strategy”) will be the real challenge. Happy to discuss.

Procurement Capability Accelerator II

The article is written. Please take a look on my publications tab and download the article.
https://aconris.wordpress.com/publications
Enjoy reading!

Procurement Capability Accelerator

Reading some blogs today I found the “Spend Management’s Top Three” on Jason Busch’s Blog “Spend matters” the business blog of spend management. To be honest this was the first blog I started to read regularly. Today he wrote his top three Spend Management issues. His second issue is a talent/recruiting miss-match inside many procurement organizations. I agree with him. In one of IBM’s previous studies on procurement CPO’s where asked to provide their main strategies for procurement performance improvement over next three years. The top three actions were people related:
1.) Management and retention of talent
2.) Upgrading of people capabilities and skills
3.) Training of staff to improve core procurement skills

From my point of view skills shortages are likely to be a major constraint on value growth. Value from procurement comes through procurement people – their skills and ability to interact with business objectives.

Currently I finalize an article on this topic. I’ll keep you updated, when it’s done.

At least I would like to refer to the CPO study again. It’s a quite interesting paper covering all relevant procurement topics from a strategic point of view. Some of the topics are still up to date like the organisational transformation of procurement and new frontiers for value and savings. A good reading.

Scoring High on the Supply Chain Maturity Model – II

Last week I was speaker at the CSCMP Europe 2007. I’ve presented how leading practices are being used to transform supply chain performance. The presentation is created based on IBM previous Global Value Chain Study.

This study, undertaken by IBM Global Business Services in
conjunction with APQC, identifies current practices, captures significant trends and establishes operational performance benchmarks in several key areas of Supply Chain Management: New Product Development, Planning, Procurement, and Logistics. By analyzing responses from companies across a range of industries, in multiple geographies worldwide, it provides unique insight into challenges and demonstrates how supply chain management is changing from a static and cost-centric function to an evolving, integrated business model.

Discover how leading practices are being used to transform supply chain performance by attending this session on the Global Value Chain Study.
This is my presentation. By the way, one of my key messages (it’s not in the presentation) was to think on the potential of utilizing Web 2.0 in Supply Chain Management. I think that Web 2.0 will reduce the cost of collaboration and one key element of Supply Chain Management is collaboration….

Supply Chain Visibility

On SupplyChainNetwork.com you find some benefits on Supply Chain Visibility. On my attendance during the last week at the CSCMP Europe 2007 conference in Paris some speakers highlighted the need and the benefits of supply chain visibility. I like this topic, because I know different performances or supply chain maturity levels of companies based on my research and have to agree with them.

To achieve a high supply chain visibility it’s necessary that a company needs integrated supply chain processes internally and externally. Enabling “real-time” supply chain information visibility inside and outside the enterprise should positively impacted the supply chain performance. Based on my previous research on supply chain planning most companies implement different initiatives to gain visibility. They respond more rapidly to changing customer requirements and market conditions and collaborate and share risks along the global network. Many are implementing vendor managed inventory and collaborative planning and forecasting programs, not only with key customers, but also their supplier community. More information can be found in this paper “Placing a lens on supply chain planning“.

How does your company determine how company’s supply chain meets different supply chain challenges? Visibility is necessary to identify issues in the supply chain and the gap between current status and plan. Then corrective actions can be set up to re-align the supply chain. Do you know your supply chain performance?

CSCMP Europe 2007

Currently I stay in Paris to attend the CSCMP Europe 2007. The first presentations today focussed on the misalignment of Supply Chain Management initiatives, managing a global supply chain and some more interesting topics. One presentation was on Supply Chain Alignment in the French Wine Industry. Quelle surprise, je suis à Paris (The conference is in Paris:-)) Do you know that the Wine Supply Chain can have up to seven different designs of a supply chain, including wine producer, wholesale and retailer? By the way, yesterday at the research seminar researchers identified more than 150 different definitions on Supply Chain Management. I prefer the one from CSCMP.

Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.

Scoring High on the Supply Chain Maturity Model

Today I will fly to Paris. I’m speaker at CSCMP Europe 2007. This conference is a must for any supply chain professional who wants to enhance alignment and relationships both within their organization and across their supply chains. I will talk and present on IBM’s previous and current studies on global supply chain management. In 2005 IBM Global Business Services carried out surveys on value chains in all major developed countries.

I will outline current challenges like political and economic uncertainty or the increasing impact of global sourcing and highlight how many companies are utilizing new approaches like Supply Chain Visibility or Sense and Respond Event Management.

See you there!

Define your supply chain aligned to China

My IBM colleagues have published an interesting paper on winning in China’s mass markets and there are lot’s of essentials for global supply chain management or in this case on supply chain management in China. Structure follows strategy. The key question is if your business model and supply chain operations aligned with your China strategy. There are several implication on your operational design of your whole supply chain.
In this research paper three operational levers were identified.
Sales and distribution channels – Transform inefficient, multi-layered sales and distribution channels suffering from limited collaboration and visibility into far reaching, cost-effective channels that provide valuable information about end customers
R&D and procurement – Develop products tailored to the needs and price points of the China market; develop deeper collaboration with cost-effective local suppliers
Human resources – Alleviate talent shortages and develop a large pool of cost-effective, scalable talent with the right skills for mass markets.

The first two of them are SCM related. I like this paper because the reader will receive deep insight in forthcoming trends on servicing China’s mass market and it’s a good example how to design supply chain strategies based on your business strategy.

The procurement opportunity in India

On http://www.purchasing.com there’s an article on Indian electronics industry called The Bridge to India (under construction) and the current supply markets in this industry. There are two main messages:
1.) The market is growing and
2.) the supply base is relatively weak.
It’s not a real surprise.
In of my previous studies we analyzed Indian’s Supply Chain Management Capabilities. The study captures current practices and their degree of use, identifies significant trends and establishes operational performance benchmarks in five key areas of supply chain management: new product
development, customer order management, supply chain planning, procurement and logistics.

One of their issues on procurement is “maverick buying”, a leading indicator of procurement performance. In India, maverick purchasing is at an average level of 12 percent. More than 40 percent of respondents have indicated that average levels of maverick spending are greater than 5 percent. This confirms the need for Indian companies to focus on spend analysis and contract compliance initiatives.

What it means to buyers?

Next to the potential market development and all the related activities like strategic sourcing, market research or supplier development you should focus on compliance management incl. spend analysis and management. Contract compliance is a fundamental building block of effective procurement – if it is not in place, further work on supplier and contract development may be nullified. Additional information can be found in this paper.

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