OD & Global Supply chain

Andreea Patrascu T& O.D. Manager

agenda

26th Nov.
27th Nov. 28th Nov. 29th Nov. 4th Dec. 5th Dec. 12th Dec.

What is Organizational Development ?

Organizational Design principles within Supply Chain

SCM strategies & performance management indicators Introduction in operations management

agenda

about organizational development

organizational models as roadmaps

core strategy tools & strategic prioritization

study case

what is organizational development

Organizational development -discipline that aims to improve the organizations performance trough planned change management interventions. Scope: improving performance When? Q. How does the need of change appear?
The burning platform Focus : systemic alignment total organizational system alignment and interfaces between parts movement within one part will affect all other parts

Change management is an important aspect of management that tries to ensure that a business responds to the environment in which it operates.

the OD process cycle

focus on diagnostic data for interventions in order to find out root causes and put in place a structured change management plan.

Gaining entry

Diagnose the situation

Implementing the plan

Influencing the change

Strong business case Leadership engagement

Discover the root problems

Include planned changes in all impacted areas

See organizational models

Communicate Gain needed resources Gain support

Facts Documentation

Organizational models as roadmaps

How do you go about analyzing how well your organization is positioned to achieve its goals ? Organization is a system ! Look for congruence between all aspects of the organization. J Galbraith Mc Kinseys 7s

7S Checklist Questions

How to put the right questions to identify gaps!

Structure:
How is the company/team divided? What is the hierarchy? How do the various departments coordinate activities? How do the team members organize and align themselves? Is decision making and controlling centralized or decentralized? Is this as it should be, given what we're doing? Where are the lines of communication? Explicit and implicit?

Shared Values:
What are the core values? What is the corporate/team culture? How strong are the values? What are the fundamental values that the company/team was built on?

Style:
How participative is the management/leadership style? How effective is that leadership? Do employees/team members tend to be competitive or cooperative? Are there real teams functioning within the organization or are they just nominal groups?

Systems:
What are the main systems that run the organization? Consider financial and HR systems as well as communications and document storage. Where are the controls and how are they monitored and evaluated? What internal rules and processes does the team use to keep on track?

Skills:
What are the strongest skills represented within the company/team? Are there any skills gaps? What is the company/team known for doing well? Do the current employees/team members have the ability to do the job? How are skills monitored and assessed?

Staff:
What positions or specializations are represented within the team? What positions need to be filled? Are there gaps in required competencies?

Organizational models as roadmaps

Organizational models is based on the theory that, for an organization to perform well, all elements need to be aligned and mutually reinforcing Burke -Litwin Nadler & Tushman The congruence model

core strategy tools

Porters Five Forces Assessing the Balance of Power in a Business Situation

1. Supplier power - assess how easy it is for suppliers to drive up prices 2. Buyer power- ask yourself how easy it is for buyers to drive prices down 3. Competitive rivalry -the number and capability of your competitors 4. Threat of substitution -if customer can easily substitute what you supply,, then this weakens your power. 5. Threat of new entry- is affected by the ability of others to enter your market

core strategy tools

PEST analysis:
Political
Government type and stability. Freedom of press, rule of law and levels of bureaucracy and corruption. Regulation and de-regulation trends. Social and employment legislation. Tax policy, and trade and tariff controls. Environmental and consumer-protection legislation. L likely changes in the political environment .

Economic
Stage of business cycle..Current and projected economic growth, inflation and interest rates. Unemployment and labor supply. Labor costs. Levels of disposable income and income distribution. Impact of globalization. Likely impact of technological or other change on the economy.
Likely changes in the economic environment

Sociological
Population growth rate and age profile. Population health, education and social mobility, and attitudes to these. Population employment patterns, job market freedom and attitudes to work. Press attitudes, public opinion, social attitudes and social taboos. Lifestyle choices and attitudes to these. Socio-cultural changes.

Technological
impact of emerging technologies. Impact of technology transfer. Impact of Internet, reduction in communications costs and increased remote working. Research & Development activity.

core strategy tools

What advantages does your organization have? What do you do better than anyone else? What unique or lowest-cost resources can you draw upon that others can't? What do people in your market see as your strengths? What factors mean that you "get the sale"? What is your organization's Unique Selling Proposition (USP)? What could you improve? What should you avoid? What are people in your market likely to see as weaknesses? What factors lose you sales? Do other people seem to perceive weaknesses that you don't see? Are your competitors doing any better than you?

S W O T

What good opportunities can you spot? What interesting trends are you aware of? Does exists some opportunities drivers? Changes in technology and markets on both a broad and narrow scale. Changes in government policy related to your field. Changes in social patterns, population profiles, lifestyle changes, and so on. Local events.

What obstacles do you face? What are your competitors doing? Are quality standards or specifications for your job, products or services changing? Is changing technology threatening your position? Do you have bad debt or cash-flow problems? Could any of your weaknesses seriously threaten your business?

core strategy tools

the radar chart
Strategy
100%

Performance management
50%

Processes
0%

Customer perception

Rewards

Systems

Skills

Systems
Starting point Current period target

strategic tools
BOSTON matrix focusing effort to give the greatest returns
hold
Useful tool for analyzing product portfolio decisions Only a snapshot of the current position

build

Has little or no predictive value

Does not take account of environmental factors There are flaws which flow from the assumptions on which the matrix is based

harvest

divest

strategic prioritization

value chain analysis Porter 1985

How you can create the greatest possible value for your customers? How does your organization create value? How do you change business inputs into business outputs in such a way that they have a greater value than the original cost of creating those outputs? Describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business!

A value system includes the value chains of firm's supplier the firm itself the firm distribution channels the firm's buyers
Porter : Competitive Advantage: Creating and Sustaining Superior Performance.

core strategy tools

Steps in Value Chain Analysis Value chain analysis can be broken down into a three sequential steps: 1. Break down a market/organization into its key activities under each of the major headings in the model;

2. Assess the potential for adding value via cost advantage or differentiation, or
identify current activities where a business appears to be at a competitive disadvantage;

3. Determine strategies built around focusing on activities where competitive

advantage can be sustained

The tag of war

Tag of war- change or die

facts

company: Voici ; clothing manufacturer market presence : global: USA, Canada , UK, Mexico sales channels: retail & online

Leadership : decentalizalized, with own management, own set of suppliers one delivery:

The company had started loosing money ( last 2 years) Supply problems affected sales High lead time comparing with main competitor Lack of operational efficiency Low TTM ; low productivity ; high inventory levels; no accuracy in forecast Supplier s dependency Lack of management control & performance management monitoring

issues

change the current organizational design structure

challenges

improve supply chain speed & efficiency in terms of cost & quality

What kind of leadership will get Voicis units to pull together?

-use the OD process steps as support & 1 organizational model as roadmap -what are the main priorities to address?

Tag of war- change or die

Continuous change that incrementally adapts the current ways of operating across all or parts of the organization

Continuous change that radically transforms all or parts of the organization

Helps to involve change management Usually does not involve change management People can cope well People find this hard

How can North Pole workshops better respond to shifts in Intermittent incremental change that Intermittent radical change that demand?

incrementally makes adaptations in all or parts of the organization Important to involve change management People find this fairly hard but not as hard as radical change

transforms all or parts of the organization

Essential to involve change management

People find this very hard

Organizational Design

The goal of effective supply chain is to optimize the end-to end in order fulfillment process, not individual functions, while achieving lowest cost ____________________________________
Supply Chain Management Strategies Shoshanah Cohen &Joseph Roussel

Organizational design trends in supply chain

Center-led Supply Management -shift toward central control and coordination that due to the intense pressure to reduce costs brought about by global competition. An inability to raise prices, demands the coordination of supply activities and the consolidation of purchase volumes in an effort to minimize supply chain costs. Organizing around Critical Processes Plan Source Make Deliver Return
Design criteria: * supply chains minimize the cost of operations at all levels *have redundancy built into its processes, allowing it to quickly respond to expected changes, maximize the service levels for fulfilling demand, manufacturing personalized products.

Spanning across Boundaries requires participation and coordination of activities between different organizational functions - marketing, operations, sourcing, and logistics. All functions must share information and conduct coordinated activities.

Evolution of supply chain organizational design

GM

Purchasing

Operations

Order Manageme nt

Marketing & Sales

R&D

Finance

Functional
Planning Logistic

what kind of structure can best support the business strategy?

Buying

Manufactu ring

GM

Transitional
R&D Finance

Operatio ns
Order fulfillment Manufactur ing Supply mngm.

Marketing & Sales

Order mngm.

Logistics

Order fulfillment

Evolution of supply chain organizational design

Integrated model Full control over the resources End to end supply chain performance
Supply management Marketing & Sales

GM

Operations

R&D

Finance

Order management

Order fulfillment

Manufacturi ng

Purchasing

Supply chain management group is responsible for cross functional operational objectives such as inventory days of supply, orders lead-time, customer on-time delivery.

Organizational design - the process

how do you determine the best structure for your company at any given time?

Organizational design is arranging how to do the work necessary to achieve a business purpose and strategy.

assess

design

plan to transition

transition

Actions Clarify purpose & vision Conduct an internal & external scan Assess & align leadership Start stakeholder engagement & leadership Deliverables: business case , high level project plan Tools: SWOT/PEST, organization assessment

Organizational design - the process

what are you customer expecting from you ? Work grouping alternatives : Function or process Product or service .

Customer

Multifocused (activity+ output + user)

assess

design

transition

Enable low cost operating structure (minimize Actions overheads, layers) Establish design criteria Ensure able to scale up at later date with minimal Develop design options Define key metrics and critical disruption to the organization success factors Keep in mid that every participant in the process is Deliverables: governance model both customer & supplier and every Supply chain Detailed design of future state event/task has an input & an output. Measurement dashboard Tools: process mapping ( core/essential ,non-core)

Organizational design - the process

The design that an organization creates should not be the result of random occurrences. . It should be the result of careful consideration given to what leaders are trying to achieve.

assess

design

transition

Actions Develop a transition plan and manage the implementation Anticipate risk & develop a mitigation plan. Deliverables: project progress reports , course corrections Tools: organization assessment against starting point , lessons learned

SCM strategies

Supply chain strategies

MARGIN IMPROVEMENT

Rationalization
(cost containment)

Customization
(customer interface enhancement; customer intimacy)

COST REDUCTION

Traditional

Advanced

REVENUE ENHACEMENT

Synchronization
(demand-supply balancing reliability)

Innovation
(customer interface enhancement)

ASSET UTILISATION

Source: Boston strategies international

Supply chain strategies

Success factors

Rationalization
Focus on total supply chain cost : planning/order sourcing/inventory management cost; Competing on low cost by focusing on better cost management and eliminate: -Excess purchases and inventory due to MUDA: Waste. Any activity that doesn't add value. Value is usually bullwhip effect defined as anything the customer will pay for -Excess capacity investment or lost orders due to production capacity; SCM techniques Strategic outsourcing Lean management- eliminate wastes Standardization Transportation Design for manufacturability Paperless work flow
MURA: variability, inconsistency, irregularity. Mura exists when workflow is out of balance and workload is inconsistent and not incompliance with the standard. MURI: Overburdening employees or processes

Supply chain strategies

Success factors

Customization
The experience must be unique to each customer Flexibility : the personalized nature of the experience must adapt to the changing needs of customer & environment including product configuration and flexible delivering capability Intimacy creating the sense of getting something unique, special Convenience Speed delivery
SCM Techniques: Control of customer relationships Customer knowledge management Value analysis linking customer data to all interactions Mass customization Design for configurability Lifetime services Customer profitability management On demand profitability

Supply chain strategies

Success factors

Synchronization
Competing on reliability Driving customer loyalty trough high service levels and quality.

Innovation
(customer interface enhancement) Newer product and services Concurrent product development Continuous market feedback Rapid & early prototyping Early supplier involvement Designing for supply chain (design independent of logistics )

SCM Techniques Pull based demand trigger Constrains management & trough output analysis Just in time ; Perfect order Make to order Sales & Operations planning Collaborative inventory management Risk mitigation

SCM techniques Market responsiveness Product development Product life-cycle management\Early supplier & customer involvement ;Design for supply chain

Key concepts

Bullwhip effect Four major causes of the bullwhip effect: 1. Demand forecast updating 2. Order batching 3. Price fluctuation 4. Rationing and shortage gaming

Key concepts
PUSH vs PULL Push production is based not based on actual demand Pull production is based on actual or consumed demand.

Supply chain contribution to the business strategy

Strategy

Source of advantage Brand & unique technology Cost-efficient operations Excellent service

Basis of competition Innovative & desirable products Lowest prices Tailored to meet the needs of customers Products you can count on

Key supply chain contributor Time to market & time to volume Efficient & low cost infrastructure Designed from the customer in SC excellence & quality control

Innovation Cost Service

Quality

Safest, reliable products

Criteria for a good operational strategy

Consistent with business strategy Aligned with your customer needs Aligned with your power position Flexible in case that environment change

5 Key configuration components

1. Operations strategy 2. Outsourcing strategy 3. Channel strategy 4. Customer service strategy 5. Asset network

Criteria for a good operational strategy

1. Operations strategy types

Key driver : product cycle and no. of product variants

Strategy When is needed +

Make to stock

High volume High standardization levels

Product that requiring many variations Customized products

Low manufacturing cost Speed of delivery

Reduced inventory Good service levels Customization Low inventory levels Wide rage of product options Simplified planning

Configure to order

Make to order

Engineer to order

Complex products that meet unique customer needs

Enable response to the specific customer requirements Differentiation

Criteria for a good operational strategy

Outsourcing strategy
allows companies to focus on their core competencies and enhance competitivepositioning

3 potential advantages:
SCALE scale up production quickly without investing in manufacturing capacity SCOPE- for companies that want to expend into new markets outsourcing partners

provides access to operations in new regions

TECHNOLOGY EXPERTISE when they have already developed a product /process technology that would be require a sizable investment to produce it internally.

Criteria for a good strategy

Channel strategy
how will you get your product or services to your customer?
direct sales force? online? retailers?...

Customer service strategy

In order to prioritize and focus your capabilities is necessary to know:
what your customer really wants what are the overall volume and profitability of your customer accounts

Asset network
-the product life cycle drive asset decisions

Global Country

Regional

risk mitigation option : market postponement

Criteria for a good operational strategy

Outsourcing strategy
allows companies to focus on their core competencies and enhance competitivepositioning

3 potential advantages:
SCALE scale up production quickly without investing in manufacturing capacity SCOPE- for companies that want to expend into new markets outsourcing partners

provides access to operations in new regions

TECHNOLOGY EXPERTISE when they have already developed a product /process technology that would be require a sizable investment to produce it internally.

Performance management
SCOR card model
Supply Chain Operations Reference model

Performance attribute
Reliability

Attribute definition
correct product correct place& customer JIT and perfect condition in correct quantity with correct documentation pull balance between supply & demand Quickly responses to marketplace; agility in maintaining competitive edge; The cost associated with operating the supply chain

SCOR LEVEL 1
Delivery performance Fill rate Perfect order fulfillment Order fulfillment lead time Response tim e Production flexibility COGS Total supply management cost Value added productivity Warranty returns Inventory cost Cash-to cash cycle time Inventory days of supply Inventor turnover

Responsiveness Flexibility

Cost

Asset management

Effective management of asset to satisfy demand . Include fixed assets & working capital

Supply Chain KPI

THANK YOU