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2017

I interviewed Sam Manna who discussed Rise of Supply Chain & Procurement Positions.

 

 

 

 

 

 

Can you first provide a brief background of yourself?

 

Thank you, Dustin. I am here in Toronto, and I've been in the world of recruitment for about 10 years now, all of which have been spent within procurement and supply chain.

 

Thanks. Well, my first question is regarding supply chain and procurement. What about education? What are universities and colleges doing now to help with this profession?

 

When I first started in the industry, talking to candidates that are in the sector, most of them kind of fell into the world of supply chain or procurement either their the DC and worked their way up to the planning and logistics side or on the finance side and end up taking up procurement. What we now are universities, colleges, offering program-specific for procurement in supply chain. So coming out of high school, it's something they can concentrate on. Also seeing a lot of rise in the importance of organizations such as APICS and the CSCMP designation as well.So I've seen universities and colleges really striving to put these programs in place. And a lot of universities, a lot of colleges, really ramping up their programs for these as well.

 

Can you talk about the rise of the CPO and how procurement is becoming more visible in organizations?

 

Again, years ago, our first...first stated working within this industry, we never really saw those senior-level candidates. You'd have a purchasing manager, logistics manager, sometimes a director. Even if it was a VP, they would be reporting in to another VP. What we've started seeing, mainly after 2008, was that procurement — mainly procurement executives — were starting to take a seat at the executive board. The importance of procurement, of supply chain, was really being seen as an asset to the organization, one that was being undervalued, underutilized. And the importance of them being able to go in, save money for the organizations without letting people go, without downsizing, has really become important for a lot of organizations. And it's something that we're very happy to start seeing, working with some CPOs, working with some very senior-level procurement staff.

 

There are numerous courses now being offered by universities and colleges and MBA programs as well. There is also a lot of organizations such as APICS as well as the Supply Chain Management Counsel here in Ontario where you can enroll, take courses to really stay on top of best practices. And I believe even LinkedIn has some great groups attached to it as well where procurement and supply chain people can really connect, talk about what they're doing in the industry, really stay on point, and strive to really be that strategic purchasing or strategic logistics executive.

 

What about professionals that aren't up to date? How can people stay up-to-date? And what's current in the profession?

 

I think they have to look outside of their own little inner circle, to be honest with you. Again, attending some of these courses would be great. But also, reaching out to some counter parts within the industry, trying to find out about what their best practices are. Many times I've seen LinkedIn, various groups of executives asking a question on how they've been able to lower costs in a specific contract, or has anyone had any experience dealing with a specific vendor. You need to talk to people. I think that's the best way of being able to come out of your comfort zone and ask, "This is how I've always done it. How do you do it? How do you go about getting those best cost savings?" especially if it's an organization where the procurement or the supply chain function is relatively new to the organization.

 


 

About Sam Manna

 

 

 

 

Sam Manna

 

Specialized Recruiter within Supply Chain, Procurement , Logistics, Engineering (Production & Operations) & Construction

 

LinkedIn Profile

I interviewed Mitt Nowshade Kabir who discussed Machine Learning in the Supply Chain.

 

 

 

 

 

 

.Over the next 10 years we will see transport vehicles being replaced with autonomous trucks, autonomous vehicles. So if you look into the possibility of how a company can get some kind of competitive advantage, you have to look into the key area of supply chain. The supply chain is an important touchpoint. For example, it can involve the customer relationship.and you can reduce costs.

 

The second part, to have access to the right kind of information. The customers are getting better served. Many companies use insights like Netflix or like Amazon. And more and more companies are using these technologies.

 

if you look at the supply chain, starting from the bottom where you are having the user interactions, where we are using AI tools and the recommendation systems, that's only the front end. At the backend, like manufacturing, we can talk about the manufacturing where the entire manufacturing process is occurring without any human intervention for days.

 

So eventually, what we would see that AI is not just used in one or two or three areas. But we do see that AI is helping to improve the operational life of the machine. There is an analysis and the supporting and maintaining tof he data from the Internet of Things.

 

So there is no limit right now to where AI will be used.  And eventually, what we will see in the very near future, the entire supply chain will be totally automatic. And one thing that we, right now, are seeing a huge impact of supply chain also, you know that we call it Bullwhip Effect.

 

The Bullwhip Effect occurs when there is fluctuation in customer demand at the retail level. It can cause massive distortion upstream. In order to reduce this effect, you have to be able to forecast more accurately, according to customer demands. The forecasting accuracy is crucial in reducing this effect. And by using AI, you can do that. You can be more accurate in determining and predicting the demand. And as a result of doing so, you will reduce this bullwhip effect. And that's done using predictive technology and AI.

 

 

 

About Mitt Nowshade Kabir

 

 

 

 

 

Mitt Nowshade Kabir

 

Founder at Flerika.com and Trouvus.com

 

LinkedIn Profile

I interviewed Michael Serwetz who discussed Effective, Low-Cost, Product Development and Sourcing Management by Simplifying Organization and Process.

 

 

 

 

 

 

Today we're speaking with Michael Serwetz, and we're going to discuss effective, low-cost product development and sourcing management by simplifying organization and process. So, Michael, can you first provide a brief background of yourself?

 

I have been doing overseas sourcing in China and more than 25 other countries for more than 30 years. During that time, I have delivered a lot of goods and have seen a lot of good things and bad things, a lot of problems. And I've learned by experience how to make things more effective and simpler so that the final goal of delivering a quality product on time can be achieved in more than 95% of the cases at least.

 

I have worked for big companies like [inaudible 00:01:01] department stores, Levi Strauss, Gold Toe, Meretz, Nick Graham, Joe Boxer, and also, I have been in my own business in China for the last 10 years. I lived in Shanghai up until recently and actually started my love affair with China by teaching in Wuxi in 1990. So my focus has been China, but I have done business throughout the world.

 

How can US companies that are doing business in China or other overseas countries, how can they simplify and streamline their process?

 

Like I said in my articles about how to make big problems out of little ones, I think that the companies need to organize themselves so that somebody takes ownership of all aspects of a project. Typically a big or even a medium-size company, they have the design department. They have a compliance department. They have a production department. They have a quality department. And all of these departments act like silos. They don't connect. And none of these departments individually has ultimate responsibility for the delivery, except maybe the sourcing VP or one person who is trying to get all of these people to work together.

 

So the first and best solution that I would offer is to try to change things to a project oriented basis rather than a part of the product oriented basis, such as design, etc. Someone should take responsibility for the entire project from beginning to end.

 

And second, that person should be empowered to make decisions if something goes wrong or something needs to be changed. The problem we've seen and the problem that I illustrate in my article is that every time there is a problem, it has to go up the flagpole to top management, which involves a lot of people running around trying to figure out what happened and who did what to whom.And it causes and lot of unnecessary emails, time, and headaches before the problem gets solved.

 

So I think that the people that are responsible for these projects should be empowered. And so that empowerment should be at the lowest feasible level. Everybody is just sitting around waiting for the manager to make a decision. And the manager is, by nature, not close to the decision, has to ask a lot of questions, and is really not capable of making the decision...as capable of making the decision as people who are involved in it day to day.

 

And then don't do anything that doesn't add value. A lot of companies waste a lot of time with processes that don't add value. I pointed out in my articles about inline inspection on reorder items. If it's the same item, for example, some companies insist on doing inline inspection for every PO, every style. And if it's the same item, why would you need to do that? As facts usually turn out, there is less than a 5% chance of defectives because it's a repeat order. So why would you need to 100% inspect orders that have less than 5% chance of having a problem? And secondly, if you do, if the customer is so involved in the process, the factory will back off and not take their full responsibility. So the second part of that is let the factory be responsible for what they're doing.

 

I think that pretty much sums it up.

 

Can you talk about avoiding the problem. I know you mentioned it. Is there a way to summarize how to avoid this problem?

 

Problems happen. And my first statement is that if you have people who are taking ownership of the process from the beginning to end, will be able to be on top of it and nip the problems in the bud because they understand what's going on in the factory. They'll be able to talk directly to the factory or the suppliers concerned and not let the problem become bigger than it needs to be.

 

And the second part, which is in my second article, is that everybody in the supply chain should be responsible for checking a product. So, for example, my example of the printed matter, how does the printed matter get delivered to a factory and defects are not discovered until it's being applied to the garment? That means that three people had a chance to check it and didn't— the supplier that made it, the office of the buyer, and the factory itself. So everybody needs to take responsibility and quality checking needs to be done at the source.

 

And the last and the most important thing is, in the apparel industry, we have a very antiquated and ineffective quality control system called AQL. AQL just waits for the end of the process to find problems. But as I pointed out in my article, if you have an example — all the examples I gave in my articles are real... If you have an example of the socks which have knitting defects, and the knitting defects are not discovered until the end, until packing, how can that be avoided? How it can be avoided is by process, by process quality control. That's what the apparel industry needs, the most major change that the apparel industry needs to make to be more effective.

 

 

 

About Michael Serwetz

 

 

 

 

Michael Serwetz

 

I, Sourcerer-business growth and relief

 

LinkedIn Profile

I interviewed Sanjay Desai who discussed S&OP Process in an Organization Part II.

 

 

 

 

 

 

Continuing our discussion with Sanjay Desai this is the Second Part of a Two Call series on Sales and Operations Planning. So, Sanjay can you give us an introduction about yourself?

 

I am Sanjay Desai, a supply chain professional who started the journey with UniLever India in their Mumbai Plant as Warehouse Blue Collar Worker during 1983.  Over last 34 years, worked my way up in diverse organisations/ multiple geographies and handled end to end Supply Chain functions.  Worked for some of the best Fortune 500 MNC’s like UniLever, AVENTIS, Exxon-Mobil, Apple Computers, Dell Global, SH Johnson, Thermo Fisher Scientific and finally HUNTSMAN as Director Supply chain GrAPAC.  Happy to talk to you today Dustin, thanks a lot.

 

Is it necessary for an organization to engage so many resources to implement S&OP process? Can an organization embark on a similar process but not so exhaustive and achieve same results?

 

It is a very logical thinking.  Historically inmost organisations there are various weekly meetings, like (Sales call, Demand Supply alignment, /Weekly MPS planning, Weekly Pricing forum) All these meetings more or less strive to achieve the same objectives in an independent manner, and they have selective participation from leadership.  These weekly meetings are not necessarily integrated hence they don’t sustain.Eventually, these meetings become mundane, boring and lose their essence.  And that is the difference.  Whereas S&OP is much more structured, it is integrated across functions and itaddresses KPI from an “Outside In” perspective.   In these weekly meetings, we will burn lot of resources, time and money but we will not reap benefits proportion to the capital deployed.

 

Which are the success factors of this process that an organization must follow to successfully implement it and sustain long term?

 

Support and active participation from highest Commercial leadership as well as cross functional S&OP Core Team members.  If the highest leadership is not signed-up, then it is not possible to garner support from cross functional leadership and then S&OP process becomes ineffective.

S&OP core team should always remember that it is a strategic process which looks at Future biz scenarios.  Hence it should be engaged accordingly, meaning, it should not become a Post mortem or a mudslinging ground for cross functional teams.  While there always be little amount or Rear-View Mirror driving, S&OP process is largely effective when it remain futuristic.

Pre-preparation is the key & participants should come prepared with data/ analysis.Here the core team will align on action plans which are communicated downstream

S&OP meeting should take decisions and provide direction for execution.  Outcomes of this meeting should be instituted in day to day operations by Supply chain, Finance and Customer facing functions.

 

What are the benefits of engaging S&OP?  Are these benefits quantifiable and do these benefits differ with factors like Industry segments or product type?

 

Yes, there are hard benefits and soft benefits.  Example of some hard benefits

 

  • Improved forecast accuracy-  15-30%  (Or reduction in BiAS)
  • Successful product launches -  15-20%
  • Inventory reduction -    7-15%
  • Manufacturing downtime -    5-10%
  • Revenue growth -    5-7%

 

These benefits are realized in Organisation who successfully implemented S&OP and achieved a certain level of maturity.  Also note that these benefits will fluctuate directly in proportion to level of S&OP maturity of the organization.

 

Soft Benefits. These benefits are very generic regardless of Industry types

 

  • Enhanced team work across multiple functions
  • Structured decision making supported by clear communication
  • One set of numbers enterprise wide with a “window into future”
  • Tight linkage between strategic plans v/s daily execution engine

 

How can an organization can determine the maturity of their S&OP process and what steps the organization can take to improve maturity?

 

Yes, there are couples of ways to do it. First one is to conduct maturity assessment at least once a year and compare this analysis with best in class organizations.  Secondly, Organisation should perform a periodic audit and benchmark the results with best in class companies’data.  Such data is available readily in the market with agencies as well as chamber of commerce.  These two exercises will provide a platform to make continuous improvements in the downstream execution process.To conduct an assessment, there are about 10-12 questions that one needs to answer.  The answers help to gauge how an organizations process stacks up against the process maturity of best in class companies.  Each question has a mark assigned.

Sum total of all questions marks are categorized in 4 levels of maturity

 

  1. Developing
  2. Performing
  3. Leading
  4. Best in Class

 

Is it easy to implement this process and what are the common challenges that an organization may face?

 

It is definitely not easy to implement a full-fledged S&OP cadence.  It requires a lot of rigor at leadership level.  At the same time, it is not a rocket science either.  It requires change management at enterprise level and also changing the way cross functional teams work with each other.  Explained other way, implementing S&OP is 60% Change management, 30% Process development and 10% System & Tools.

 

Some of the broad challenges that an organization may face to make S&OP successful

 

  • Lack of senior leadership buy-in
  • Lack of objective (strategy) statement
  • One size fits all planning
  • Devil is in detail (S&OP is high level)
  • S&OP turning into post-mortem meeting
  • Getting fixated on past performance (i.e. forecast error not Bias)
  • Not taking decisions and communicating the actions after each S&OP

 

Can you give examples of some of the best MNC who have embraced this process and resulted into significant gains over a period of time.

 

  • Johnson and Johnson – Pharma MNC with 4 industry segments
  • Cisco Systems – IT / Technology MNC with large product offering
  • Mondelez - Food / Confectionary MNC
  • Owens Illinois (OI) – Glass manufacturer with multiple plants/ products to offer

 

These Organisations have multiple divisions and customer segments in various geographies/  These Organisations have complexity but they nurtured and used their  S&OP process to overcome their challenges.

 

Do you have any concluding remarks?

 

Successful S&OP process is a journey of continuous improvement which allows an organization to plan strategically to execute tactically. A true S&OP process which is implemented and executed enterprise wide will reap benefits consistently till it matures to best in class of its own.

 

To recap in brief, a 3 pronged approach to achieving S&OP excellence is

 

  1. Make is easy to implement
  2. Make is easy to execute and
  3. Make it easy to sustain

 

Part 1: S&OP Process in an Organization

 

About Sanjay Desai

 

 

 

 

Sanjay Desai

 

Strategic SCM Transformation, Manufacturing Planning, Inventory Mgmt, Network optimization, Service Segmentation & P&L

 

LinkedIn Profile

I interviewed Matthew  Mason who discussed New Regulations in the Trucking Industry.

 

 

 

 

 

 

Today we're speaking with Matt Mason who is one of the founders and owners of a 3 PL serving retailers in the food industry. We're going to talk about some of the new regulations in the trucking industry. So, Matt, can you first provide a brief background of yourself?

 

Myself and fellow partners, we founded BM2 Freight Services in 2008. So we're coming up on our 10 year anniversary here next year. We've been hauling frozen food, produce, dry good for the duration of our existence. And we're specializing in that right now.

 

Can you talk about what's happening in the industry in terms of regulations?

 

Yeah, well, in 2011, the FDA came out with a law that just came into effect this year called the FSMA. The Food Safety Modernization Act. What that did and a pretty brief description of that, that brought the logistics companies, the truckers, to have skin in the game now in regards to the FDA's rules and regulations on the safe transport of food.

 

So who will be impacted by this?

 

Well, before it was just the shippers and receivers, and now that the truckers that are transporting the goods are also liable to make sure they are in compliance with the new rules and law that in effect, a few of the things that they have added now are you have to have constant communication with the temperature of the reefer unit during transit. You need to have documentation of prior loads hauled from the particular truck that's going to do the next load. And then there's clean out requirements for those trucks. Those are just a few of the bullet points that are better moving forward.

 

Can you talk about some of the implications or why this is so important?

 

Well, I think they realized that there was... The FDA and all of these manufacturers are all having great processes in place for the product when its own site on their facility, but then once it hits the truck and goes out on the road, it's kind of a gray area, and nobody was responsible for when it was on the read. And I think they realized there was a big need to be fit there, and that was the [inaudible 00:02:56].

 

Do you have any recommendations then for retailers in the food industry?

 

We're viewing ourselves as a good 3PL, which we do you consider ourselves to be. We can be used to drive the compliance for the retailers and the growers and the shippers. We view ourselves as an extension of them, and a good 3PL can be your future transportation compliance manager so you don't worry about that once you hire the 3PL to handle your freight.

 

And where can the audience learn more about your company and how you can help?

 

You can visit us at www.BM2Freight.com. We have a panel on there about our specialization and through transport. And our contact information can be found on the website as well.

 

And thanks for sharing today.

 

Thank you, Dustin.

 

 

About Matthew Mason

 

 

 

 

 

Matthew Mason

 

President at BM2 Freight Services

 

LinkedIn Profile

 

I interviewed Maria Koshechkina who discussed Negotiations and the Multi-Cultural Environment.

 

 

 

 

 

 

Brief background of myself

 

My name is Maria. I am procurement and project management professional with more than 10 years’ experience managing international suppliers and staff, providing successful negotiations in multicultural environment, project management, auditing, designing procurement regulations and delivering tangible operational efficiencies in cross-functional and multinational matrix corporate and non-profit roles.

 

Introduction to the topic

 

When negotiating in a multicultural environment, you should be aware of the impact of verbal and nonverbal communications. For instance, simple hand gestures or expressions have various meanings around the world. Unless you are aware of these meanings, you may find yourself in an embarrassing position, which might put you at a disadvantage.

Additionally, it is important to understand the different negotiation styles that exist in contrasting cultures. Generally speaking, the way North Americans or Western Europeans negotiate is different from the way Africans or Asians negotiate. To be successful, you should recognize the cultural style of negotiation you will encounter and modify your approach accordingly.

What is the impact of verbal and nonverbal communications on multicultural negotiations

 

Nonverbal communication differs significantly among cultures. Therefore, if you are involved in multicultural negotiations, you should never use gestures like hand signals. For instance, one acceptable hand signal in Italy is a terrible insult in China, and a common hand signal in the United States is perceived as an insult in South American countries.

 

Exhibiting body language that is appropriate in Western Europe is not necessarily appropriate while interacting with a team in the Middle East. For example, while negotiating in the Middle East, it is common to be very physically close to negotiating partners. In such a case, physical distance might be interpreted as unwillingness to negotiate on a personal basis. In contrast, if you are negotiating in Germany and you violate the personal space of a negotiating partner, it could offend the individual and make the situation uncomfortable.

 

Effective negotiation requires a broad understanding of different styles of communication; this is so you can modify your negotiating style accordingly. North America or Western Europe may be classified as verbal cultures. In cultures such as these, words have a significant meaning, there is a time sensitivity to engage in a discussion and reach compelling points, the logic is linear, there is clarity in the communications, and information is used to stress a point or reach a conclusion.

 

Asia and Africa, though, may be broadly classified as visual cultures. In these cultures, nonverbal communications are more important than verbal communications, logic is not linear but lateral, and discussions often cover various points before arriving at a conclusion. Emotion and intuition play an important role in negotiations. There may initially be a lack of clarity in communications until a conclusion is reached. These cultures use information not only to exchange facts but to establish association.

 

What are the major cultural differences in styles of negotiations?

 

Time

 

When involved in a multicultural negotiation, you should be aware that different cultures perceive time differently. Time is not an absolute; rather, it’s relative. For example, if you are in Germany and have scheduled a negotiation to start at 10:00 a.m., then you can reasonably expect everyone to be there on time. However, participants will likely not be as punctual in Venezuela or Brazil, for example.

 

It is critical to remember the sensitivity of time on a global scale; different cultures use time as a pressure point, an enabler, a constraint, a strategy, or as a tactic to gain advantage in a negotiation. Time becomes an issue when Western Europeans and North Americans negotiate in Asia or Africa. Negotiation time for Europeans and North Americans is measured in hours and days, while negotiation times in Asia and Africa are measured in months and years. Therefore, Western Europeans and North Americans should dedicate sufficient time when both preparing for a negotiation and establishing relationships when negotiating with their Asian and African counterparts.

 

Leadership

 

Group dynamics also vary among cultures. For example, if you are negotiating in Japan, you will typically find a tight-knit team with a well-defined leader. If you are negotiating in the United States, however, you may find yourself engaged in simultaneous conversations with three or four different members of the partners’ negotiating team. If you are doing business in Asia or Africa, you may find it difficult to discern who has the decision-making authority.

Another point that affects team leadership and dynamics is the degree of government involvement in negotiations. While in North America and Western Europe the government has a minor or no role in negotiations, in some countries in Asia and Africa, the government plays an influential role in negotiations.

 

The Pace of Negotiations

 

As previously discussed, in Asia and Africa, negotiations take place over months, if not years. However, this is not the case with North Americans and Western Europeans, who make the common mistake of thinking they can complete negotiations in days when negotiating with Asian or African partners.

Generally, Western Europeans and North Americans believe negotiations have reached a formal conclusion once their counterparts have signed an agreement. The signing of a contract in Asia, the Middle East, and Africa does not end a negotiation; in fact, it marks the start of negotiations. Consequently, once Western Europeans and North Americans have signed a contract with Chinese, Japanese, or African partners, they may have to renegotiate issues they thought were already finalized.

 

Personal Relationships

 

For Western European and North American cultures, negotiations are concluded once the agreement is signed. Their relationship with suppliers is primarily defined by the formal agreement; therefore, a personal relationship with their partner is not vital.

 

This is in sharp contrast to the cultures in Asia, Africa, and South America, where negotiations start when the contract is signed. For these cultures, the contract is not the definitive statement of the relationship between negotiating partners; the relationship continues to evolve through negotiations. Such relationships have low business content and high social content. Thus, if you are doing business in Asia or Africa or South America, establishing a personal relationship is critical to your success.

 

Summary

 

To be an effective negotiator, you should be aware of the key differences in negotiating styles that exist among major cultures. Based on this diversity, you should try and identify your position and that of your partners on issues like the pace of negotiations, the topics of discussion, use of time, and team composition and dynamics.

 

 

About Maria Kosechkina

 

 

 

 

 

Maria Kosechkina

 

Procurement Project Manager, FF&E and Interiors Freelancer | Helping Companies Translate Their Business Goals to Reality

 

LinkedIn Profile

I interviewed Sanjay Desai who discussed S&OP Process in an Organization Part I.

 

 

 

 

 

 

Today we're speaking with Sanjay Desai and the topic is S&OP Process in an Organization. This is a two part series and this is part 1. Sanjay can you first provide an introduction?

 

I am Sanjay Desai, a focused supply chain professional who started the journey with UniLever India in their Mumbai Plant as Warehouse Blue Collar Worker during 1983.  Over last 34 years, worked my way up in diverse organizations/ multiple geographies and handled end to end Supply Chain functions.  Worked for some of the best Fortune 500 MNC’s like UniLever, AVENTIS, Exxon-Mobil, Apple Computers, Dell Global, SH Johnson, Thermo Fisher Scientific and finally HUNTSMAN as Director Supply chain GrAPAC.  I left Huntsman in Dec 2016 and embarked next phase of my career as a Free Lance SCM professional. Honoured to talk to you today Dustin, thanks a lot.

 

What is Sales and Operations Planning?

 

S&OP is a STRATEGIC senior management tool that aims at improving end to end value chain efficiency of an enterprise.  It is NOT about Supply Chain (only) hence I mentioned Value Chain - Enterprise wide. S&OP process creates a robust frame-work around the core processes of the business.  This frame-work allows the senior leader/s to effectively build and communicate execution plan, also understand the moving dynamics of the business, and to have the ability to quickly shift gears and execute smartly in the changing environment.  This process of self calibration is repeated at regular interval using S&OP platform.

 

When S&OP came into picture and how has this process evolved so far?

 

Good you asked this question.  Oliver Wight who are the owners of this tool, mentioned that they first implemented this process around late 1980, which means it is around now for close to 30 years.  While it has evolved to a full-grown process by now, the core elements have remained more or less the same.  What has changed so far, is the execution methodology of the process.  Different organizations have digested this process and amended some of the execution principles to suit their business model.

 

Who should own S&OP in the organization?  Are you aware what is the general practice today in the industry?

 

Thank you asked this question Dustin!! This has been a topic which is debated widely with various opinions.  I would say that S&OP process is most effective and will produce desired results, if it is functionally owned by Commercial and driven by the highest authority in that function.  Supply Chain is in best position to run this process since it impacts working capital, Customer service and delivery efficiency.  The senior leadership involvement is not just demonstrative but practical one aimed at keeping the S&OP focused on future, being strategic and decision oriented.

 

Not very long ago, we started hearing another process called IBP..What is IBP and is there a synergy in IBP with S&OP or are they different?

 

IBP is an acronym for (Integrated Business Process) In aesthetics and in principal, it is more or less the same process with differences being in the Nomenclatures used and overarching scope.  Financially it is more woven and interconnected incorporating Financial Plans and Budgets at various stages in the process.  Explained in another way, IBP is about shifting the focus of current S&OP beyond Supply Chain function and bringing-in executives from other functions inside from an ownership perspective.   Although Oliver Wight does not agree to the sentiment, it is widely felt by industry leaders/ practitioners that IBP is like a “Big Brother” to S&OP process.

 

What are the key elements that an S&OP should address?

 

At a high-level S&OP is a 5-step process which is executed in a certain regularity. It is highly practical and recommended to run this process atleast once a month.  5 Broad Key elements of the process are 1)Product Review (NPI, EOL, Pricing) 2) Demand Review (changes, deals, market activities 3) Supply review (availability, shut downs, factory capacities, Asset Utilisation)  4) Financial review or Integrated review (P&L changes, Cost impacts, Gaps analysis, What if scenario)5) MBR or Management Biz Review (Actions, Alignments and decisions)

 

 

Part 2: S&OP Process in an Organization

 

About Sanjay Desai

 

 

 

 

Sanjay Desai

 

Strategic SCM Transformation, Manufacturing Planning, Inventory Mgmt, Network optimization, Service Segmentation & P&L

 

LinkedIn Profile

I interviewed Rod King who discussed Supply Chain Design: From The Business Model Canvas to the Supply Chain Canvas.

 

 

 

 

 

Today we're speaking with Dr. Rod King who is the author of 'Business Model Canvas: A Good Tool with Bad Instructions' and we're going to talk about Supply Chain Design: From The Business Model Canvas to the Supply Chain Canvas. So Dr. Rod can you tell us what your book is about?

 

My book – “Business Model Canvas: A Good Tool with Bad Instructions?”– takes a critical and deep look at the popular tool of the Business Model Canvas. Also my book provides a simple but multilevel mapping framework that enables entrepreneurs to save lots of time, money, and energy while they discover and solve business model (supply chain) problems not only in private and public sectors but also in non-profit organizations. In short, the book shows how the Business Model Canvas can be upgraded for use as a tool for Universal Pain Discovery & Solving, that is, as a platform for rapidly discovering and solving pain in every domain. Also, the book proposes the use of novel visual tools such as the Business Model Strip and POKER Canvas that facilitate business model (supply chain) improvement and innovation in environments with multiple stakeholders and trade-offs. Further, the book provides a universal visual language that uses one line (rather than a tessellated canvas of 9 building blocks) to represent a “pipe” business model or business model with a single customer segment. Finally, the book provides a universal problem-solving heuristic of the Pain-Plan-Do-Review (PPDR) or learning cycle to guide effective and efficient use of business modeling tools such as the Business Model Canvas, Mission Model Canvas, and Lean Canvas.

 

What are the deficiencies inherent in the Business Model Canvas which you address in your book?

 

My book highlights the Business Model Canvas’s “12 handicaps” that lead to significant waste of resources as well as slower application in business model (supply chain) improvement and innovation projects. Of the 12 handicaps, it’s important to note the following disadvantages of the Business Model Canvas

 

1. The Business Model Canvas is a static block diagram (without an inherent process or a visual heuristic for iterative problem solving):

 

The Business Model Canvas is typically presented as a set of 9 building blocks that describe a business model. However, the 9 building blocks are not directly related to the four phases of a pain solving (learning) cycle. Consequently, the Business Model Canvas tends to be used as a one-shot list for visually documenting the parts of a static business model. The dynamic aspect of continuously resolving trade-offs or solving problems in a business model is not emphasized.

 

2. Business Model Canvas is optimized for a single stakeholder (Customer):

 

The network of relationships between the 9 building blocks of a Business Model Canvas is non-obvious. For a single category of customers or “pipe” business model, a Business Model Canvas can be easily read and understood. However, for two or more categories of customers such as in a double- or multisided platform (supply chain), the logic of a Business Model Diagram becomes unwieldy, inaccurate, and difficult to understand. In short, scalable block diagramming of a Business Model Canvas is limited especially when illustrating platforms such as in multisided business models (Uber; Airbnb; Apple (iPhone); Google (Search)), government, and non-profit organizations.

 

3. Business Model Canvas deals with profit-focused impacts (while ignoring social and environmental trade-offs):

 

The original nine blocks of the Business Model Canvas can be used to show how an enterprise creates and delivers a value proposition in order to capture profit. The emphasis of the Business Model Canvas is on documenting financial trade-off (revenue streams; cost structure) and in particular the metric of profit. Blocks do not exist for documenting social and environmental impacts or trade-offs. Thus, the original topics of a Business Model Canvas cannot be used to describe social business models as well as environmental (sustainability) models. Also, Michael Porter’s concept of Shared Value or the Triple Bottom Line (Profit-People-Planet) framework cannot be directly applied on a classic Business Model Canvas. Overcoming this handicap has led to the development of bespoke canvases such as the Mission Model Canvas and Social (Business) Model Canvas.

 

4. Few business tools can be directly and visually integrated with the Business Model Canvas

 

The system or problem solving theory, which governs the organization of building blocks on the Business Model Canvas, is non-obvious.Many uses of the Business Model Canvas are therefore superficial. Also, it is difficult to link existing business tools with the building blocks of the Business Model Canvas. For instance, there is weak integration between the Build-Measure-Learn loop of the Lean Startup Method and the structure of building blocks on the Business Model Canvas. The Six Sigma process of DMAIC cannot be directly linked to the granular building blocks of the Business Model Canvas. In practice, use of the Business Model Canvas is relegated to a scorecard for documenting the status of a business model rather than as a set of dynamic blocks for continuously resolving emergent pains or trade-offs of a business model. When properly structured, the Business Model Canvas can be used as a platform where many existing business tools become “plugins” or “apps” for solving many and varied problems in business.

 

How can your book be used by supply chain executives or entrepreneurs in this industry?

 

One of the biggest handicaps of the Business Model Canvas is the absence of an equivalent linear representation of a business model in the form of a line diagram or chain such as in the “Business Model Strip.” In other words, no equivalent line diagram – except for the Business Model Strip – exists for scalably representing a business model or supply chain. Supply chain networks are difficult to represent using the block diagram and notation system of the Business Model Canvas.

 

In contrast, the tools of the Business Model Strip and POKER Canvas, which are featured in my book, can be used to simply, visually, and comprehensively document, analyze, design, and manage supply chains (“pipes”) as well as networks (“platforms”). My book introduces the four generic elements of any business model, value chain, or supply chain: Value Creator (VC); Output (O); Value Recipient (VR); Feedback (F). These four generic elements can be decomposed into the topics of the nine building blocks of a Business Model Canvas. Using a Business Model Strip, a supply chain can be visualized as a sense-and-respond or cybernetic system that involves interaction between the four aforementioned elements with a view to eliminating trade-offs.

 

The attachment shows an application of the concept of the Business Model Strip to illustrate a Supply Chain Canvas which visualizes a “fractal supply chain” as a series of business models or “self-similar supply chains.” The Supply Chain Canvas seamlessly integrates ideas of Supply Chain Analysis, Design, and Management with those of Business Model Improvement and Innovation. Consequently, Supply Chain Practitioners can use a Supply Chain Canvas to rapidly and collaboratively map, analyze, and design supply chains as well as business models of any complexity and in any domain.

 

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Supply Chain Business Model Design

 

 

About Rod King

 

 

 

 

 

Rod King, Ph.D.

 

AUTHOR of "Business Model Canvas: A Good Tool With Bad Instructions?"; CONSULTANT on Business Model Hacking (BMH)

 

LinkedIn Profile

I interviewed Elias Azerrad who discussed Defining KPIs and Analyzing the Impact of Productivity on Logistics Cost.

 

 

 

 

 

 

Can you first provide a brief background of yourself?

 

Hi, Dustin. I'm 22 years old. I graduated from one of the Paris universities where I studied economics and management for three years. I'm currently in advanced Master of supply chain at ISLI Bordeaux. it was founded more than 30 years ago and is the oldest European institution devoted to logistics and global supply chain management. And I'm currently working at Rexel Group as supply chain analyst. My focus over the past years has been to develop skills related to supply chain management and data analysis in order to have an overview of the various impacts of the supply chain projects and them leverage.

 

What are KPIs and how do you definite them?

 

KPIs is a measurable value that demonstrates how effectively a company is achieving key business objectives. So organizations use KPIs to evaluate their success at reaching targets. So selecting the right KPIs will depends on your industry and which spot of the business you are looking to track. So each department will use some different KPI types to measure their success based on specific goals and targets.

 

So to be useful, KPIs need to be monitored and reported. So how to constrict and to make a good KPI, so you have to make sure that the KPIs you're choosing is aligned with the strategy goals and objectives of your organization. Then you have to make sure that the KPIs you choose to measure should have data that can be easily obtained and tracked. So either monthly or daily or weekly, it depends on what you want.

 

Then the KPI should keep everyone on the same page and moving in the same direction. So with all the team, either they're operational, either they're strategic. It also should be reliable and accurate to obtain some result. And the thing is that your business is always growing and changing, and you should evolve your KPIs as well.

 

What are the impacts of productivity on logistics costs?

 

So regarding my Master’s thesis, I did like to focus my work on the impact of the logistics costs. So the productivity impacts the logistic costs in many ways. And I decided to focus on the warehouse costs and especially the salaries and benefits. So the productivity is a measure related to three units: time, people, production/action. So my assumption is that in supply chain, that the warehouse has been subject to the variation of the flows. So it means you can't fully control the variation of the flow when you are inside. The only thing you can control is the people who actually work there, and they are the only adjustment variable available to us.

 

So the salary and benefits represent a major input cost between 50 and 60% of the total of the warehouse costs. So if you can control and readjust these costs, you will considerably reduce your total of costs.

 

So the objective of my Master’s thesis was to be able the quantify the impact of productivity variation and more precisely, the deviation from given budget in order to allow discussion between top management group department, country, operational teams, strategy team, on Transformation, automation projects and lean.So the human factor is an essential link in the supply chain. And the aim was not to demonstrate that there is too much people but rather to show that the use of temporary workers is a significant cost, and it must not be used to the detriment of training or initiating new methods.

 

So on the basis of history, I tried to establish a correlation for each country between productivity and the number of employees. So I launched survey about the total salaries to have an overview about how much it costs to the firm with the bonus with the leave sick, and all these kinds of things, for permanent employees and temps. Then I used a mathematical function that could help me to determine the number of people based on activity of last year, for example.

 

So after that, I compared the model to the reality, and I quantified the gap between the model and the people who actually work there, each months.

 

So I used the gap and the mathematical function to quantify with the survey that I made on salaries and benefit to determine cost.

 

I am aware that this method could be skewed with change of product mix, logistics transformation and automation, but it's quite accurate when you compare to the reality.

 

How are KPIs relevant to your analysis?

 

So relevant KPIs is you tool optimizing an ongoing activity with the purpose of maximizing the likelihood of achieving the goal for that activity. So when you are writing or developing a KPI, you need to consider how that KPI is related to a specific business, outcome, or objectives.

 

So KPIs need to be customized to your business situation and should be developed to help you achieve goals. You have to write the objectives. You have to share your KPIs with the stakeholders. You have to review the KPIs so either weekly or on a monthly basis and make sure the KPIs are actionable. So you have also to make sure that to evolve your KPIs to fit the changing needs of the business and check to see that if the KPI is attainable or not.

 

Thanks for sharing today.

 

Thank you, Dustin.

 

 

About Elias Azerrad

 

 

 

 

 

Elias Azerrad

 

Analyst Supply Chain at Rexel Group // CoFounder & Editor @Tech Crush

 

LinkedIn Profile

I interviewed Sanjay Desai who discussed Customer Segmentation.

 

 

 

 

 

 

It's great to speaking with you today again Sanjay for our next interview this topic today is Customer Segmentation. Before we start can you provide a brief background of yourself?

 

I am Sanjay Desai, a focused supply chain professional who started the journey with UniLever in Mumbai as Warehouse Blue Collar Worker during 1983.  Over last 34 years, worked my way up in diverse organisations/ multiple geographies and handled end to end functions in Supply chain.  Worked for some of the best Fortune 500 MNC;s like UniLever, AVENTIS, Exxon-Mobil, Apple Computers, Dell Global, SH Johnson, Thermo Fisher Scientific and finally HUNTSMAN as Director Supply chain GrAPAC.  I left Huntsman in Dec 2016 and embarked next phase of my career as a Free Lance SCM professional. Very happy and honored to talk to you today Dustin, thanks a lot.

 

Whats is Customer segmentation?

 

Customer Segmentation (as the name suggests) is a process of subdividing the Customers or market/s into specific Category of groups, so these groups can be serviced deferentially creating appropriate value to the customer at the same time investing right amount of resources.  A company can use Customer Segmentation as the principal guideline for allocating their resources like product development, marketing support, service programs and delivery efficiency.

 

How does it work / what are the elements to address in this process?

 

This is not easy or simple as it sounds.  It requires a lot of change management.  The first step is to seek alignment with highest leadership within the organisation before we start climbing this platform.  It requires a uniform stakeholder buy-in globally since this will have substantial impacts to downstream execution operation and Customer behaviors in future. It requires a detailed step by step collaborative project planning by cross functional groups like Product Mgmt, Supply Chain, Sales and IT.

 

In a very broad sense…

 

We need to divide the Customers markets into measurable Segments based on a few agreed parameters like Revenue realized, Profit Margin, Cost to serve, Global importance to the customer/s as well as Long term relationship with the customer/s.

 

Determine the potential of each customer / segment by analyzing these parameters with the costs and effort associated serving those segments.  Plot and record this data as we will take key decision based on these factual findings.

 

Based on what data tells us, we need to design an IT enabled solution so we have ability to execute day to day operations at Customer or order level as required.

 

Why is segmentation necessary?  Can we not treat all customers on one standard service?

 

I suppose most industries (excepting a few great MNC’s) could be doing that today which means we are over providing a service level to a set of customers and under providing a service to a deserving set of customers which means, we are doing an injustice to another segment which is more deserving.

 

Imagine a Mil $ Key Customer account is treated in the same vein as a customer who buys a couple of 100’s of $ each year.  Isn’t is unfair to the Key Account?  Yes it is.

 

This process is a great tool to identify Customers who are Key Global accounts, Customers who are loyal to us over many years (relationship) customers who buy Millions of $ and then there are customers who buy very little in $ terms as well as customers who buy from us only once or twice a year.  As an enterprise, we need to differentiate and serve the customers based on their relative value and importance to our organisation as well as adding value to Customers so they continue to buy from us over a sustained period.

 

A segmented approach provides that execution platform to the Organisation.Customer Segmentation is most effective when a company tailors their product/ services offerings to Customers which have a relative high value to the organisation.

 

Benefits of Segmentation: ROI to Enterprise.

 

Yes Dustin, there are benefits which are quantifiable / measurable.

 

The biggest advantage is our Customer facing front end (Sales and Marketing) is synchronized with back end (Supply chain / Operations) in terms of Promise made to Customer is matched by fulfillment performance.

 

Delivery performance and fulfillment costs are optimized to the relative value that we get from our target Customers

Segmented approach helps Organisation to push those “One Timer” Customers to change their behavior and forces them to form tactical partnerships which results in higher revenue potential for Organisation

 

Segmentation ensures that “Expedited and Rush” orders are properly channelized thru an ‘approval” mechanism which results in overall reduction in the “stress” and “noise” in delivery performance.  More often Expedited and Rush order create stress and noise in operations.

 

It helps to develop a focused sales organisation effort at more profitable customer segment and ultimately increase customer satisfaction and revenue potential in a controlled manner.

 

Would this approach hold true in next 5 years of eCommerce / Technological disruption?

 

Great question.  It will actually help Organisations to balance their Working Capital costs v/s Customer Service bench marking the relative value of Customer segment to the Organisation. Note that eCommerce or technology is an enabler of business.   The backend principles of balancing Working Capital, optimizing Physical delivery costs will always be there, regardless of the medium that we use to conduct business.

 

Concluding remarks:

 

Asia being the epicentre of growth in the next couple of decades, the last mile delivery performance will take lot of prominence.  And with many companies competing for market share of the limited Pie (in Asia), what will separate Organisations from each other is their end to end value chain performance (not just supply chain performance) NOW is the right time that we should think of our Customers like our employees.   All Organisations have a yearly performance review system for employees, where-by Merit / Bonus adjustments are determined in a differentiated manner based on employee performance ratings.  When we segment our own employees based on their performance for pay, why not Customers.    Our employees are relatively more critical to organisation with their value…Ultimately it is the employees who build processes, strategies which draw customers to buy from us and not other way round. It is high time we start segmenting our customers now and service them accordingly.

 

Thanks Dustin…Was a great call today..

 

About Sanjay Desai

 

 

 

 

Sanjay Desai

 

Strategic SCM Transformation, Manufacturing Planning, Inventory Mgmt, Network optimization, Service Segmentation & P&L

 

LinkedIn Profile

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