adaptive responsive supply chain€¦ · 16 nov 2016 9th global supply chain and logistics summit...

16 Nov 2016 9th Global Supply Chain and Logistics Summit www.sclgsummit.org1

Continuous Cost Reduction Resilience in

Adaptive Responsive Supply Chain

Dr. Lai Ving Kam, Associate Professor Logistics and Supply Chain ManagementBerjaya University College of Hospitality, Kuala Lumpur, Malaysia Email: [email protected]

Manufacturing

Distribution

X-Dock/

Retail DC

Sales

Channel

Component Assembly

Material Suppliers

International Transport

Outbound

Transport

Client

T3 Supplier

T1 Supplier

T4 Supplier

N SupplierMulti- EchelonSupply Chain

Supply Chain Macro Process

48

http://www.berjaya.edu.my/

16 Nov 2016 9th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Stage 1Correct the

Worst problems

Stage 2 Adopt Best

Practice

Stage 3Link strategy

with operations

Stage 4Give an Operations

advantage

InternallyNeutrality

ExternallyNeutrality

InternallySupportive

ExternallySupportive

Increasing Operations Capabilities

RedefineIndustry expectation

Clearly theBest inThe Industry

As good ascompetition

Holding theOrganizationBack

Incr

easi

ng S

trat

egic

Impa

cts

The four-stage model of Supply Chains contributionsRoles of Supply Chain functions :- Implementing business strategy Supporting business strategyDriving business strategy

W her e ar e y ou?

Roles of Supply Chain

Who has the capacity to lead?


9 Feb 2011

Rapid fall in prices

Technological products rapidly becoming

mass market commodity products with increasingly shorter lifecycle,

Increase in the usages of open standards-based technologies supported by rapid advancing

multi-technologies interface application technologies

Fashionable products

chic appeal and trendy in technology and aesthetic design

combining quick response product introduction capacities with enhanced

product design capabilities to both design fashionable products that

capture the latest consumer trends and exploit minimal product launching

lead times for better connectivity to match supply with uncertain demand.

Global Trends


9 Feb 2011

1. Products become more fashionable

2. Products & Technology

lifecycle continuously

shortening

3. Prices cascading

downward rapidly and continuously

4. Constant change of consumer preferences

5. Technology Mutations-Non proprietary towards

Open technology & multi technology

interfacing

6. Products commoditization

4

Global Market Changes


9 Feb 2011

Manufacturing

Distribution

X-Dock/

Retail DC

Sales

Channel

Component Assembly

Material Suppliers


Outbound

Transport

Client

T3 Supplier

T1 Supplier

T4 Supplier

N Supplier Multi- EchelonSupply Chain

Supply Chain Macro Process

Adaptive Responsive Supply Chain

New Trends:• 5G • 3D Printing • Robotic / Autonomous

Vehicles


Managing Uncertainty in a

Supply Chain Connectivity

Centrality of Connectivity

in

Adaptive Responsive

Supply Chain

in

Volatile Environment

Industries are facing greater pressures from market volatility with shorter interval of new add-ons product introductions made easy by open-technology platform proliferation and greater connectivity of supply chain.

Consequently, responsive supply chain needs to be much more adaptive and agile in sustaining business and market share to be resilience.

Need to looks at the repercussions of rapid product and technology mutations; higher market volatilities, and the criticality of appropriate systems and methodologies in delivering market resilience and sustainability.

While the rest of world is speeding up, what can you do to catch up or attain the leadership position?


9 Feb 2011

DevelopmentIntroduction

Growth

Saturation

Decline

Research

R&D

Promotion

Rapid

Expansion

Market

Saturation

Changing

Customer

Preference

Cost1

Sales1

Profit 1

Add-On product

Introduction ‘n’

ChangingCustomer

Preference ‘n’

Price1

Pote

ntia

l

Cann

ibal

izat

ion

Source: Lai VK (2015). “Comparative Study on Continuous Cost Reductions between Electronics and Non Electronics sub sectors in”

Cost N

Cost 3Cost 2

Extended Product Sales

Price 2 Price 3

Price N

Profit

Sales 2

Sales 3Sales N

What business must do !

9

Extended Product Lifecycle Management


9 Feb 2011

2015 CCR Fig & Table

Development Introduction

GrowthMaturity Decline

Cost

Sales

Profit

ResearchMarket

Saturation Rapid

Expansion

Promotion Changing Customer

Preference

De

velo

pm

en

t

De

velo

pm

en

t

De

velo

pm

en

t

De

velo

pm

en

t

Sale

s

Sale

s

Sale

s

Sale

s

En

d-O

f-Li

ne

En

d-O

f-Li

ne

En

d-O

f-Li

ne

En

d-O

f-Li

ne

1st GenerationProductLifecycle

2nd GenerationProductLifecycle

3rd GenerationProductLifecycle

‘N’ GenerationProductLifecycle

Cost Sales

Profit

Dollars

Dollars

A

B

3 stageLifecycle curve

Standard 5 stage

Lifecycle curve


9 Feb 2011

Supply Chain Strategy

Facilities

Information Sourcing Pric ing

Trans portation

Supply Chain Structure

Efficiency Responsiveness

Inventory

Logistics Drivers

Cross-Functional Drivers

Adopted from Chopra , M eindl (2007) Supply Chain Management –Strategy, planning & Operations

Co

ntin

uo

us

C

os

t Re

du

ctio

n

fram

ew

ork

COST

CSV, CM , PPM ,PDD, PLM

Ad hoc Reactionaryor

Predetermined process

Supply ChainDecision Framework

Traditional Cost Reduction Processes

Competitive Strategy


9 Feb 2011

Efficiency Adaptive Responsiveness


Core Strategic

Vision (CSV)

Cost

Management

(CM)

Product

Portfolio

Management

(PPM)

Product Design

& Development

(PDD)

Product

Lifecycle

Management

(PLM)

CSV Reliability

CSV Organization Alignment & Communication

CSV Framework platform

CSV Adaptability & Agility

CM Tools & Techniques / Management Control

Critical CM Capability

Cost Reduction Maturity level

CM Agility & Flexibility

PPM Critical Competencies

PPM Strategic Management

Risks & Intelligence

Adaptability & Agility

Product & Technology Strategic Management

Product Platform Design Strategy

Product Cost Optimization

PDD strategic Alliance

Strategic Management & Planning

Aptitude & Capacity

Agility & Flexibility

Product Balancing Out Managemen t

Critical Elements Business

Architecture

component

Th

eo

retica

l fram

ew

ork

Manufacturing

Distribution

X-Dock/

Retail DC

Sales

Channel

Component Assembly

Material Suppliers


Outbound

Transport

Client

T2 Supplier

T1 Supplier

T3 Supplier

N Supplier

Adaptive Responsive Supply Chain Macro Process

Source: Lai VK (2015). “Comparative Study on Continuous Cost Reductions between Electronics and Non Electronics sub sectors in Fashionable Products”

Production Management

Critical Elements CapacitiesProductivityAutomation

Agility & Quality

20

Adaptive Responsive Supply Chain Framework /Model


Continuous Cost Reduction Framework

Continuous

Cost

Reduction

(CCR)

Core Strategic

Vision (CSV)

Cost

Management

(CM)

Product

Portfolio

Management

(PPM)

Product Design

& Development

(PDD)

Product

Lifecycle

Management

(PLM)

CSV Reliability

CSV Organization Alignment & Communication

CSV Framework platform

CSV Adaptability & Agility

CM Tools & Techniques / Management Control

Critical CM Capability

Cost Reduction Maturity level

CM Agility & Flexibility

PPM Critical Competencies

PPM Strategic Management

Risks & Intelligence

Adaptability & Agility

Product & Technology Strategic Management

Product Platform Design Strategy

Product Cost Optimization

PDD strategic Alliance

Strategic Management & Planning

Aptitude & Capacity

Agility & Flexibility

Product Balancing Out Managemen t

Critical Elements CCR Architecture

component

CCR= 0+1CSV+2CM+3PPM+

4PDD+5PLM+.

CCR is the sum of

product of CSV, CM,

PPM, PDD, PLM

Theo

retical framew

ork

Dependent Variable

Independent Variable

Ref: Researcher’s own analysis


Competitive Strategy

Facilities

Supply Chain Structure

Efficiency Responsiveness

Cor

Co

nti

nu

ou

s C

ost

Red

uct

ion

fra

mew

ork

Cro

ss –

arch

ite

ctu

ral C

om

po

ne

nt

Dri

vers

Product Portfolio

Management

Product Design and

Development

Core Strategic Vision

Cost Management

Product Lifecycle

Management

Centrality of Continuous Cost Reduction

in Adaptive ResponsiveSupply Chain

Source: Lai VK (2015). “Comparative Study on Continuous Cost Reductions between Electronics and Non Electronics sub sectors in Fashionable Products”

Predeterminedand adaptive processes ?

What we need ?

13Dr. VK Lai Associate Professor - India Supply Chain Summit 19-20, May 2016


9 Feb 2011

Product Portfolio Management

Product Design and Development


Cost ManagementProduct Lifecycle

Management

A-RSC

Platform

design

A-RSC

prediction

Strengths

Isolated /

Stand Alone

A-RSC

predictor

Contribution of

Critical element

Guiding

Principle

--identify

-Assess

--appraise

--associate

Develop

A-RSC

framework

Formulate

A-RSC system

and process

Ref: Lai VK’s own analysis

Adaptive Responsive Supply Chain Framework






Management

Adaptive Responsive

Supply Chain

ConsumerRetailerDistributorManufacturerSupplier

Guides and Directs -Integrate-cooperateCoordinate

Phenomenon Observed in Supply Chain

Orde

r Size

Time

Customer

Demand

Retailer OrdersDistributor Orders

Production Plan

Distributor Order

Production Plan

Customer Demand

Retailer Order

Bullwhip Effect

Adaptive Responsive Supply

Chain

Deterministic Business strategies

Technology & Product

Strategies

Product Strategies &

Policies

Cost-price relationship Management

Competitiveness•Sustainability•Responsiveness•Cost Efficiencies•Robustness •Agility•Flexibility•Survival•Quality

Sustainable Profits

Uncertainty / Volatility

Structured A-RSC Framework

Dr. VK Lai Associate Professor - India Supply Chain Summit 19-20, May 2016


9 Feb 2011





Management

Adaptive Responsive

Supply Chain

ConsumerRetailerDistributorManufacturerSupplier

Adaptiveness

Supply Chain

Efficiency Responsive

Technology

Product

Market

Production

22

Centrality of Connectivityin Adaptive Responsive Supply Chain


9 Feb 2011

Accelerated Flying Wild Geese Industries Migration

Japan 1950s

Korea

TaiwanHong Kong

Mid 1950sg

Malaysia Singapore

1960s

China

Thailand

PhilippinesIndonesia Vietnam

Rest of ASEAN 1990s

India

USA

Europe 1980s

Africa2014-5

?South America 2025

China Manufacturing 2025

Germany Manufacturing

4.04.0

ASEAN Reintegration

USA Re-shoring

Africa2020

How about these ? One Belt One Road

Japan?

Central Asia

EasternEurope


9 Feb 2011

Reactive

Move from Reactive to Adaptive

Logistics

Costs

Agile

manufacturing

Logistics

Connectivity

Responsive

marketing

system / process

Supply Chain

ManagementCustomer

satisfaction

Intelligence

Efficiency

Logistics

Management

Adaptive


9 Feb 2011

Basic Requirements for a Adaptive Responsive Supply Chain

1. Working and updated sustainable Core Strategic Vision (CSV) to guide and direct the business, technology and product strategies

2. Supply Chain efficiency is insufficient,

adaptive responsive and scalability are equally critical

3. Develop and maintain strategic business partnership with all stakeholders.

4. Must be agile and proactive. Not ad hoc

reactionary programme

A-RSC


9 Feb 2011

The Adaptive Responsive Enterprise

Ability to react on real time changes to sustain flexible market demand profitably

Create insights based on complete and timely

information and intelligence throughout the

value chain.

Agile and Rapid respond to changing market,

business, and supply and demand conditions.

Intelligence

Adaptive Respond

Supply Chain

Strategies

Extended Supply Chain

Market Intimacy

A-RSC

43


9 Feb 2011MARKET Rapid Change: consumer preference

Increased product configurations

Shortening product lifecycle

Service bundled with products

COMPETITION Technology / Product innovation

Process / Service innovation

Commoditization

Price cascading

TECHNOLOGY Proliferation of Open Standard technology

Multi-technology interfacing technologies advancement

Incoming 5G Mobile and cloud computing platforms

Continuous and disruptive process and product innovation

ECONOMY Trend toward regionalization

Global slow down

Shrinking margins

Shrinking consumption

GOVERNMENT REGULATIONS Environmental control

Legal compliance / polarized

Trade policies

Competitive Industry standards

Adaptability in a Responsive Supply Chain is the key to

succeed in today’s volatile business environment

Forces Driving AdaptabilityA-RSC

44


9 Feb 2011

Adaptability in a Responsive Supply Chain is the key to succeed in today’s volatile business environment

Rapid Change Is Constant In Current World!

You have to be ready for the unexpected often disruptive !

Supply Chain

Responsive Efficiency

Adaptive

A-RSC

45


9 Feb 2011

Managing the Supply Chain - Conflicting Goals


Supply Chain

Adaptive

As low cost as possible

Satisfy customer at all cost

Balancing between low cost andmaking customer happy

profitably

A-RSC


9 Feb 2011



Supply Chain

Adaptive

As low cost as possible

Satisfy customer at all cost

Balancing between low cost and making customer happy profitably

Higher cost

Low Responsiveness

X

XIs this your current situation?

A-RSC

47


9 Feb 2011



Supply Chain

Adaptive

Very low cost

High customer satisfaction

Balancing between low cost andmaking customer happy

profitably

Higher

Higher

Most Optimum Position !48


9 Feb 2011

1

Supply

Management

Networks/

Ecosystem

Extended

Enterprise

Total

Enterprise

Broader Definition of Supply Chains that create value

Components, Products

And Services

Function

performance

Discrete

Capabilities for

Value creation

New Business

Opportunities

Value Chain

Leverage

Strategies

Fig 3.1 Creating More Value and Dimension of innovation & Supply Chains

Developing SC Strategy

In support of Innovation

Create the most value for the enterprise by

leveraging external resources and capabilities

through supply chain optimization

Incremental RadicalNew to enterprises New to the worldDoing what we do better

Innovation


9 Feb 2011

Old & New R&D Models

Closed innovation

Firms select desired technologies Firms perform R&D in house Firms put technologies in products Product revenues fund additional R&D Globalization (1): adjusting products to markets

Open innovation

Strategic R&D – integral to business strategy Technology acquisition (licensing,

corporate venturing, alliances) Externalization of R&D

(outsourcing, firms research institute, university centres of excellence)

Globalization (2): tapping global talent pools


9 Feb 2011

Volatility in Supply and Demand

Pressures to deliver “More with Less”

Talents availability, skill gaps

•Risk management•Scenario planning

•Continuous Efficiency focus •Balance customization vs. consolidation

•Selective automation•Capability development•Better work environment

The constants Imperatives


9 Feb 2011

Global Supply Chain Risk Increasing

Beginning of the CHANGE to new world order

Global Supply chain risk especially in Asia Pacific continued to rise due toworsening economic conditions in China, USA, Europe, and rest of world.

Donald Trump President Elect. gives more uncertainty to world trade for next6-12 months.

China One Belt One Road (OBOR) and Asian Infrastructure Investment Bankcreate more superior connectivity to the world.


9 Feb 2011

China’s One Belt One RoadChina Supply Chain Connectivity Strategies

"Just waiting for higher Chinese wages to push jobs

their way is a recipe for failure,”


Presentation Title

Presented by:

Continuous Cost Reduction Resilience in Adaptive

Responsive Supply Chain

Dr. Lai Ving Kam, Associate Professor –Logistics and Supply Chain ManagementBerjaya University College of Hospitality, Kuala Lumpur, Malaysia Email: [email protected]

http://www.berjaya.edu.my/

adaptive responsive supply chain€¦ · 16 nov 2016 9th global supply chain and logistics summit...

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