keypoints in developing a 5 year supply chain strategy,the vision and strategy,IITA in view(Weaknesses, opportunities and threats)

1. George Cooper
November 2009

2. 3 KEY WORDS
In Developing a 5 year Supply Chain
Strategy
REVIEW
DEVELOPMENT
CONTROL

3. coles

4. In Developing a 5 year Supply Chain
Strategy
There is a need to:
• Understand where money is spent
• Evaluate strengths and weaknesses within
current organisation and its existing strategy
• Plan short, mid and long term
• Develop strategy based upon evidence and data
• Develop KPIs to ensure strategy is on course
• Develop systems and staff to maintain the
course

5. The Vision and Strategy
Need for vision and strategy must balance:
• Financial guidelines and limits
• Scientific and organisational objectives and
desires / needs
• Growth and learning of internal personnel and
beneficiaries
• Requirements of all stakeholders internal and
external

6. IITA Annual Report
• Total Funding $US 51.09 million
• 94.2% from CGIAR
• Expenditure $US 50.747 million
• 83.3% for program expense
• $US 16.7 million for management and general
expense

7. IITA Annual Report
CGIAR priorities:
• 33.5% Sustainable management of resources
• 31.1% Generic improvement
• 15.0% Improving policies
• 11.1% Agricultural diversification
• 9.4% Sustaining biodiversity

8. IITA
Likely Financial priorities:
• Maintain and improve KPIs and efficiencies to
generate continued and increased support and
funding.
• Help to maximise communication of work and
benefits.
• Maximise use of funding for scientific resources
by optimum efficiency in supply chain

9. IITA
Likely Stakeholder priorities:
• Effective and efficient use of funds
• Productive meaningful output from funds
• Real cohesive food improvement research
• Maximise productivity and communication of
results
• Viable farming and food production research

10. Opportunities
• Scientific Research fully supported
• Maximise funds available for research
• Minimise waste
• Minimise Cost
• Improve Efficiency
• Improve Bottom Line / Cash availability
• Alliances with manufacturers rather than agents
• Alliances with Importers
• Minimise expenditure on stock and develop fluid
supply chain.
• Items where needed and on Time
• People being fed

11. Threats
• Ineffective utilisation of funds resulting in less
research and loss of funding confidence
• Possibility of extended supply chains leading to
delays, shortages and wasted time.
• Exposure to excess stock and subsequent
obsolescence
• More effective use of funds by other organisations
leading to greater confidence in their research /
operations
• Supply / continuity / availability
• Items logistically unavailable and late
• People starving

12. IITA
Weaknesses, opportunities and threats may
include:
• Price / cost
• Quality of goods and services
• Reliability of supply (Availability on time)
• Service levels
• Communication
• Impact of loss of funds both to program and
future funding

13. The First Steps Towards Solution
• Identify Problems
• Identify Causes
• Effect Solutions
• Measure

14. The Process of 5 Year Improvement is
therefore to:
• Understand causes of problems
• Understand research, operations and funding
• Agree goals and direction
• Devise strategy
• Effect solutions and KPIs
• Involve, motivate and train staff
• Introduce controls
• Develop strategy and innovative solutions
• Involve suppliers and move forward

15. Developing the Purchasing /
Supply Strategy and Team for 5
year plan
Requires clear understanding of the
role

16. Role of Purchasing and Supply:
To help and advise on:
• Minimising cost and improving bottom line /
research funding
• Satisfying customers re service (internal and
external)
• Increasing efficiency
• Mirroring supply to demand
• Developing sourcing and supply chain strategies

17. Apply Best Practice Purchasing and
Develop Effective 5 Year Supply Chain:
• Researching and understanding the internal
and external problems and market thoroughly
• Developing the best overall supply solution re
price, quality and supply reliability
• Consolidating spend (maximising opportunity)

18. Apply Best Practice Purchasing and
Develop Effective 5 Year Supply Chain:
• Rationalisation of suppliers with regard to
price, quality of service and reliability
• Apply:
– Negotiation
– Cost reduction
– Value Analysis
– Vendor Rating

19. Apply Best Practice Purchasing and
Develop Effective 5 Year Supply Chain:
• Supplier development / relationship building
• Determining the total cost of acquisition
• Rigid control of pricing, freight and services
• Buying team becoming professional enough to
warrant being fully involved in long and short term
strategic decision making and direction
• The value of purchasing to the bottom line being
recognised at all levels throughout the entire
organisation

20. Likely Timescale
• 0 – 3 Months
Review current situation including systems, controls, staff,
problems, suppliers
• 3 – 12 Months
Change and modify problem areas and create competitive market
atmosphere supplier review. (Consider supplier days, conference,
e auctions etc). Introduce system and administrative controls etc
• 12 – 20 Months
Continue process of change and introduction of new suppliers, staff
reviews, training

21. Likely Timescale
• 20 - 24 Months
Review, analyse and modify. Introduce 360 degree
feedback
• 24 – 48 Months
Conduct further improvements taking account of
market changes
• 48 – 60 Months
Further review and hone ALL

22. Food for Thought

23. “The Future Viability and Funding of IITA
may Depend upon Purchasing and the
Supply Chain”

24. The Purchasing Pie
Profit
6%
Overheads
15%
Materials
55%
Labour
24%
The average purchasing department spends over
50% of what the organisation receives as
income

25. Purchasing and the Bottom Line
Apportionment of Sales Revenue
A 5% reduction in bought
100%
out costs can increase
Bought Out
Bottom line Cash by 25%
Materials &
Services
50%
Overheads
Labour
Profit

26. Lean Thinking Supply
Includes minimising waste in any form
including:
• Minimal stock solutions
• Demand driven supply
• Direct to customer supply
• Simplified operations
• Change
• Challenging current practices and suppliers

27. Implementing Lean Thinking in the
Supply Chain
• Is about accepting the need for change
• Planning change
• Implementing change
• Managing change
• Making it work

28. Improving the Productivity of Capital
Sales Revenue
PROFIT
Purchasing
Costs
Efficiency
Inventory Return on
Investment
Supply Cash
Chain Capital
Efficiency Employed
Fixed Assets
Receivables

29. Purchases & Stocks – How they affect Funds and
Bottom Line
Working Capital Current Assets
Year 1 £4,800.0 Year 1 £5,100.0
Total Capital Year 2 £2,600.0 Year 2 £3,800.0
Employed
BALANCE Year 1 £9,800.0 Current Liabilities
SHEET Year 2 £8,100.0 Year 1 £300.0
Fixed Assets Year 2 £1,200.0
Year 1 £5,000.0
Return on Year 2 £5,500.0
Investment
Other Costs
Year 1 16.3%
Year 1 £16,700.0
Year 2 54.1% Sales Turnover Year 2 £15,400.0
Year 1 £37,100.0
Year 2 £36,100.0
Profit
Year 1 £1,600.0
PROFIT & LOSS (4.3%) Total Costs Purchases
ACCOUNT Year 2 £4,400.0 Year 1 £35,100.0 Year 1 £18,800.0 (50.7%)
(12.3%)
Year 2 £31,700.0 Year 2 £16,300.0 (45.2%)

30. Food for Africa and the World

31. Help for the World - Questions