The Future of a Networked Supply Chain Dr

The Future of a Networked Supply Chain Dr. Kevin Mc. Cormack March 2014 Advanced Analytics for Business Solutions Copyright © DRK Research 2014

Managing the Extended Enterprise: The Future of the Networked Supply Chain The supply chain world is more connected than ever before. Social media and collaborative-networked applications are commonplace. Mobile apps make the office “everywhere”. How do you use this connectivity to improve supply chain performance? What are the best practices currently being used and under consideration? This presentation presents recent research suggesting the future and what is needed to be successful. Copyright © DRK Research 2014

Independents Associates Other JK Data Analytics ISM Shanghai China Consulting Shanghai i. Cognitive Singapore Data Top TBD Europe On Demand Analysis Percipio SAS Portland, OR Neurametrics Profit Point DRK UMFG Brazil Phil. PA Advanced Analytics for Business Solutions Orion NIPE NJ 17 th Floor University of Ljubljana Slovenia TX Global BPM Research Network University of Zagreb, University Croatia Of Maryland Skema France Business Process Knowledge ISM BPM Network Vlerick Leuven Gent Management School Belgium Ph. D. Program U of ES Brazil Supply Chain Council Northwood University

Dr. Kevin Mc. Cormack is President of DRK Research and a professor at Skema Business School (France) and Northwood University. Dr. Mc. Cormack has over 30 years of business leadership, teaching, research and consulting experience. His experience covers many national and international industry segments and a broad range of business processes. He has been a member of or has successfully conducted engagements with several government agencies and major companies in the food, forest products, pharmaceutical, chemical, consumer products, high tech and the plastics industry. Some of his clients have been Kraft, Philip Morris, CPC International, Cargill, Texas Instruments, USMC, Phillips Petroleum, Chevron-Phillips, Columbia Forest Products, Dow Chemical, Warner-Lambert, Standard Charter Bank, Microsoft, Intel, Tektronix, several state governments, Borden Chemical, California Public Employees Retirement System (Cal. PERS), Wal-Mart, Campbell’s, General Mills, Fairchild Industries and Pepsi. Co. He has written six books and over 100 articles on business process, Supply Chain Management and business strategy.

Evolution of Supplier Development Supply Network Management STRATEGIC SUPPLIER DEVELOPMENT Higher Evolutionary Strategies Supply Base Performanc e/Capability REACTIVE SUPPLIER DEVELOPMENT SUPPLY BASE REDUCTION SUPPLY BASE ASSESSMENT TOTAL QUALITY MANAGEMENT Lower Time

Connectivity, Capability and Friction (Interaction Costs) Interaction costs: The money and time expended whenever people and companies exchange goods, services or ideas. Internet Broadband Internet Wireless Capability Internet Phone Telephone Radio Mobile Wireless High Connectivity High Interaction costs Post Low People to People High Telegraph Low Friction Low

P 2 P View - Constraining Copyright © DRK Research 2007

P 2 P “Networked” View Copyright © DRK Research 2014

SC Network Units of Analysis s Interactions and Relationship s s s SC Network Organizer s s Commodity Category s Supplier Attributes DRK Confidential Do not Distribute without Permission Supplier Environment 9

SC Network Components Interactions and Relationship s Performance Relationship s The customer’s reputation with suppliers is also a critical factor. Customer of choice s Supplier Environment SC Network Organizer s s Environmental Geographic, market, transportation, etc. s s Supplier Attributes Human Resources Supply Chain Disruption Financial Health Copyright© 2007 DRK Research, LLC

Interactions and Relationships The basics - Orders / goods / money – do this in a self service, efficient way. Communications (two way) – not just orders! Face to Face meetings – still important. Proximity is Important (Geographic, Organizational, Institutional, Cognitive, Social) The Goal: to be the customer of choice of your suppliers and build and benefit from a relationship. Copyright © DRK Research 2014

ks SC Network “Amazon” Like Hub r wo er th t Ne O s Interactions and Relationship s From $250/PO to <$5 s s H ub s SC Network Organizer s Commodity Category s Supplier Attributes DRK Confidential Do not Distribute without Permission Supplier Environment 12

Customer of Choice “A customer of choice consistently receives competitive preference for scarce resources across a critical mass of suppliers in its database, ” A Procurement Strategy Council report found that suppliers rated only 5% of customers as “customers of choice. ” A customer of choice also receives a performance preference of 5 -10% (price, delivery, quality, etc. ) The network organizer has control of this! Copyright © DRK Research 2014

Relationships to Performance Industry Focus Customer Leverage Network Performance Relationship Reputation Critical Info Sharing 30% improvement in relationship factors leads to an 8 -10% improvement in network performance

Information Sharing is critical to network performance Cost Structure Process / Material Change Production Schedule Network Performance Freq. of Critical Info Sharing Inventory Status Accreditations EPA Violations Other Gov. Validations

Financial Performance of each member is critical to network performance Profitability of Business Unit Cust. Sat. of Business Unit Network Performance Financial Indicators Perf. v. Competition Perf. of Business Unit AR v. Payable Cycle Time

Building Network The Web (Internet enablement) – over 20 years old! An Amazon type hub. Social Networks (Facebook, Linked. In, etc. ) – building linkages with a purpose. Mobile Apps – (i. Pad, Phone, etc. ) - easy connections from anywhere. BYOD – bring your own device. What are the issues? No longer are you tied to a desk and device! Copyright © DRK Research 2014

Building Network Issues: Who pays for the Amazon hub? Competitiveness – suppliers connect to many networks with many different formats Confidentiality – who controls? Who sets the rules? Big data – analytics! Trust – is this getting better or worse? Opportunistic Behaviors (cheating) – better or worse? Copyright © DRK Research 2014

Actions Build key relationships with your suppliers. Become customer of choice. Build YOUR network (Amazon, Linked. In, etc. ) Big data – Self service analytics! Make things visible, actionable. Trust – make it better Opportunistic Behaviors (cheating) – enforce the rules BYOD and Mobile – it is here, deal with it or leverage it Copyright © DRK Research 2014

Questions? Dr. Kevin Mc. Cormack March 2014 Advanced Analytics for Business Solutions Copyright © DRK Research 2014