outcome driven supply chain - part 2
DESCRIPTION
Presented at MDP on 'Demystifying Supply Chain' organised by Management Development Center at Energy Acres, UPES DehradunTRANSCRIPT
Dr. Etinder Pal SinghFeb 24, 2012
Presented at MDP organized by Center for Management Development & UPES Dehradun
Consequences of Supply Chain Disruptions
•Impact of disruptions on supply chain performance:–Disruptions in the supply chain supply chain performance decreases
–Higher costs, lower delivery dependability, lower service level etc.
•Impact of disruptions on stock-related metrics and financial-statement metrics:–10% decrease in shareholder wealth –40% decrease in stock returns–107% drop in operation income–114% decrease in return on sales–93% drop in return on assets
Source: Hendricks and Singhal (2003, 2005a, 2005b) , Wagner and Bode (2008)
The consequences of disruptions are severe but are they the same for all firms?
We need to answer the following
• How do you design a supply chain for a specific desired outcome?
• When can outcomes be blended and under what conditions should they not be?
The Emergence of the Blended Outcomes
EnterpriseChallenge – How to achieve multiple objectives• Solution
– Blended Outcomes
Blending Outcomes
• Blending outcomes means making tradeoffs
• When blending outcomes,one should stand out
• Emphasis on the alignment of incentives within supply chain
• It complicates the outcome measurement process
• Some outcomes should not be blended (cost and innovation)
Success depends on• Critical SC drivers
– Demand driven (Walmart/Dell)– Supply driven (oil/gas)– Technology driven
• Global Cultural Differences• Location• Corporate culture (when boss is away)• Stage of product life
– Early stages (responsiveness, innovation,security)– Maturity (cost and resilience)
• “The only constant is change.”– Heraclitus, 600 BC, Greek philosopher
• “It is not the strongest of the species that survive, not the most intelligent, but the ones most responsive to change.” – Charles Darwin
Final Comments
• If we shift from old view of supply chains to the new view, we have to rethink the supply chain.
• To understand the new supply chains, we need to understand outcomes.
• The new supply chain must be designed to make the blended outcomes inevitable.
Thank you for listening!
Any questions?