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How Supply Chain Management is Changing the Rules of

Competition Better, Faster, Closer


Only a few years ago, most marketing professionals would
have answered the question:
How do you compete?
Through our brands of course
However, the marketplace has changed radically over the last decade.
No longer is it enough to rely on the strength of :

????

Consumer Pull
Brand Loyalty is now a fairly rare phenomenon
Now focus much more on value and, in particular, availability.
For FMCG marketing people the big question now is : What do we have to do to
convince the retailer to give us presence on the shelf?
Page 1

How Supply Chain Management is Changing the Rules of


Competition Better, Faster, Closer
Only a few years ago, most marketing professionals would
have answered the question:
How do you compete?
Through our brands of course
However, the marketplace has changed radically over the last decade.
No longer is it enough to rely on the strength of :
Consumer Pull
Brand Loyalty is now a fairly rare phenomenon
Now focus much more on value and, in particular, availability.
For FMCG marketing people the big question now is : What do we have to do to
convince the retailer to give us presence on the shelf?
Page 2

Challenge faces by organizations

competing in

business-to-business markets

How do we achieve preferred supplier status?.


As their customers
increasingly seek to
reduce their supplier
base, manufacturers and
suppliers generally must
now focus upon the
ways in which customer
value can be created
and maintained.

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What is Customer value?

Customer value can be defined as the customers perception of benefits


gained from the relationship less the total cost of ownership.
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The New Rules of Competition


The rules of competition are
changing. It is no longer enough to
rely in brand values or proprietary
technology. Certainly, strong brands
combined with product and process
innovation can provide a firm
foundation upon which marketplace
success can be built. But real
competitive advantage comes from a
combination of loyal consumers,
committed customers and a superior
supply chain.

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Marketing and Logistics Converge


the interplay of three key competitive elements

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Integrated Supply Chain Management...


Closing the gap

Consolidate position

Taking the lead

Changing the rules


of the game

...Roadmap to Excellence
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A Bit of History: 1930-1950


Bank Robber Slick
Willie Sutton
When asked why he
robbed banks, Sutton
simply replied
"Because that's where
the money is."

Page 8

Where the Money Is


Supply-chain generally accounts for between 60% and
90% of all company costs1
A 2% improvement in process efficiency for supply-chain
processes has 3000% - 5000% the impact of a 2%
improvement in efficiency for IT, HR, Finance1 Sales
Any surprise most Process Methodologies or techniques
had their origin primarily in Supply-Chain Management?
Six-Sigma Lean BPR ERP ISO MRP-II TQM
Fortune-10 Company Supply-Chain Cost % Total Costs2
GM

Ford

Conoco

Wal-Mart

Chevron

IBM

Exxon

GE

Citi1

AIG1

94%

93%

90%

90%

88%

77%

75%

63%

0%

0%

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1 Exclusive of Financial Services companies


2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 SCM Benchmark data on SCM cost for discrete & process industries

BEST Supply-Chain Assessment tool


principles
The performance of the weakest activity of an
Element determines the performance of the
Element
The performance of the weakest Element of the
Supply-Chain determines the performance of the
overall Supply-Chain

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Questions?

Page 11