Vijay kusurkar value chain stratagem
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    Vijay kusurkar value chain stratagem Vijay kusurkar value chain stratagem Document Transcript

    • 12th ECR Asia Pacific Conference Value Chain Stratagem – Going beyond traditional boundaries Vijaykumar Kusurkar Senior Director, SCM Applications, Asia Pacific Safe Harbor Statement The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle. © 2006 Oracle Corporation – Proprietary and Confidential
    • Lessons Learned From The Last Downturn What Winners in Last Recession Did Right Set priorities based on VALUE creation • Focus: strategic cost management AND value creation Leveraged TECHNOLOGY • Invested in systems to gain & manage insight on value drivers Collaborated with customers to develop NEW products • Developed new products, services uniquely suited to downturn Note: Winners outperformed others in industry 6 years following SHAPED demand through pricing for 1990-91 recession. Losers are those that underperformed others in profitability the industry. -- Source: Accenture • Shaped demand to gain market share and profits Business Environment & Supply Chain Management A Time of Change and Innovation.
    • Changing Information Needs Pressures Shaping • Retailers’ information advantage Consumer Products IT • Consumer buying behaviors and interactions • Global expansion and emerging markets • Synchronization across value chain participants • Need for agile IT response Paradigm Shift in Information Flow Current State Future State Consumers Consumers Retailers Retailers Distributors Suppliers Distributors Suppliers Marketing Information Marketing Planning/ Analytics Analytics Product Human Product Human Management Transactional Resources Management Information Resources Processing Platform Platform Innovation Planning Innovation Transaction Processing Finance Finance
    • From Automation To Differentiation Knowledge - Sales & Operations Planning Based, - Network Centric Product - New Product Development Innovation Collaborative & Launch - Demand Sensing & Shaping - Distributed Order Management - Collaborative Supply Execution - Personalized Customer - Supplier Development Service Process - Forecasting Complexity - Account Management (SFA) - Channel Management - Order Entry - AR - E-Commerce - AP - Customer Self Service - Employee Tracking - Employee Self Service Automation - Basic Accounting - EDI / VMI Based, Transactional Internal External, Process Reach Universal From Automation To Differentiation Knowledge - Sales & Operations Planning Based, - Network Centric Product Collaborative Differentiated Business - New Product Development & Launch Innovation Processes & Shaping - Demand Sensing - Distributed Order Management (20% of IT Collaborative Supply Execution - Budget) - Personalized Customer - Supplier Development Service Process - Forecasting Complexity - Account Management (SFA) - Channel Management - E-Commerce Commodity Business - Order Entry - AR - AP Processes - Employee Tracking - Customer Self Service (80% of IT Budget) - Employee Self Service Automation - Basic Accounting - EDI / VMI Based, Transactional Internal External, Process Reach Universal
    • TODAY’S REALITY Demand Volatility and Uncertainty “We are experiencing significant swings in demand--complicating demand and supply planning and visibility across the value chain” Copyright © 2010, Oracle and/or its affiliates. All rights reserved. TODAY’S REALITY Supply Chain Complexity “We are always very slow to react to change, instead of being able to anticipate and respond quickly.”
    • TODAY’S REALITY Accelerating Cost-effective Innovation “How can I innovate faster than my competition with my products and supply chains getting more and more complex?” Copyright © 2010, Oracle and/or its affiliates. All rights reserved. TODAY’S REALITY “We constantly struggle Alignment between Demand, with multiple disparate, Supply, Product departmental data sources and a lack of a holistic planning process. This is negatively affecting our competiveness and profitability.” Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
    • Today’s Value Chains need new Planning Approaches Planning strategies that you should focus on today DEMAND VOLATILITY SENSE DEMAND MORE QUICKLY and UNCERTAINTY and SHAPE FOR REV GROWTH SUPPLY CHAIN DEVELOP RISK MITIGATION COMPLEXITY and RISK and POSTPONEMENT STRATEGIES LACK OF RESPONSIVENESS IMPROVE AGILITY and QUICKLY TO SUDDEN PROBLEMS RESPOND TO EVENTS BUSINESS INSIGHT and CONTINOUSLY MONITOR CONTINUOUS IMPROVEMENT VALUE CHAIN PERFORMANCE Copyright © 2010, Oracle and/or its affiliates. All rights reserved. Value Chain Planning Modular – Craw, walk, run: start with your most important problem first FORECAST TO PLAN Planning Production Analytics Scheduling Risk Trade Management Collaboration Management and Network and VMI Design Demand Sales and Supply and Signal Operations Distribution Management Planning Planning Service Demand Inventory Parts Management Postponement Planning Global Order Promising Common MIDDLE MIOBIEE RDBMS COLL SOA SECURITY OBIEE WFL Planning WARE Server Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
    • Value Chain Planning Complete – Best in class products support best in class processes SALES AND OPERATIONS PLANNING COMPREHENSIVE TRADE MANAGEMENT STRATEGIC PLANNING and RISK MGMT INTEGRATED PLANNING and EXECUTION Copyright © 2010, Oracle and/or its affiliates. All rights reserved. Value Chain Planning Integrated with Oracle – Open to non-Oracle systems AIA AIA AIA AIA AIA AIA Legacy Systems Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
    • Oracle Value Chain Planning Enables leading edge and transformational business processes … Predict Shape Monitor and Manage Align 17 Copyright © 2010, Oracle and/or its affiliates. All rights reserved. Predict market requirements and manage risk Translate real-time demand visibility to profitable market strategies • Sense demand closer to the point of consumption with real- time visibility to demand events Demand Signal Management • Improve forecast accuracy Risk Demand Management through advanced analytics Management and consensus forecasting • Predict impact of supply chain risk to your network • Account for variability in your inventory positioning and postponement strategy 18 Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
    • Sense demand closer to point of consumption Retail Store Data DEMAND SIGNAL REPOSITORY • POS sales Non-Oracle Applications SOA-Based Integration INTEGRATE RESPOND ANALYZE CAPTURE • Price MANAGE • Store inventory TRADE PROMOTION PLANNING & OPT • Promotional plans • Store replen. rules • Store forecasts SALES & OPERATIONS PLANNING • Data sources centrally cleansed, Retail DC/ harmonized and aggregated SUPPLY & DISTRIBUTION PLANNING Distributor Data • Pre-built dashboards and reports • DC shipments • Powerful BI capabilities • DC inventory PRODUCT LIFECYCLE MANAGEMENT • DC replen. rules • “Sense & Respond” event mgmt Other DEMANTRA TRADE PLANNING External Data Pre-Built Integration • Retail loyalty DEMANTRA SALES & OPERATIONS PLN • IRI/AC Nielsen DEMANTRA DEMAND MANAGEMENT • 3rd party demographic • Causal (weather,etc.) ORACLE SUPPLY & DISTRIBUTION PLN • RFID/EPC ORACLE PRODUCT LIFECYCLE MGT • IMS, NDC, EDI (867, ORACLE RETAIL 852), Scripts, Pedigree • Unstructured text • More timely data to better sense, shape and respond to demand • Reduced manual effort and cost • Consistent data more easily leveraged across teams and applications 19 Copyright © 2010, Oracle and/or its affiliates. All rights reserved. Drive to consensus demand more effectively Improve forecast accuracy through advanced analytics and collaboration • Move from a regimented periodic to a continuous demand planning process – Continuous collaboration across sales, marketing, finance, supply chain and customers – Each participant gets tailored view – configurable work sheets – Comprehensive audit trail of changes – Consensus based on inputs and weightings from groups • Leverage advanced analytics to more accurately predict demand – High precision statistical forecasting, no statistical background required – Superior Bayesian-Markov analytics – Use any combination of quantitative or qualitative data to establish your base line forecast – Forecast based on attributes and characteristics • Get quickly to an improved and realistic consensus number – Collaborate with internal and external constituents – Use multi-dimensional analysis to adjust, allocate, and rollup – Workflow driven forecasting exceptions ensures responsiveness 20 Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
    • Oracle Value Chain Planning Enables leading edge and transformational business processes … Predict Shape Monitor and Manage Align 21 Copyright © 2010, Oracle and/or its affiliates. All rights reserved. Shape demand for profitability Balance demand and supply fluctuations • Shape demand via promotions planning • Manage new product introductions and marketing to maximize revenue S&OP Trade • Maximize sales and improve Promotion Management execution by balancing demand and Supply and Distribution supply in a continuous S&OP Planning process 22 Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
    • Shape with integrated promotion planning Understand the financial and operational impacts of sales incentives Demantra Predictive Trade Planning and Optimization • Synchronizes sales, marketing, and supply chain – Develop integrated strategies to adjust demand to available supply – Implement profitable sales and marketing strategies that are feasible for supply chain to execute and check availability of material and capacity to satisfy promotion demand – Leverage excess capacity to influence demand • Predict the impact of marketing programs – Decompose lift to understand halo effects, cannibalization, and consumer stock piling • Simulate volume and profitability of future promotions – Optimize promotional events based on goals and constraints - profit, revenue, units, budget, timing, margin – Perform what-if analysis to understand the impact of varying promotional tactics 23 Copyright © 2010, Oracle and/or its affiliates. All rights reserved. Oracle Value Chain Planning Enables leading edge and transformational business processes … Predict Shape Monitor and Manage Align 24 Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
    • Align operational plans with corporate goals Execute to plan OperationPlan and Monitor – Sales and s Plan Plan and Monitor – Tactical and Operational Plans DISTRIBUTE MAKE BUY SERVICE Collaborate • Plan your extended value chain with holistic supply and distribution planning • Improve demand fulfillment through real-time order promising • Improve production throughput through plant-level scheduling and monitoring • Improve supply chain visibility and align trading partners via collaboration • Transform your service operations to profit centers 25 Copyright © 2010, Oracle and/or its affiliates. All rights reserved. The Best-In-Class Companies Outperform Other Players Through Higher Focus on S&OP METRIC PERFORMANCE Performance Summary: Customer service levels (on- time and complete to the • Best-in-class companies customer’s request date) 50% 81% 91% 97% 100% have greater focus on S&OP Average forecast accuracy at • Key S&OP metrics the product family level tracked by companies 50% 60% 74% 86% 100% on a regular basis are: Average cash conversion – Return on net assets cycle (days) – Customer service 180 120 60 15 0 levels – Cash conversion Return on Net Assets cycle (RONA) 20% -10% -5% 5% 15% – Gross margin – Demand forecast Gross Margin accuracy 20% 30% 40% 55% 60% KEY: Laggards Industry Average Best In Class Note: Best-in-Class = top 20% of performers; Industry Average = middle 50%, and Laggards = bottom 30% of performers. Source: Aberdeen Research, Sales & Operations Planning: Aligning Business Goals with Supply Chain Tactics; June, 2008. Results based on survey responses from over 300 companies across four manufacturing industries: process, consumer, discrete, high tech / electronics.
    • Today’s Integrated Planning Systems Email and Excel Financial Planning Financial Planning Long-Term Long-Term Financial Financial Working Working Treasury Treasury Profitability Profitability Performance Performance Financial Financial Planning & Planning & Capital Capital Management Management Management Management Scorecards Scorecards Planning Planning Budgeting Budgeting Planning Planning Human Human Product Product Demand Demand Customer Customer Supply Supply Logistics Logistics Resources Resources Performance Performance Management Management Management Management Planning Planning Planning Planning Planning Planning Management Management Functional Operational Planning Functional Operational Planning Financials Human Resources CRM SCM Manufacturing Better Approach Real time, continuous and collaborative Sales and Operations Planning process • Replace disconnected processes Product Demand Supply Finance – Move off of standalone Excel – Stop manual “integration” by email • Minimally, start with traditional S&OP process implementation Product Demand Supply Finance – Demand and supply balancing – Data integration • Better: move to continuous, event- Demand Trade Supply driven S&OP S&OP Risk – Manage by exception, proactive alerts Design – Optimized what-if scenarios Finance – Forward looking analytics Event-driven Sales and Operations Planning – Unified platform: integrated data and process
    • Start quickly – Progress at your own pace Evolve to a best-practice Sales and Operations Planning process Network optimization and design Promotion optimization Risk Management Inventory Optimization Product life cycle management Demand shaping Demand and supply balancing Workflow driven exceptions Promotion planning Financial planning Eliminate Single consensus demand number spreadsheets Pre-defined S&OP analysis worksheets Demand and supply review Financial review Personal dashboards Key takeaways • It is time for change and just ERP based IT infrastructure that merely automates process is not enough • Demand driven value chains that – Sense and Predict Demand Closer to point of Consumption – Shape Demand for Profitability – Align Operational Plans and Corporate Goals – Have built in forward-looking analytics so executives can quickly understand and make informed decisions – Provide integrated system that enforces executive S&OP decisions at operational planning level