{"id":5003,"date":"2020-06-11T00:00:42","date_gmt":"2020-06-10T22:00:42","guid":{"rendered":"https:\/\/ditech.media\/?p=5003"},"modified":"2020-06-12T08:28:05","modified_gmt":"2020-06-12T06:28:05","slug":"supply-chain-management-kpis","status":"publish","type":"post","link":"https:\/\/ditech.media\/news\/supply-chain-and-fulfillment\/supply-chain-management-kpis\/","title":{"rendered":"Supply Chain Management KPIs"},"content":{"rendered":"

Internationally Experienced Director – Senior Executive – Trusted Board Advisor – Value Chain Business Transformation & Performance Improvement Specialist<\/em>
\nTier One Multinational Enterprises across Diverse Industries<\/em>
\nLisa\u2019s focus is on formulating and facilitating supply chain solutions that address yesterday\u2019s issues of reactivity, uncompetitive delivered cost and lead times, poor delivery performance, excessive waste, lack of transparency, silo’d operations, poor data mgt and cost centre mindsets.<\/em>
\nLisa works with organisations across a diverse range of sectors and industries to devise and embed creative, innovative and uniquely customised solutions that prepare organisations to address tomorrow\u2019s issues. This is achieved by anticipating and embracing disruption, applying new technologies, including digital, creating new channels, collaborating, delivering end-to-end transparency, transitioning to a demand driven, profit centre of excellence and a key deliverer of strategic value to the customer.<\/em>
\nAs a director, advisor and consultant to numerous corporations globally, Lisa and her team have added many billions of dollars in value. Lisa currently works with many new technologies, including big data, collaborative technologies, AI, robotics, renewables and block chain.<\/em><\/p>\n

 <\/p>\n

What attracted you most to be a part of the Supply Chain Management Industry?<\/h3>\n

This is quite a funny story as I look back.<\/span><\/p>\n

I worked with E.I.Du Pont at the highest levels supporting the chairman of Asia Pacific with building a strategy for the AP region which was being recognised as an engine of growth for Du Pont globally. This was a major change for the organisation, as AP in the past had been categorised as opportunistic and it was now moving to strategic. This involved working out what Du Pont would look like in Asia pacific and how it would go about growing the business in the region. Du Pont in those days consisted of 37\u00a0 businesses in hundreds of countries around the world.<\/span><\/p>\n

As my work in Japan was coming to an end, I was given an assignment to resolve major issues that we had in the Printing and Publishing and medical businesses relating to the production, finishing and distribution of film used in the Graphic arts and X-ray medical businesses.<\/span><\/p>\n

The funny part is that I was asked twice by the Chairman of AP as he was at the time, and soon to be global CEO and global chairman, to take on this role and turned him down twice. I was perfectly happy working and living in japan, and jetsetting around the world, and Australia was the last place I wanted to go.<\/span><\/p>\n

I was taken aside by a very senior global business leader who explained to me that no one ever turned Chad, the chairman down when he was offering them a new role, a promotion at that and could I please reconsider so that when he asked me to take this role a third time, could I please accept the new role.<\/span><\/p>\n

I was appointed as business manager, in the business dealing with a global supply chain, which had original manufacturing in Neuisenburg in Germany and United States, and had finishing plants in Tokyo, japan and Sydney, Australia. Interestingly the business had a major issue with deliveries into Asia Pacific (exc Japan and Australia).<\/span><\/p>\n

This was before they even had supply chain managers, but fixing the supply chain was my responsibility.<\/span><\/p>\n

This role was one of the most interesting and exciting that I had, and the results of this work were extraprdinary. (I soon left Australia again bound for the US,to work again for the senior leadership team, the chairman of AP, was now CEO and chairman of the entire co, so it was wise to agree to this role despite my initial misgivings.)<\/span><\/p>\n

One evening when I was in the office working late, I had an epiphany. My global colleagues, who were all totally committed to their roles, I knew would have done their best, worked hard and gone home the evening before thinking that all was well. Yet, here I was , in an office, at 10.30pm, on the other side of the planet, trying to work out why our customers still had not received their products. This was when I realised that delivering on functional goals was never going to work to meet customer needs, because essentially every function could meet their goals and still customers could not be serviced\u2026. How could this be?<\/span><\/p>\n

This was when I realised that something more was needed, and this something more was a single point of focus on meeting the needs of customers and that this goal needed to be included in each of the functional silos measurable objectives.<\/span><\/p>\n

In Du Pont in those days we had a globally agreed and understood organisational culture which enabled interactions, We also had a matrix structure so the businesses focused on meeting their objectives and the countries focussed on meeting theirs. Sure this caused conflict but it was healthy conflict because ultimately everyone wanted customers serviced. Still something was falling through the cracks!<\/span><\/p>\n

Unfortunately, for this particular problem, the resolution needed to go right back to the global planning, even before the global manufacturing. My work involved documenting, understanding and correcting the entire end to end process across the business, complete with responsibilities and accountabilities for each person within the process.<\/span><\/p>\n

The processes that I documented were the product flow, information flow, financial flow, value creation(destruction) flow and risk flow with special focus on the handover or grey areas between functional silos.<\/span><\/p>\n

When the process was implemented, the supply chain worked. Of course, we had a process for continuous improvement to the process, so it was continually being refined.<\/span><\/p>\n

My role did not end there. Of course once we had the supply chain working there was always the next challenge of improving that performance and that led us into the world of supply chain planning and optimisation.<\/span><\/p>\n

The results were quite extraordinary and the process that I used was used as a prototype for the rest of the supply chains across Du Pont globally.<\/span><\/p>\n

The Du Pont business that I was in, was sold, and I then moved to a new organisation\u00a0 Coca Cola Amatil.<\/span><\/p>\n

We used ops research tools in those days to model the end to end supply chain and reimagine, based on demand, what the supply chain needed to look like for 3-5 years hence across the Asia Pacific region.<\/span><\/p>\n

(Today our planning horizons need to be much shorter.)<\/span><\/p>\n

We came up with several different scenarios which went to the board. They selected their preferred scenario based on a combination of delivered cost, cash flow and return on invested capital, with of course the outcome, optimal delivered cost for the perfect order for the ideal state. Once they selected their preferred option, we set about rebuilding the supply chain to be fit for purpose for that industry and our AP customers. This was extraordinary work in extraordinary times. And again delivered extraordinary results.<\/span><\/p>\n

What are the major KPI\u2019s for the Supply Chain you have encountered cross-functionality between Logistics, warehousing, Procurement and Demand & Planning forecasting?<\/h3>\n

Supply Chain kpis\u2019s are really important.<\/span><\/p>\n

At the highest level we are requiring so much from our supply chains. These days they need to be safe, secure, resilient, optimised, cost effective, efficient and fit for purpose. And then perfect in their operation. (And let me tell you this is a nirvana, that is never achieved.)<\/span><\/p>\n

We all want to be part of a business that is growing(knows their customers and what they want now and what they are going to want in the future), has a handle on their costs,(but drives profitability), manages their cash well (so cares about inventory, inv turns and even\u00a0 cash to cash cycle time) and provides a return on invested capital that\u2019s better than a bank.(in whatever economic environment we operate in so we can attract investor funds.)<\/span><\/p>\n

Importantly, we want to be part of a business that adds value and lots of it and gets paid handsomely for the value it adds, so we always need to have a handle on value added(and destroyed.)<\/span><\/p>\n

Additionally, though, I really like Lora Cecere\u2019s take on KPI\u2019s in her extraordinary work on \u2018Supply Chains to admire\u2019\u2019(1) The kpis that she uses for value are Market capitalisation and price to tangible book value vs peers over time.<\/span><\/p>\n

I really like the idea of being able to link the work we do in supply chain to the profit and loss statement and the cash flow statement so that we can measure the impact of supply chain on the current and future value of the business.<\/span><\/p>\n

At the operational level we have a plan that the supply chain is trying to fulfil, and really this plan should be delivering the target outcomes for each of the above categories so this means that the critical kpi becomes performance to plan (presuming that the plan reflects the ideal state for the perfect order for that level of infrastructure.)<\/span><\/p>\n

In terms of cross functional KPI\u2019s, this is where the process work really kicks in. So then the question becomes what does the perfect order for the end to end supply chain look like and how does this compare with the ideal state.<\/span><\/p>\n

Functional leaders can control what happens within their functions, but who controls what happens in the grey area between functions? No one, so this where a process can, does and will fail if there isn\u2019t a clear failsafe option in place to ensure that the grey area is covered in the 1st place. The only way that I know to monitor these areas is to monitor performance to process, (or perfect order status) and report on what happened that was outside the process,(deviation from perfect order) so that eventually the teams are programmed to do what the process says and nothing else until there is a change in the programme, or we have a technological solution. Let me try to explain:<\/span><\/p>\n

    \n
  • \n
      \n
    • Between functions we need clear handovers with timing and back-ups. Sounds simple enough.<\/span><\/li>\n
    • Warehousing and logistics: For example: when product is loaded onto a truck, the warehouse looks after loading but logistics is now responsible for the load. If the load is incorrectly loaded, who is accountable? It depends. Well if the manifest is wrong and the warehouse load to the manifest, it\u2019s who compiles the manifest. (This may be logistics or, customer service.) If the load is incorrect, but the manifest is correct, then it\u2019s the warehouse. If the warehouse believe that the load was correct, but the driver cannot deliver all his product he may have made an error in an earlier delivery \u2026. And so it goes. Each step needs to be made failsafe. Ie it must become impossible for someone to do anything but the right thing for every order. And if the wrong thing does occur, it needs to be picked up immediately. (or as soon as possible, reported on, brought to the attention of the business and corrected.) This is relentless work, but must occur. The tougher one is at the start, the more likely the team will get this right.<\/span><\/li>\n
    • Any kpi\u2019s that are looking at loading and unloading rates, and matching capacity of the logistics fleet with the capacity of the warehouse to load and unload. (Here\u2019s where an outstanding logistics operation is disadvantaged by an inadequate or mismatched warehouse operation and vice versa)<\/span><\/li>\n
    • Warehousing, logistics and procurement: This is a very difficult grey area, because the information in procurement is often very difficult to extract and utilise. I am big proponent of greater use of smart contracts and AI in procurement to do the heavy lifting with regard to inbound deliveries especially to ensure that we have the product we need to the quality required, at the time required, in the amount necessary to ensure that operations can proceed. We also need to have back-up suppliers in place especially for our strategic products and we need to be able to switch to these suppliers if necessary with little notice.<\/span><\/li>\n
    • Procurement and demand planning and forecasting: of course procurement needs to ensure that the demand plan can be achieved at every level. This means at the annual level, the three monthly, the mothly, and the weekly level.<\/span><\/li>\n
    • With regard to demand planning and forecasting, this is more about having the theoretical view of what will happen(the ideal state with some ops research scientific modelling behind it) vs the actual and keeping on top of the actual demand vs forecast daily.(and running ongoing scenarios as the supply chain changes daily to determine the optimal remediation strategies.<\/span><\/li>\n
    • All of these examples require a comparison between the plan(or perfect order) and what actually happens and an explanation for the deviation.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n

      <\/p>\n

      Could you tell us about a time that you found a way to improve a process? How did you do it? What impact did this have?<\/h3>\n

      My first experience in supply chain was all about global process improvement. I didn\u2019t know anything at all about supply chains. I used the frameworks that were available to me within Du Pont. It included product flow, information flow, financial flow, value creation\/destruction flow and risk mitigation.My work was extraordinarily successful and it put my career on a trajectory for which I will be forever grateful. Through this work I have learned about the value and importance of cross functional processes and how they add value to businesses.<\/span><\/p>\n

      How would you manage the money necessary for procurement?<\/h3>\n

      Understand supplier base: First port of call is to understand the supplier base using the Kraljic matrix which aims to classify the supplier base into a simple 2×2 matrix impact with axes for supply risk and profit impact. (Strategic and non-strategic broken into leverage, bottleneck and non-critical items each of these dictates the nature of the relationship and importantly this translates into the time\/effort we will spend on these suppliers.)<\/span><\/p>\n

      Actually managing the sheer volume of contracts and information. Nowdays, no one wants to read an 80 page contract to work out what needs to happen let alone be able to manage hundreds of thousands of these documents. This function is a great contender for artificial intelligence in supply chain. (Get the Ai to do the heavy lifting on all the existing contracts. )<\/span><\/p>\n

      Contracts going forward: I would be having a close look at what I could achieve with smart contracts, or at the very least including a schedule which outlines the purpose of the contract, the parties, the goal(smart), what each will contribute(smart), how we know when success is achieved(smart),how we resolve conflict,how we ensure that the supplier will be self reporting, self correcting,self managing; meeting review schedule, proposed contract expiry date.<\/span><\/p>\n

      How do you add value to your supply chain team with your experience and competencies?<\/h3>\n

      I am fortunate because in addition to my supply chain skills, I have high level strategic and business change and transformation, governance and risk mitigation skills. The combination, along with my international co director qualifications,\u00a0 has taken me into several key leadership positions including NED roles.<\/span><\/p>\n

      Sometimes in supply chain we lose the ability to think at a higher level and from my perspective this is critical. I add value to my clients by assisting them to re-imagine and co-create resilient, fit-for-purpose supply chains and this is becoming more important than ever in our post covid-19(After C-19) world<\/span><\/p>\n

      Often supply chain is deemed, completely operational and tactical, and reactive. Certainly some supply chains are just that, but those are the supply chains which will struggle for survival in the new world.<\/span><\/p>\n

      How much supply chain management benefits a business?<\/h3>\n

      I wish that everyone understood what I understand in terms of cross functional business processes and servicing customers. Supply Chain is critical to every business. Every business takes some sort of raw material (even services do this) adds value, and then on sells the product. Supply chain(or value chain)\u00a0 is the process of adding value, and that\u2019s ultimately what keeps the business in business, so therefor it\u2019s absolutely critical to a business. Often these days it also includes value destruction so it\u2019s important we keep an eye on the value creation(destruction) process.(An example of value destruction is making product that optimises the utilisation of a manufacturing plant, but has no value to customers, so therefor it sits in our inventory for ever, thus destroying value and yes, to my absolute amazement, this is still happening today.)<\/span><\/p>\n

      How do you keep up with the new developments in supply chain management?<\/h3>\n

      New Tools and Technologies, including the IOT are changing supply chain in significant ways. So too, has the covid-19 experience.<\/span><\/p>\n

      As a consultant and thought leader in the industry, it\u2019s important that I am up to date.<\/span><\/p>\n

        \n
      • I have a virtual team in the Philippines who are researching supply chain tools and technology and ensuring that my team and I are all across new developments.<\/span><\/li>\n
      • I have several go to websites that I use.<\/span><\/li>\n
      • I am really interested and excited by future trends and\u00a0 listen to futurists regularly.<\/span><\/li>\n
      • I am active on social media including LinkedIn. I have more than 15K connections with like minded people and am a member of many of the on-line groups<\/span><\/li>\n
      • I am a member of most supply chain associations and attend webinars and events regularly.(as well as a number of strategy, business transformation, governance, risk and director groups.)<\/span><\/li>\n
      • I write blogs and am active in the supply chain thought leader space. Whilst I am based in Australia I like to keep in touch with colleagues within the region and then globally to better understand what\u2019s happening in their geographies.<\/span><\/li>\n
      • I attend conferences and am often asked to speak and do find these opportunities great for professional and personal development and knowledge building.<\/li>\n<\/ul>\n

        I feel privileged to have had the experiences that I have had in supply chain and to also have the opportunity to share my experiences with others in a way that helps them in their careers and assists their businesses to improve in extraordinary ways.<\/span><\/p>\n

        Addendum:<\/strong><\/em><\/p>\n

        A little silver lining to the covid-19 situation:<\/span><\/p>\n

        Have you ever heard the term \u2018supply chain\u2019 used so frequently in the daily news cycle? Did people even know what a supply chain was prior to Covid-19? You would be working hard to find someone who doesn\u2019t know what a supply chain actually is now.<\/span><\/p>\n

        The crisis has made it clear why our current supply chains are gaining much notoriety. It\u2019s a sad fact that many now understand the dire consequences of poor supply chains.<\/span><\/p>\n

        Now, the challenge is to re-imagine and co-create better, stronger, more fit-for-purpose and more resilient supply chains now. Those who do will be successful. Those who don\u2019t, will struggle for survival in the after covid-19 (AC-19) era. I am so excited about our supply chains of the future! I cannot wait to see them in action!<\/span><\/p>\n

        Reference: “Lora Cecere\u2019s supply chains to admire”<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

        Internationally Experienced Director – Senior Executive – Trusted Board Advisor – Value Chain Business Transformation & Performance Improvement Specialist Tier One Multinational Enterprises across Diverse Industries Lisa\u2019s focus is on formulating and facilitating supply chain solutions that address yesterday\u2019s issues of reactivity, uncompetitive delivered cost and lead times, poor delivery performance, excessive waste, lack of …<\/p>\n","protected":false},"author":2330,"featured_media":5147,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[169],"tags":[],"_links":{"self":[{"href":"https:\/\/ditech.media\/wp-json\/wp\/v2\/posts\/5003"}],"collection":[{"href":"https:\/\/ditech.media\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ditech.media\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ditech.media\/wp-json\/wp\/v2\/users\/2330"}],"replies":[{"embeddable":true,"href":"https:\/\/ditech.media\/wp-json\/wp\/v2\/comments?post=5003"}],"version-history":[{"count":0,"href":"https:\/\/ditech.media\/wp-json\/wp\/v2\/posts\/5003\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ditech.media\/wp-json\/wp\/v2\/media\/5147"}],"wp:attachment":[{"href":"https:\/\/ditech.media\/wp-json\/wp\/v2\/media?parent=5003"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ditech.media\/wp-json\/wp\/v2\/categories?post=5003"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ditech.media\/wp-json\/wp\/v2\/tags?post=5003"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}