An Alignment Model for Collaborative Value Networks

AN ALIGNMENT MODEL FOR COLLABORATIVE VALUE NETWORKS Carlos Bremer Rodrigo Cambiaghi Azevedo Alexandra Pereira Klen

PRO‐VE’09 Conference ‐ Thessaloniki, Greece ‐ October 2009

Axia Consulting – the Milestone

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SAP® Award for Best SCM Research

Ricardo Catto, MBA Partner @ Axia

Carlos Bremer, PhD Partner @ Axia

Philadelphia, December 1999

Axia Consulting – the Evolution

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AXIA in Greek means VALUE 2000 – Marks Axia Consulting’s embryonic stage – Axia Transformation Methodology is developed following the award‐winning research of SAP University Alliance

2003 – Axia Consulting starts its activities 2005 – Axia carries out international projects in Europe, China and Argentine 2007 – Axia’s Management Model undergoes advances with implementation in different complex environments 2008 – Axia expands its office and creates the Center of Innovation in Business Transformation 2009 – Axia Consulting expands its business to North America

Traditional Approach for Transformation Projects

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Value Chain Management Transformation

People

Processes

Technology

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B


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• Software Engineering Perspective • Y2K Problem • Specialization of Consulting Business • Leadership looking for fast and concrete solutions • Functional Mind‐set • …. 6


A


People

Processes

Technology

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B


• Traditional processes consider just explicit mechanisms • Lack of applied references –Functional perspective –Ambiguous definitions and applicability

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A


People

Processes

Technology

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B


• • • • •

Communication Motivation Training Team Building ….

10

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Traditional versus Innovative Transformation Approach

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How to address Value Chain Management Transformations?

2000

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11

2009

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Value Proposition

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Results

Ensure the generation of significant results for our clients through Value Chain Management innovation

n

A

C e u l Va

h

e m e g na a M ain

B

on i t a rm o f s n t Tra

time

Dimensions of a Robust Transformation Approach

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People

Processes

Technology

Vision

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B

Value Proposition

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•

Vision: Deploy the business strategy through a value proposition perspective and align the transformation vision among the leadership – Understand company strategy – Compare the business strategy with the current customer value proposition (competitive strategy, target markets, products, services, channels, brand) – Analyze competitors value proposition – Benchmark similar business models

Frame

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4

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9


A


People

Processes

Technology

Vision

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B

Integrated Frame

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1 2 3 4 5 6 7 8 9


A


Strategy

People

Processes

Technology

Vision

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B

Value Proposition

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•

Strategy: Translate the transformation vision into a value delivery model and related work plan – Definition of Multiple Value Chains • Flexible, Lean, Agile or Replenishment • Relationship model based on selling/buying behaviors

– Value chain network design/adjustments • Analyze network scenarios considering different value chain propositions, sustainability issues, risk management and costs

– Determine main KPI´s goals (Best in class, advantage, parity) • Align Value proposition with operational model & trade‐offs

– Initiatives Roadmap and investment plans 19

Proposed model: Four Forces or Logics of Dominant Behaviours Logo Cliente Carl Gustav Jung proposed four “psychological function” of human behaviour. Base on Jung’s model, John Gattorna defines four predominant customer buying behaviours.

I

Developer D

Integrator ’ ng i l e ‘Fe Strength for cohesion, cooperation and relationship

‘In

tu it

ion ’

Strength for creativity, changes and flexibility

Strengths Strengths of of Behavior Behavior

t sa en ‘S

Strength for analysis, systems and control

n io ’

A

Administrator

Source: Gattorna, J. Living Supply Chain, 2006

Strength for energy, action and results ‘T ho ug ht ’

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Producer P

Types of Value Chains

Source: Gattorna, J. Living Supply Chain, 2006

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Strategy

People

Processes

Technology

Vision

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B

Value Proposition

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Processes: Structuring a set of management processes that are able to maximize the achievement of company’s strategic goals by continuously align the existing business trade‐offs – – – – – – –

Strategic Planning Management Sales & Operations Planning Demand Fulfillment Order Management Execution Flow Management Demand Management Supply Management

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A


Strategy

People

Processes

Technology

Vision

KPI´s

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B

Value Proposition

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Key Performance Indicators: establish a set of performance indicators in order to monitor the adherence between the value proposed to customers against the real value delivered. – Analyze the company performance drivers – Define the company’s Value Chain Scorecard ® • • • •

Flexible Chain Replenishment Chain Lean Chain Agile Chain

– Implement a process to support the management of the Value Chain Scorecard®

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Organization

People

Strategy

Processes

Technology

Vision

KPI´s

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B

Value Proposition

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Organization: aims to address a new organizational model able to sustain the transformation vision – Understanding the organizational culture – Communicating transformation’s decisions – Following up individual/organizational evolution – Defining R&R – Setting Org. Clusters


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Results

Alignment between value proposition and value delivery Management process orientation

B

Multiple Value Chains

on i t a rm o f s an r T t n

A

e People, values, beliefs m e g a n a M n i a Organizational behavior h C e Valu Required technology

Value Chain Scorecard

time

Axia Transformation Methodology

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Alignment Model

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Conclusion

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An important challenge faced by companies in gaining competitive advantage is the alignment between their value proposal to the market with the actual value delivered.

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For Collaborative Value Networks to succeed it is necessary to align the multiple supply chains that co‐exist in a single enterprise.

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This presentation discussed the practical application of a model that aligns multiple value chains based on the 7 Dimensions Transformation Methodology.

Dimension Vision – Strategic Differentiation Product Leadership

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Customer Intimacy

Operational Efficiency

Value Chain Scorecard (VCSC) Product Customer Leadership Intimacy SUSTAINABLE VALUE GENERATION

DCOR

H2O Consumption

Perfect Product Design Design Chain Cycle Time Product Design Change Cycle Time Total Design Chain Cost

‘’

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Carbon Footprint

Energy Consumption

Operational Efficiency

Cash‐to‐Cash Return on Working Capital

CCOR

Return on SC Fixed Assets

Share of wallet Order Fulfillment Cycle Time Downside Supply Chain Adaptability

Supply Chain Management Costs

Perfect Order

Cost of Goods Sold

SCOR

Design Chain FTE per Product Design

Relationship time Customer Loyalty Index

PPM

S&OP Accuracy Sales Plan Accuracy Sales Quote Adherence

Purchase Order Modification Average

Technology

Manufacturing Plan Accuracy Production Program. Adherence

Production Order Modification Average

Raw Material Plan Accuracy RM Program. Adherence Distribution Order Modification Average

People 35

Distribution Plan Accuracy Distribution Program. Adherence Supplier Perfect Order

Organization

Multiple Value Chains

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John Gattorna, PhD

“The dynamic alignment concept provides to the demand and supply management processes with a structured way of linking customer and suppliers behaviors to the operational side of an enterprise. It’s an outside‐in management approach”.

Dimension Process – Axia Reference Model® Develop

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Serve

LONG TERM PLANNING (STRATEGIC PLANNING)

SUPPLY MANAGEMENT

Raw Material

INTEGRATED PLANNING (S&OP)

FULLFILLMENT MANAGEMENT

ORDER MANAGEMENT

EXECUTION FLOW MANAGEMENT

ENABLING PROCESS

Finished Goods

Balanced ScoreCard (BSC)

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Value Proposition Customer

Balanced Scorecard 9One-size-fits-all Internal Process Value Delivery

Sale

Planning

Supply

Deliver

9 Do not manage trade-offs

Produce

Learning and Growth

Organization

People

Tecnologia

Value Chain Scorecard Application

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Sustainable Value Generation Profit Value Profit Value

Planet Value

Inventory Turns

Cycle Time Cycle Time

Overall Assets Overall Assets Efectiveness (OAE) Efectiveness (OAE)

Supply Chain Supply Chain Flexibility Flexibility Total Costs Total Costs

Stock Out Stock Out Stock Out

Cost of Goods Sold Cost of Goods Sold Cost of Goods Sold Cost of Goods Sold

Supply Chain Management Cost

On Time In Full

Tactical

Quality of Goods Quality of Goods

Planning Accuracy Planning Accuracy

Operational Fully Flexible Agile Lean Continuous Replenishment

Best In Class Schedule Adherence Schedule Adherence

Process and Variabilities 39

Advantage Parity

Customer Service

Cost to Server

People Value

Organizational Behavior

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Organization

Human Resource Policies and Practices

Organizational Values

Work Desing and Organizational Structure

Basic Underlying Assumptions

Leadership and Trust

Roles and Responsabilities

Organizational Results Aligning the organizational elements to the business vision.

Organizational Sistems Group Decision Making Group Results

Stress and Changes

Work Teams

Group Structure

Conflict

Communication

Politic Model

Creating positive interactions between the groups. The relationship should be aligned to the organizational goals.

People

Group Level

Individual Learning

Abilities and Knowledges

Individual Values and Beliefs

Individual Decision Making

Personality and Emotions

Attitudes

Individual Result

Perception Interpretation

Biographical Characteristics

Motivation

Individual Level

Adapted from Stephen P. Robbins (2005). Organizational Behavior. Pearson Prentice Hall, 11ª Edition.

Developing and increasing the technical and behaviorial competences for the positive envolvement of the individuals in the groups.