Supply Chain Management Assignment …

1 M&IS 34060 Operations Management Supply Chain Management Assignment Assignment : Read the textbook chapter on Supply Chain Management (SCM), chapt. 11, and the enclosed white paper that relates to SCM. As you read, notice how many connections between the white paper and operations Management topics such as SCM (ch. 11) operations strategy (ch. 2), forecasting (ch 4), process and product design (ch. 5 and 7), etc. Use at least four concepts or discussion points from the whitepaper and show how these "imperatives" relate to these other OM issues and concerns. ( all seven imperatives need to be covered.)o Some of the white paper is technical in nature and other areas give accessible examples. Be sure to include in any technical discussion some form of explanation or example to illustrate what is meant. o Be sure to use formatting cues, such as bold or headings, so I can easily find the different points you are making.

2 O This must be type-written and double-spaced and would typically be somewhere in the 3 to 5 page range. Please use paragraph form. This will be part of your Individual Investigation that is to be turned in at the end of the semester. Note, though, the schedule has a suggested timeframe for when you may want to complete this as it relates to other course materials. W WHITEPAPER BEGINS ON NEXT PAGE High Performance in a Volatile WorldSeven Imperatives for Achieving Dynamic Supply Chains23 IntroductionIncreasing economic volatility has severely disrupted the Supply chains of companies across industries. Rapid swings in the availability and price of key commodities, major currency fluctuations, upheaval in financial markets, disruptive geopolitical events and continued development of customer channels on a global basis have conspired to place unprecedented pressure on the way these companies source, manufacture and distribute products.

3 Accenture research has found that those with very dynamic and well- synchronized Supply chains can use such volatility to their advantage. Companies that want to do so face seven imperatives, which we describe and illustrate in this paper. Large, global companies face numerous challenges in today s tumultuous economic climate. One of the biggest is creating dynamic Supply chains that help a company achieve and maintain high performance despite major fluctuations in demand and Supply , significant changes in commodity availability and prices, big swings in currencies, unforeseen geopolitical events and the need to align to both mature and emerging high growth markets. Customer expectations are high and rising, and global competition has dramatically shortened the lives of products from cellular phones to automobiles. Innovations are commoditized in weeks or months rather than years. Unpredictable commodity and transport costs can render low-cost offshoring a high-cost alternative, continuously forcing companies to reevaluate how and where they source, manufacture and distribute products.

4 Research that Accenture has conducted going back to 2003 has found that Supply chains have a disproportionate impact on corporate performance relative to the attention generally paid the function in most companies1. According to this research, a Supply Chain can account for between 50 percent and 70 percent of a manufacturer s total costs of doing business and more than 50 percent of its assets. It can also have significant impact on customer service and sales. Reflecting this prominence, a clear majority of executives (89 percent) say Supply chains are core to business success and that their importance is growing. To put it bluntly, not only do more dynamic Supply chains result in superior corporate performance, but it is almost impossible to overcome the negative bottom-line impact of more traditional Supply Chain models in today s permanently volatile environment. 45 Accenture further has found in our client experience that the most successful companies clearly align their Supply Chain operations with the value proposition of the business and invest in those operational areas that lead to highest shareholder return.

5 In fact, we have found business practices and capabilities that are a great strategic fit with the overall focus of the business and can execute reliably and flexibly can play a major role in helping companies generate cash, reduce operational costs, improve asset productivity, optimize their tax liabilities, drive revenue growth and market differentiation and foster greater environmental more recent research, completed at the end of 2008, Accenture interviewed 1,500 executives in North America, Europe and Asia from more than 600 companies in 10 industries. (Nearly half 48 percent were in companies with at least $1 billion in annual revenue.) As we studied how these organizations design and manage their Supply chains for superior performance, it became Figure 1. The seven Supply Chain imperatives combine to drive high apparent that no one silver bullet could explain success. We did, however, identify seven fundamental guiding principles that effectively serve as a line of demarcation between a would-be and a true high-performance business (see Figure 1).

6 Four of the imperatives focus on strategic fit the linkage between the corporate vision and strategy with the Supply Chain vision and strategy. These imperatives are to:1. Articulate a clear value creation Approach the Supply Chain as a value delivery Segment the Supply Chain and consistently adapt it to the characteristics of each Optimize the global operation architecture for scale, access, flexibility and risk remaining three imperatives focus on execution the ability to turn the strategy into business practices that are performed flawlessly on a daily basis. These imperatives are to:5. Selectively invest for mastery in differentiating capability areas. 6. Deploy information systems that deliver insightful analytics, alignment and Drive process execution discipline with the right talent powered by a culture that enables high that excel in these seven areas will be better positioned to develop, source, manufacture and distribute superior products at lower relative costs; increase revenue, profit and shareholder value faster than competitors; and more effectively anticipate customer needs and meet them profitably.

7 In the remainder of this document, we explore these imperatives and provide examples of how leading companies have addressed them to build Supply chains that help drive high performance and competitive advantage in an era of unprecedented volatility and research and client work have revealed that companies with superior Supply Chain performance have a clear understanding of how they create value for customers. In addition, these companies know what they need to do in the future to provide even greater customer value and thus fuel their own growth. We refer to this as having a value creation algorithm, and it has two core elements (see Figure 2):Value proposition orientation What a company (or business unit) is known for, its market differentiation and what that differentiation requires of its Supply orientation What the business must focus on (in terms of its customer segments, product/service offering, channels to market and geographies) to generate current and future it may appear simple, clearly articulating a company s position on those two dimensions is not easy.

8 Yet doing so is crucial to creating a Supply Chain that contributes to high performance, and the best companies in our survey had clearly defined themselves in the two Value Proposition OrientationEvery organization has five fundamental ways in which it can generate customer value: Product leadership unique product and service features (for example, the sound quality of Bose audio speakers, the user interfaces of Apple computers, cell phones and music players, and the attractiveness of LVMH Group s luxury apparel, perfumes, watches and other consumer products)Speed to market a rapid product lifecycle turnaround (such as that exhibited by apparel maker and retailer Zara)Customer experience the quality and personalization of each interaction (as demonstrated by such companies as online shoe retailer Zappos and the personal experience of the local Starbucks shop)Price competitiveness a lower relative price point for given product feature (Wal-Mart is the undisputed leader in this area)

9 Choice extensiveness the breadth of the product catalog and configurability of solutions ( has built the world s leading online business by pursuing this avenue to value whereas WW Grainger is well known in the industrial distribution world for its broad product line)Many executives say their company pursues all five value propositions. However, as a company approaches world-class operations in any one of the five it becomes increasingly difficult to fulfill the other competing propositions. In fact, in some situations, the operations required to fulfill the five objectives can be mutually exclusive, thus making it impossible to be world-class in all five with a single operating model. With Figure 2. The two elements of a value creation No. 1: Articulate a clear value creation algorithm6a clearly chosen and articulated value proposition orientation, companies can make effective operational trade-offs and build the appropriate operating models to fulfill demand for different customer segments and different value propositions.

10 High-performance businesses do make such choices and do so more explicitly than not. Take Apple Inc. The company s value proposition is clear: product leadership. In turn, Apple has created a Supply Chain that is highly tuned to deliver this value proposition. Consumer audio product manufacturer Bose is another good example. Bose looks for technical ideas that no one else has commercialized. It then makes its product look very different so that consumers will take interest long enough to understand the technical product differentiation. Forty years after its founding, Bose remains true to the principle of product leadership and drives all aspects of the business from this The Growth Orientation In addition to clearly understanding what customer value they should focus on, leading manufacturers are better at determining where, how and to whom to provide that value. Masters have a much better sense of which customers to target, how to reach them (marketing messages and distribution channels) and in what regions of the world.