Achieving Excellence in End-to-End Supply Management

1. Breakout Session # 207 Michael P. O’Hara, General Manager – Services Industry, Nextance, Inc. Tuesday, April 27, 2004 2:45pm – 3:45pm Achieving Excellence in End-to-End Supply Management

3. The end-to-end approach to the supply chain is now seen as a competitive edge , a feature so sexy it inspires extra ogling on Wall Street. Dell Computer and Nokia already get higher valuation because of their superior operations. Forbes Magazine October 13, 2003

4. Supply Chain is a Strategic Lever in Services Organizations Goal Delivering the right products and services at the right cost:value and at the right time Methods ALIGN … Procurement with organizational demand EXECUTE … Strategic sourcing Contractual agreements MANAGE … Supply Chain performance OPTIMIZE … Internal and external Supply Chain

8. Islands of Automation and Process Pockets of innovation exist but lack maturity of manufacturing sector pCard eprocure-ment Exchanges Ware-houses Spend Data On-line RFx Reverse auctioning Contract Systems Consortiums

9. Strategic sourcing Online RFx Contract management Supplier management Spend optimization Integrated supply chains Demand management Performance management Compliance Integrated tools Trends in the Services Sector Web applications e-Procurement Exchanges Portals Inside and Outside Organization Where is the integration of Technology and Process, of People and Information? 1995 1998 2000 2005 M A R K E T Birth of Supply Chain Management for services industries

14. Big Picture

28. The Four Enablers Find, Define, Implement and Integrate the Right Practices, People, Processes and Tools Best Practices Tools Process People Process Tools

29. Consider the Airline Industry – Two prevalent business models exist: Efficient vs. Effective Low-Fare airlines realized that several factors make success for an airline, moving people quickly, while providing a standard level of service at a low-cost is their goal. Other airlines tried to vary the offering and looked for efficiency in moving passengers by funneling customers through a “hub”. Focusing on one aspect of efficiency and assuming that gain would outweigh other shortcomings proved disastrous. They lost focus on the total picture and assumed efficiency would equate to profitability. Southwest, realized the simple concept, planes make money when they are in the air. What looked like an effective model for the major airlines, simply wasn’t. Multiple Types of Aircraft Hub System Differentiated Service Variable Costs Unprofitable Average time in air per day : 8.6 Focus on efficiency One type of Aircraft Point-to-Point Standardized Service Low Cost Profitable Average time in air per day : 11.5 Focus on efficiency and effectiveness Major Airlines Low Fare Airlines