Supply Chain Management & World Class Logistics Assessment
Supply Chain Management & World Class Logistics Assessment
Supply Chain Management & World Class Logistics Assessment
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<strong>Supply</strong> <strong>Chain</strong> <strong>Management</strong> &<strong>World</strong> <strong>Class</strong> <strong>Logistics</strong> <strong>Assessment</strong>Amsterdam, September 2000
The top ten companies in electrical engineeringand electronics in fiscal 1999190.8158.0150.1134.1Total sales in billions of DMSales in electrical capital goods in billions of DM120.4112.2107.499.472.282.980.676.675.771.975.171.356.158.038.229.8GE(USA)IBM(USA)Siemens(Germany)Hitachi(Japan)MatsushitaElectric(Japan)Sony(Japan)Toshiba(Japan)Fujitsu(Japan)HewlettPackard(USA)NEC(Japan)© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 2cf - August, 00
Sales figures for the Siemens Groups(in billions of DM)Power GenerationPower Transmission and Distribution15.56.4Automation and Drives 13.8Industrial Projects and Technical Services 8.1Production and <strong>Logistics</strong> Systems 2.5Siemens Building Technologies 8.3Information and Communication Networks 24.0Information and Communication Products 19.1Siemens Business Services 7.1Transportation Systems 5.8Automotive Systems 6.4Medical Engineering 8.0Osram 7.2Infineon 8.3Siemens Financial Services 0.5Siemens Real Estate <strong>Management</strong> 2.3© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 3cf - August, 00
Global player:Present in almost every country• SalesManufacturingManufacturing locations:EuropeAmericasAsia-PacificAfrica,Middle East, C.I.S.357161879© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 4cf - August, 00
<strong>Supply</strong> <strong>Chain</strong> <strong>Management</strong> expands the concept of <strong>Logistics</strong>OrderOrder<strong>Supply</strong><strong>Supply</strong>“order to invoice“Pay“offer to cash“ Definition of of <strong>Logistics</strong> is is similar to to <strong>Supply</strong> <strong>Chain</strong><strong>Management</strong> <strong>Logistics</strong> systems and supply chains sharecommon design principles© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 5cf - August, 00
Four essential processesSource: SCOR Model (<strong>Supply</strong> <strong>Chain</strong> Council)PlanSupplierSourceProductionMakeDeliverCustomer<strong>Supply</strong> <strong>Chain</strong> <strong>Management</strong>is is a a process-oriented integrated approach to to procuring, producing anddelivering products and services to to customers. has a a broad scope that includes sub-suppliers, suppliers, internal operations,trade customers, retail customers and end users. covers the management of of material, information and value flowSource: MIT© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 6cf - August, 00
<strong>World</strong> <strong>Class</strong> <strong>Assessment</strong> -Objective and QuestionsAimQuestions How to ensure comparibilty ?Identify the bestsolutionthe fastest wayand implement it it Solution is choosen by which criteria ? Where are best practices in place ? How can best practices be transferred ?© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 7cf - August, 00
Structured <strong>Logistics</strong> <strong>Assessment</strong> of the Business Unit Assessing the <strong>Supply</strong> <strong>Chain</strong> Core Processes in in consideration with bestpractice solutions Increasing <strong>Supply</strong> <strong>Chain</strong> performance while keeping or or even decreasingprocess expenses Determining action items to to improve performance/ costs ratio Creating the possibility of of internal Benchmark of of the various Business Unitsby comparing their <strong>Logistics</strong> maturity© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 8cf - August, 00
Different Kinds of Business require different<strong>World</strong> <strong>Class</strong> CriteriaProductBusinessSystemsBusinessProjectBusinessAfter SalesServiceDelivery time in daysHigh Delivery CapabilityLong Del.-Time(weeks)High Delivery ReliabilityLong Del.-Time (months)High Delivery ReliabilityShortest Del.-Time(hours) Lean order management Program production inproduct lines Distribution channeloriented <strong>World</strong> Wide distributionsystems <strong>Supply</strong> centers andsupply organization Customer specificconfiguration Standard Components Changes in configurationand dates Order monitoring Direct delivery ofcomplete systems Installation and set up atcustomers site Long time between offerand fulfillment Engineer to order Complex deliverystructures Project- Change- andClaim- management Project oriented deliveryof parts and components Controlling ofconstruction site Call-Center, 24 h. Planning and control oftechnicians Car boot supply “overnight” Central Warehouse,regional Depots Returned partsmanagement© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 9cf - August, 00
Performance Indicators with clear focus on EVAIndicatorsSales- Sales Steadiness- Sales Increase Delivery by by daterequestedResult Delivery CapabilityEVACosts- <strong>Supply</strong> <strong>Chain</strong> Costs-Costs ofNon-Conformance Delivery Reliability Delivery Quality Delivery TimeCapitalCostsAssets- Inventories- Accounts Receivable Inventory Turns© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 10cf - August, 00
Uniform parameters have been definedSupplierCustomerS M D S M DSource Make Deliver Delivery time Delivery by date requested Delivery capability Delivery reliability Delivery quality Inventory turnover <strong>Logistics</strong> Performance IndexDifferentiation into Core Processes possible© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 11cf - August, 00
Processes and Sub-Processes for eachKind of Business definedSupplierCustomerS M D S M DSource Make Deliver<strong>Supply</strong> <strong>Chain</strong>DesignSalesPlanningOrder<strong>Management</strong>Procure Produce Distribute• Determinescenarios for eachmarket and salesproduct group• Design the sales/quantity planningprocess• Design the orderprocessing• Design theprocurementprocess• Design theproduction process• Design distributionprocess• Identifybenchmarks• Formulate andadjust supplychain goals• Prepare and makedecisions to makeor buy• Design processchain and i• Administermaster data• Plan and agreesales quantities• Plan materials/product volumes• Determinestockpiling strategy• Generate offers• Record orders andset delivery dates• Track orders• Bill orders• Shape supplierrelations• Handle MRP andorders• Check and stagegoods• Generateproduction plan• Manage productionorders• Shape serviceprovider relations•ShipDesign processesOperational processes© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 12cf - August, 00
Three <strong>Assessment</strong> Levels definedSupplierCustomerS M D S M DSource Make DeliverDoes notmeetrequirementsProfessional<strong>World</strong> <strong>Class</strong>Sub-process 1Sub-process 2Sub-process 3Sub-process 4Sub-process 5Sub-process 6Sub-process 7Differentiation into Core Processes possible© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 13cf - August, 00
Quantitative and qualitative results are compiledin one portfolioQuantitativeQualitativeDelivery timeDelivery by date requestedDelivery capabilityDelivery reliabilityDelivery qualityInventory turnover<strong>Logistics</strong> Performance IndexSub-process 1Sub-process 2Sub-process 3Does notmeetrequirementsProfessional<strong>World</strong> <strong>Class</strong>Quantitative assessment+-Analysis ofthe approachesNeed foraction<strong>World</strong> classlevelOn the waytoworld classSub-process 4Sub-process 5Sub-process 6Sub-process 7-+Qualitative assessment© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 14cf - August, 00
<strong>Assessment</strong> Example - OverallDoes not meetRequirementsProfessional<strong>World</strong>-<strong>Class</strong>1. <strong>Supply</strong> <strong>Chain</strong> Design2. Sales Planning3. Order management4. Procurement5. Production6. DistributionCommentsThe overall performance is very goodMost processes are „<strong>World</strong> <strong>Class</strong>“, not a single process is below requirements.Improvement areas are mentioned in detail on the sub process level.© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 15cf - August, 00
<strong>Assessment</strong> Example - Order <strong>Management</strong>Does not meetRequirementsProfessional<strong>World</strong>-<strong>Class</strong>1. Designing order <strong>Management</strong> Process2. Offer Process3. Order Entry an Delivery Time Determination4. Controlling of Orders5. BillingCommentsNo uniform IT system in placeMultiple order entry stagesVarious system configuratorsCustomer information only partly availableTransparent-, customer focussed-, fast reacting production at the plant Flexible assembly (+/- 35%)Billing to the end customer by sales department© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 16cf - August, 00
<strong>Assessment</strong> Example - Key FiguresDelivery Time Delivery Reliability Delivery Capability- 86% + 65% + 66%Inventory Space Installation Time- 60% - 50% - 50%© 2000 by Corp. Procurement and <strong>Logistics</strong> - SiemensProcurement and <strong>Logistics</strong>sc-world_amsterdam_20000804.ppt - page 17cf - August, 00
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