SUPPLY CHAIN PROFIT DRIVE TRAIN

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SUPPLY CHAIN PROFIT DRIVE TRAIN

• Alberta Buyer Seller Forum
• Mar 23 24, 2004

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BUYER SELLER FORUM

• Extend your supply chain
• Build strong alliances
• Win new business

Why the focus on supply chain and alliances?
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Deteriorating Business Conditions
3
INSURANCE
79
15
HIGHER EXCHANGE RATE
68
6
ENERGY COSTS
61
2
REGULATORY ENVIRONMENT
42
2
LABOUR COST
38
4
CANADA-U.S. BORDER CONDITIONS
36
10
COST OF MATERIALS
35
12
COMPETITION OUTSIDE CANADA
34
4
PAYROLL TAXES
32
6
AVAILABILITY OF SKILLED PERSONNEL
27
20
MARKET DEMAND IN CANADA
24
7
COMPETITION IN CANADA
19
PERCENT OF COMPANIES
5
PERSONAL TAXES
16
1
BETTER
TRANSPORTATION INFRASTRUCTURE
15
WORSE
5
CORPORATE TAXES
13
8
AVAILABILITY OF FINANCING
13
Source Striving for Excellence, CME, 2003
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SUPPLY CHAIN 1990S

• The complete set of activities, resources and
  information needed to plan, source, manufacture,
  store, sell and deliver products to customers.

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SUPPLY CHAIN REALITY
C U S T O M E R
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WHY SUPPLY CHAIN NOW?

• Consultant hype
• SC cost bottom line leverage
• High real interest rates expensive inventory
• Reality of international production
  (globalization)
• Competitive pressure to harness new technology
• Internal cost-cutting weariness

WHAT ARE BUYERS DOING?
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1. INTEGRATING PROCESSES
S
S
B

• standard formats
• point to point links
• document defined

EDI
S
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2. EXTENDING REACH INTO SC
STEEL STRAP PRODUCER
SAWMILL
CUSTOMER
TRUCKER
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2. EXTENDING REACH INTO SC
STEEL STRAP PRODUCER
SAWMILL
CUSTOMER
SAWMILL
SAWMILL
SAWMILL
SAWMILL
TRUCKER
RAIL
12 to 21 total cost reduction
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3. COLLABORATING WITH THE ENEMY
JOINT BUYING

• private contracts (not a buying group)
• common needs
• supplier assistance focused

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4. OUTSOURCING OFFSHORING

• Non-Core Service Outsourcing
• Allow focus on core activities
• Access economies of scale, specialization Best
  Practices
• Avoid technology investment and risk but gain
  benefits

• OFF-SHORING
• 1/10th the labour cost
• 20 greater productivity
• 3 greater accuracy
• UK bank in India

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5. REPOSITIONING
BC
BC
JAPAN
13
5. REPOSITIONING
BC
BC
JAPAN
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BUYER ACTIONS

• Integrating processes externally
• Extending reach into supply chain
• Collaborating with the enemy
• Outsourcing off-shoring
• Repositioning (e.g. out of production?)

Increasing Strategic Impact
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IMPLICATIONS

• Increasing room to grow value add through supply
  chain focus.
• Imperative to grow value add through supply chain
  focus

Tomorrow ask not what you can sell your
customer ask how you can improve the supply
chain mesh together.
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BC Supply Chain Council for more information,
contact Ken Fraser, Managing Director
BCSCC [phone] kfraser_mml_at_telus.net