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Supply Chain Innovations Key to Global Strategy

Innovations in many industries, as well as infrastructure requirements and
economic development in emerging markets, are creating unprecedented de-
mand tor raw materials around the world. That's why it is now so crucial to
have supply chain management at the center of any long-term business strat-
egy for the chemicals sector. Successful supply chains are never static; they
must be dynamic and innovative to meet burgeoning global needs.
Alex Royez is Vice President, Executive Director of Global Supply Chains at
Dow Coming, the supplier of silicon-based products, technologies and solutions^
Greg Mekjian is Executive Vice President, North American Operations at
Bristlecone, Inc.. a leading provider of supply chain and business process solu-
tions. Previously he was Vice President. Extended Supply Chain Management
Solutions, at SAP.

Framing the supply chain issue—where should a
company define the boundaries when considering its
supply chain and where should its concerns stop?
Alex Royez(AR) Onesizedoesnot fit all. There are no text-
book rules or mathematical equations
that help a company define the bound-
aries of a supply chain. It is impoiiani
10 take a "voice of the customer" and
"voice of the business" approach,
and balance those two perspectives
and nc-eds. Custoniei-s need to be able
to identify where they fit within the
defined supply chain, and employees Alex Royez
must have a clear line of sight to cus-
tomers and know how they fit into the supply chain. The
key is ensuring balance and harmony within the internal
enterprise and externally—and then employing good
change management and communication skills.
Greg Mekjian (GM) Any issue that impacts customer ful-
filment is a company's supply chain
responsibility, whether the company
owns the physical elements of the
supply chain, only a portion of the
supply chain, or none at all. The chal-
lenge is to identify the critical com-
ponents of the supply chain, internal
or external, that need to be planned,
monitored and acted upon. This is Greg Mekjian
not easy, because the critical compo-
nents of the supply chain morph on an on-going basis.
How do you ensure the customer's voice is inte-
grated into your supply chain strategy so there is a
common understanding of what the customer wants
and not a series of interpretations of what the cus-
tomer wants?
,AR Getting the information closest to the source that will
act on the information is critical. In some cases, a custom-
er's manufacturing schedule might trigger an electronic
replenishment signal, eliminating the information passing
through the hands of purchasing, sales, and customer
service. In other cases, it's a self-service model that best
facilitates this requirement and allows customers to choose
"exactly" the solution that meets their needs. For example,
our Xiameter® business is a self-service model with clearly
defined business rules, so everyone is working with the
same information. Any deviation from the business rules
triggers an exception handling process. Still in other cases,
its establishing trusting relationships in which customer
operations staff talk to supplier operations staff.
At Dow Coming, we work directly with our custom-
ers to help them with their internal process needs, work-
ing side-by-side with them to develop new opportunities.
so we hear first-hand the voice of the customer and can
match that with our total solution offering.
GM The concept of the extended supply chain takes into
consideration product development/design, strategic sourc-
ing. customer requirements, and their expectations about
service. When devising strategies for supply chains that are
heavily customer centric (discrete manufacturing), specific
attention must be given (o how customers channel their re-
quirements into the entry funnel of an adaptive supply
chain. Users of advanced technologies can make this trans-
parent to the customer and to the serving enterprise.
Has the increasing globalization of trade placed
more strain on tbe supply chain system, and, if so,
what is tbe best way to respond to these issues?
AR With soaring global demand for raw materials, infor-
mation about price, demand, supply, transportation, and
labor rates needs to be available at the fingertips of key
decision makers. My company is responding to this signifi-
cant increase in global demand by optimizing production
wherever possible through supply chain improvements.
productivity enhancements, and investments in additional
manufacturing capacity. For example, in the first half of
2004, we increased volumes over 15 percent, compared to
the same period in 2003.
We may not have mastered turning an ocean freighter
on a dime, but we can ensure we have the right material
on that ocean freighter and that the freighter is routed
via an optimal channel, so it can deliver the material to
the customer on-time at the most competitive price. That
translates into market share, long-term relationships and
limitless future opportunities.
GM Globaliziition of trade and trade restrictions has defi-
nitely complicatc-d the extended supply chain requirements.
This has necessitated investment in ERP, including the capa-
bility to support global trade and trade restrictions and de-
mand and supply planning solutions. While these implemen-
tations started out being country-specific, the trend is more
to regional and global implementation, as Dow Coming
has done. Tliis move supports the requirement for one
"truth" without significant effort spent in consolidation and
reconciliation of operational andfinancialdata. To a large
extent, this has been made possible by advances in informa-
tion technology, including the internet.
To what extent should a company enable tbe supply
cbain around its technical abilities, and bow mucb in-
formation sbould it share witb its business partners?
AR To address this question thoroughly, a company must
understand its business model and strategy. Perhaps there
is a segment of the business that is seeking a long-term,
trusted advisor, joint partner relationship - in other words.
where supply chain boundaries become blurred, where it's
no longer possible to see where one company starts and
another ends. We once thought information translated to
power, but, today, the power is in the sharing of informa-
tion which, in this context, provides an opportunity to re-
duce costs that can be shared by all the constituents within
the supply chain. Of course, in other business models,
where you want your customers to be self-suflicient, you
will want to share the information necessary for them to
sustain that self-sufficiency This requires sharing credit
history and status, order status, histoiy. profile informa-
tion, pricing, and market pricing. Its about managing
your own destination, being responsible and accountable
for performance and success.
CM The technology is not really a constraint when it
comes to supply chain management. The real challenge is
the ability and willingness to collaborate between supply
chain trading partners. MuUi-level supply chain visibility
and planning is the next frontier. There are definite ben-
efits to this in terms of eost savings, however, the cultural
change and distrust factors have to be overcome. With the
advent of the internet, we have a low-cost way for trading
partners to see demand and supply which was previously
not available to them. I am seeing a higher degree of com-
fort with more information-sharing than ever before.
How key are behavioral aspects? Do you need to
cbange tbe behavior of people in the supply cbain or
adjust tbe system to reflect tbe people in it?
AR Chemistry, technology and advanced algorithms are
simple in comparison to changing behaviors within an
organization. However, with good change management
models, it is possible to spark the momentum and enthu-
siasm that will develop into ownership, empowerment and
an ellective supply chain culture. It's not about adjusting
the system to accommodate the people, nor is it really
about changing the people -rather it's about providing the
information, tools, desire and vision that allows the supply
chain incumbents to own the vision, live the vision, and be
empowered to achieve the vision.
(;M Many organizations have not yet addressed the issue of
increasing supply chain complexity Change management
and training initiatives can help improve operational efiec-
tiveness, but there is a bottleneck if the technical and business
sophistication required by the new tools/technologies isn't
present within the organization. The system is only the en-
abling tool to personify the core competency of the people.
For more information about Dow Corning and its innovative
products and solutions, go to \vw\\\do\\'corning.comlinnovate.
For more information about Bristlecone. Inc. and its supply
chain solutions, go to www.hcone.com.

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