www.SDCExec.com

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Automating Purchase-Automating Purchase-to-Pay at BAE Systemsto-Pay at BAE Systems

Page 18

Extending QualityExtending Qualityinto the Globalinto the Global

Supply ChainSupply Chain

Next-generation Supply Chain Training

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Third-party Logistics - Survival of the Fittest

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Is ERP Still a Four-letter Word?

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INSIDE

ALSO

Issue 3e Volume 10August 2009

Vested Outsourcing: Game-changing Rules for BPO66 1212 Inbound Shipment Management The New Frontier

Outsourcing

S o l u t i o n s - b a s e d I n t e l l i g e n c e f o r S u p p l y C h a i n R O I

Business ProcessBusiness Process

2121 Supply Chain Readiness for REACH and Global Material Regulations

August 2009 | www.SDCExec.comwww.SDCExec.com 2

T he economic downturn has driven a great deal of handwringing in the supply chain community about risk management. Much of the debate has been around whether supply chain executives should be spending more time proactively scrutinizing their suppliers to identify at risk vendors, or proactively putting in place back-up plans in the event of a supplier failure. The consensus, of course, is that supply managers ought to be spending ample time doing both.

One danger, however, in concentrating too much effort on the now is that supply chain executives might not be prepared for the next. The current recession has seen many companies scal-ing back on facilities and staffing for production or warehousing/distribution to a point that it will be difficult for them to scale up to meet demand when the economy rebounds making this one of the greatest risks facing the supply chain today, notes Mark Humphlett, director for supply chain solutions marketing with Infor www.infor.com. Humphlett believes that companies need to understand that risk management is pervasive and, just like quality management, needs to be built into daily practices examining how fluctuations within the supply chain affect production, customer service levels and, ultimately, the bottom line.

Another danger is that by focusing on the known unknowns in front of them, supply chain executives might miss the unknown unknowns coming at them from behind. Rory King, an executive with IHS www.ihs.com, likens it to drivers who worry about the

highway patrol officer with a radar gun behind the billboard along the side of the freeway. While a speeding ticket is no doubt an inconvenience, the real threat to life and limb is the reckless driver coming up from behind and swerving into your lane, says King, who is my co-author on the report Supply Chain Readiness for EU REACH and Global Material Regulations in this issue.

The looming danger, in this case, is the potential for supply disrup-tions as the effects of environmental legislation begin to ripple through-out the supply chain. Based on our research, many companies have yet to recognize the significant impact that these regulations will have on their continuity of supply. As a result, they are leaving themselves open to being blindsided as engineers are forced to redesign old products to incorporate new materials, as suppliers end of life components that no longer have a large enough market, or as companies are compelled to realign their entire supply networks around new carbon tax and trade costs to list just a few of the potential impacts.

Call to Action: Well be continuing our look at supply chain risk in the August/September print issue of Supply & Demand Chain Executive due out in mid-September. In the meantime, write me at areese@sdcexec.com to let me know what you view as the greatest risks to your supply chain, how you are responding to those risks, and where you see the greatest danger from unknown unknowns in your supply networks. Your feedback will help shape our coverage of this topic in the upcoming issue and beyond. Ill look forward to hearing from you.

Unknown Unknowns

Andrew K. ReeseEditor

Supply & Demand Chain Executive

executive memo Supply Chain Risk Management

areese@sdcexec.com

August 2009 | www.SDCExec.comwww.SDCExec.com 4

table of contents Issue 3e Volume 10 August 2009

Executive MemoSupply Chain Risk ManagementBy Andrew ReeseUnknown Unknowns

Best PracticesThird-party Logistics By Mike SchoenfeldSurvival of the Fittest

Best PracticesEnterprise Resource Planning By Ned LillyIs ERP Still a Four-letter Word?

Best PracticesProcure-to-pay Automation By Editorial Staff Automating the Purchase-to-pay Process at BAE Systems

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29

1212

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Supply Chain Readiness for REACH and Global Material Regulations21 Special Research Report: Preparing for the impact of REACH is a supply chain imperative to

mitigate the impact of coming supply and demand discontinuities. Heres your REACH Readiness Action Plan.

18

ffhe Purchase-to-pay E Systems

Meeting the numbersis easier for some companies.

Your data. Our insights. One month.

No brainer.

Looking for something other than short-sighted cost cuts or sporadic performance adjustments to meet your numbers? Maintenance, Repair, and Operations includes spare parts, materials, and chemicals that can tie up 15% of procurement spend and 75% of purchasing requisitions. This leaves signi cant dollars - and opportunity - on the table. In a months time, IHS MRO Inventory Optimization can identify measurable opportunities to increase, maintain, or strategically

reduce production capacity while simultaneously decreasing inventory investment and operating costs. Tough decisions. No brainer. Contact IHS.

IHS MRO Inventory Optimization

Email: MROInsights@IHS.com Web: www.ihs.com/MRO

Major cost reduction?Cut people

Limit productionReduce Labor

Freeze spendingCancel contract

Adjust MRO inventory and

maintain production?

POs and portions of POs t

o cancel

Items to return

Items to consume

Items to sell

Items to buy

August 2009 | www.SDCExec.comwww.SDCExec.com 5

table of contents Issue 3e Volume 10 August 2009

Vested Outsourcing: Game-changing Rules for OutsourcingBusiness Process Outsourcing By Kate Vitasek and Mike LedyardBuilding stronger relationships and greater value from your outsourcing relationships by moving from win-lose to win-win

Inbound Shipment Management The New FrontierTransportation Management By Jay Friedman and Jerry LevyTh e case for deploying a Web-based inbound transportation management system

Let the Sims Begin: Next-generation Supply Chain TrainingProcurement By Jim WexlerLeveraging simulation training to keep key personnel on top of their game

Extending Quality into the Global Supply ChainGlobal Focus By Andrew K. ReeseTrek Bicycle Corporation uses a Web-based SPC solution to gain real-time visibility into quality on its suppliers plant fl oor

Streamlined Connectivity Makes for Good Chemistry between Trading PartnersIndustry Focus By Editorial Staff WACKER uses a business process network to automate processes with global supply chain partners

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August 2009 | www.SDCExec.comwww.SDCExec.com 6

In Search of a Better Way to OutsourceFor the past two years, the authors have participated

in a University of Tennessee research program funded by the Air Force to formally study companies that were employing performance-based approaches for outsourcing. This article is based on our research and hands-on experience working with organizations that have adopted symbiotic performance partnerships that truly unlock win-win solutions.

While many believe win-win is a simple buzzword that is theoretical in nature, our research has uncovered there is indeed a set of unwritten rules that companies can use to develop performance partnerships where both parties in the outsourcing relationship go the distance to achieve much higher levels of performance and cost savings than previously thought possible.

We have distilled our lessens and approach into what we call Vested Outsourcing because it is typified by an outsourcing relationship where both parties have a stake in maintaining the arrangement and work

together to create a performance partnership that takes both the company outsourcing and the service provider to levels of cost, service and profitability levels not realized previously.

A Better Approach: The Rise of Vested Outsourcing

After reading many articles that detail all the things that go wrong in outsourcing relationships, you might be asking yourself, Is there a better way? The good news is that thought-leading companies have been challenging conventional outsourcing models over the past 10 years. The result has been an evolution to a next-generation outsourcing model we call Vested Outsourcing.

In the familiar