four tiers of manufacturing and supply chain · four tiers of manufacturing and supply chain...

• Josiah Edmond

• Director of Strategy

• Smyna Supply Chain Consulting

• Australia

Four Tiers of Manufacturing and Supply Chain Practices: A Close Look at the Nigerian

Manufacturing Industry

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Presentation Target Audience

• This presentation is best suited for

• Organisation Leaders

• Organisational Decision Makers

• Heads of Manufacturing, Directors and Managers

• Heads of Procurement, Directors and Managers

• Plant Managers

• Operations Directors and Managers

• Heads of Supply Chain, Directors and Managers

• All Related decision making job functions

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Introduction

• What is Practice?

• Audience Activity

• In your Organisation?

• In the industry your organisation operates within?

• In the Supply Chain Industry ?

• Practices defined as “a method, procedure, process, or rule used in a particular field or profession; a set

of these regarded as standard” – Business Dictionary


Introduction (Cont.)

• Not to be confused with Good Manufacturing Practice (GMP) which is a general system and

standards adopted by governments for measuring the health and safety of food products

manufactured by organisations in the food and beverage industry.

Why is manufacturing and supply chain practice

important?


Why does Manufacturing & SCM Practices Matter?

• Competition

• Competition is rife in the global business environment

• Conventional practices no longer guarantees business success and sustainability

• We live in the age now referred to as “The Age of Disruption”

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Why does Manufacturing & SCM Practices Matter? (Cont.)

• As long as there is competition in the business environment the type of manufacturing and supply chain “Practices” employed are critical

• Currently The Australian Government is providing up to

$M149 to manufacturing companies targeted at enhancing manufacturing and SC Practices

• What are these “Practices” and how can manufacturers know which practices to adopt and which practices to renounce?


4 Tiers of Practices

• In most business environment people only talk about “Best Practice”

• Organisational leaders encourage their employees to adopt best practice.

• But just what is “ Best Practice”?

• From a manufacturing and SCM perspective, many people misuse the word “Best Practice”


4 Tiers of Practices

• 3 other practices in use within organisations from a manufacturing and supply chain perspective also exist. These are:

• Leading Practices

• Common Practices

• Redundant Practices


4 Tiers of Practices— Best Practices

Source: Edmond J. & Soliman F. 2016 “Organisational Best Practice Redefined: A Hybrid Supply Chain Perspective”

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Best Practice

Common Practice

Redundant Practice

Leading Practice

Manufacturing & Supply Chain Practices Hierarchy Model

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4 Tiers of Practices— Redundant Practices

• Redundant practices as the name denotes are redundant no longer practiced by majority of organisations within the industry or at least no longer practiced by the best in class organisations within a given industry and considered outdated. Redundant practices are proven to be, or at least, considered as

• counter-competitive

• unproductive and/or

• infinitesimally productive



• Redundant practices may have in the past been regarded at least as one of theses

• Best Practice

• Leading Practice or

• Common Practice

• Cook & Hutchinson (2012) in their publication “Network and Operations Planning for Telecommunications Getting the Edge in the Network-Expansion Boom” stated that “Best practice of yesterday guarantees failure today.”



• Example of redundant practices are • Procure to Stock & manufacture to stock (industry

exclusive) • Unless an industry requirement, organisations no

longer procure to stock just for the sake of it. • The period of Push system of procurement has passed. • Today procurement function are more demand driven

and integrates: • Advanced sales and demand forecasting techniques • Calculated cycle stock and safety stock • Lead time

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• Manufacture to Stock

• Today manufacturing is also demand driven. Manufacturers are now Lean minded, taking into consideration, manufacturing queue time, production cycle time and production cycle efficiency. There are some industry exceptions though.

• Manufacturers are more focused on manufacture to demand and assemble to demand



4 Tiers of Practices— Redundant Practices (Cont.)

• Manufacture to Stock

• Why? It is all about achieving less overhead cost, efficiency and productivity which are all critical to competitiveness and profitability.

• To learn more about demand driven supply chain come and listen to our presentation entitled “Understanding and Integrating Principles of Demand Management Within the Nigeria Manufacturing Industry"



4 Tiers of Practices— Common Practices

• Common practices refer to those practices within an industry considered as standard practices in the value creation process or chain.

• Common practices are widespread within and across industries

• Generally do not guarantee competitive advantage or winning market share.


4 Tiers of Practices— Common Practices (Cont.)

• Common practices, in the past might have been considered

• Best Practice

• Leading Practice

• For example, in time past during the 1970s, the early days of the emergence of Enterprise Resource Planning systems

• ERP deployment and use considered best practice.


4 Tiers of Practices— Common Practices

• Walmart as a case study

• Reaching and attaining competitiveness require that organisation transcend above common practice.

• Common Practice remain an essential part of organisational practices

• they are the foundation upon which other processes and practices are built.

• They are the minimum requirement for producing goods and services.

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4 Tiers of Practices— Leading Practices

• Practices that have consistently been proven to achieve higher result within an industry are categorised as “Leading” practice

• Many refer to this as best practice, however the dynamic meaning of best practice differ.

• Six Sigma

• Lean Methodology

• Integrated Business Planning (an Advanced Approach to (S&OP) are all the categorised as Leading practices according to the publication.



4 Tiers of Practices— Leading Practices

• In this age of disruption, intense business competition and technological advancement what makes best practices from a manufacturing & SC perspective not easy to identify

• Many practices considered as best practices actually are leading practices.

• By the time certain practices are widely identified and accepted as best practices they become leading practices.


4 Tiers of Practices— Leading Practices (Cont.)

• What leading practices are best for your organisation?

• That will depend on your organisation’s competitive priorities and strategic objectives.

• The dynamics of your organisation must be incorporated in determining which leading practices are best fit .



• So what is Best Practice?

• Put simply: best is best. Practices that are unequalled by comparison.

• Best practice is achieved through a collaborative effort

• In every organisation there are more than 1 industry in action at any given time. A pharmaceutical company: Finance, Marketing, IT, Manufacturing, HR are all different industries operating in that company at any one time


4 Tiers of Practices— Best Practices (Cont.)

• Industries are generally classified into an main categories

• Operating Industry

• Cross Functional Industry Or Complimentary Industry

• Different from the 4 main types of industries: Primary, secondary, service & quaternary

• Effective collaboration of industry insights within the Operating Industry and Cross functional Industry leads to best practice.


Best Practice in the Supply Chain Industry

• In the late 90s a group of researchers (Dyer, Cho, & Chu) identified SC Best Practice as “Strategic Supplier Segmentation”

• The 90s were the era of change with the rapid shift to downsizing and outsourcing

• It was also the growth of the Procurement function as critical to competitiveness

• Their research indicated that organisations spend more than half of every revenue dollar in procurement


Best Practice in the Supply Chain Industry (Cont.)

• During the same period a publication edited by Garttona from Andersen Consulting now “Accenture” pointed that “Strategic Supply Chain Alignment is the way to go from a best practice perspective

• Many contributors to Garttona agree that aligning supply chain processes, strategies, with organisational strategies is the best practice in supply chain



• Klock, Lei & Handley in their publication “Best Practice in Supply Chain” (2009) presented 10 best practices in supply chain . Among them are

• Hiring best supply chain professional (L)

• World Class ERP systems & Best in class sourcing strategies* (L)

• Outsourcing of non core function & processes (C)

• Environmental sustainable actions (C)



• *A recent research in the U.S found that many pharmaceutical companies that undertook huge CAPEX in Demand Solution software do not necessarily have a more accurate forecast output than those companies that employ a more basic forecast systems like spreadsheets


Manufacturing & SC Best Practice Defined

• Best Practice therefore is defined as

• Practices within an organisation’s (operating industry) and its (cross-functional industry) proven to have repeated achieved outstanding results when compared with that of the competition.

• Best Practice is transitory

• Best Practice is endlessly evolutionary

• Companies must constantly and systematically evaluate and re-evaluate their practices to maintain competitiveness within their operating industry


Manufacturing & SCM BP

Source: Edmond J. & Soliman F. 2016 “Organisational Best Practice Redefined: A Hybrid Supply Chain

Perspective”


Pursuing Best Practice? Need To Know & Adopt

• To be competitive, Nigerian Manufacturers must constantly review various practices employed

• Determine what categories those practices fall within.

• Applying relevant weight to those practices provides comprehensive understanding and visibility of competitive sustainability level.

• Best and Leading practice not necessarily expensive to implement

• Subject Matter Experts (SMEs) are indispensable in building a Leading and Best practice environment in organisations.



• From a Syllogistic perspective Industries, organisations and organisational cultures are like fingerprints.

• No two different human fingerprints are the same.

• Therefore no two different industries, organisations and organisational cultures are the same.

• The principles of the OI&P Model can be applied to other industries or organisations

• The result of one organisation should not be replicated in its original form to another organisation.



• A systematic evaluation of supply chain practices provides visibility to the level of competitiveness of its supply chain.

• It contributes in determining the business sustainability of an organisation.

• Want to compete with the best??

• The answer is to behave like the best

• Want to beat the best??

• The answer is to apply best practice


Best Practice vs Innovation

• Innovation prone to trial and error

• Innovation can fail or not accepted by the wider consumer market

• Best practice is insightful and market gap driven

• Applying Leading Practice positions an organisation to take advantage of competitive errors on the part of its competitions

• Innovation and best practice are closely related

• Most successful innovation were largely supported by best practice


Definitions

• Redundant Practices: those practices past or present that are no longer proven to competitively add value either to an organisation, its products, services or image and/or have been proven to be counter-competitive, unproductive, or infinitesimally productive

• Common Practice: those minimum industry required practices needed by an organisation in its value creation process or chain. Common practice rarely ever becomes redundant.


Definitions

• Leading Practices: practices that have consistently been proven to achieve higher result within an industry

• Best Practice: practices within an organisation’s (operating industry) and its (cross-functional industry) proven to have repeated achieved outstanding results when compared with that of the competition.


Audience Discussion & Activity: Your Organisation’s Current Practices

• What are the practices in use in your company?

• What is your manufacturing shopfloor processes like?

• What is your production cycle time by product? Do you know?

• Have you calculated your production cycle efficiency?

• What is the true average cost of your product?

• How robust is your procurement function?



• Do you Have a Demand Management function? If yes

• What is your Demand Management function like?

• What about a supply planning function? (combined in some companies)



• What Performance Management Dashboard are currently used by your organisation?

• Single factor

• Multiple factor

• The 3 Ps Approach (Population, Participation, & Productivity)?

• Does your organisation have a robust Continuous Improvement function?



• When was the last time you check for hidden factories and invisible processes?

• Do you have a cyclical demand review system? If yes what part do the sales, marketing and product managers play?

• How much is the cost of written off obsolesces by month?

• Are you fully utilising your effective manufacturing capacity?

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• What about economy of scale during up time?

• What is your inventory management policy like, your current Inventory Days of Supply (DOS)?

• Do you have a SCM Analytics for enhanced and accurate data dependent decision making?

• And more…

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Conclusion

• ‘A brand is what a brand does’— Bill Morrow CEO nbn™


four tiers of manufacturing and supply chain · four tiers of manufacturing and supply chain...

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