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DEVELOPING A ROADMAP
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To understand how to develop your roadmap for an integrated, extended supply chain, then, let s revisit the steps shown in Figure 6-1 one by one.
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Step 1: Set the Priorities for Change
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The complexity of the supply chain which touches numerous corporate functions, including product design, procurement, manufacturing, distribution, and postsales support, as well as diverse, often global sales channels and external partners makes pinpointing the right focus for improvement efforts a challenge. Your supply chain strategy is the right place to start.
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CHAPTER 6 A Roadmap to Change
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Note that developing and executing to your roadmap and addressing the core disci- Your strategy always plines may be somewhat iterative. As an should drive your example, the approach you take to a certain roadmap initiative may require that you make roadmap, not the changes to the organization or redefine perother way around. formance targets. However, your strategy always should drive your roadmap, not the other way around. 1 provides a detailed approach to developing your supply chain strategy; use the strategy to evaluate your current capabilities and determine any structural supply chain changes that are required to execute it. Clearly, if any basics are broken, you ll need to fix them. Perhaps you are experiencing specific performance problems. Or if you ve bought or sold a business recently, you may have to adapt your supply chain accordingly. To set the priorities for change, use the following principles as a guide:
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Use a business-driven approach. Identify the type of change required. Understand the interrelationships among initiatives. Consider your culture and environment.
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Use a Business-Driven Approach
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You need to ensure that each improvement initiative will deliver real business value. Almost invariably, a portfolio of prospective initiatives will have total resource requirements far in excess of the resources actually available to support them and varying opinions about what needs to be done first. To overcome these obstacles, define the performance objectives for key supply chain metrics, such as on-time delivery, inventory days of supply, or total supply chain management costs. As described in 5, you ll need to look at these metrics as an interdependent set and make any necessary trade-offs. Base these trade-offs on the primary basis of competition that forms the foundation of your strategy innovation, cost, service, or quality. Then decide on appropriate targets and performance priorities. Next, quantify the value of reaching these targets this may be a cost saving or an improvement in customer service that will result in increased revenue. Then, when you have determined the resource level required to make the changes that will result in these benefits, you will be prepared to calculate the overall return for a specific set of initiatives. This
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Strategic Supply Chain Management
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will give you an objective way to make the trade-offs necessary to maximize the overall benefit to your business. As an example, let s look at Company X, a consumer-electronics company that has chosen superior customer service as its primary basis of competition. For Company X, on-time delivery or fast-order fulfillment will be a high priority. This means that the management team should establish quantitative, time-phased targets for ongoing performance improvement in areas such as improve on-time delivery to commit performance by x percent every six months. They ll need to tie these objectives to specific initiatives designed to enhance performance. They ll also need to quantify the value of achieving these targets and balance this value against the investment required to achieve it.
Identify the Type of Change Required
Before even considering specific initiatives for your roadmap, it s important to have a view of the order of magnitude of change required to realize the value of the performance objectives. Although large investments in new processes, skill sets, or information systems may seem like prerequisites for significant performance improvement, they may not be the right place to start. You need to fix what isn t working today before you can focus on taking major You need to fix what steps toward next-generation performance. For example, many companies own enterisn t working today prise resources planning (ERP) systems before you can focus that provide them with standard material requirements planning (MRP) functionality on taking major but manage material requirements planning offline. These same companies may look to steps toward nextsophisticated applications, such as advanced generation planning and scheduling (APS) applications, as the solution to the issues they experperformance. ience as a result of not having centralized planning data. While using MRP isn t necessarily a prerequisite to a successful APS implementation, the discipline, control, and data integrity inherent in a stable planning process are. This means that these companies will need to focus first on resolving any dataquality and process-compliance issues. Layering a sophisticated information system on top of a weak process is likely to make things worse, not better.
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