TRB Symposium Embracing Global Complexity to Drive Competitive Advantage in a Networked Economy

  • Upload

  • View

  • Download

Embed Size (px)


TRB Symposium Embracing Global Complexity to Drive Competitive Advantage in a Networked Economy. October 21, 2013. Robert Handfield, PhD Director, Supply Chain Resource Cooperative Bank of America Distinguished Professor. Agenda. The study How is complexity increasing? - PowerPoint PPT Presentation

Citation preview

BVL Presentation Draft

TRB SymposiumEmbracing Global Complexity to Drive Competitive Advantage in a Networked EconomyOctober 21, 2013Robert Handfield, PhDDirector, Supply Chain Resource CooperativeBank of America Distinguished ProfessorAgendaThe studyHow is complexity increasing?Strategies to deal with complexityFinal ThoughtsTrends and Strategies in Logistics and Supply Chain Management: Creating End to End Strategies for a Networked EconomyPartnersProf. Sidong Zhang, Prof. Jiazhen Huo (Tongji University) Prof. Paulo Fleury, Prof. Cesar Lavalle (Univ. Rio),Prof. Ravi Shankar (IIT Delhi)Prof. Victor Sergeev (HSE Moskau)Jos Marinus (ELA, President)Prof. Paulo Resende (FDC Cabral, Brazil)Professor Hauzhe Chen, (ECU, USA)Professor Meng Lu, (DinaLog, The Netherlands)

Prof. Dr.Robert B. HandfieldProf. Dr.Hans-Christian PfohlProf. Dr.-Ing.Frank StraubeDr.Andreas Wieland

We began by interviewing 60 globalSupply Chain Officers.4


Then completed a multi-lingual survey of 1700 executives across the global We found the world is becoming avery complex place indeed!6

#1 TREND: INCREASED CUSTOMER EXPECTATIONSlowhighComplexity is Occurring in Many FormsLocal content requirements are driving companies to work with new suppliers and new manufacturing environments (e.g. complete knockdown production in emerging countries)Growth of markets in Brazil, Russia, India and China are also the most complex to navigate due to unpredictable regulations, transportation infrastructure, and risksPart numbers and product designs offer more customized options driving part proliferation and inventory control challengesGreater concern over multi-tier network disruptions (Thailand floods, Tsunami) as well as control over supply networksIncreasing volatility and unpredictability in demand combined with currency, commodity, and financial risks8

Synchromodality is a tool to give your customers a very reliable flow to allow you to decide at the last minute to switch a shipment and use the train, barge or road, when there is a hiccup. ----- Meeting Notes (10/2/12 10:24) -----Customer expectation is key. Those that have fragmented views are losing power - and they are delivering somethign to sales - and not understanding the customer. More and more companies - don't know if end to end is moving forward or not.8#1 LOGISTICS OBJECTIVE - Meeting Customers Requirements for Customized Logistics SolutionsCost pressures are also increasing!Network Innovation ComplexityProduct networks are becoming more complex, as organizations need to create more diverse sets of product/service bundles customized to local market requirements.Explosion of new channels, fragmenting existing sales channels and distribution requirementsE-commerce is driving smaller packages to more customersCustomized inbound logistics requirements that are customer-specific, and which vary by region and country Product bundling with other channel participants to create innovative new market opportunities11

It is not just growth of production volumes, but the doubling or tripling of volumes in existing plants, new production plants in BRICs, a dramatic increase in the number of models, ,more part numbers, and diverse channels.----- Meeting Notes (10/2/12 10:24) -----Value added per company is decreasing. It is still true - we are trying to outsource our value added and that means we need more logistics - and decreasing personal value-added is important. tomato souop creates - need logistics to create the quality. Globalization and cost pressure and volatile demand -and flexibility on cycle times. Outsourcing shortenes cycle times - and we ahve strategies that are responding to these trends. Cost pressure but the customer must be explicitly mentioned and what we want. Demand segmentation is a trned - 11How are companies embracing complexity?12

Talent Management, End to EndIntegration and Integrated Planning is the focuslowhighAligning People, Process, Technology andNetwork Strategies to Embrace ComplexityPEOPLETalent ManagementRapid Decision-MakingPROCESSGovernance Process StandardsIntegrated Planning

TECHNOLOGYTechnology Investments

NETWORKHorizontal/Vertical CooperationOutsourcing/Insourcing

Technology InvestmentsGlobal Network VisibilityCost to ServeEnd to End IntegrationNetwork AdaptationNetwork CooperationProcess StandardsIntegrated PlanningNetwork AdaptationCorporate ResponsibilityGreen LogisticsGovernment CooperationPEOPLE: Having the Right People Empowered to Act and Deal with Logistics Complexity, Corporate Sustainability, and Ability to Learn New Technologies is Fundamental.Correlation with TMCorrelation with RDMTalentShortfalls.38.27NewTechnologies.36.26SustainabilityPressure.36.25CostPressure.11.19Increased Riskand Disruption.23.25CustomerExpectations.18.20Globalization &complexity.20.18PEOPLETalent ManagementRapid Decision-MakingPROCESSGovernance Process StandardsIntegrated Planning

TECHNOLOGYTechnology Investments

NETWORKHorizontal/Vertical CooperationOutsourcing/Insourcing

P1 Talent ManagementP2 Rapid Decision-Making

Talent ManagementTop Performers Engage More with UniversitiesWanted: Rational, Long-term, Global SpecialistsPROCESS: Globally Integrated Adaptable Processes With Technology Embrace Volatile EnvironmentsCorrelation with PSCorrelation with IPCorrelation with NAGlobalization &Complexity.22.25.21TalentShortfalls.34.26.28Poor LogisticsInfrastructure.34.26.26Volatility.19.22.18Increased Riskand Disruption.34.35.28NetworkedEconomy.23.25.20NewTechnologies.32.37.42PEOPLETalent ManagementRapid Decision-MakingPROCESSGovernance Process StandardsIntegrated Planning

TECHNOLOGYTechnology Investments

NETWORKHorizontal/Vertical CooperationOutsourcing/Insourcing

PR1 - Global Process StandardsPR2 - Integrated PlanningPR3 - Network AdaptationDriving Decision Agility20One of the biggest challenges is how to balance consistency in execution yet still tapping into the creativity and flexibility that Id want if I was running that operation. And so we have been in search of that right balance and there is no easy answer to it. If we get our minds right on how things should work and how they work best and we teach that across our enterprise, our leaders will be more apt to approach similar problems from a similar mindset. We define the processes that must be in place, and the policies that must be followed, and finally the playbooks that act almost as a user guide on how to think through the overall requirements and get them done! We then have a global SIOP function to optimize global requirements across regional requirements, especially around our global product lines. But we recognize that they will be interpreted and acted on differently at a regional level. So we are structured regionally to drive the deployment of our global strategies, to optimize freight flows, and deal with regionally-specific issues.

20Growth in New TechnologyAnalytics and Big Data InvestmentsNETWORK: End to End Integration and Adaptation Enables Aligned Actions Across Your Global Business PartnersCorrelation with E2ECorrelation with OSCorrelation with HVCSustainabilityPressure.32.21.32TalentShortfalls.29.15.30CulturalIssues.27.24.28Increased Riskand Disruption.32.22.27NetworkedEconomy.38.18.27NewTechnologies.47.23.39PEOPLETalent ManagementRapid Decision-MakingPROCESSGovernance Process StandardsIntegrated Planning

TECHNOLOGYTechnology Investments

NETWORKHorizontal/Vertical CooperationOutsourcing/Insourcing

N1 - End to End IntegrationN2 - Outsourcing /InsourcingN3 - Hor/Vert CooperationN3 Corporate ResponsibilityN3 Green LogisticsN3 Government CooperationGovernmentRegulation.33.22.39SustainabilityPressure.59.44.37Correlation with CRCorrelation with GLCorrelation with GCSustainable Footprints Remain CriticalCrop CultivationBlending ChemicalsProductionPrintingPackingTransportationWarehousingDisposalEnvironmental Footprint of a ProductThe environmental footprint of a product accumulates all carbon emissions along the supply chain.Sustainability is part of our product roadmap from product development to green logistics and customer application. We dont view it as a trend, we view it as a right to operate, just like safety. ----- Meeting Notes (10/2/12 10:24) -----Companies are trying to put in standads for different logistics systems for places like China and Brazil. Do we have a standard box and how do we apply it? Balance between globalizatiaon and localization - and how much to do it? p24Final Thoughts: People are the Foundationfor Agile and Resilient Supply Chainsmost important thing is to work on the capability of our people and increase competenciesput a lot of importance on continuous training.and we see a high regional variation in is high in India, but practical application of knowledge to daily situations and problems in the workplace is not good.we cant afford to lose good people, so we try to take care of them as they are in demand in Brazilstrengthened ties to elite Chinese universities and a selective hiring processin Russia we hire for their mindset and willingness to learn, not their supply chain experience. Then we bring them to our Western locations and train them how to do business..we have to move people out of traditional functional silos so that they are able to speak to people outside of supply chainyou need a backbone cadre of B players who are solid but who have low turnoverthey will deliver reliably 90% performance. Once you have that base, you can deal with the volatility of human capital.25