Supply Chain Management

Sam Peou

Copyright 2012

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Disclaimer: This document has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Radius Market Cambodia Ltd, its members, employees and associates do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

Table of Contents

• What is Supply Chain Management?...........................................................................................................3 • Why Supply Chain is Important ?.................................................................................................................4 • The Logics Behind SC Collaborative Strategy...............................................................................................5 • Key Management Engines That Fly Supply Chain........................................................................................6 • Forward & Reverse Supply Chain Concepts..................................................................................................7 • Basic Supply Chain Flow Charts...................................................................................................................8 • Forward Supply Chain Perspective..............................................................................................................9 • Reverse Supply Chain Perspective.............................................................................................................10 • Forward & Reverse Supply Chain Functions....... .......................................................................................11 • Benefits of Supply Chain Focus .................................................................................................................12 • Dysfunctional Supply Chain Process Outcomes.........................................................................................13 • Forces That Cause Supply Chain Reactions................................................................................................14 • Supply Chain Process Deficiency Debugging.............................................................................................15 • Corporate Hazard Risks..............................................................................................................................16 • Supply Chain Process Debugging Recommendations................................................................................17

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What is SCM?

The Supply Chain is the interconnecting activities of business partners starting from raw material extraction and/or exploration points to consumers’ point-of-use/process including manufacturing, distribution, transportation, wholesaler, retailer and any other supplier that participates and engage in a wide spectrum of activities such as production, delivery and the sale of a product or service. Supply Chain Management (SCM) is typically focusing primarily on 2 vital functions “Forward & Reverse” or sometime known as forward and reverse logistics

Generally, SCM is the interfacing and nurturing of business operational activities which encompassing partner’s business relationship management activities vertically and horizontally, i.e., from raw materials extracted points to consumers’ point-of-use or point-of-consumptions

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Why SCM is Important?

Almost Everything that We Touch, Use, Work On, Consume and Perhaps Feel Are Driven By Supply Chain Management

Synchronized SCM Allows Companies to Accelerate its Processing, Manufacturing and Distributing Capabilities of Raw Materials, Good s and Services to End Customers or Point-of-Use More Efficiently and Effectively

Unsynchronized SCM Causes the De-Accelation/Disruptions to its Processing, Manufacturing and Distributing Capabilities of Raw Materials, Goods and Services to End Customers or Point-of-Use

End-2-End Supply Chain Process Needs to be Synchronized to be Efficient End-2-End Supply Chain Process Needs to be Checked/Collaborated Regularly to be Synchronized

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The Logics Behind SC Collaborative Strategy

Regardless of Company’s sizes, technological advances, financial strengths, skilled resources and core-competency capabilities; Not a single company in the world who can extract raw materials, produce, and deliver its finished products and services to end-users/processors and/or point-of-consumptions without utilizing external collaborative channel’s efforts and supports 6

Core-Competency Focus Management Focus Long Term Supplies Visibility Long Term Supplies Security Risk Mitigations & Sharing Knowledge & Info Sharing Financial Leveraging Flexibility Management Market Regulations Advocate

Key Management Engines That Fly SC

The Corporate Cockpit

Management

The Navigation

Management Systems

The Cabin Crews

Management

On-Ground

Strategic

Management

Vision, Mission, Values, Strategy, Goal s& Objectives Executive Management & Leaderships Financial Management Product Research, Innovation & Development HR Development & Nurturing Business & Market Development Corporate Compliances (Procedure, Policy) Environmental Management

Access /Acquire External Resources Outsourcing Strategy Management Supplier & Customer Relations Management Knowledge Exchanges & Collaborations Risk Leveraging Management Market Development ,Targets & Penetrations Marketing Strategy Strategic Brand Development

Shop Floor Layouts & Production Flow Control Management

Efficiency & Productivity Focus Planning & Scheduling Production Measuring & Controlling Processing & Conversion Warehousing & Distributing Quality Control Management Customer Services Procedure, Policy & Work Instructions

Corporate Navigation Systems Communications Management

Systems MIS (Management Information

Systems)- ERP, MPS, MRP, CRM

Information Tracking & Tracing Control Management

Reporting Management Information Transfer

Management KPIs Dashboard

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Corporate Affairs Operational Affairs

Information Technological Affairs Collaborative Affairs

Forward vs. Reverse SCM Concepts

Forward SCM

Reverse SCM

A Process of Pushing or Delivering of Processed Raw Materials, Semi and Finished Products into Processing Facilities, and/or Consumer’s Markets via Partner’s Collaborative Channels

A Process of Extracting/Returning Raw, Semi and Finished Products from Processing, Manufacturing, Distributing Facilities and/or Consumer’s Markets or Customer’s Installed Base via Partner’s Collaborative Channels to Designated Site Locations for Various Reasons 8

Basic Supply Chain Flow Charts

Natural Resources Exploration/

Extraction

Raw Materials Processing/ Conversion

Semi-Finished Goods Developing Processing

Finished Goods Developing Processing

Warehousing/ Distributions

Importers/ Wholesalers Retailers Consumers

Waste Management/ Containment

Waste Recycling Treatment

Natural Source/Reuse

Researching, Developing, Planning, Leading, Organizing, Controlling, Collaboration, Nurturing

Logistics, Warehousing, Distribution & Technical Control Management

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Forward Supply Chain Perspective Raw Materials Plantation & Production Finished Goods Production & Manufacturing

Finished Goods Distribution & Logistic Center Wholesales & Retails Outlet

Waste Management Household & Commercial Consumptions Waste Containment

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Reverse Supply Chain Perspective

Household& Commercial Point of Use Repair Centre /Recycling Facility

Scrap Component Processing Facility Raw Mats Processing Facility Electronic Component Manufacturing

Computer Manufacturing Wholesales & Retails Household/ Commercial

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Forward & Reverse SCM Functions

Forward Supply Chain Reverse Supply Chain

Sales Order Management Product & Technological Research, Innovation,

Design , Development & Deployment Business & Market Competitive Analysis Converting raw materials into consumable or

usable goods External Partner Interactions & Collaborations Pre-Sales Support Services Customer Order Management (Sales Orders) Warehousing and Distributing, Raw, Semi, and

Finished Goods to Point-of-Use Understand Consumer Behaviors, Needs, and

Wants Quality & Environmental Management Manufacturing Costs End-2-End Product Costing & Pricing Manufacturing Efficiency & Productivity Raw Materials Procurement & Sourcing

Return Authorization Management Product Reengineering & Reprocessing Product Return/Recall Management Product Defective Management Product Point-of-Use Management & Analysis Spare Parts/Components Allocation Management Technical Supports Help Desk, Call Center, and On-

Site Technical Support Post Sales Support Services Customer Installed Base Product Management Repair Center Operating Costs Ene-2-End Repair Prices/Costs Repair/ Return Efficiency & Productivity Spare Parts/Components Procurement & Sourcing Product Reliability Management & Analysis Waste, Recycling & Environmental Management

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Benefits of SCM Focus Customer Support Services Long’s Term Customer Order Commitments Great Market Access Opportunity Increase Sales & Revenues Visibility of Sales & Financial Forecasting Brand Awareness & Recognitions Brand Loyalty

Obtain Reliable Materials Sourcing & Supporting Services Increase Visibility of Sales & Financial Forecasting Secure Better Prices, Quality, & Quantity Needed Control Procurement & Sourcing Activities Better Leveraging & Sharing Risk Establish Long Term’s Partner Commitment to Align Corporate Vision, Mission, Value, Goals & Objectives

Improve Product Efficiency & Quality Low Turn Over/Attrition Rates Improve Working Environment Attracting External HR Resources Improve Commitment, Focus, Team-Work Increase Knowledge & Responsiveness Encourage Innovation & Proactiveness Boosting Employee’s Self-Confidence Strengthen Key Resources

Improve Overall Company’s Bottom Line Increase Sales & Profit Margins Reduce Unnecessary /Overlapping Costs Reduce Inventory Carrying Costs Reduce HR Training & Development Costs High Visibility of KPIs and Performances 13

Dysfunctional Supply Chain Process

Outcomes

• Misalignments of Corporate Vision, Mission, Values, Objectives, and Goals • Confusing, Time Consuming, Low Profitability & Productivity • High Production & Procurement Costs • Inability to Determine Actual Profits/Losses • Inability to Determine Accurate Pricing, Costing, & Forecasting • Limited Visibility of Key Performance Indicators (KPIs) • Limited Visibility and Understanding of Internal Strengths & Weaknesses • Limited Market Access / Time to Market • Poor Quality, High Rates of Return & Defective • Low Employee’s Morals, High Attrition Rate/Turn Over • Poor Customer Service, Low Sales, Low Prices • Brand Names Disloyalty • Poor Partner Relationships, Unreliable Long Term’s Supply Commitments • Low Inventory Turn Over, High Inventory Cost • Negative Impacts to Corporate Bottom Line

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Forces That Cause SC Reactions

Internal Forces

Natural

Forces

External

Forces

Changing in Corporate Vision, Mission, Value Objective, Goals, Policy, & Procedure Employee’s Morals & Working Conditions Corporate Strategy & Tactical Approaches Financial Capability & Control Management (Positively & Negatively) Management Information System (MIS) Internal Core-Competency, Skilled Resources/Capabilities Employee’s Strikes & Demonstrations

Change in Weather Climates Fires, Floods, Droughts, Storms, Rains Earthquakes, Tsunami, Hurricanes Tornados, Volcanoes Disease & Virus Outbreaks Other Accidental Incidents or Disruptions

Market Competitions Change in Raw Material Prices Shifting in Partner’s Corporate Vision Mission, Value, Objectives, Goals, Procedure & Policy Changing in Partner’s Financial Capabilities & Control Management Consumer Behaviors & Demands Market/Economic Conditions Partner’s Employee Strikes/Demonstrations Shift in Political/Social Climates Government Regulations Technological Evolutions Stock Markets Global Financial Environments Environmental Implications Terrorist Attacks/War Outbreaks Shifting in Religion Beliefs

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Beyond Corporate Controls

Within Corporate Controls

Supply Chain Process Deficiency Debugging

Employee & Management Capabilities

Accessories & Equipment

Capabilities

Process & System

Capabilities

Check Existing Process, Procedure, Policy, Work Instructions Check Existing ERP System/Management Information System (MIS) Capabilities Check Production Shop Floor Layouts & Designs from Start to Finish Check Disaster Recovery, Backup Plans & Strategy Check Customer Requirements

Check Corporate Organizational Charts Check Functional Departmental Roles Check Employee’s Job Descriptions & Roles Check Skilled Resources Availability Check HR Policy & Its Competitiveness Check Management Experiences Management Capabilities Check Headcounts to determine Whether its under/ over Staff Check Relevant Labour Laws to Ensure Internal HR Policy Aligns with External Requirements and Laws

Check Equipment Functionalities Check Equipment Reliabilities & Usability Check the Ergonomic of Equipment, & Accessories Check Technical Support Services & Backup Plans Check Supplier’s Capabilities & Management Experiences

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Supply Chain Process Needs to Be Checked & Collaborated Regularly To Be Synchronized and Efficient

Corporate SC Hazard Risks

Corporate Hazard Risks

Financial

Market

Operations

Strategic

Shareholder’s Values, Corporate Values & Goodwill Sales, Profits & Stock Prices Sales & Demands Forecasting Working Capitals & Cash Flows Employee’s Salaries & Compensations Corporate Sustainability & Capabilities

Market Trades & Shares Product & Service Prices Timing & Places Customer Relations Customer Services Consumer Demands Brand Recognitions Brand Loyalty

Production Forecasting, Planning & Scheduling Production Flows-Inputs/Outputs Over/Under Stocks & Inventories Raw Materials Sourcing/Procurement Manufacturing Efficiency & Product Quality Warehousing, Logistics & Distributions HR Productivities & Morals

Corporate Vision, Mission, Values, Objectives, Goals Supplier’s Relations & Collaborations Public Relations & Images In-house/Outsourcing Activities Product Research , Innovation & Development Investment Opportunities

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Supply Chain Process Improvement Recommendations Reassess and Re-evaluate Equipment Functionalities, People Capabilities, Process & System

Capabilities Reassess, Re-evaluate, and Analyze Company’s Existing Process, Procedure, Policy and Work

Instructions which Focus on Internal and External Interconnecting Activities or Tasks Clearly identify Business Process Gap/Deficiency including Management Information Systems (MIS)

or Enterprise Resource Planning (ERP) Develop, Implement, Modify and Deploy New Process, Procedure, Policy, and Work Instructions

Where Necessary & Required Re-Defining/Reassigning Roles and Responsibilities for Each Employee Implement International Standard & Compliance Implement Key Performance Indicators (KPIs) to Measure & Control Take Corrective Action Swiftly and Decisively Continue to Check and Collaborate End-2-End Processes Regularly, Align to Ensure Synchronization Executive Management Supports are Key to Improve Supply Chain Process

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