Debrief 1

1
Did you join the
management team
or the fire brigade?

2
Debrief after round
1

Your first experience with The Fresh Connection

What went well?
What did not go so well?
Was everything clear?

Please give us your reflection in headlines

Review team results

Team ranking
Individual rankings
KPI benchmarks

3
Maturity scan:
Strategy

Stage of Characteristics
evolution

Stage I: Ad hoc decisions, fire fighting problems, no

Ad hoc clear strategy

Stage II: Functional organization with each function

making separate decisions in its own silo,
Functional based on a functional vision and policy

Stage III: Shared cross functional strategy and vision,

translation to all functional areas not yet
Integral implemented on tactical level

Stage IV: Shared cross functional strategy and vision,

clear translation to all functional areas,
Visionary guideline for all tactical measures

4
 Strategy
&
Strategy into
Action
5
A Supply Chain and
its traditional
conflicts

High inventory turns

VP Supply Chain
Maximum flexibility

Components Finished product

Supply Production Distribution

VP Purchasing VP Operations VP Sales

Lowest purchase High utilization % High service level

price Long runs minimize Safety stocks
Full truckloads changeovers
Low unit costs

6
Competitive
strategy

What must your supply chain excel at?

Benefit driven by
customer value
Flexibility
customization
Cost: variety
low volume
cost
Quality : Time
top quality delivery speed
consistent quality on-time delivery
development speed

7
 Companies should know
their Order Winners (and
Order Qualifiers)

Competitive factors: Performance objectives:

If customers value these Then we need to excel at these
Low price Cost
High quality Quality
Fast delivery Speed
Reliable delivery Dependability
Innovative products and services Flexibility (product/service)
Wide range of products and Flexibility (mix)
services
The ability to change the timing Flexibility (volume and/or
or quantity of products and
An order winner
servicesis a characteristic that will win the delivery)
bid or customer's
purchase. To provide order winners, firms must be better than their
competitors.
An order qualifier is a characteristic that is required for a product or
service to be considered by a customer. Firms must provide the qualifiers
to get into or stay in a market. To provide qualifiers, they need only to be as
good as their competitors.

Source: Hill, 2000 8

 The relation between
competitive strategy
and supply chain
strategy
Finance, Accounting, IT and HR

Marketing
New product
andOperations
Distribution Service
development
Sales

Supply
Chain
Value
Chain
Value is created through a chain of value adding processes/functions
that must be performed for a successful sale. Other
process/functions support and facilitate
Supply chain strategy: determines the nature of material
procurement, transportation of materials, manufacture of product or
creation of service, distribution of product
Consistency and support between supply chain strategy,
competitive strategy, and other functional strategies is important

9
Source: Sunil Chopra, Peter Meindl, Supply Chain Management, 3rd ed., 2007
 Supply Chain
strategy

Supply chain strategy must fit with competitive

strategy

Competitive
Strategy Cost Quality

Time Flexibility
Competencies
Supply Chain
Strategy
Resources Processes

10
Source: Sunil Chopra, Peter Meindl, Supply Chain Management, 3rd ed., 2007
 Achieving strategic
fit

Step 1: Understanding the customer and the

companys value proposition

Step 2: Understanding the supply chain

capabilities

Step 3: Achieving strategic fit

11
Source: Sunil Chopra, Peter Meindl, Supply Chain Management, 3rd ed., 2007
 A one-dimensional
world

Functional products Innovative products

n e s s
i e nc y n s i v e
e f f i c s po
re
Stable, predictable demand
Dynamic, unpredictable
demand
Fisher (1997) distinguishes two
product types
and just two relevant supply chain
strategies
Source: Marshall L. Fischer What is the right supply chain for your product?, HBR 1997 12
 Differences in
demand

Functional Innovative
products products
Product life More than 2 3 months to 1
cycle years year
Contribution
5% to 20% 20% to 60%
margin
Product
Low High
variety
Avg. forecast
10% 40% to100%
error
Avg. stockout
1% to 2% 10% to 40%
rate
Avg. forced
season-end 0% 10% to 25%
markdown
13
Source: Marshall L. Fischer What is the right supply chain for your product?, HBR 1997
 Different supply
chains

Physically Market
efficient supply responsive
Chain supply chain
Supply efficiently a Quickest possible
Primary goal
lowest possible cost response
Manufacturi
High utilization Capacity flexibility
ng focus
High inventory
Inventory
turns, minimize Buffer stocks
strategy
inventory
Reduce but not at
Lead time Invest aggressively
expense of higher
focus to reduce lead time
costs
Supplier Speed, flexibility
Cost and quality
selection and quality
14
Source: Marshall L. Fischer What is the right supply chain for your product?, HBR 1997
 Match products and
supply chain

standardize

efficiency

refocus on responsiveness
refocus on efficiency
Strategy
responsiveness

innovate

functional innovative
product

15
Source: Marshall L. Fischer What is the right supply chain for your product?, HBR 1997
 Achieving a strategic fit:
Choose your right
supply chain

Responsiv
e supply High
chain shelflife
%

Responsive
ness
spectrum

Low
shelflife
Efficient %
supply
chain
Functional Demand Innovative
products uncertaint products
y
spectrum
16
Source: Sunil Chopra, Peter Meindl, Supply Chain Management, 3rd ed., 2007
 Supply Chain
Performance

Two key points

there is no right supply chain strategy
independent of competitive strategy
there is a right supply chain strategy for a
given competitive strategy

All functions in the value chain must

support the competitive strategy to
achieve strategic fit

17
Source: Sunil Chopra, Peter Meindl, Supply Chain Management, 3rd ed., 2007
Strategy exercise

Company Mission

Key Strategies
& Objectives

Actions by Per Role

Measures / scorecard / dashboard

18
19
 Strategy into
action
Levels in version 2013
Theme Sales SCM Operations Purchasing

Service level # Shifts

Delivery window
Level 1 Reliability Order deadline Safety stocks # Pallet locations
Delivery reliability
Shortage rule # FTE

Lotsizing in SMED
Batches and Shelf life
Level 2 frequencies Trade unit
production and Increase speed Trade unit
purchasing

Intake time
Preventive
Supplier selection
maintenance
Speed and Payment terms
Level 3 quality
Payment terms Frozen period Solve breakdowns
Quality
training
Transport mode
Raw materials
inspection
 Extensions
in version 2013

Theme Sales SCM Operations Purchasing

Promotional
pressure
Extension Production interval Resource selection Dual sourcing
S&OP Category
a tool
management
Forecasting

Outsourcing VMI
Extension External Promotion horizon
warehouse (MCC) Supplier
b collaboration VMI
Inflate PET development

CO2 sla Decrease of water

usage
Decrease of
Extension CO2 footprint
energy usage
c Sustainabilty
Decrease of start
up productivity
loss

Extension KPIs and

KPI selection KPI selection KPI selection KPI selection
d targets

Tracking & tracing Contract duration

Supply chain Quarantine Supplier
Extension Risk events
risk Scenarioplanner Risk events development
e Relaunch (horizon)
management Pooling warehouse Dual sourcing
FTE Risk events