www.mobius.

eu
Focused Consultancy, Measurable Benefits

Principles and Trends in

Supply Chain Management and
Business Process Management
Amsterdam, 1 October, 2010

Prof. Dr. ir. Hendrik Vanmaele

hendrik.vanmaele@mobius.eu
AGENDA

 Supply Chain Management today

 Process Organization

 From Process Mapping to Business Process

Management

 Corporate Performance Management

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 Supply Chain
Definition
A supply chain contains these elements:
 Suppliers deliver inflow of
 Raw materials / Intermediates / finished products
 Goods for production or distribution
 Consume raw materials and supply chain resources
 Clients consume OUTFLOW of
 Intermediates / finished products
 Assets add value throughout the supply chain
 Production / Inventory / Transport
 Organization a framework for planning and control

ORDER INFORMATION
suppliers

clients
MATERIAL FLOW INFORMATION

FORECAST INFORMATION

Production Finishing Distribution

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 Supply Chain Management
Definition
Supply Chain Management is a framework for :
 Managing all mentioned supply chain elements
 Providing information transparency throughout the supply chain
 Planning and controlling business processes within the supply chain
With the objective to obtain :
 Agile, flexible and reliable satisfaction of market demand
 Support for all the objectives of the organization
 Continuous improvement of all processes
 Integrated optimization yielding better results than the local optimization of individual
processes

ORDER INFORMATION
Suppliers

Clients
MATERIAL FLOW INFORMATION

FORECAST INFORMATION

4
Supply Chain Management

 Focus concepts :
 End-to-end process integration,
 Information transparency and consolidation,
 Segmentation based on requirements

 Today’s challenges
 « Segment Focused » supply chain solutions
 Multi-echelon end-to-end supply chain optimization
 Integrated planning approach
 Product life cycle management
 Strategy implementation (KPI’s)
 Collaborativeness (CPFR)
 SCM – framework systems & processes
At each level: determine priorities / control capacity / solve conflicts
Lang
term

Network design Strategic Network Planning Portfolio design

Sales & Operations Planning

Demand
term
Mid

Master planning – Rough Cut Capacity Plan

Planning
Production & distribution
Purchasing & planning
Short
term

ATP & Demand

MRP
Scheduling Transport plan Fulfillment

finished finished
suppliers

Raw material Semi finished EDC RDC

Clients
CODP
WIP WIP Transit

Purchase Production Finishing Distribution Sales

Demand Management
general process overview

Management interests
Financial coordination: Mgmt coordination: Process Performance Management:
Pricing & Payment terms S&OP Cycle Performance & KPI reporting

Core processes

Customer Portfolio Demand Planning Order promising

• Demand channels • Demand Planning coordination & order execution
• Service setting • Generating the demand plan
• FCST Consumption / ATP
- sales judgments
• Order fulfillment
- forecasting
- collaboration
•Validating the demand plan
Article Portfolio • Interaction with S&OP cycle Influencing demand
• Product generation planning • Publishing the demand plan • Proactive
• Product lifecycle planning - planning and MPS • Reactive
• Product classification - management

Supporting services
Organization

People in the Demand Management Team

Systems and algorithms for demand Management

Sales and Operations Planning
general process overview
Overview

S&OP cycle
Finance Supply Demand

Market Unconstr.
Data collection Statistical Intell. Hierarch. Sales Sales
& purification FC correction approval FC plan

S&OP S&OP
Preparation meeting Consensus Demand
Data collection Supply
Supply Demand &Supply Prod.
& purification preview
analysis Scenario Demand & Supply Plan plan
calculation &Supply plan translation
Plan
consensus
Data collection Financial Financial Financial
& purification analysis preview Plan

Demand & Supply plan measurement

& reporting

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AGENDA

 Supply Chain Management today

 Process Organization

 From Process Mapping to Business Process

Management

 Corporate Performance Management

9
From a Functional towards a Process Oriented Organisation
Traditional Organization

Functional SILO’s within organization

Custome
r

Partner

Characteristics
• Limited process ownership (hierarchical management decides)
• High (uncontrollable) lead times
• Non value adding activities (inefficiency, waste)
• Limited integration with other partners
• Isolated operational strategies
• Limited economy of scales

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From a Functional towards a Process Oriented Organization
Process Oriented Organization

Custome
r

Partner

Characteristics
• Quick response time : short and predictable lead times
• High degree of accuracy
• Integration with different partners (customer, supplier,…)
• Participative decision structure
• Standardization of repetitive work
• Integrated system / consolidated management of data
• Optimal use of resources
• Flexible organization
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Process Management

 Business Process Management starts from the processes but has an

impact on organization, manpower and ICT.

CRM

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AGENDA

 Supply Chain Management today

 Process Organization

 From Process Mapping to Business Process

Management

 Corporate Performance Management

13
Process Management as Enabler
Strategic Context

Mission / Vision
Where are we going ?

Objectives Performance indicators

What do we need to Are we accomplishing what
Who should ensure these accomplish to get there? we need to accomplish ?
objectives are being realized?
data source

Processes/Projects
How can we accomplish
those objectives?

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Process Mapping and Design

 Process design is the single definition of business

processes aiming at:
 Initial effort to evolve to a process oriented organization.
 Eliminating all activities without added value.
 Supporting the introduction of new systems.

 Applied techniques:
 Graphical representation of the process by means of Flow
charts.
 Data flow diagrams (input/output).

 Result:
 Process definitions with related flow charts and
procedures.
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Process Mapping and Design

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Process Management
Ingredients

PROCESS

PEOPLE
Customer
ORGANISATION

ICT

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Process Management
Ingredients - Organisation

Project Plans

BPM Program Office

Management
werkgroepen
New Projects

Steering
Committee Prioritize, Processes
decide,manage
Process Owners

ORGANISATION
Implementation
(Lean) Daily & Monitoring
Department A Department B
Management

Process

Process Mgr

Process
Coordinator

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AGENDA

 Supply Chain Management today

 Process Organization

 From Process Mapping to Business Process

Management

 Corporate Performance Management

19
What is performance measurement ?
A definition

 What is performance measurement ?

“…The process of developing measurable indicators that can

be systematically tracked to assess progress made in achieving
predetermined goals and using such indicators to assess
progress in achieving these goals…”

“…The process that supports the decision making process by

generating indicators of how well the (…) system is achieving the
desired or expected outcomes…”

“…Financial and non-financial comprehensive manner to

monitor organisational progress…”

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Starting with the strategy
Objectives

 Objectives link the mission/vision to the desired

results
What is our ambition ?
What are our long term goals ?
Strategic
objectives

Operational
objectives

…
Critical success factors How will we realize them ?
What do we need to do ?

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Starting with the strategy
Objectives

 Objectives should be SMART to be effective

 Specific: precise about what has to be achieved

 Measurable: clear on how to quantify the realization of the

objective

 Agreed or achievable: realistic expectations

 Relevant: to the organization and to whom it is assigned

 Time-based: start or finish date

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Translating strategy into action
Processes and projects

 Strategy does not realize itself, initiatives are necessary

 Initiatives consists of activities that transform inputs into output
which realize a certain effect

Inputs Activities Outputs Effects

 Initiatives take the shape of:

 permanent activities (processes)
 temporary activities (projects)

 Organizations start with a given set of projects and processes:

 Are we doing what we should be doing ?
 Is what we’re doing, what we should be doing?

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Defining performance indicators
What are performance indicators ?

 Performance indicators are numerical representations of

phenomena that should be controlled

 Performance indicators are derived from objectives

 They measure the degree of realization of an objective

 Performance indicators quantify phenomena

 They can take different shapes
 Numbers
 Rankings
 Categories (Yes /No)
 …
 Different ways exist for measuring the data
 Observe
 Extract from a recording
 Ask
 …

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Defining performance indicators
“Golden rules”

 Criteria for a good performance indicator

 Does it measure the objective

 Does it measure team rather than individual performance

 Can it be translated into action

 Does it have a clear polarity

 Do we have a mix of ‘leading’ and ‘lagging’ indicators

 Can we avoid unwanted effects or manipulation

 Does the value of the information outweigh the effort of collecting it

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Balanced scorecard
2nd generation balanced scorecard: Strategy maps

 Defining how the organization will distinguish itself in order to

realize its mission/vision

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Q&A

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