Value chain strategy 180315
Description
Value chain strategy 180315
Transcript
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Value Chain Strategy
Jan Steenberg FCILT
Vice President CILT International
Chairman of the International Education Standards Committee
Encouraging the development of leading edge thinking and
best practice in all areas of the supply chain, logistics and
transport
Facilitating the development of personal and professional
excellence
Raising the profile of the profession
Providing relevant services to members and employers
CILT – the professional body for everyone in supply
chain, logistics and transport
Professional Sectors
4
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Supply Chain versus Value Chain
A Division of Connect Group PLC
Typical Supply Chain Vision
At all times provide the business with a
competitive advantage through best-in-class
performance in Service, Cost and Inventory
by utilising the right Processes, employing
skilled People and have best practise
Systems.
6
A Division of Connect Group PLC 7
Vision to “Mission”?
The question to ask is what does it mean to fulfil the vision?
The Supply Chain Five “A”’s
Aligned (to business and customer requirements)
Affordable (be cost competitive)
Agile (react in a controlled way to change)
Accurate (fact driven with one version of the truth)
Adaptable (can change mode of operation flexibly)
But what is the Mission?
A Division of Connect Group PLC
Why Value Chain and Not just Supply Chain?
• Supply Chain:
• For a distribution business it is all about product flows, costs, service and
inventory.
• It looks to optimise those parameters with input from other functional areas, but
not necessarily integrated with other functional plans.
• Focus on Cost, Cost and Cost (and perhaps a bit on inventory too).
• It is both an input to the business strategy and an output from it.
• Value Chain:
• It is all about where the Value is generated, or lost, in the processes between
Suppliers, the Business and its Customers.
• It directly involves Supply Chain, Trading and Commercial Functional areas
supported by Finance, HR and IT.
• Focus is on optimising Contribution and minimise Total Cost to Serve.
• It informs the overall business strategy.
We need to understand
what value is required
and control its delivery…
In order to be able to
sustainably improve and
innovate our offerings…
CONTROL:
Right First Time
IMPROVE:
More Rights
INNOVATE:
A Better Right
Develop Data and
Process conformance
Improve E2E Value
Chain Performance
Create New Levels of
Business Performance
UNDERSTAND:
Why isn’t it Right?
What’s really going
on?
What should we focus
on?
Understand, Control, Improve, Innovate…
Enabling Structures:
Organisational, Physical, System
PEOPLE
Empowered, Engaged
& Educated to be ‘T’
Shaped
PROCESSES
Effective, Integrated,
Compliant, Appropriate
& Superior
STRATEGY
Clear, Customer
focused, Actionable,
Communicated
Own and are
Responsible for
METRICS
Aligned, Integrated,
Compelling, Visible
Driving the behaviours of
DATA
Accurate, Timely,
Owned Master and
Transactional Data
Aligned to and measuring the success of
Delivered by Executing Measured by
Enabled by
Driven by
CULTURE
High Trust, Value Driven, Focused on Organisational Success and Continuous Improvement
The 7
Keys
Drives the
reporting of
SYSTEMS
Integrated
Planning, Execution
and Reporting
Aligned Integration (TM):
7 Keys to Organisational
Greatness (c) Sean Culey
Measuring Conformance to
Measuring the
integrity of …
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Strategy Development Process
Initial Findings and Surveys
A Division of Connect Group PLC
Employee Engagement
Business Maturity Profiling
0
1
2
3
4
Culture
Goals & Strategy
People and Organisation
ProcessesMetrics
Systems
Data
4 – Orchestrated
3- Optimised
2- Integrated
1- Functional
The ConsortiumCompany X
SCOR Process Heatmap:
(based on # issues
identified per process
area)
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Strategy Development Process
Methodology & Analysis
Enabling Structures:
Organisational, Physical, System
PEOPLE
Empowered, Engaged
& Educated to be ‘T’
Shaped
PROCESSES
Effective, Integrated,
Compliant, Appropriate
& Superior
STRATEGY
Clear, Customer
focused, Actionable,
Communicated
Own and are
Responsible for
METRICS
Aligned, Integrated,
Compelling, Visible
Driving the behaviours of
DATA
Accurate, Timely,
Owned Master and
Transactional Data
Aligned to and measuring the success of
Delivered by Executing Measured by
Enabled by
Driven by
CULTURE
High Trust, Value Driven, Focused on Organisational Success and Continuous Improvement
The 7
Keys
Drives the
reporting of
SYSTEMS
Integrated
Planning, Execution
and Reporting
Aligned Integration (TM):
7 Keys to Organisational
Greatness (c) Sean Culey
Measuring Conformance to
Measuring the
integrity of …
Phase 0
Understand
Current AS-IS
Situation
Understand current
business
environment
Clarify current
processes, systems
and performance
levels
Establish cultural
strengths and
weaknesses
Understand key
issues and first cut
potential solutions
Map issues and
solutions against
SCOR model
Feedback findings
to Group, discuss
and completed AS-
IS SCOR Model
Phase 1a
Define Value
Chains &
Competitive
Strategies
Leadership
Workshop:
Define Value
Creation Model
Undertake Value
Chain Definition
and Product /
Customer Mapping
Define Value Chain
competitive
strategies
Identify Value
Chain KPIs using
SCOR
Map current
performance
versus target
Perform Rough Cut
Value Chain
Strategic Analysis
Value Chain SWOT,
PESTLE &
Competitor
analysis
Phase 1b
Validate
Financial
Opportunity
Data Analysis:
Verify SCOR KPI
levels
Verify Value Chain
Strategic Analysis
Complete Value
Chain profit
analysis
Analyse VC
Inventory and
Cost-to-Serve
Leadership
Workshop:
Analysis results of
data analysis
Select Customers
& products to focus
on
Identify service
performance
levels, T&C’s and
gap to Fill
Prioritise Value
Chains
Select Value Chain
Pilots
Phase 2
Design the
Future Value
Chain
Integrated Team
Workshop 1:
Clarify and
Communicate
Approach
Establish Value
Chain Team
Create future state
end-to-end process
flow
Define Impact on
Strategic KPI
Define activity’s
roles and
responsibilities
(RACI)
Define Rules and
Behaviours
Define Data
requirements
Phase 3
Design the
Performance
Control
System
Integrated Team
Workshop 2:
Define Short, Medium
& Long Term Planning
Processes
Define the Process,
Data & Behaviour
Conformance Metrics
(KCI)
Define the Process
Performance Metrics
(KPI)
Define the Business
Performance Metrics
(BPM)
Define the VC
Management
Processes
Design Daily IBE
Meeting
Design Weekly IBM
Meeting
Design Monthly IBP
Meeting
Design Organisational
Structure and
Resource Review
Phase 4
Develop CI
Roadmap
Define solutions
needed to implement
the VC Approach
Align solutions to
original issues to
ensure completeness
Group Solutions in
Projects
Undertake effort /
impact analysis per
Project
Agree Project
Ownership
Create Project Portfolio
Matrix
Complete Project
Implementation
Roadmap
Phase 5
Ensure
Executive
Support and
Launch
Review with key
stakeholders and
allocate resources
Develop Training and
Education
Requirements
Perform
Executive Review
Establish Supply Chain
Network and Stock
Profile for Value Chain
Agree Targets and
Checkpoints
The Five Phases of Strategy Development
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Strategy Development Process
Output & Results
WHY?
Strategic Direction
Value Creation Model
Value Proposition / Statement
Value Model Definition
Value Chain Strategic & Market
Analysis
Value Chain Profit Analysis
Pilot Value Chain(s)
Value Chain Strategy
Strategic KPI’s
Performance Target
Set direction, create focus,
determine targets
HOW?
Consider the Planning and
Management of the Strategy(s)
WHAT?
HOW?
Integrated Planning & Management
Value Chain E2E Process Flow
Value Chain E2E Performance
Measures
Value Chain Process Map
Value Chain Network
Value Chain Performance Control,
Communication and Governance
Value Chain Organisation
Roles & Responsibilities
Align, Integrate, Plan,
Improve Operations
WHY?
(Outputs and direction from Strategic
Sessions Reviewed, Analysed and
Understood)
HOW?
(Outputs and direction from Planning
& Management Sessions Reviewed,
Analysed and Understood)
WHAT?
Integrated Execution
Daily Control Mechanisms
Process and Data Conformance
Role Clarification
Visible Dashboards
Purposeful Engagement
Waste Identification & Elimination
Execute & Control Daily
Operations,
Conform to Plan
WHY?
(Outputs and direction from Strategic
Sessions Reviewed, Analysed and
Understood)
WHAT?
Consider how the processes will be
executed on a daily basis
Executive Team
Strategic Focus and Direction
Management Team
Planning & Improvement
Operational Team
Excellence in Execution
%TimeDedicatedBringing it together: Creating an Aligned, Integrated & Engaged Organisation
Business
Activity Maps
Value Chain
Activities and
Measures
Value Chain
Management
Value Chain
Results
Key
Performance
Metrics
Key
Conformance
Metrics
Performance
Dashboard
Roles and
Contributions
Aligned &
Integrated
Roles
Aligned VC
Metrics
Aligned &
Integrated
Measures
Aligned &
Integrated
Functions
Performance
Control
Meetings
End to End Value Chain Swimlanes
Functional
Contribution
Statement
Aligned &
Integrated
Management
Integrated
Plans,
Actions and
Message
Value Chain
Strategy
Reliability
Customer Experience
Profitability
Aligned and Integrated Value Chains
Value Chain
Objectives
and Goals
Value Chain Segmentation
Move from Meeting Expectations to Customer Delight
Improve Service, Reduce Waste, Grow Revenues and Market Share
Political Economic Social Technological Legal Environmental
Ring-fenced
education
budgets to
maintain
spend in real
terms
Back to basics
pens and
pencils – part
of Gove
strategy
Academies
trend likely to
continue
Extension of
lifetime
education
window (e.g.
16-18)
Likely that
spending per
pupil remains
stable
Free school
meals likely to
drive
opportunity in
catering
Early Years
and care likely
to be more
sensitive to
faster
economic
growth
Exchange rate
fluctuations
for overseas
sourced
products
Population
boom in
primary
schools
driving spend
per pupil
Concentration
in urban areas
Increased
multi-
culturalism
E-commerce
Tablet
proliferation
New ICT
curriculum
Social media
Increased
parental
empowerme
nt through
technology
3D printing
and mass
customisatio
n
PSBO
status?
Increasingl
y litigious
society
increasing
child
safeguardin
g
OFSTED
requiremen
ts
CH&S
legislation
CSR credentials
/ Ethical
sourcing /
Green miles
increasing
energy prices
increasingly
looking for
alternative
renewable
energy
Disposable of
hazardous
products
Recycling
packaging
Ethical sourcing
Increase in
overseas input
costs (e.g.
China) and
potential to
reshoring
Increased
pressure on
global shipping
infrastructure
Negative Impact Positive Impact Exploitation Action
Increased use of technology
drives lower need for traditional
products (pens, paper)
Greater price transparency due
to technology
Decreased barriers to entry for
large competitor (e.g. Amazon)
Population boom
PSBOs have to account for
pensions/stock holdings in line
with private sector (e.g. more
commercial)
Growth opportunities in ICT
Growth opportunities in
OFSTED compliance
Less complex / international
supply chain
Link our products to OFSTED
improvement
Increase focus on local/near-
shore manufacturers
Improve ICT proposition
Ahead of the game to cater for
greater multi-culturalism
Estimated Impact of External Factors
Competitor
Name
Competitor Strength
(Neutralize)
Competitor Weakness
(Exploit)
Business Opportunity
Findel Breadth of offer (i.e. Specialist SP/SC/SEN)
Sainsbury Type Scheme
Replicable
Brand recognition } UK
Overseas channels } International
Trade Channels
Scale
Low strategic emphasis of parent company
investment
IT Platform at GLS
Product marketing
No loyalty scheme
Employee Engagement
Customer Service
Short Termism
Marginal “true” profit
Damaged reputation for service
Loss of Sainsbury’s
Take contracts
Discount and win using price in their core
area.
Buy them!
Bid Sainsbury’s
Scotland } Investment in
London } headcount
NI }
PSBO (not
KCS)
Loyalty
One of us
Compliant with EU
Services and Products
More relevant (Bursar)
Price
Loyalty Payments
Integrated to back office
Lack of investment Capital Investment
Lack of innovation
Service
Price not quantity
Uncertain future –
State Aid
Lack agility (aim
Can only address public sector – early years /
care
Intl
Cannot discount
Legal / choice
Political lobbying
Influencing owners regarding selling out
Understanding law
– EU
– UK & state aid Teckal
We can invest in our offer – web / service
/ loyalty
Price Repositioning
Sales coverage / CRM / marketing
Own brand
Kent or
L.A.T.C.
Per PSBO
Commercial View
In the private sector
Adjacency to London
Brand – London
New warehouse S.A
New warehouse Capacity
Competitor Conditioning stop us focussing
on them
Capital structure
-Peak / Cash
-Pensions
-Shared overheads
Stable
Not national brand
Lack Innovation – web
– product / range
Buy them
Aggressive trading – discount / FY14 Peak
Hire their sales team
TTS Eys Presence
Strong Promos
Product Exclusivity
Linkage to the curriculum and appeal to
teachers KS1 & KS2
Stable parent company in Education
National and International
Brand awareness
Poor service
Lack of offer to secondary school
Lack of commodity offer
BME web/etc.
Just DM v limited field sales
Buy them
Win LG contracts i.e. Gems
Become “specialist” EYS KS1 & KS2
Local / Small
Operations
WPs,
Wescare
Local relationships
Same day service – Local stock
Personal service
Low Overheads
Tactical/Low Prices
Order Scheduling
Locations replo Caretaker
Limited range
Reliance on DD to market
Offers a full range
Buying T?? Outside core paper & “C+J”
Offer S.D.D close to TR/SW
Aim guaranteed “step change”
Track & acquire Best Operator
Tailor an offer
Amazon Brand
Breadth of Range
Price/Customer Base
e-commerce offer
e-commerce leadership
Delivery
Not focussed on Education or care
Lack of range Authority
low share in Education or Care
Not a place where teachers look – no
catalogue
No loyalty process
No credit
Improve e-commerce offer
Build here stop being Commoditised
Teachers
Utilised their market share for BSC
Viking/OD or
Lyreco,
Bunzl,
Banner
Price
Scale Buy Price
Specialist in Stationery, C&J
Service “to desk”
EU Compliant framework to SEU??
Breadth of range
Lack of special outside C&J Stat
Not educationally focussed
Serve Multiple segments
Focus on our specialism in education or
care
EXTENAL INFLUENCES – Competitors, PESTLE
PRIMARY SECONDARY
Winner
Meets Unspecified
Desires
&
Creates Evangelism
Auto price match
School late next day delivery
Quality exceeds expectations
Auto-compliance (paperless system – no
audit)
Integrated order solutions
Suggested order forms (based on order
history)
‘Wow’ loyalty scheme
Forums / teaching consultants
Customisation ‘surprise’
As primary, but with focus on…
VMI / Consignment resource hubs
Integrated e-commerce solution
(favourites, basket sales, workflow
through to approval etc.)
Forum for teachers etc.
Proactive price leadership
Loyalty based pricing
Attractor
Meets Desires
&
Creates Loyalties
Best value
Slotted Delivery
High quality & durability
Guided best value
Management Information – showing buying
patterns etc.
Product Recommendations
Curation of range (range rationalisation)
Rewarded for loyalty (biscuits)
Lesson plans
Customisation as requested
As primary, but additional focus on:
Curriculum planning
Better understanding of their school /
region (Ofsted reports, demographics,
future requirements)
Qualifier
Meets Expectations &
Creates Satisfaction
Competitive Price
On time / in-full free delivery
Fit for purpose / Safe
Accurate paperwork
Simple problem resolution
Ease of multichannel ordering
Ease of indexing and search
Not missing out (loyalty)
Support materials
Competitive Price
On time / in-full free delivery
Fit for purpose / Safe
Accurate paperwork
Simple problem resolution
Ease of multichannel ordering
Ease of indexing and search
Not missing out (loyalty)
Support materials
The Customer Hierarchy of Needs
Education Consumables
Strategic Supply Chain and Commercial focus of
each Value Chain…
We have identified 3 main supply chains across the 13 value chains
How The Value Chains map to Key Segments
Key customer segments
maps to the individual
Value Chains through the
service propositions for
each of them and based
on current performance
will be targeted in
different ways to achieve
the right results.
SCORcard refreshed with Real Performance and Financial Data
Estimated Parity Req
Level Current Gap Gap
Reliability Perfect Order Fulfillment [Total Perfect Orders] / [Total Number of Orders] x 100% S 80% 84.10% 80.0% 85.0% 93.0% -4.1% 9.9%
Responsiveness
Order Fulfillment Cycle Time
(Lead Time in days)
[Sum Actual Cycle Time for all Orders Delivered] / [Total
Number of Orders Delivered] in Days
A 3 3 2 1 0.0 -1.0
Agility
Ups. Supply Chain Agility (in
days)
The number of days required to achieve an unplanned
sustainable 20% increase in quantities
delivered.
P 0.0% 0.0%
Cost Total Cost to Serve
Planning Cost +
Sourcing Cost +
Material Landed Cost +
Production Cost +
Order Management Cost +
Fulfilment Cost +
Returns Cost +
Cost of Goods Sold
A 0.0% 0.0%
Assets Return on Working Capital
Return on Working Capital = ([Supply Chain Revenue] –
[Total Cost to Serve]) / ([Inventory] + [Accounts
Receivable] – [Accounts Payable])
P 0.0% 0.0%
Service
Gap
Revenue Profit Service Revenue Profit
Value in Achieving Parity Value in Achieving Superiority
Calculation SuperiorAttribute Metric (level 1)
Actual
Current
Parity Adv
Project Portfolio Matrix – Effort and Impact Overview
Project Portfolio Matrix
LOW MEDIUM HIGH
HIGH
HIGH
MEDIUM
MEDIUM
LOW
LOW
LOW MEDIUM HIGH
IMPACT
EFFORT
IMPACT
EFFORT
P05
P03
P02P01
P08
P07
P06
P15
P14
P13
P12
P11
P20
P19
P18
P25
P23
P22
P21
P30
P29
P28
P27
P26
P35
P34
P33
P32
P31
P38
P37
P36
P45
P42
P41
P50
P48
P47
P46
P51Quick
Wins
Sponsored
Projects
Consider
Carefully
!!
Develop an Aligned and Integrated Roadmap to move the
business forward as one
Quick
Wins
New Ways
of Working
Sponsored
Solutions
Long Term
Innovations
/ New Business
Models
EFFORT
IMPACT
High
Low
HighLow
Quick
Win Projects
New Ways
of Working
Sponsored
Solutions
Long Term
Innovations
/
New
Business
Models
Define
Solutions
Group
Solutions
into
ProjectsAlign to
Identified
Issues
• New Channels
• New Systems
• New Strategies
• New Business Models
• System ,
Enhancements
• Network Redesign
• Website
Enhancements
• Business
Intelligence
Improvements
• New Partners
• ‘Stop Doing’
activities
• Process & Data
Conformance
improvements
• New roles &
Responsibilities
• New Planning
Processes
• New Reports
• New Management
meetings
• New Operational
Reviews
• New
Communication
Structures
Aligned Improvement Roadmap
“To be the preferred supplier in our chosen markets, knowing our customers always choose us, because
we have what they want, we make buying easy and we understand them better than our competitors”.
Deliver 3 Year Plan
(Profitable Growth)
Make Buying Easy
Have What The Customer Wants,
When They Want It
Understand Our Customers
better than the Competition
Become Customers First Choice
Increase
Annual Sales
Revenue to ‘x’
Reduced ‘Cost
to Serve’
Increased
Return on
Assets
Marketing ROI
Own Brand
Sales Revenue
# Classroom
Partnerships
Net Promoter
Score
# and % of
Complaints
Increase in E-
Commerce
Orders
Site Visit Order
Conversion %
Perfect Order
Fulfilment
# Customers
Average Order
Value & Freq
# Orders per
Customer
Market Leading E-Commerce
Develop and Grow Own
Brand Range
Customer & Value Chain Segmentation Customer Loyalty Scheme
Classroom
Partnerships
Cost to Serve &
Profitability
Mapping
Data and Information Management
Batch
Management
Integrated
Business
Planning
SC Risk
Management
Strategy
Supplier Mgt
Improvements
Develop CRM
Strategy
Agile Pricing
Strategy
Quality
Management
Finance
Performance
Monitoring
Marketing ROI
Project
Carrier
Performance
Monitoring
Category
Management
Performance
Monitoring
Order
Management
Enhancements
E-Commerce
Strategy
Logistics
Process
Improvement
New Roles & Responsibilities – Data, Quality, Value Chain, Project & Programme Mgt, Marketing
Distribution
Network
Strategy
Value Chain
HR Strategy
Inbound
Freight
Strategy
Procurement
& Overseas
Strategy
SRM System
Implementation
System
Architecture
Improvements
Product
Barcoding
Value Chain Dashboard
Customer
Loyalty
Strategy
Marketing
Performance
Monitoring
Define and Agree Customer & Internal Business Rules
Available to
Promise
Customer Service Performance Monitoring
VC Performance Management – Daily / Weekly Meetings
Supply Planning
Performance
Monitoring
Demand
Planning
Performance
Monitoring
Logistics
Performance
Monitoring
Strategic Projects
Tactical Projects
Operational Projects
Strategic Imperatives
Business Performance Metrics
Vision
Goals
E-Commerce
Enhancements
Sales
Performance
Monitoring
Reduced #
Returns
CRM System
Single View of
the Customer
Agile Pricing
Capability
% Inquiry >
Order
Conversion
Cost to Serve
Analysis
Daily Service
Meetings
Process & Data
Conformance Metrics
Projected Service
Levels (ATP / Allocation
Failures)
Schedule conformance
issues
Picking issues
Inventory integrity
issues
Transportation issues
Weekly Demand
Supply Review
Process Performance
Metrics
Projected Sales
Activities
Customer Service
Performance
Demand Plan
Consumption and
Forecast Accuracy
Supply Plan Adherence
(Production and
Packaging)
Rough Cut Value Chain
Profitability / Cost-to-
Serve
Monthly
Planning Meeting
Value Chain Performance
against Target
Portfolio Review
Demand Planning
Supply Planning
Value Chain Profitability
Review
Integrated
Reconciliation
Quarterly
Strategic Review
Strategic Business
Performance
Customer Analysis
Profitability Mapping
Analysis
Competitor Analysis
PESTLE Analysis
Innovation review
NPD / NBD / NMD
Value Chain Performance Control – IBP
PLAN
DO
CHECK
ADJUST
PLAN
DO
CHECK
ADJUST
PLAN
DO
CHECK
ADJUST
A Division of Connect Group PLC 31
Key Learnings
1. Be clear on The Business Vision and on the “Why”.
2. Involve the right people and ignore organisational and managerial
boundaries. Pick the best.
3. Utilise the SCOR Model and use it as a framework for developing
the journey to excellence.
4. The governance model and accountabilities within it has to be clear.
5. Implementation is everything so focus on deliver, deliver, deliver.
6. Finally. Start Small and Scale up. Build your 5A SC…
“Planning is everything, but
plans are nothing in themselves”
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