Transcript Presentation Title - New England Supply Chain Conference

ISM®
2006 Northeast Supply Chain Conference
& Educational Exhibition
October 2006
“Supply Chain”
Your Company’s Secret Weapon
Shelley Stewart, Jr.
Senior Vice President, Operational Excellence
& Chief Procurement Officer
Tyco International (US), Inc.
The Evolution of Supply Chain
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•
From Tactical to Strategic
•
Creation of the CPO Level
•
Globalization of Supply Chains
•
Engagement in Non-Traditional Spend
–
HR
–
Legal
–
IT
•
“Bravely” Using Technology
•
Talent Skill Shift
Total Cost Driven
Purchase Price
Administration
Payment-terms
Inventory
Set up
Scrap
Quality
Expediting
Maintenance
Capacity
eNablers
Revenue Recognition
Mfg Efficiencies
Lead-time
Planning
Warehousing
Specifications
Attacking all of the Opportunity
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Signing the Contract is only the Start!
Supplier Value Scenarios
Different Types of Supplier
Value Management
3 Supplier Collaboration
Value Creation
• Six Sigma
• Value Engineering
• ESI
Contract
Signed
2 Supplier Performance
Management
Up to 75 percent of
Sourcing Savings
can disappear
within 18 months
1
Non-Compliance
Strategic Sourcing
Time
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Source: Geller & Company; PSC
™
Taking it Straight to the Bottom Line –
Some of the Key Elements
Best Practices
Procurement Role
Core Part of Corporate Strategy
•Strategic Sourcing
•Negotiations Management
•All Spend Categories in Scope
•Risk Management
•Partnerships with Suppliers
•Supplier Recognition
•Contract Management & Supplier
$
Centric Strategies
•Cost Reduction Planning/Tracking
•Budget Adjustments to Preserve
Cost Reductions
•Low-Cost Country Sourcing
•Consortium Buying
•Asset Recovery
Innovation & Technology
•Selective Outsourcing
•Spend Analysis & Category Management
•Demand Aggregation
•Electronic RFIs, RFPs
•Reverse Auctions
•Optimization & Decision Support
•Contract Mgmt & Compliance
•Results Tracking & Reporting
•Supplier Performance Evaluation
5 May 1, 2020
•Project Mgmt & Executive Dashboard
Objectives
•Aggressive Stretch Objectives
•Total Cost of Ownership
perspective
•ROIC goals
•Objectives Shared Across Entire
Organization
•Incentives/Consequences
•Supplier Performance Metrics
Good Leadership
•The Right Leader
•Leadership Culture at all Levels
•Bias to Action and Results
Optimized Organization
•Structure that works in your culture
•Cross-functional involvement
•Speaking with One Voice
•Commitment to Continuous Learning
•Professional Career Track
Excerpted from the book
“Straight to the Bottom Line”
A Global Business




Broad geographic sales
mix - $40.0 Billion
Facilities in over 60
countries
Asia-Pacific
14%
$5.8
Europe
27%
$21.2
$11
More than 40% of sales
are outside the US
More than 50% of
employees are outside
the US
$2.2
Other
Americas
5%
Significant Worldwide Presence
6
US
54%
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(based on FY2004 data)
Diverse Portfolio of Leading Brands
Electronics
Healthcare
Fire &
Security
Engineered
Products
Our Brands Are Well Known and Respected
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Key Areas of Focus
•
Strategic Roadmap
•
Global Commodity Strategy/Teams
•
Leadership Engagement
•
Emerging Market Sourcing
•
eSourcing Strategies
•
Talent Development
People
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-
Processes
-
Technology
Strategic Roadmap
Segment
Geography
Strategies
Scope
Training
2003
2004
“Build the Foundation”
“Expand the Core”
Segment C
Segment D
Segment E
Segment F
Segment A
Segment B
North America
EMEA
China
India
Latin America
Volume Leverage
eSourcing
Traditional “Purchasing”
Low Cost Country Sourcing
“Segment Specific”
- 10 Teams
- Limited Spend
22 Teams/110+ Sub-Teams
Begin Global Expansion
7 Step Sourcing
Process
eSourcing
Leadership Training
2005
“Accelerate the Impact”
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“Sustain the Gains”
Eastern Europe
Indirect Compliance
Working Capital (DPO)
Supplier Development
Emerging Market
Expansion
“Global Sourcing”
Continue Global
Expansion
55% Spend Addressed
Trade Compliance
IT Contract
Six Sigma Sourcing
Expanding Toolkit and Scope
9
2006+
Competency Training
New Product
Development
Strategic Sourcing Teams
EMEA
North America
•Capital Equipment
•Chemicals
•Commercial Print
•Corp Commodities
•Electronics
•Energy
•Facilities
•Fleet
•IT
•Metal Forming
•Molded Plastics
•MRO
•Office Equipment
•Office Supplies
•Packaging
•Resins
•Telecom
•Temporary Labor
•Tooling
•Transportation
•Travel
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Latin America
•Energy
•Fleet
•MRO
•Packaging
•Telecom
•Temporary Labor
•Transportation
•Travel
•Capital Equipment
•Castings (New)
•Electronics
•Energy
•Fleet
•Inj. Molding (New)
•IT
•Metal Forming
•MRO
•Office Consumables
•Office Supplies
•Packaging
•Steel Tubes (New)
•Telecom
•Temporary Labor
•Transportation
•Travel
30 Category Teams, 229 Initiatives
Asia
•Electronics
•Fleet
•Packaging
•Telecom
•Temporary Labor
•Tooling
•Transportation
•Travel
Electronics Category Team
Electronics Steering Committee
Analyst
Team Leader
TE
TFS
THC
TEPS
IPO
(Reps)
Electronics Category Team
Category
Initiatives
Resource #1
PCBs
Resource #2
Segment
Council
Segment
Council
Business
Stakeholders
Business
Stakeholders
Caps
PCBAs
Cables
Conn.
Resource #3
Electronics Category Team
Initiative Leaders
Segment
Council
Segment
Council
Business
Stakeholders
Business
Stakeholders
Etc..
TE
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TFS
THC
TEPS
IPO
Offices
IT Sourcing Team Structure
CIO
Council
Hardware
Servers, Desktops,
Resellers
Hardware
Telecom
Wireline, Wireless
Telecom
Software
Services: Consultants,
Outsourcing, Pro Serv.
ERP, Microsoft,
Commodity
Software
Resellers
Infrastructure
Council
Apps/ Enabling
Council
Security
Council
Sourcing Sub-Teams
IT Sourcing Steering Committee
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Tyco
Sourcing
Leadership
Team
(TSLT)
Leadership Engagement
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Category
Executive Sponsor
CAPEX
SVP, Operational Excellence
Chemicals
Segment President
Commercial Print
SVP Communications
Electronics
Segment President
Fleet
Segment President
IT
SVP, Chief Information Officer
Legal
EVP, Chief Counsel
MRO
SVP, Investor Relations
Packaging
Segment President
Resins
Segment President
Telecom
Chairman & Chief Executive Officer
Temp Labor
SVP, Operational Excellence
Travel
EVP, Chief Financial Officer
Transportation
SVP, Corporate Governance
Senior Leaders Actively Involved
Global Sourcing Regions & Commodities
Asia
Eastern
Europe
•
•
•
•
Mexico / Latin
America
• Metal parts
• Cable Harnesses
• Assemblies
Raw material
Metal parts fabrication
Castings
Tooling
• Electronic components
• Cables / Harnesses
• Auto parts / stamping
• Molded parts / Tooling
• PCB / PCBA
• Textile
• Contract mfg. - Hi Volume
• Castings
China
India
• Molds & Dies, Molded Parts
• Metal parts / Machining
• Chemicals / Resins
• Pharma & Bio-tech
• IT & ITES
• Textiles
• Castings & Forgings
Selecting Regions Based on Total Cost, Quality & Delivery
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Strategic Sourcing – Global Sourcing

Global Sourcing
Spend
2003
2004
2004-2005 Focus on Asia … IPOs
established in China and India:
–
–
–
–
2005
2006
Tooling
Electronics
Metal forming
Chemicals

Expanding to Eastern Europe, Latin
America & Southeast Asia in ’05
through ‘07

Developing local talent via ongoing
training … Sourcing, Integrity, Trade
Compliance

Raising awareness & overcoming
internal resistance in high cost
countries
Big Opportunity Ahead
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Spend Management Roadmap
2006-2007
2005-2006
Supplier Portal
COMPLETE
Contract Mgmt
Contract Mgmt
COMPLETE
2004-2005
eProcurement
eProcurement
2003-2004
Datawarehouse
Datawarehouse
Datawarehouse
eSourcing
eSourcing
eSourcing
eSourcing
Sourcing Applications Building Blocks
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What’s Next ??
Supplier Network
eProcurement
Spend
Visibility
eSourcing
Contract
Management
Catalog
eInvoicing
ePayment
Category
Procurement
Contract Compliance
Tyco ERP & AP Systems
17
System 1
Suppliers
Invoices / PO’s
System 2
Suppliers
Invoices / PO’s
System 3
Suppliers
Invoices / PO’s
System N
Suppliers
Invoices / PO’s
GL / Cost Center
GL / Cost Center
GL / Cost Center
GL / Cost Center
Item, etc
Item, etc
Item, etc
Item, etc
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Competency - Based Training
Supplier
Performance
Management
Team
Management
Strategic
Sourcing
Total Cost
Management
Supply Chain Competencies:
Fact - Based
Decision
Making
Commitment to Continuous Learning
1. Leadership / Behavior
Results-Oriented Leadership
X
Communications and Relationships
X
Data Management & Analysis
X
Disciplined Problem Solving
X
2. Sourcing
Supplier Management
X
X
Purchasing
Strategic Sourcing
X
Advanced Procurement
X
X
3. Supply Chain
Logistics and Distribution
X
Inventory Management
X
Demand Management
X
Optimized Organization
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The Future of Supply Chain
•
More Strategic Roles in Supply Chain
•
Extended Collaboration with Supply
Base
•
More Aggressive use of Technology
•
Continued Globalization of the Supply
Chain
•
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Larger Talent Pool from Universities
with Supply Chain Specialization
Saving Money
My job is saving
you money.
I love my job!
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