Supply Chain Challenges

Ijaz Yusuf
Director
Center for Supply Chain Research
School of Business and Economics
University of Management and Technology,
Lahore
Email: director.cscr@umt.edu.pk
Ijaz_yusuf2002@yahoo.com
Cell: 03054440603 , 0333-4302970

Logistical Performance Index

(LPI)
Country

Int
LPI
Rank

LPI

Germany 4.11

Custom
s

Infrastructu
re

Internatio
nal
Shipments

Logistics
Competenc
e

Trackin
g and
tracing

Timeline
ss

4.00

4.34

3.66

4.14

4.18

4.48

Japan

3.97

3.79

4.19

3.55

4.00

4.13

4.26

15

USA

3.86

3.68

4.15

3.21

3.92

4.17

4.19

27

China

3.49

3.16

3.54

3.31

3.49

3.55

3.91

39

Malaysia 3.44

3.11

3.50

3.50

3.34

3.32

3.86

47

India

3.12

2.70

2.91

3.13

3.16

3.14

3.61

79

Banglad
2.74
esh

2.33

2.49

2.99

2.44

2.64

3.46

110 Pakistan 2.53

2.05

2.08

2.91

2.28

2.64

3.08

155 Somalia

1.33

1.50

1.33

1.33

1.17

1.38

1.34

Email: director.cscr@umt.edu.pk Cell:

03054440603

Stakeholders of LPI

Government
Customs (Laws, SRO, Duties, Levies etc)
Infrastructure (Road Density, Ports, etc)
Implicit (Exchange Rate, Political Stability, Good Governance)

Academia
Tracking and Tracing (Systems, IT, Products etc)
Timeliness (Systems, Attitude, Behaviour etc)
Logistics Competence (Systems, KPI, LPI etc)

Corporate World
International

Shipments
Logistics Competence

Linkages among Govt,

Academia & Corporate World
Internat
ional
Shipme
nts

Tracking
and
Tracing

Infrastr
ucture

Timeline
ss

Logistic
s
Compet
ence

Custom
s

Email: director.cscr@umt.edu.pk Cell:

03054440603

Types of
Challenges
Implicit
Challeng
es

Explicit
Challeng
es

Implicit Challenges
Customer

Focus
On time delivery
Quality as per agreed
specifications
Collaboration
Win-Win Approach
Supplier / Partnership Relationship
Cost Control

Explicit Challenges
Innovation

and Creativity
Globalization
Supply Chain Volatility
Risk Management
JIT Inventory
Searching for Working Capital
Intellectual Property Interchange
Standardization
Global Eye for Consumer Product Safety
Resurgence of LOC
Shortening Cycle Time
Volatility in Energy, Exchange Rate
Free Trade Agreements
Certifications like Legacy Act

Innovation and Creativity

Quality Circles
Idea Boxes
Kaizen Teams
Kaizen Blitz
Small Group Activities
Out of Box Thinking Awards
Process Improvement Teams

Email: director.cscr@umt.edu.pk Cell:

03054440603

Globalization

Know

the cultures, languages, laws,

customs
Learn to optimize beyond the corporate
and supply chain spheres of influence
Exploit global efficiencies
Enhance value with dynamic
optimization.
Optimize pipeline inventory, the global
supply chain network and cost structures.
Create cost-efficient sustainable products
and practices while hedging risks with
partners.
Email: director.cscr@umt.edu.pk Cell:
03054440603

Supply Chain Volatility

Oscillatory

waveform of exchange rate

Market transparency
Fluctuating price sensitivity Level
Affect of Global commodities
Absence of price regulatory bodies

Email: director.cscr@umt.edu.pk Cell:

03054440603

Risk Management
Risk

and opportunity management

should span the entire supply chain
---From demand planning to expansion of
manufacturing capacity
--- Cash Coverage
--- Disruption of Quality
--- Financial uncertainties of the partner

Email: director.cscr@umt.edu.pk Cell:

03054440603

JIT Inventories

JIT inventory is the result of

JIT Mindset
Information integration
Co-ordination
Resource sharing
Organizational relationship linkages

Email: director.cscr@umt.edu.pk Cell:

03054440603

Searching for Working Capital

Buyers

look to extend their payment

terms whereas suppliers want
receive- able quickly to manage the
supply chain finance.
To look their trade flows to derive to
create additional liquidity
To mitigate the brewing
payables/receivables conflict
Email: director.cscr@umt.edu.pk

Intellectual Property Interchange

Standardization
Establish standards for generalized
and industry specific solutions
o Design and develop taxonomies,
terms,
technical
jargon
and
semantics generalized and industry
specific
o Need
standardized syntax and
schemes
for
expressing
and
interchanging intellectual property
and another business information
o

Email: director.cscr@umt.edu.pk Cell:

03054440603

Global Eye for Consumer Product

Safety
o

Establish
safety
standards
and
regulations especially for children
products

In November 2008, representatives from

China, the European Union and the United
States met in Brussels for the first high-level
trilateral summit on product safety to
discuss key developments and further joint
activities to improve cooperation and the
exchange
of
information
relating
to
consumer product safety. for generalized
and industry specific solutions
Email: director.cscr@umt.edu.pk Cell:
03054440603

Resurgence in letter of Credit

Resurgence in the use of letters of
credit to facilitate the financing of
international trade. With credit getting
tighter in all sectors, the supply of
letters of credit have been declining
while the cost has risen dramatically

For the right borrower and the right

transaction there are still deals to be
done, but the market will remain tight

Customer Focus
Guranteed delivery on mutual agreed
date
Defect free supplies
No inventory risk
Ability to respond quickly to changes
in market demand and competitors
A level playing field for constrained
products

Email: director.cscr@umt.edu.pk Cell:

03054440603

Supply Chain Risk Mitigation in

economics downturn
Supplier Financial risk
Extending the payment period
Unpredictable economic recoveries
Volatility in energy, currency exchange
rate, world commodity, labour rates

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Shortening the Supply Chain

Manufacturing

will continue to
recongiure their supply chain by
moving operations and sourcing
points near to customers
warehouse

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The main objective of this paper is to understand scm and explore

the various challenges and opportunities evolving day by day. Firms from
established and mature economies are increasingly expanding into
emerging markets. Globalization forced companies to change their
competitive priorities and redesign the supply chain aggressively with a
global focus. For some companies the driving factor is the new market for
its products and for some other it is the access to new suppliers or raw
materials from any where from the world at low cost, for a third it is about
lowering the cost of manufacturing and services through outsourcing .
Regardless of a galore of opportunities there are many common supply
chain challenges as they enter or expand their business in emerging
markets: new risk of disruption of quality, financial uncertainties of the
partner, unfamiliar cultures, varied infrastructure, historical reasons and
rapid growth and change. Globalization ,vertical disintegration, outsourcing
and off-shoring, shorter product life cycles, lesser lead time, JIT inventory
are also some factors which led to challenges like information integration,
co-ordination and resource sharing, organisational relationship linkage.
Information is the power of modern scm. A company with modern
technology and having and effective supply chain management system
with information integration as its foundation will have a definite edge over
competitors and various scm challenges
Email: director.cscr@umt.edu.pk Cell:
03054440603

Main

Challenges Identify Right System

Requirements
Select Right Solution
Depute Right Implementation
Team
Provide Right Time frame with
Right Methodology
Email: director.cscr@umt.edu.pk Cell:
03054440603

Main

Challenges Identify Right System

Requirements
Select Right Solution
Depute Right Implementation
Team
Provide Right Time frame with
Right Methodology
Email: director.cscr@umt.edu.pk Cell:
03054440603

Real-time,

KPI-Driven, visibility across

the extended supply chain
2. Purpose driven (composite)
applications that can orchestrate
transactional lifecycle in
heterogeneous environments (Orderto-Cash: Order Fulfillment)
3. Ability to "fix" broken processes so
that they can be routed through the
normal path quickly and efficiently
Email: director.cscr@umt.edu.pk Cell:
03054440603

My biggest headaches in supply chain are as follows not in any

particular order:
1) Training. We have the most educated people in the world but
too few of them understand how to CONTROL our supply chain.
Our team is empowered to make decisions e.g. delaying
purchasing, holding outbound trucks, expediting parts, but too
few of our people understand the impact to the complete supply
chain and the risks to our customers and their end users.
2) Impact assessment. We deal with thousands of customer
order changes per week. Each one of the changes cascades
through the supply chain. Assessing cost impacts correctly so
we can pass them on to our customers and vetting the costs
against customer contracts is a non-trivial task.
3) Supply chain software. We do not need fancy programs to
manage the supply chain effectively. What we do need is data.
Trying to get a system set up that uses one data nomenclature
for all countries, trade zones, suppliers, customers, warehouses,
production facilites is a huge task
Email: director.cscr@umt.edu.pk Cell:
03054440603

Key challenges of supply chain management are

First Challenge : Lack of Global supply chain view among stakeholders
Making all stakeholders understand value of global optimization. Typically
this is due to historic reasons. The integrated supply chain management
systems provide opportunity for global optimization. But the silo based
legacy supply chain management structures and processes had created a
mindset of silo optimization. One of the key challenge is to generate this
overall view to the stakeholders of supply chain management.
Second challenge : Misalignment of organization structures
Current organization structures do not help capitalize on the
opportunities in managing supply chain more efficiently. These structures
are supported by performance requirements that support silo thinking.
Third challenge : Lack of suitable business models
Supply chain business eco system is more fragmented and less
streamlined. Participants in the eco system try to maximize value within
their boundaries leaving overall supply chain efficiency for a toss.

posted January 8,

Email: director.cscr@umt.edu.pk Cell:

03054440603

This is the third in a series of Supply Chain Matters posts that

responds to a challenge among the blogsphere community of supply
chain bloggers to offer some thoughts on the seven grand challenges
for supply chain management for the next ten to twenty years. The
notion of seven challenges was motivated from a recent Gartner
research theme that outlines The Seven Great Challenges for IT.

In my part one and part two posts on this topic, I outlined what I
believe to be the first five grand challenges, namely:

-Ubiquity of Portable Computing Leading to Sensory

Networks

-True Supply Chain Business Intelligence and Decision Making

Tools

-Managing the Explosion of Data and Information Needs

Involved in Global Based Value Chains

- Managing Supply Chain Risk Management on a Global Basis

- Resolving of Who Assumes Ownership for the Extended

Supply Chain?
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03054440603

To understand the potential risks, one must understand the

key ingredients which make C-Level Supply Chain Executives
successful. A good white-paper written by William V. Fello
and Peter Everaert for Korn/Ferry International, The New
Supply Chain Executive: Using the Integrated Supply Chain
as a Competitive Weapon lists five ingredients:

1) A seat at the strategic decision-making table

2) Cross-functional expertise and relationships

3) Strong customer and supplier relationships

4) A global mindset

5) Demonstrated success as a change-agent

When you examine the list, two items stand out as the
greatest potential risks: Cross-functional expertise and
relationships and strong customer and supplier relationships

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03054440603

The study sets out a five point agenda for chief operating officers
over the next two years:

1. Improve customer access and accuracy of supply chain

planning

2. Increase upstream and downstream supply chain flexibility

3. Focus on total supply chain cost engineering

4. Implement end-to-end supply chain risk management

5. Integrate and empower supply chain organisation

Ultimately, the report said: The main challenge for many

companies is not to redefine their organisation models, but to
transition and manage the organisational change. To make a truly
empowered supply chain organisation work, companies first must
determine what their target models should look like and
persuade senior management to make the required changes. To
make an integrated supply chain work, it is essential to train and
acquire top talent with end-to-end supply chain knowledge.
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The five trends identified by the study are:

1: Supply chain volatility and uncertainty have permanently increased

Market transparency and greater price sensitivity have led to lower customer loyalty.
Product commoditisation reduces true differentiation in the consumer and business-tobusiness environments.

2: Securing growth requires truly global customer and supplier networks

Future market growth depends on international customers and customised products.
Increased supply chain globalisation and complexity need to be managed effectively.

3: Market dynamics demand regional, cost-optimised supply chain

configurations
Customer requirements and competitors necessitate regionally tailored supply chains
and product offerings. End-to-end supply chain cost optimisation will be critical.

4: Risk management involves the end-to-end supply chain

Risk and opportunity management should span the entire supply chainfrom demand
planning to expansion of manufacturing capacityand should include the supply
chains of key partners.

5: Existing supply chain organisation are not truly integrated and empowered
The supply chain organisation needs to be treated as a single integrated organisation.
To be effective, significant improvements require support across all supply chain
functions.

The survey found that many participants were driven by short-term exigencies and did
not strengthen critical capabilities during the recession.
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Using supply chain technology to reduce operating expenses

Supply chain technology helps consumer goods companies reduce inventory investments while maintaining
or improving customer service levels. Using supply chain applications, manufacturers can invest in inventory
that has the potential to contribute greater profitability while meeting customer expectations. One way is by
gaining insight into opportunities related to the tradeoffs of customer service and the corresponding
inventory investment requirements. For example, companies can compare the cost of 98 per cent service
levels to 97 per cent, or see the impact of leveraging time-phase inventory policies to deliver 99 per cent
service levels during peak seasons versus 97 per cent during slower periods. Regardless of the final strategy,
the optimal inventory plan is one that reduces inventory investments, avoids stock-outs, minimizes obsolete
inventory and provides better visibility of procurement and product needs while improving customer service.
Supply chain planning solutions analyse the tradeoffs of various inventory strategies across a wide spectrum
of customers, products and distribution centres and consider market factors like seasonality, promotions and
new product introductions.

Second, technology helps synchronize and balance the two opposing business objectives of achieving
ultimate customer service at a low cost. Most businesses want to have a very high customer service level, but
they want to do so at the lowest total cost possible. Supply chain technology can help companies assess
tradeoffs to meet their customer's needs, but in a way that allows them to make a profit. Supply chain
planning helps dramatically increase forecast accuracy, streamline product introductions, assess promotions
and create plans attuned to the market, and supply chain execution provides transportation, warehousing and
inventory management to ensure cost-effective order fulfilment and on-time deliveries.

production optimization starts with a good demand forecast

The third area where supply chain technology can favourably impact operating expense is through production
optimization. Companies must make sure that their manufacturing resources are producing the products most
likely to sell at the time the consumer wants to buy. Again, production optimization starts with a good
demand forecastcompanies must know what products to make, when, how much and in what sequences to
manuf

acture, and where they need to go.

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03054440603

Choosing between ERP and best-of-breed supply

chain solutions
Most consumer goods companies agree that supply chain
responsiveness offers a competitive advantage. The key is
time-to-benefit, and the questions a consumer goods
manufacturer should ask both ERP and best-of-breed
vendors are: Whats your average implementation time?
Can the solution be easily integrated with my current ERP
system? How many resources are needed to implement
the system? And, once its up and running, how many
people are required to maintain the solution? How well
does the system satisfy my current business needs? How
flexible is the system to adapt to my changing business
needs over time? Do I have to upgrade the entire ERP
system in order to take advantage of the latest
innovations in supply chain technology

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03054440603

Creating a demand-driven supply chain

Theres a new supply chain game in town. According to AMR Research, a
demand-driven supply network is a system of technologies and processes
that senses and responses to real-time demand signals across a network
of customers, suppliers and employees.

To support a demand-driven supply chain, consumer goods companies

must employ performance-driven supply chain practices, such as
continuous business monitoring and proactive alert notification, which
give them complete global visibility across their supply networks to adapt
to changes in demand and adjust accordingly based on real-time insight
into worldwide operations. Additionally, a reliable global demand plan
provides the foundation for sales and operations planning (S&OP) which
helps consumer goods companies better align daily operational activities
with strategic corporate objectives; more effectively balance supply and
demand; and make better-informed decisions that impact both the top
and bottom lines.

supply chain responsiveness offers a competit

ive

advantage
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03054440603

But

lack of collaboration and

integration between supply chain
and product development
partners continues to be a major
concern, Butner said.

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03054440603

According

to Butner, global economic

turmoil and uncertainty underlie the most
significant challenges supply chain
management executives identified in our
study.
Chief among these challenges are
fluctuation in customer demand and
variances in customer requirements. She
also noted that as the number of supply
chain partners increases, the need for
accurate, time-sensitive information
becomes more acute.
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There

is, and seemingly always has

been, constant pressure for supply
chain management and operations
to create enterprise value, the
study noted. End-to-end supply
chain cost and pipeline inventory
optimization are predominant
challenges, as well as the means
for protecting margin and
decreasing working capital
Email: director.cscr@umt.edu.pk Cell:
03054440603

Elements of QC Framework

Executives Committee

Quality Circles

Elements
QC of
Framework
Facilitator and
His team

Operating Committee

More Free Trade Agreements

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03054440603

Useage of Encryption
technology
within their
Usage of encryption technology within their products must be
banned to stop the product failure issues
products

Thanks
for
lending your
ears