Value chain strategy 180315

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www.ciltuk.org.uk Value Chain Strategy Jan Steenberg FCILT Vice President CILT International Chairman of the International Education Standards Committee

Transcript of Value chain strategy 180315

Page 1: 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

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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

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Professional Sectors

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Supply Chain versus Value Chain

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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.

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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?

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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.

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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…

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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

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Employee Engagement

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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

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SCOR Process Heatmap: (based on # issues identified per process area)

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Strategy Development Process

Methodology & Analysis

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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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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

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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

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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

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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

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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

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Strategic Supply Chain and Commercial focus of each Value Chain…

We have identified 3 main supply chains across the 13 value chains

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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.

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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

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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

!!

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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

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Aligned Improvement Roadmap

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“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

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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

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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”