Strategic Supply Chain
Management
Medical Device Supply Chain Council
1 October 2013
Section 1
Why is strategic
supply chain
management
important?
PwC
Section 1 Introduction
Strategic supply chain management is
more important than ever
Shorter economic cycles
More frequent
natural disasters
Increased pressure
on companies Rising costs in low-cost countries
and their
supply chains Reduced access to working capital Strategic
supply chain
Competition for talent management is
more challenging
Greater focus on sustainability
— and much more
critical to the
Increased competition
bottom line
Shorter product life cycles
Multiplication of channels and segments
1990’s Today
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 3
Section 2 Your supply chain as a strategic asset
Leading companies have a specific focus
in their supply chains
Design the supply chain from the
Obsessively drive excellence in
“customer in” – tailoring structure,
Execution to deliver increasing
operating models, and practices to
customer value at lower cost
maximize customer value
Make the
supply chain
a strategic
asset
Acquire and develop the best Plan the supply chain -
supply chain Talent with the right integrating with business plans
mix of skills to handle today’s more and collaborating with suppliers
challenging activities and customers
Unlock the full power of supply chain Information to enable the best decision making,
from the boardroom to the shipping dock
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 4
Section 2 Your supply chain as a strategic asset
Leaders reap significant benefits from
strategic supply chain management as …
… it improves the top line
Best-in-class companies’ (BICC) sales growth is almost 50% higher than non-BICC
Sales growth
BICCs
Non-BICCs
50 60 70 80 90 100 110 120 130 140 150
Percentage of industry average
… it improves the bottom line
Best-in-class companies have 20% higher profitability than non-BICC
Profitability
BICCs
Non-BICCs
50 60 70 80 90 100 110 120 130 140 150
Percentage of industry average
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 5
Section 2
Strategic supply chain
management’s five
core disciplines
PwC
Section 3 The five core disciplines of Strategic Supply Chain Management
The book details the five core disciplines
that drive performance
Design the supply chain around a defined basis of
competition to enable the overall business strategy
Use metrics to measure the health of Develop integrated supply chain processes
each core supply chain process and and systems that interface efficiently with
identify problem areas the rest of the enterprise
Understand core competencies Develop and maintain organizational
and choose partners to maximize structure and skills to define and
focus and profitability manage the supply chain of the future
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 7
Section 3 The five core disciplines of Strategic Supply Chain Management
Core Discipline 1:
View your supply chain as a strategic asset
Four primary bases of competition
Innovation
time to market
and time to volume Align your supply chain with your
business strategy and your primary basis
Quality of competition
procurement and production
excellence and quality control
Align your supply chain
Supply Consider customer service proposition,
chain with your business strategy
sales channels, value system, operating
Customer experience strategy andand
model your
assetprimary
footprint in basis of
your supply
interactions designed from
the customer’s perspective competition
chain strategy
Re-evaluate the supply chain strategy
Cost
efficient, low cost supply chain regularly
configurations and processes
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 8
Section 3 The five core disciplines of Strategic Supply Chain Management
Core Discipline 1:
View your supply chain as a strategic asset
Case in point: Luxury menswear company
• Custom orders in US, fabrics designed in Italy and garments made in China
• Operates with the philosophy that “custom-fitted clothes can be provided at the
cost of off-the-shelf garments”
Style consultant Style consultant
meets customer meets customer
Ordering Make Delivery
Customer on-line Launch production Delivery to customer
order
Source: Strategic Supply Chain Management: The 5 Disciplines for Top Performance, second ed., McGraw-Hill, 2013, p.6
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 9
Section 3 The five core disciplines of Strategic Supply Chain Management
Core Discipline 2:
Develop an end-to-end process architecture
Enterprise process model
Leadership and strategy
Business planning Objectives deployment
Ensure the supply chain process
architecture encompasses Plan,
Products, services, and technology development
Source, Make, Deliver, Return, and
Enable Use your basis of
processes
Marketing and sales
competition to choose and
Core
Integrate the supply chain with the
Supply chain prioritize
other core enterprise specific
processes
(Plan, Source, Make, Deliver, Return, Enable)
activities and practices
Customer service and support
Use your basis of competition to
choose and prioritize specific activities
and practices
Governance HR IT Finance Legal
Support
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 10
Section 3 The five core disciplines of Strategic Supply Chain Management
Core Discipline 2:
Develop an end-to-end process architecture
Case in point: Global on-line retailer
Offers “the Earth's Biggest Selection”
Seeks to be world's most customer-centric company, where customers can
find and discover anything they may want to buy online
Stocked by on-line
retailer Exact delivery date
Distributors
Best Practice
Estimated
delivery date • Common, robust processes
• Proactive shipping notification
Partner • 24x7 order status
companies • Link to carrier’s web site
Items available in millions
Source: Strategic Supply Chain Management: The 5 Disciplines for Top Performance, second ed., McGraw-Hill, 2013, pp.63-64
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 11
Section 3 The five core disciplines of Strategic Supply Chain Management
Core Discipline 3:
Design your organization for performance
Designing a
Supply Chain Organization
Ensure the talent mix and pipeline
Roles and
responsibilities
cover execution, planning and
enabling activities
Consider context, culture and
complexity when designing your
supply chain structure (centralized,
Organizational
decentralized and hybrid)
structure Insist on clarity in accountabilities,
Skills and with a priority on cross-functional
talent roles & activities
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 12
Section 3 The five core disciplines of Strategic Supply Chain Management
Core Discipline 4:
Build the right collaborative model
The Collaboration Spectrum
Extensive
Too many best friends Synchronized
Master internal collaboration
as an enabler for
collaboration with external
Degree of collaboration
partners
Coordinated
Segment supply chain
partners to determine the
Cooperative needed type of relationship
Trust your partners while
ensuring that you manage
your interests
Transactional Little pain, little gain
Limited
Number of relationships
Many Few
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 13
Section 3 The five core disciplines of Strategic Supply Chain Management
Core Discipline 5:
Use metrics to drive supply chain performance
Level 1 Metrics
Performance attributes
Focused on the Internally
customer focused
Level 1 metrics
Responsiveness
Reliability Measure from your customer’s
Agility
Assets
cost
perspective
Choose the metrics that will drive your
Perfect order fulfillment supply chain strategy forward
Order-fulfillment cycle time
Upside supply chain flexibility Ensure your metrics are balanced and
Upside supply chain adaptability comprehensive
Downside supply chain adaptability
Total cost to serve Benchmark to understand potential
Overall value at risk performance levels
Cash-to-cash cycle time
Return on supply chain fixed assets
Return on working capital
Source: Supply Chain Operations Reference Model, Supply Chain Council
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 14
Section 3
Transforming the
supply chain
PwC
Section 4 Transforming the supply chain
Leaders start with a clear understanding
of the type of change needed
Types of Supply Chain Change
Impact on Business Performance
Introducing new ways of competing in your
Supply chain industry or changing your basis of
innovation competition—typically part of a broader
operational transformation
Supply chain Achieving industry-leading performance in
excellence service, cost, or quality
Supply chain Making incremental year-on-year
improvement performance improvements
Effort / investment required
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 16
Section 4 Transforming the supply chain
Leaders use a comprehensive approach for
supply chain transformation
The unique challenge of
supply chain transformation
Cross-functional involvement
End-to-end outcomes
Interfaces with other core enterprise
processes
Multiple teams and sites around the
globe
Involvement of customers and suppliers
Operations continuity is essential
Strategic Supply Chain Management • The Five Disciplines for Top Performance
PwC Slide 17
Strategic supply chain management
– a different mindset and a focus on
making change happen – can enable
superior performance and industry
leadership
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