5 steps to achieving supply chain excellence · 5 steps to achieving supply chain excellence 1....

1

5 Steps to Achieving

Supply Chain Excellence

by Sharyn Grant

Managing Director

LSC Solutions Pty Ltd

2

Presentation Overview

• About LSC Solutions & Sharyn Grant

• What keeps you awake at night?

• Supply Chain Excellence Methodology

• Case Study Company: Surat Basin Homes

• 5 Steps to Achieving Supply Chain Excellence

• Conclusion

• Question Time ^

3

About LSC Solutions Pty Ltd

• Established in 2004

• Operate in QLD, NSW & VIC

• Team of 8 Professional Consultants plus Support Staff

• Best-practice sustainable solutions for:

o Supply Chain & Logistics Management

o Health Safety Environmental & Quality

Assist clients to achieve

superior customer service performance

through supply chain excellence ^

4

About Sharyn Grant

• Founder & Managing Director, LSC Solutions Pty Ltd

• 17 years’ experience in Logistics, Supply Chain and Human

Resources Management

Doctorate(starting soon)

Supply Chain Performance Management

Masters Logistics Management, RMIT

Degree – Double MajorLogistics & Operations Management; and

Human Resources Management, USQ

Lecturer Maintenance Materials Management, CQU

5

• Global non-profit organisation - close to 1,000 members

• Product: Supply Chain Operations Reference (SCOR®) Model

• World standard for supply chain management

• SCOR® Framework, Training, Certification & Benchmarking

• Sharyn Grant:

• Events Chair, Supply Chain Council Aust/NZ Leadership

Team

• LSC Solutions is trained and experienced in applying SCOR®

& Supply Chain Excellence Methodology ^

Supply Chain Council

Source: Supply Chain Council

SCOR® is a registered trademark of Supply Chain Council.

6

What Keeps You Up at Night?


Stock Market Volatility, Oil Prices,

Labour, Political Instability, Security

Reducing Total

Supply Chain Costs

Supply Chain

Resiliency &

Sustainability: Risk

Management & Green

Inventory/

Working Capital/

Asset Management ^

Competing in a

Global Market

Providing Superior & Consistent

Customer Service While Increasing

Revenue & Margin

7

Supply Chain Excellence Methodology

• World-leading supply chain management best practice

SCC & SCOR® Brochures are available

at LSC Solutions’ trade booth ^

SCOR® Model The Framework Supply Chain Council

Supply Chain

Excellence

Methodology

Application of

SCOR® within a

project

framework

Peter Bolstorff and

Robert G. Rosenbaum

8

SCOR® organises around 5 key management processes:


http://supply-chain.org/online-access

Plan Alignment of resources to demand

SourceBuying or acquiring materials or

services

MakeConversion or value-add within

supply chain operations

Deliver

Customer interaction, from

receiving order to final delivery

and installation

Return

Reverse material or service flows

away from customer backwards

through supply chain

SCOR® Model

SCOR® Model contains:

• 200 process elements

• 550 metrics

• 500 best practices

9

Source: http://supply-chain.org/f/SCOR-Overview-Web.pdf

This brochure is available at LSC Solutions’ trade booth

SCOR® Model End-To-End Supply Chain Management

10


Strategic Attribute Strategic Metric Strategy

Supply Chain

ReliabilityPerfect Order Fulfillment

Getting orders

right

Supply Chain

ResponsivenessOrder Fulfillment Cycle Time Speed

Supply Chain

Agility

Supply Chain Flexibility Respond to

changesSupply Chain Adaptability

Supply Chain

Cost

Total Supply Chain Management Cost Costs within

supply chainCost of Goods Sold

Supply Chain

Assets

Cash-to-Cash Cycle TimeManaging assets

Return on Supply Chain Fixed Assets

SCOR® Model Level 1 MetricsC

ust

om

er

Inte

rna

l

11

5 Steps to achieving Supply Chain Excellence1. Build support for supply chain improvement, profile your strategic position,

segment market channels and prioritise supply chains.

2. Research and identify the #1 strategic performance attribute (supply chain

reliability, responsiveness, agility, cost or asset management) that your key

target markets expect world’s best practice.

3. Measure and critically analyse priority supply chain networks, operations,

processes, material flow, technology and responsibilities, to identify risks,

constraints, competitive performance gaps and improvement opportunities.

4. Design and configure scalable, sustainable, efficient and safe supply chains

and operations that will enable the achievement of world’s best practice in

your #1 strategic performance attribute.

5. Plan, execute and monitor your Supply Chain Strategy to transform supply

chains and operations, and deliver best practice in customer service, cost

control, and management of risk, relationships and knowledge. ^

Source: Adaptation by LSC Solutions of Supply Chain Excellence

Methodology by Peter Bolstorff and Robert G. Rosenbaum

12

Case Study Company:

About Surat Basin Homes

• Established in 2006

• Family business located in Chinchilla and Brisbane

• Leading provider of quality built homes in the Surat Basin

region: Chinchilla, Miles, Wandoan, Roma

• Winner of CCCI Business Excellence Awards:

• Business of the Year Award

• Gold Award

• Part of the Caspian Property Group

• 25 employees (58 in the Group)

• Over the last 2 years, staffing and turnover doubled ^

Phone: 1800 041 411

www.suratbasinhomes.com.au

13

Surat Basin Homes: Supply Chain Excellence Program

The Challenge

• $200B CSG projects in Surat Basin

• Rapid demand growth from 19 to 150

housing projects

• Focus: Capture growth. Manage

supply chain Risk.

• Required: Increase supply chain

capability & capacity to meet

demand, whilst improving:

o Perfect Order Fulfilment

o Order Fulfilment Cycle Time

o Total Supply Chain Management

Cost

o Costs of Goods Sold

The Solution:

• LSC Solutions’ Supply Chain Excellence

Program

• Commenced late 2010

• Using SCOR® & Supply Chain Excellence

methods:

o identified performance gaps in key

metrics to reach target performance

levels

o identified inbound / internal process

issues

o created 12 projects to drive

improvement

• Prioritised projects by impact, effort, risk

and benefit. ^

14

Step 1: Build support for supply chain improvement, profile

your strategic position, segment market channels and

prioritise supply chains.

Objective: Build Organisational Support & Define Project

Scope^



15

Step 1: Build support (cont’d)

Surat Basin Homes:

• Market Channel Profile:

o 38% of clients represented 82% of revenue

o 4 Market Channels: Investors, Owner Occupied, Spec, Corporate

o Strongest Market Channel: Investors

• Demand growth forecast:

o 19 to 150 builds per year (87% increase) from 2010 to 2014 ^

FYE10 FYE12 FYE14

No. of houses

built / building19 50 150

16


Surat Basin Homes:

Supplier Profile:

• 110 suppliers were used in

2010

• 23% of suppliers represented

80% of spend

• Supply & Install and Materials:

> 72% of spend

• Identification of major

purchasing categories &

commodity groups ^

Purchasing Categories Commodity Groups

Supply & Install

Roofing

Plaster

Air conditioning

Plumbing

Materials

Concrete & Reinforcement

Hardware

Frames & Trusses

Taps & Appliances

Windows & Screens

Contractors

Carpenter

Concreter

Bricklayer

Tiler

ServicesPermit Fees

Excavation

17


Surat Basin Homes: Supply Chain Definition Matrix

Se

Products:

Market Channel

Corporate Investors Spec Owner Occupied

4bdrm/2bath x x x x

Duplexes x x x

2bdrm/2bath x

4bdrm/4bath x

3bdrm/2bath x

1bdrm/1bath x

Supply Chain = Product to Market Channel

• Eg. “4bdrm/2bath – Investors” is a supply chain

• 11 supply chains identified ^

Source: Supply Chain Excellence Methodology by Peter Bolstorff and Robert G. Rosenbaum

18


Surat Basin Homes: Supply Chain Priority Matrix

Evaluate & prioritise supply chains:

Supply ChainsOverall

Rating

Priority

Criteria

Supply Chain

Revenue

Gross Margin

%

Number of

House

Designs

Volume Sold

(Qty)

Strategic

Importance

(Rank) (Rank) (Rank) (Rank) (Rank)

Weight

x x x x x

RankingWeighted

ResultRanking

Weighted

ResultRanking

Weighted

ResultRanking

Weighted

ResultRanking

Weighted

Result

4bdrm/

2bathInvestors xx

Ra

nk

ing

x

We

igh

tin

g

=

We

igh

ted

Re

sult

xx xx xx xx xx xx xx xx xx xx

4bdrm/

2bath

Owner

Occupiedxx xx xx xx xx xx xx xx xx xx xx

4bdrm/

2bathSpec xx xx xx xx xx xx xx xx xx xx xx

• 8 priority supply chains identified (80% of forecast revenue)

• Highest Priority Supply Chain: Investors - 4bdrm/2bath (incl. all designs) ^


End of Step 1

19

Step 2: Research and identify the #1 strategic performance

attribute (supply chain reliability, responsiveness, agility,

cost or asset management) that your key target markets

expect world’s best practice.

Objective: Identify competitive performance requirements ^



20

Step 2: Research & identify #1 strategic performance

attribute

Surat Basin Homes• Method: Select 1 x Superior, 2 x Advantage, 2 x Parity (per channel)

• Scope narrowed to 3 market channels

• Result of Surat Basin Homes’ perception of market expectations:

Strategic Performance AttributesMarket Channels

Investor Spec Corporate

Cu

sto

me

r

Faci

ng

1. Supply Chain Reliability Superior Superior Advantage

2. Supply Chain Responsiveness Advantage Parity Superior

3. Supply Chain Agility Parity Parity Advantage

Inte

rna

l 4. Supply Chain Cost Advantage Advantage Parity

5. Supply Chain Asset Management Efficiency Parity Advantage Parity^


21

Step 2: Research & identify #1 strategic performance

attribute

Surat Basin Homes: Voice of Customer• Strong 75% response rate from surveying Investor Market

• A statistically sound response not achieved from other 2 market channels

• Survey revealed that Surat Basin Homes know their Investor Market very well

• #1 strategic performance attribute identified: Supply Chain Reliability

Voice of CustomerSurat Basin Homes

Perception of Customer Needs

1. Reliability (Superior)

2. Cost Management (Advantage)

3. Responsiveness (Advantage)

4. Asset Management Efficiency (Parity)

5. Flexibility (Parity)

1. Reliability (Superior)

2. Cost Management (Advantage)

3. Responsiveness (Advantage)

4. Asset Management Efficiency (Parity)

5. Flexibility (Parity)

End of Step 2

22

Step 3: Measure and critically analyse priority supply chain

networks, operations, processes, material flow, technology

and responsibilities, to identify risks, constraints,

competitive performance gaps and improvement

opportunities.

Objective: Analyse Performance & Identify Improvement

Opportunities ^



23

Step 3: Measure and critically analyse performance and all

supply chain processes

Surat Basin Homes• Measured performance areas requiring Superior & Advantage level

• Narrowed scope again to focus efforts on areas of greatest importance

Strategic Performance AttributesPerformance

Level

Level 1

Strategic Metrics

Ext

ern

al

Cu

sto

me

r Fa

cin

g

Supply Chain Reliability Superior • Perfect Order Fulfilment

Supply Chain Responsiveness Advantage • Order Fulfilment Cycle Time

Inte

rna

l

Supply Chain Cost Advantage• Total Supply Chain Management Cost

• Cost of Goods Sold ^

24



Measure Supply Chain Reliability

Measure applicable activities

Source: SCOR Model Version 10.0, Supply Chain Council

Level 1

Strategic Metrics

Level 2

Process Metrics

Level 3

Activity Metrics

Perfect Order

Fulfillment

% of Orders Delivered in Full 2 Activity Metrics

Delivery Performance to

Customer Commit Date

2 Activity Metrics

1 Activity Metrics

Documentation Accuracy 4 Activity Metrics

Perfect Condition 5 Activity Metrics ^

25



Measure Supply Chain Responsiveness



Level 1

Strategic Metrics

Level 2

Process Metrics

Level 3

Activity Metrics

Order Fulfilment Cycle

Time

Source Cycle Time 7 Activity Metrics

Make Cycle Time 7 Activity Metrics

Deliver Cycle Time 14 Activity Metrics ^

26



Measure Supply Chain Cost (Part A)



Level 1

Strategic Metrics

Level 2

Process Metrics

Level 3

Activity Metrics

Total Supply Chain

Management Cost

Cost to Plan 5 Activity Metrics

Cost to Source 5 Activity Metrics

Cost to Make 3 Activity Metrics

Cost to Deliver 2 Activity Metrics

Cost to Return 2 Activity Metrics

Supply Chain Risk Mitigation Cost 5 Activity Metrics ^

27



Measure Supply Chain Cost (Part B)


Level 1

Strategic Metrics

Level 2

Process Metrics

Cost of Goods Sold

Direct Labour Cost

Direct Material Cost

Indirect Cost Related to Production ^

28



Surat Basin Homes: Performance Results as at December 2010

Strategic Performance AttributesLevel 1

Strategic Metrics

Performance Result

December 2010

Ext

ern

al

Cu

sto

me

r Fa

cin

g

Supply Chain Reliability Perfect Order Fulfilment70%

(% of customer orders)

Supply Chain Responsiveness Order Fulfilment Cycle Time125 days

(Average actual cycle time)

Inte

rna

l

Supply Chain Cost

Total Supply Chain

Management Cost

7.84% (% of revenue) or

$78.38 per $1K in revenue

Cost of Goods Sold76.44%

(% of revenue)

• Data capturing not configured to measure performance

per market channel

• Therefore measured total performance

29



Surat Basin Homes: Balanced Supply Chain Performance Scorecard [Dec 2010]

Strategic Performance

Attributes

Level 1

Strategic Metrics

Actual

Performance

Dec 2010

Parity

(50th)Advantage

Superior

(90th)

Parity

Gap

Competitive

Requirement

Gap

Ext

ern

al

Cu

sto

me

r Fa

cin

g Supply Chain

Reliability

(Target: Superior)

Perfect Order

Fulfilment70% 80% 90% >93% -10% -23%

Supply Chain

Responsiveness

(Target: Advantage)

Order Fulfilment

Cycle Time125 days 172 days

120

days

110

days

+47

days-5 days

Inte

rna

l

Supply Chain Cost

(Target: Advantage)

Total Supply Chain

Management Cost

7.84% or

$78.38 per

$1K in

revenue

$108.84

per $1K in

revenue

$76.16 per $1K in

revenue

$43.48 per $1K

in

revenue

-$30.46 -$2.22

Cost of Goods Sold 76.44% 80.74% 72.5% 59.57% -4.30% -3.94%

• Used benchmarks from Supply Chain Council data

• Identified Competitive Requirement Gap

30



Surat Basin Homes: Performance Results Against Parity

• Competitive in world marketplace - Supply Chain Cost exceeding Parity


AttributesStrategic Metrics

Comparison against Parity

Level Performance

[Dec 2010]

Supply Chain Reliability

(Target: Superior)Perfect Order Fulfilment Below Parity by 10%

Supply Chain Responsiveness

(Target: Advantage)Order Fulfilment Cycle Time

Parity exceeded by 47

days

Supply Chain Cost

(Target: Advantage)

Total Supply Chain

Management Cost

Parity exceeded by

$30.46/$1k in revenue

Cost of Goods Sold Parity exceeded by 4.30%

Comparative benchmarking data not available for Order Fulfilment Cycle Time:

• Set Parity based on contract promise ^

31



Best-in-class companies outperform their median competitors with a 50%

Cost Advantage

Source: Supply Chain Council - PRTM/The Performance Measurement Group

Total Supply Chain Management Costs (% of Revenue)

9.2%

12.3%

10.7%10.0%

10.7%

9.1%

6.6%7.4%

4.8%5.5%5.3%

4.2%3.5% 3.6%

5.4%

3.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Automotive Industrial Chemical &

Advanced Materials

Computer Consumer Goods Pharmaceutical Semiconductor Telecommunications

Equipment

Best-in-Class

Median

% o

f R

ev

en

ue

Surat Basin

Homes as at

Dec 2010

7.84% ^

32



Surat Basin Homes:• Analysis of Materials Management (sample only)

Findings Opportunities

• Materials purchased

project by project

• Sourcing not based on

aggregated demand

• No supplier agreements

• Doubling handling of

materials

• Supplier and delivery

issues

• Aggregate materials demand to maximise

buying power

• Significant spend savings opportunities

identified

• Establish supplier agreements

• Develop closer relationships strategic

suppliers and agree performance standards

• Source some materials from manufacturers

to eliminate double handling ^

33



Surat Basin Homes:• Analysis of Work & Information Flow, Operations & Systems (sample only)

Sample of Findings Sample of Opportunities

• Non-integrated information systems

causing process delays and duplicate

information

• Traces of strategic procurement

responsibilities across several roles

• Absence of procurement risk management

• Limited end-to-end supply chain mgmt

• Limited supply chain performance reporting

• Issues identified in processes pertaining to

purchasing and order management

• Integrated ERP to improve process efficiency

and information visibility

• Source integrated ERP for entire Group

• Identified need for Supply Chain Manager or

Procurement Manager

• Establish formal Procurement Function

including a list of processes required eg.

tendering

• Use a Balance Supply Chain Performance

Scorecard ^

End of Step 3

34

Step 4: Design and configure scalable, sustainable, efficient

and safe supply chains and operations that will enable the

achievement of world’s best practice in your #1 strategic

performance attribute.

Objective: Design Future State Supply Chains & Operations ^



35

Step 4: Design and configure supply chains and operations

Surat Basin Homes: Improvement Strategies (sample only)• Designed material flows to eliminate doubling handling and improve

efficiency

• Identified opportunity procurement categories and commodities for the

establishment of strategic supplier agreements

• Developed a Procurement Strategy including a list of strategic

requirements to manage procurement risk

• Developed roles and responsibilities to manage Supply Chain end-to-end,

specifically Procurement Management

• Produced a Big Picture Process Map to capture processes across entire

Group of companies to identify ERP technology requirements

• Developed a series of Level 3 Activity Process maps to detail technology

requirements (including design of future state process requirements)

• Developed ERP specification ^

End of Step 4

36

Step 5: Plan, execute and monitor your Supply Chain Strategy

to transform supply chains and operations, and deliver best

practice in customer service, cost control, and management

of risk, relationships and knowledge.

Objective: Develop Project Portfolio, Implement & Monitor

Performance ^



37

Step 5: Plan, execute and monitor Supply Chain Strategy

Surat Basin Homes:• Produced Supply Chain Strategy Report

• Assembled Project Portfolio for 12 projects – a sample included:

o ERP Implementation

o Establish Supply Chain & Procurement Roles

o Establish Procurement Function

o Establish Strategic Supply Agreements

o Improve Purchasing Process

• Conducted:

• Project Benefit Analysis

• Impact & Effort Analysis

• Opportunity Analysis

• Developed Supply Chain Strategy Implementation Plan & Schedule ^

38


Surat Basin Homes: Project Benefit Assessment (sample of projects illustrated)

• Identify how each project contributes towards achieving strategic metrics ^

No. Project Description

Reliability Responsiveness Costs

Perfect Order

Fulfilment

(% of total orders)

Order Fulfilment

Cycle Time (days)

Total Supply Chain

Management Cost

($ per $1K in

revenue)

Cost of Goods

Sold

(% of revenue)

Baseline 70% 125 days $78.38 76.44%1 ERP Implementation This project will xxxx xx% -xx -$xx -xx%

2 Establish Supply Chain &

Procurement Roles

This project will xxxxxx% -xx -$xx -xx%

3 Establish Procurement Function This project will xxxx xx% -xx -$xx -xx%

4 Establish Strategic Supply

Agreements

This project will xxxxxx% -xx -$xx -xx%

5 Improve Purchasing Process This project will xxxx xx% -xx -$xx -xx%

Benefit (Competitive Gap) 23% -5 -$2.22 -3.94%

Target Performance Level 93% 120 $76.16 72.50%

Data withheld to maintain confidentiality.


39


Surat Basin Homes: Impact & Effort Assessment (sample of projects illustrated)

Impact Assessment:1 1 1 1 1 1 1

x <= 9% x <= 9% x <= 9% x <= 9% x > 6 Negative None

2 2 2 2 2 2 2

10% <= x <= 19% 10% <= x <= 19% 10% <= x <= 19% 10% <= x <= 19% 3 < x < 6 Neutral Some to Many

3 3 3 3 3 3 3

x => 20% x => 20% x => 20% x => 20% x < 3 Positive Most to All

No. Project

%

IMPROVEMENT

for Perfect

Order Fulfilment

%

IMPROVEMENT

for Order

Fulfilment Cycle

Time

%

IMPROVEMENT

for Total Supply

Chain

Management

Cost

%

IMPROVEMENT

for Cost of

Goods Sold

Time Benefit

starts being

realised

(Months)

Customer

Satisfaction

Impact

Leveragable

across Target

Markets

Total

Impact

1 ERP Implementation 2 2 2 1 2 3 3 15

2 Establish Supply Chain

& Procurement Roles2 2 2 2 3 3 3 17

3 Establish

Procurement Function2 2 2 2 3 3 3 17

4 Establish Strategic

Supply Agreements1 1 2 3 3 3 3 16

5 Improve Purchasing

Process2 2 2 2 3 3 3 17

% IMPROVEMENT identified on Project Benefit Assessment ^Source: Supply Chain Excellence Methodology by Peter Bolstorff and Robert G. Rosenbaum

40


Surat Basin Homes: Impact & Effort Assessment (sample of projects illustrated)

Effort Assessment: 1 1 1 1

x > 6 Project Team High x > $100K

2 2 2 2

3 < x < 6 FT Resource/s Medium $25K < x < $100K

3 3 3 3

x < 3 PT part of roles Low x < $25K

No. Project

Time to Develop &

Implement

(Months)

Resources

Required to

Implement

Complexity

(Technically /

Organisationally)

Project Cost

internal & external

resources, capital

Total

Effort

1 ERP Implementation 2 1 1 1 5

2 Establish Supply Chain &

Procurement Roles3 2 2 1 8

3 Establish Procurement Function 3 2 2 3 10

4 Establish Strategic Supply

Agreements3 2 2 3 10

5 Improve Purchasing Process 3 3 3 3 12

Source: Supply Chain Excellence Methodology by

Peter Bolstorff and Robert G. Rosenbaum

41


Surat Basin Homes: Result of Impact & Effort Assessment (sample of projects)

Total Score* Project No. Project

29 5 Improve Purchasing Process

27 3 Establish Procurement Function

26 4 Establish Strategic Supply Agreements

25 2 Establish Supply Chain & Procurement Roles

20 1 ERP Implementation

* Impact Score + Effort Score = Total Score ^

42

No. ProjectTotal

Impact

Total

Effort

1 ERP 15 5

2Supply Chain &

Procurement Roles17 8

3Procurement

Function17 10

4Supply

Agreements16 10

5 Purchasing Process 17 12


Surat Basin Homes: Individual Impact & Effort Scores (sample of projects)

•All recommendations were High

Impact projects

•Identify Quick Wins ^

43


Surat Basin Homes: Priority of Implementation based on

Impact/Effort Assessment (sample of projects only)

Project No. Project

1 ERP Implementation

5 Improve Purchasing Process Quick Win

3 Establish Procurement Function

4 Establish Strategic Supply Agreements

2 Establish Supply Chain & Procurement Roles

44


Surat Basin Homes: Opportunity Analysis – Expected Gross Opportunity• Approx $2.6M (absolute value) for 12 projects

• Gross Profit increase by 3.9%

• Plus significant spend savings through negotiated supplier agreements

Quantified Benefits for Achieving Supply Chain Performance Targets

Need to consider cost to implement projects to identify net opportunity.

Values withheld to maintain confidentiality.

(sample of projects only)

No. ProjectPerfect Order

Fulfilment

Order Fulfilment

Cycle Time

Total Supply

Chain

Management Cost

Cost of Goods

Sold

1 ERP Implementation $ value $ value - $ value - $ value

2 Establish Supply Chain & Procurement Roles $ value $ value - $ value - $ value

3 Establish Procurement Function $ value $ value - $ value - $ value

4 Establish Strategic Supply Agreements $ value $ value - $ value - $ value

5 Improve Purchasing Process Quick Win $ value $ value - $ value - $ value

Totals $ value $ value $ value $ value

45


Surat Basin Homes: Priority of Implementation based on Opportunity Analysis

• ERP implementation remained a pre-requisite to addressing process issues

• Establish Supply Chain & Procurement Roles expected to generate 2nd highest

benefit (out of the 12 projects identified)

• Procurement/purchasing projects were combined into one project ^

Values withheld to maintain confidentiality.

(sample of projects only)

Project No. ProjectGross Opportunity

(absolute value)

1 ERP Implementation $ value

2 Establish Supply Chain & Procurement Roles $ value

3

4

5

Establish Procurement Function

Establish Strategic Supply Agreements

Improve Purchasing Process Quick Win

$ value

$ value

$ value

46


Surat Basin Homes: Approval; Supply Chain Strategy Implementation Plan &

Schedule

• First project commenced: ERP Implementation

• Sourced and evaluated ERP’s

• ERP selected: JD Edwards EnterpriseOne (leading edge)

• First residential construction company in Australia to use

• Implementation by end of 2012

• End-to-end SCM roles assigned to GM and Construction Manager

• Procurement Manager recruited, who has:

• Commenced improving the Purchasing Process

• Established Procurement Function & Strategic Supply Agreements

• A long list of other improvements have been achieved

• Completed SCOR® training with Supply Chain Council - saying course

was “Fantastic!” ^

47


Surat Basin Homes: Benefits Achieved as at 2012

• Superior Target Achieved:

• Perfect Order Fulfillment: � 23.9% to 93.9%*

• 93% Target Exceeded

• Order Fulfillment Cycle Time: Reduced by 3 days* to 120 days

• Cost of Goods Sold: Reduced by 0.64% to 75.80%

• expected to reduce further once spend savings realised

• Revenue has doubled

• Spend savings forecast: $1.6M over next 8 mths

• 8% savings over past 2yrs

• includes 6% by Procurement Manager within first 3mths

of starting ^ * As at 17 August 2012

~ As at 30 June 2012

48


Surat Basin Homes: Monitoring Supply Chain Performance

Balanced Supply Chain Performance Scorecard - 2012

* As at 17 August 2012

~ As at 30 June 2012

End of Step 5 ^

• � TSCMC: staff increase to manage demand & ERP costs

• SC Cost targets expected to be achieved by FYE13


Attributes

Level 1

Strategic Metrics

Actual

Performance

2012

Parity

(50th)Advantage

Superior

(90th)

Parity

Gap

Competitive

Requirement

Gap

Ext

ern

al

Cu

sto

me

r Fa

cin

g Supply Chain

Reliability

(Target: Superior)

Perfect Order

Fulfilment93.9%* 80% 90% >93% 13.9%

Exceeded

TargetSupply Chain

Responsiveness

(Target: Advantage)

Order Fulfilment

Cycle Time122 days 172 days

120

days

110

days

50

days-2 days

Inte

rna

l

Supply Chain Cost

(Target: Advantage)

Total Supply Chain

Management Cost

9.29%~

$92.88

per $1K in

revenue

$108.84

per $1K in

revenue

$76.16 per $1K in

revenue

$43.48 per $1K

in

revenue

$15.96 -$16.72

Cost of Goods Sold 75.80%~ 80.74% 72.5% 59.57% 4.94% -3.3%

49

SCORindex – Supply Chain Council

• SCORindex chart

tracks the value of an

aggregate 70

company SCC

members from 2003

on.

• Correlates SCC

Membership/SCOR

investments with

Shareholder value.

Source: http://supply-chain.org/scor/scorindex

50

Industry Membership Scope


51

Conclusion: 5 Steps to Achieving Supply Chain Excellence1. Build support and prioritise your supply chains

2. Identify #1 strategic performance attribute target markets expect best practice

3. Measure and critically analyse performance and supply chain processes

4. Design and configure supply chains and operations that will achieve and sustain

your #1 strategic performance attribute

5. Plan, execute and monitor your Supply Chain Strategy to become globally

competitive.

Visit Sharyn at LSC Solutions’ trade booth regarding:

• LSC Solutions’ Supply Chain Excellence Program

• Supply Chain Council Membership

• Training: SCOR® Framework & SCOR® Project

• SCOR® Certification

• Brochures available

LSC Solutions

1300 LSC LSC

www.lscs.com.auThank You!

Any Questions?

5 steps to achieving supply chain excellence · 5 steps to achieving supply chain excellence 1....

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