The Drivers of Supply Chain Management Competitive Advantage

The Drivers Of Supply Chain Management Competitive Advantage

John T. (Tom) Mentzer, Ph.D. Bruce Chair of Excellence in Business 310 Stokely Management Center The University of Tennessee Knoxville, TN 37996-0530 (865) 974-1652 FAX 974-1932 JMENTZER@UTK.EDU www.bus.utk.edu/ivc

Supply Chain Strategy Principle #1

Coordinate the Traditional Business Functions Across the Supply Chain.

Supply Chain Strategy Principle #2

Collaborate with Supply Chain Partners on Non-Core Competency Functions

The Drivers of Supply Chain Management Competitive Advantage

Supply Chain Functions

Design Make Brand Price Promote Buy Stock Display Sell Deliver Finance Risk

INITIAL SUPPLIER ..

Ultimate Supply Chain

.

SUPPLIER

FINANCIAL PROVIDER FOCAL FIRM MARKET RESEARCH FIRM

CUSTOMER THIRD PARTY LOGISTICS SUPPLIER .. . ULTIMATE CUSTOMER

Supply Chain Strategy Principle #3

Look for Supply Chain Synergies.

The Drivers of Supply Chain Management Competitive Advantage

Before Consolidation

After Consolidation

Continuous Shipments
Chicago
Wednesday Shipment Thursday Shipment

New York

St. Louis
Friday Shipment

Atlanta

Tuesday Shipment

Houston
Monday Shipment

The Drivers of Supply Chain Management Competitive Advantage

Supply Chain Strategy Principle #4

Who is your customer? Not all customers are created equal. How do you reach your customers? How do you reach differential advantage with your customers (Hint: It is not always the product)?

Supply Chain Strategy Principle #5

Not All Vendors Are Created Equal Either

Supply Chain Strategy Principle #6

Global does not mean buying from the next county. Global does not mean buying nothing domestically.

The Drivers of Supply Chain Management Competitive Advantage

Supply Chain Strategy Principle #7

Identify and Manage the Supply Chain Cycles

Achieving Logistics Leverage: A Supply Chain View

Suppliers Manufacturers Distributors Product Services Information Financial Resources Demand Forecasts Retailers Consumers

Supply Chain Strategy Principle #8

Manage Demand (Not Just the Forecast) in the Supply Chain

The Drivers of Supply Chain Management Competitive Advantage

Supply Chain Management

Demand Management

Demand Management In Supply Chain Management

Demand Planning

Marketing / Customer Relationship Management

Sales Forecasting Management

Supply Chain Flow Cycles

Thread Cloth Skirt Retailer Consumers

Plan Execute

Plan Execute

Plan Execute

Plan Execute

Demand Error In A Traditional Supply Chain

Demand = 1,100 1,000 units units
End-use
Customer

1,210 units
Wholesaler

1,331 units

1,464 units

Retailer

Manufacturer

Supplier

Safety Stock + 10%

+ 10%

+ 10%

+ 10%

Total Demand Error (Safety Stock) = 110.5%

The Drivers of Supply Chain Management Competitive Advantage

Demand Error In A Demand Planning Supply Chain

Demand = 1,000 units
End-use
Customer

1,100 units
Retailer

1,100 units
Wholesaler

1,100 units
Manufacturer

1,100 units
Supplier

Safety Stock + 10%

Total Demand Error = 10.0%

Supply Chain Strategy Principle #9

Inventory is not the answer (Inventory Visibility is). Substitute information for assets. Who has the information you need?

Supply Chain Strategy Principle #10

Systems Are Templates to be Laid Over Processes. Make the tool fit the problem, not the other way around. Use Tools Wisely. Systems Should be Communication Devices.

The Drivers of Supply Chain Management Competitive Advantage

Systems Are Not Processes Processes Learning People Systems

Supply Chain Strategy Principle #11

Not all products are created equal.

Supply Chain Strategy Principle #12

Waste By Any Other Name is Still Waste

The Drivers of Supply Chain Management Competitive Advantage

Resources Are:
Value Added Non-Value Added Waste

Supply Chain Strategy Principle #13

Make Yourself Easy to do Business with.

Supply Chain Strategy Principle #14

Do not let tactics overshadow strategies

The Drivers of Supply Chain Management Competitive Advantage

Supply Chain Strategy Principle #15

Are your supply chain strategies and reward structures aligned?

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