Bill Stankiewicz Scope 2010 Supply Chains For The 21st Century
1. Market Centric Industrial Supply
Chains for the 21st Century
Scope Conference Presentation
April 2010
0
2. Scott Mason
1
Exec. Vice President – Global Supply Chain; Stepan Co.
Sr. Vice President- Global Supply Chain and SHE; Nalco Co.
President – Institutional Division ; Nalco Co.
Exec. VP & President ; Graftech International Ltd.
Vice President Global Supply Chain; Union Carbide Corp.
29 years leading industrial businesses and
supply chains
e-mail : scmason@ameritech.net
4. 3
Market Centric Industrial Supply Chains for the 21st
Century
The development of internally supplied and externally
sourced solutions to manage industrial supply chains
accelerated in the last decade. This presentation will
focus on the use of these advancements and the
interconnectivity of strategy, systemic analysis, lean,
external service company capabilities, and IT
technology in solving several real-world industrial supply
chain challenges. We will look at the critical factors
that led to the selection and implementation of these
solutions.
5. WHAT DOES IT MEAN TO BE MARKET CENTRIC ? 4
Market Innovation
Needs
Complexity
Business Low cost
Strategy producer
Business
Policy’s Cost
Supply Chain
Design
Starts with Understanding the
Business Strategy
Customer Intimacy
6. Supply Chain Challenges for the 5
Coming Decade
Globalization Growth
Changing Volatility in
Regulations key inputs
Companies are
Environmental searching for a Product
coherent strategy to
sustainability integrate the critical quality
elements
Logistics Collaboration
Disruptions with External
Partners
Pressures to Personnel
Reduce costs Skills and
Turnover
7. Supply Chain Strategy and Function Excellence
have become Synonymous
Industry Response on Strategic Focus of Industrial Supply Chains
All Plants U.S. Canada
Sample 927 787 140
Continuous Improvement Program 73.0% 72.9% 73.6%
Quality Certifications 52.5% 50.6% 63.6%
Customer Satisfaction Surveys 45.3% 45.9% 42.1%
Benchmarking 34.8% 35.2% 32.9%
Environmental Management 31.8% 32.4% 28.6%
Total Productive Maintenance 24.8% 24.5% 26.4%
Energy Management 23.2% 23.2% 22.1%
None of These 10.0% 10.3% 9.3%
Industry Week/MPI 2007 Census of Manufactures
Supply Chain Executives Reflect a Strong Internal Focus Yet
Business Leaders See Growth and Customer Interaction as the
Key Demands for the New Decade
8. Why Incorporate a Market Centric Approach in
Your Supply Chain Strategy?
INSIDE-OUT VIEW OUTSIDE-IN VIEW
What are our deficiencies? What are our customers/market needs?
What are the priorities? What value impact do they have?
What are the resource constraints? What solutions are possible?
What should our goals be? What should our goals be?
Resets priorities around the customer
Opens new needs and novel ways to create value
9. Do you know what demands your system
must serve ?
Understanding the requirements of the system is a
necessary first step to aligning the system to meet the
business needs
10. Common Challenge: Cultural Change to 9
External Centricity
Experienced Planned Predictive Managed
React to Material Dynamic Creating
Incoming Resource Patterns Demand
Orders Planning From First Patterns
System Principals Desired
Petrochemicals
Water Treatment & Oil Field
Graphite Electrodes
Reaction to External focus Receiving Orders
Planning on demand To Taking Orders
determinants
12. 11
Customer Intimacy Back Ground
Market Needs Business Strategy Business Requirements
• Discreet demand • Unique solutions for • Service levels > 97%
each customer and for many
• High demand
customers 99%
volatility (+300)% • High component of
service in offering incl. • Numerous container
• Typically VMI
VMI & CPU types to serve many
• Wide variety of demand levels and
• Limited
consumption rates unique customer needs
standardization either
• High relative cost by product or market • Ability to “rush”
to ship segment delivery in under 3
days
• Numerous line • Have customer “out
items in an order source” this need to • Large multi-sized
supplier returnable container
fleet management
• Strong sustainability
elements, i.e. recyclable • Many unique delivery
containers, etc. requirements
13. 12
Step 1- Implement Demand Sensing
Demand volatility and complexity is increasing. By becoming
closely linked to our customers supply needs and rate of change,
we can ensure a response capability to support the business
strategy and satisfy customers needs.
Concept Critical Factors Selected Solutions
• Internally developed sonic
Acquire and • Capable of acquiring
level sensors integrated
aggregate Point 10’s of thousands of
with existing field process
of Use (POU) data points
controllers
demand
• Multiple materials and
information for • Industry available
container types
integration equipment for
throughout the • Intelligent system to telecommunications
supply chain analyze & predict
• Web-based data hub
demand patterns
• World Telemetry
• Connect into order
monitoring intelligence
entry & production
software
management systems
• Integrate with 6.0 SAP
ERP backbone
14. 13
Step 1- Implement Demand Sensing
Demand volatility and complexity is increasing, by becoming
closely linked to our customers supply needs and rate of change
we can ensure a response capability to support the business
strategy and satisfy customers needs.
Concept Critical Factors Selected Solutions
Acquire and • Capable of acquiring • Internally developed sonic
level sensors integrated
aggregate Point Use of thousands of
10’s Information andwith existing field process
Speed
of Use (POU) data points
demand To Combat Complexity controllers
• Multiple materials and
information for • Industry available
container types
integration equipment for
throughout the • Intelligent system to telecommunications
supply chain analyze & predict
demand patterns • Web based data hub
• Connect into order • World Telemetry
entry & production monitoring intelligence
management systems software
• Integrated with 6.0 SAP
ERP backbone
15. 14
Demand Sensing
Insitu cell
transmitters
Production
Planning Cheap data
bandwidth
Order Management
Tracking, predicting,
SAP - ERP and alarming smart systems Liquid level
and solid Wt.
Sensors
Technology has reached the point of cost-
effective solutions for point of use “demand “
sensing in Industrial Supply Chains
16. Step 2 - Integrate Material Management Process to 15
Achieve Real Time Connectivity
Coupling real time demand data with predictive capability and
communicating this information automatically through the entire
supply chain enabled a cost-effective, time-effective response
Concept Critical Factors Selected Solutions
• Intense multi-year focus on
Recognition that • Capable of acquiring
automation
numerous supply 10’s of thousands of
chains existed data points • Integrated order entry with
SAP ERP
Manual hand-offs • Demand analysis to
were slowing the establish MTO products • Detailed analysis of demand
flow of critical vs. MTS products patterns for supply strategy –
information hybrid MRP & production
• Intelligent system to
through the planning
analyze changing
different supply
demand patterns • Upgraded internal warehouse
chain elements
• Connect into system
production and logistics • Integrated supplier order
systems and partners exchange – Ariba
• Integrated logistics carrier
management - Odyssey
17. 16
Step 2 – Extended Connectivity
Logistics Optimization Insitu cell
Software transmitters
Production
Planning & Cheap data
Warehouse mgt. bandwidth
Transportation Tracking, predicting,
Consolidation and alarming smart
systems
Liquid level
and solid Wt.
Private Fleet Mgt Sensors
e-Procurement
Export Order Mgt
Extending the Technology Solutions across virtually all
supply chain interfaces
18. Odyssey Overview and Capability
Transport Supply Chain Business Process Services
Large Transport Network
•$42 Billion cargo value moving
•Greater than 1000 transport providers
•Over $1 Billion in transportation spend
Single Point of Contact
• All Modes of Transportation – Marine
(Parcel, Container, Barge), Rail (Tank, Box,
Intermodal) and Truck (Pack, Bulk, Hopper)
• Warehouse & Terminal Management
• All Logistics Services
Technology
•Automate “low cost” decisions
•Execution, monitoring performance
•Data driving continuous improvement
•Lower costs & enhanced capability
19. 18
Benefits Achieved
High service levels achieved with very high response to short
lead time orders
Better manufacturing capacity utilization
Reduced company finished goods inventory
Largely eliminated sales time in on site inventory management
Improved route optimization and delivery load maximization
Eliminated “tank too full” returns – Reduced transportation
costs and restocking work
Eliminated “tank run dry” events – Additional Sales
21. 20
Operational Excellence Back Ground
Market Needs Business Strategy Business Requirements
• Customers have • Global one stop supplier • Global supply
global networks capability with
• High quality, standardized flexibility to react to
• Consolidation in & consistent product currency fluctuations
supplier base has supplied to all locations
created stronger • Raw material supply
competitors • Low cost producer critical in maintaining
strategy consistency &
• Business bid in competitiveness
period increments
• High structural
• Required product overhead leads to high
interchangeability facility utilization
from all suppliers necessary for cost
dilution
22. Maximizing Asset Utilization 21
Customer needs and high asset utilization are often not aligned. By
focusing on supply chain reliability and managing demand through
customer-centric policies, significant opportunity exists to maximize
profits.
Concept Critical Factors Selected Solutions
Extending the supply • Long manufacturing • Decision Tool: Multi-node
chain through the cycles +45 days integrated supply chain
sales and marketing • Requires highly optimization model
processes. predictable supply system
Establishing policies • Commercial and supply
and decisions to • Operational scale and chain goals aligned - Free
support combined turn-down limitations Cash Flow
outcomes. • Global commercial
market • Play Book: S&OP
interactive process
• System to balance designed to drive demand
multiple segment demand management decisions
vs supply capability
• Annual commercial • Redesigned assets to
bidding process single constraint system
23. Maximizing Asset utilization 22
Customer needs and high asset utilization are often not aligned. By
focusing on supply chain reliability and managing demand through
customer centric policy’s, significant opportunity exits to maximize
profits.
Concept Critical Factors Selected Solutions
Extending the supply • Long manufacturing • Decision
chain through the Optimization technology Tool: Multi-node
Using cycles +45 days integrated supply chain
sales and marketing coupled with Lean process
• Requires highly optimization model
processes.
designs and supply system • Commercial and supply
Establishing policy’s
predictable sales strategies
and decisions to • achieve enhanced chain goals aligned - Free
toOperational scale and
support combined turn down limitations
outcomes. system efficiencies Cash Flow
• Global commercial
market • Play Book: S&OP
interactive process
• System to balance designed to drive demand
multiple segment demand management decisions
vs supply capability
• Annual commercial • Redesigned assets to
bidding process single constraint system
24. Optimization Model
The process of constructing an optimization model
forces a full and frank assessment of the systems real
capabilities and economic trade-offs
WH
Plant
WH
Plant Plant
Plant
Plant
Plant
WH
Plant WH
26. Demand Management Integrated System 25
Demand Management Planning Scope
Customer
• Spot sales to
Traditional Planning Scope transactional
customer or
market segment
• Commercial
contracts with
Sales Production Logistics specific times
• 100%
contracts
A single constraint or bottle neck • Segment
pricing
strategies tied
to throughput
RM Forming Bake Graph Output
Machining
27. 26
Benefits
High Asset Utilization & Operating rates + 95%
End-to-End Cycle Times Reduced >20% with
Corresponding Capacity Increase
Reduced Inventory Required for Demand Levels
– finished product inventory virtually eliminated
Total Free Cash Flow $ Maximized
29. 28
Innovation - Delivery Back Ground
Market Needs Business Strategy Business Requirements
Customers • Deep understanding • Delivery system
constantly look for of customer issues performance that meets
additional value and changing needs Department of Home Land
from suppliers Security requirements
• Flexibility and
adaptability to allow • Delivery system that
for unique solutions manages low customer
for each customer impact in complex multi-
stop deliveries
• Leverage the
elements of • Ability to “rush” or
technology & service respond with product
in offering delivery on short notice
• Compete on value • Many unique delivery
creation beyond requirements
targeted offering
scope
30. Delivery “Not an exciting area, Think again !” 29
Federal mandated DHS rules changed the standards for entering many
industrial sites. Customers struggled with these changes while at the same
time delivery driver quality dramatic changed with new regulations on
driving hours and increasing transport demand.
Concept Critical Factors Selected Solutions
A delivery program which • Business strategy • Site audit and
reduced error rate of all supported customer compliance team to
aspects in complicated segment establish delivery
deliveries requirements
• Meet DHS requirements
Goal: “100/100” standard • New delivery process
• Meet individual site
requirements aligned with carrier
or a Zero Defect Delivery
partner
• Reproducible in multiple
sites and industry settings • Redundant
verification pre-delivery
• Limited increase in total
cost • Dedicated carrier
driver for last mile
31. Delivery “Not an exciting area, Think again !” 30
Federal mandated DHS rules changed the standards for entering many
industrial sites. Customers struggled with these changes while at the same
time delivery driver quality dramatic changed with new regulations on
driving hours and increasing transport demand.
Concept Critical Factors Selected Solutions
A delivery program which • Business strategy
Using external changes • Site audit and to
reduced error rate of all supported customer compliance team
aspects in complicated changing customer needs
or segment establish each delivery
deliveries requirements
as opportunities for innovation
• Meet DHS requirements
Goal: “100/100” standard • New delivery process
• Meet individual site
requirements aligned with carrier
or a Zero Defect Delivery
partner
• Re-producible in multiple
sites and industry settings • Redundant
verification pre-delivery
• Limited increase in total
cost • Dedicated carrier
driver for last mile
32. 31
Zero Defect Delivery Process Flow
Surveys, Audits Logistics Field
& Training Auditor
3.Create shipment & release for dispatch
4. Plant schedules w/
1. Create delivery carrier 3 days prior to p/u
Customer Bulk
Dedicated
Service Planning
Driver
2.Advise availability
Logistics
Coordinator
Logistics Carrier
Coordinator Operations
• Review all • Proactive call to carrier
open orders • Dispatch dedicated
to confirm requirements driver program
• Proactive call to field • 100% check call
sales if delivery is
delayed
Reduced delivery events to nearly zero. Capability integrated
into offering with significant market share improvements
33. 32
Benefits
Eliminated carrier failed deliveries
Customer risk,
time and resources
Eliminated delivery complaints
Created new “premium” service offering;
logistics leaders became part of selling
team
Open new access point to customer
through logistics audits
Significantly increased market share in
high security end market segments
Significantly increased service image
34. 33
Innovation - Supplier Collaboration Background
Market Needs Business Strategy Business Requirements
• Customers have • Global one stop supplier • Global supply
global networks capability with
• High quality, standardized flexibility to react to
• Consolidation in & consistent product currency fluctuations
supplier base has supplied to all locations
created stronger • Raw material supply
competitors • Low cost producer critical in maintaining
strategy consistency &
• Business bid in competitiveness
period increments
• High structural
• Required product overhead leads to high
interchangeability facility utilization
from all suppliers necessary for cost
dilution
35. 34
Supplier Collaboration
Raw material attributes directly impact the cost,
performance, and effectiveness of the end product.
Concept Critical Factors Selected Solutions
• Selecting a supplier • Margin sharing
Customers
and designing the agreement with coke
constantly look for
relationship to align for supplier based on end
additional value
cost and value sharing product selling price
from suppliers
through combined
optimization • Combining supply
Looking across
chain productivity
longer elements of • Elements of the supply programs to select
the supply chain chain where throughput high return
provides additional or cost impact of current opportunities
optimization standards is high, i.e.
opportunities “specifications” • Utilization of material
science impact on end
• Exclusive technology product with process
sharing arrangement technology to optimize
combined supply chain
36. Significant Capacity Increase Achieved by 35
Changing Processing Conditions In Multiple Steps
of the Combined Process
Lights
After Before
Petroleum
Heavy Feed
Quality
Liquids
Processing Time
Raw Material Processing Time Solid Coke
was Driven by Market
Specification on Impurities
Modified Impregnation and Baking Step
Bake.
Solid Coke Forming Bake Graph Impregnation Machining Electrodes
37. 36
Benefits
Productivity reduced total cost by >12%
Additional capacity increased
throughput of assets at time when
demand peaked
Supply reliability
Combined processing knowledge and reduced cost
opened path to new cost effective at peak customer
operating periods
material technology for high
performance products that reduced
customer consumption rates by 15%
Unique supplier relationship expanded
into other value creating opportunities
39. Summary
Businesses need more than functional excellence from supply
chains in the next decade; they need a market-centric approach to
support their growth objectives and to ensure the finite resources
available are employed to create maximum value.
40. Summary
Businesses need more then functional excellence from supply
chains in the next decade; they need a market centric approach to
support their growth objectives and to ensure the finite resources
available are employed to create maximum value.
A market-centric supply chain’s priorities will be defined by the
business strategy and will focus externally to ensure business
alignment and to identify partners and solutions to meet the
business requirements.
41. Summary
Businesses need more then functional excellence from supply
chains in the next decade; they need a market centric approach to
support their growth objectives and to ensure the finite resources
available are employed to create maximum value.
A market centric supply chain priorities will be defined by the
business strategy and will focus externally to ensure business
alignment and to identify partners and solutions to meet the
business requirements.
Supply Chain leaders that:
- understand and engage in development of the Business
Strategy
- communicate the choices that align the supply chain with the
strategy and market needs
- deliver the necessary capability
- and look for unique ways to meet customer needs
Will find success no matter what industry !