“What’s the difference between DELL, ACER, SIEMENS or HP, which makes DELL today the number one computer manufacturer worldwide? “ With this rhetorical question Dr. Martin Christopher began his analysis, in the executive workshop “Gaining Competitive Advantage through Superior Logistics and Supply Chain Management” that was organised by Supply Chain Management Forum (SCMF) on the 4th and was repeated on the 5th of April 2006 at Athens Hilton Hotel. “Perhaps products’ differences are minimum. In the modern globalize business environment advantage comes from capabilities” Dr. Martin Christopher said.
“In DELL there are two (2) advantages: The lower end to end delivered cost (cost advantage), creating superior customer value through enhanced service (value advantage)”.
Why from the five (5) bigger USA car manufacturers, (General Motors, Ford, Daimler - Chrysler, Toyota and Honda), that operate in the same business environment, directed by executives which got their degrees from the same universities and developed in the same business environment and use the same suppliers, only Toyota and Honda are doing their business successfully while the others face serious problems?
Based on the Cranfield Centre for Logistics and Supply Chain Management - that operates under Dr. Martin Christopher direction – current research results, “The leading-edge companies have perfect supply chains” fact that confirmed by similar researches and studies around Europe and USA conducted by other institutions.
Dr. Martin Christopher, impressed and set his audience – composed of executives coming from Greek and International firms leader in their business field - thinking by presenting and analyzing series of contemporary indicative case studies.
Based on the data available in SCMF, over 90% of the participants had the feeling that this workshop met their expectations, and despite the rather high cost, over 85% considered it as money for value.
“ZARA maintains part of its production in Europe (Spain - Portugal) but is the world leader in apparel industry for years. The core element of ZARA’s strategy is the development and maintenance of an “Agile Supply Chain”. It makes ZARA capable to respond rapidly to unpredictable changes in demand. The basic characteristics of its strategy are: Substituting information for inventories, non-added-value time reduction, non-added-value activities removal, reduction of complexity and minimization of lead time”.
Dr. Martin Christopher was impressive. He borrows, as tools of analysis, philosophical notions and physics disciplines to presents topics and difficult concepts comprehensively, indication of speaker’s deep scientific and professional background and knowledge.
“Velocity = Distance/Time”. In ZARA is translated in “Agile Supply Chain = Supply Chain Length /Time”. Their success lies on the reduction of the non added value time.
According to the philosopher Francis Bacon “If we are to achieve results never before accomplished, we must expect to employ methods never before attempted”. If someone analyzes in-depth Dell’s strategy and methods will understand the importance of the above sentence.
Dr Martin Christopher focused particularly in the concepts of velocity and lead time reduction. He pointed out that the ratio Value Adding Time/Total Lead Time is the typical way to measure the supply chain management efficiency. The above ratio for leading companies is approximately 10% but for the most companies is fluctuated between 2% - 5%.
The above ratio can be improved only when operations are focused on the added value procedures. “An activity adds value if the customer cares about it. A value activity is one which creates a benefit for which the customer is prepared to pay”.
His opinions about forecasting tools to predict demand was subversive also. “Instead of spend time and money to develop and use advance forecasting models and tools with unreliable results as time prolongs, it is better to focus on the real demand chain”.
“Planning in business is the fulcrum. Demand is at one edge, inventories and capacity on the other. If planning not only depends on forecasting but on the supply chain visibility, it is possible to keep inventories and capacity low. As business planning is far away from the real demand, inventories and the cost are going up. This is not only a theoretical approach but the result of WALL MART and PROCTER & GAMBLE collaboration.
“Most opportunities for cost reduction and/or value enhancement lie at the interface between supply chain partners”. According to Warren Buffet, one of the biggest capital investor in the world, “The value of a company is determined by the discount value of the cash that can be taken out of the business during its remaining life”. In other words, “Profit is an opinion, cash is fact”.
Dr. Martin Christopher by presenting the results of the last Council of Supply Chain Management Professionals (CSCMP) research, pointed out that leading edge companies have had formal logistics organizations longer, are more apt to have logistics headed by an officer-level executive and are becoming more centralized as they adapt organization structure to mission, while the usage of outsourcing is continuously increasing. Dr. Martin Christopher pointed out the fundamental principle: Outsource activities, Not control.
At the end of the workshop Dr Martin Christopher focused on the challenges that companies faced today in order to develop more responsive supply chains to customer’s demand. Responsive supply chains are by definition, highly integrated. Kraft’s Food supply chain presentation was really useful and helpful. Managing through cross functional teams, Kraft Food achievedinternal integration, that penetrates the operations, and external integration with upstream suppliers and downstream customers.
He marked also “Cross Functional Teams development means: Encourage flexibility by replacement of Job Descriptions by Task Descriptions, develop managers with T-Shaped Skill Profile and create Process Teams completely connected with the customers.
The answer in the question of how this can be achieved was “Following Toyota’s model. They develop “Brilliant Procedures for Ordinary People”.
Martin Christopher is Professor of Marketing and Logistics and Director of the Center for Logistics and Supply Chain Management at Cranfield University. His work in the field of logistics and supply chain management has gained international recognition. He has published widely and his recent books include Logistics and Supply Chain Management and Marketing Logistics. Martin Christopher is also co-editor of the
International Journal of Logistics Management and is a regular contributor to conferences
and workshops around the world. At Cranfield, Martin Christopher directs the Centre for Logistics and Supply Chain Management, the largest activity of its type in Europe. The work of the centre covers all aspects of transportation and logistics and offers both full-time and part-time Masters degree courses as well as extensive management development programmes. Research plays a key role in the work of the Centre and contributes to its international standing.
In addition to leading a number of on-going research projects in Logistics and Supply Chain Management, Martin Christopher is active as an advisor to many organisations and is non-executive director of a number of companies.
The Council for Supply Chain Management Professionals has awarded Martin Christopher its Distinguished Service Award for 2005. This is North America's highest accolade for work in the area of supply chain management and is the first time it has been given to anyone outside North America.
Martin Christopher is an Emeritus Fellow of the Chartered Institute of Logistics & Transport on whose Council he sits. In 1988 he was awarded the Sir Robert Lawrence Gold Medal for his contribution to logistics education and in 1997 was given the USA Council of Logistics Management's Foundation Award.
Currently there are three major fields of research in which Martin Christopher is engaged with colleagues from Cranfield:
Books in Print