Value chain strategy 180315
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Transcript of Value chain strategy 180315
www.ciltuk.org.uk
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 6
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.
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”'sAligned (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
PEOPLEEmpowered, Engaged& Educated to be ‘T’
Shaped
PROCESSESEffective, Integrated,
Compliant, Appropriate & Superior
STRATEGYClear, Customer
focused, Actionable, Communicated
Own and are Responsible for
METRICSAligned, Integrated, Compelling, Visible
Driving the behaviours of
DATAAccurate, 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
SYSTEMSIntegrated
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
Culture
Goals & Strategy
People and Organisation
ProcessesMetrics
Systems
Data
0
1
2
3
44 - 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
PEOPLEEmpowered, Engaged& Educated to be ‘T’
Shaped
PROCESSESEffective, Integrated,
Compliant, Appropriate & Superior
STRATEGYClear, Customer
focused, Actionable, Communicated
Own and are Responsible for
METRICSAligned, Integrated, Compelling, Visible
Driving the behaviours of
DATAAccurate, 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
SYSTEMSIntegrated
Planning, Execution and Reporting
Aligned Integration (TM):7 Keys to Organisational Greatness (c) Sean Culey
Measuring Conformance to
Measuring the integrity of …
Phase 0Understand
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 1aDefine Value
Chains & Competitive Strategies
Leadership Workshop:
Define Value Creation Model
Undertake Value Chain Definition
and Product / Customer MappingDefine Value Chain
competitive strategies
Identify Value Chain KPIs using
SCORMap current performance versus target
Perform Rough Cut Value Chain
Strategic AnalysisValue Chain SWOT,
PESTLE & Competitor
analysis
Phase 1bValidate Financial
Opportunity
Data Analysis:Verify SCOR KPI
levelsVerify Value Chain Strategic AnalysisComplete Value
Chain profit analysis
Analyse VC Inventory and Cost-to-Serve
Leadership Workshop:
Analysis results of data analysis
Select Customers & products to
focus onIdentify service
performance levels, T&C's and
gap to FillPrioritise Value
ChainsSelect 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
flowDefine Impact on
Strategic KPIDefine activity's
roles and responsibilities
(RACI) Define Rules and
BehavioursDefine Data
requirements
Phase 3Design the
Performance Control System
Integrated Team Workshop 2:
Define Short, Medium & Long Term Planning
ProcessesDefine the Process, Data & Behaviour
Conformance Metrics (KCI)
Define the Process Performance Metrics
(KPI)Define the Business Performance Metrics
(BPM)Define the VC Management
ProcessesDesign Daily IBE
Meeting Design Weekly IBM
MeetingDesign Monthly IBP
MeetingDesign Organisational
Structure and Resource Review
Phase 4Develop 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 ModelValue Proposition / Statement
Value Model DefinitionValue Chain Strategic & Market
AnalysisValue Chain Profit Analysis
Pilot Value Chain(s)Value Chain Strategy
Strategic KPI’sPerformance 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 FlowValue Chain E2E Performance
MeasuresValue Chain Process Map
Value Chain NetworkValue Chain Performance Control, Communication and Governance
Value Chain OrganisationRoles & 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 MechanismsProcess and Data Conformance
Role ClarificationVisible Dashboards
Purposeful EngagementWaste 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 TeamStrategic Focus and Direction
Management TeamPlanning & Improvement
Operational TeamExcellence in Execution
% T
ime D
edic
ate
dBringing 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
ReliabilityCustomer Experience
Profitability
Aligned and Integrated Value Chains
Value Chain Objectives and Goals
Value Chain SegmentationMove 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 empowerment through technology
3D printing and mass customisation
PSBO status?Increasingly litigious societyincreasing child safeguarding
OFSTED requirements
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 matchSchool late next day deliveryQuality exceeds expectationsAuto-compliance (paperless system - no audit)Integrated order solutionsSuggested order forms (based on order history)'Wow' loyalty schemeForums / teaching consultantsCustomisation 'surprise'
As primary, but with focus on…VMI / Consignment resource hubsIntegrated e-commerce solution (favourites, basket sales, workflow through to approval etc.)Forum for teachers etc.Proactive price leadershipLoyalty based pricing
Attractor
Meets Desires&
Creates Loyalties
Best valueSlotted DeliveryHigh quality & durabilityGuided best valueManagement Information - showing buying patterns etc.Product RecommendationsCuration of range (range rationalisation)Rewarded for loyalty (biscuits)Lesson plansCustomisation as requested
As primary, but additional focus on:Curriculum planningBetter understanding of their school / region (Ofsted reports, demographics, future requirements)
Qualifier
Meets Expectations &
Creates Satisfaction
Competitive PriceOn time / in-full free deliveryFit for purpose / SafeAccurate paperworkSimple problem resolutionEase of multichannel orderingEase of indexing and searchNot missing out (loyalty)Support materials
Competitive PriceOn time / in-full free deliveryFit for purpose / SafeAccurate paperworkSimple problem resolutionEase of multichannel orderingEase of indexing and searchNot 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%
ResponsivenessOrder Fulfillment Cycle Time
(Lead Time in days)
[Sum Actual Cycle Time for all Orders Delivered] / [Total
Number of Orders Delivered] in DaysA 3 3 2 1 0.0 -1.0
AgilityUps. 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
GapRevenue Profit Service Revenue Profit
Value in Achieving Parity Value in Achieving Superiority
Calculation SuperiorAttribute Metric (level 1)Actual
CurrentParity Adv
Project Portfolio Matrix – Effort and Impact Overview
Project Portfolio Matrix
LOW MEDIUM HIGH
HIGH
HIGH
MED
IUM
MEDIUM
LOW
LOW
LOW MEDIUM HIGH
IMPA
CT
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
P48P47
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
IMPA
CT
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 ItUnderstand Our Customers better than the Competition Become Customers First Choice
Increase Annual Sales
Revenue to ‘x’
Reduced ‘Cost to Serve’
Increased Return on
AssetsMarketing 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-CommerceDevelop and Grow Own Brand Range Customer & Value Chain Segmentation Customer Loyalty SchemeClassroom
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 SystemSingle 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 - IBPPLANDO
CHECKADJUST
PLANDO
CHECKADJUST
PLANDO
CHECKADJUST
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”