Martin McKie, Director EMEA Supply Chain at Arris - Collaboration: The key to success


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Martin McKie, Director EMEA Supply Chain at Arris spoke at the SCL Event July 2013

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  • The introduction of range based forecasting is one of the key successes of the supplier S&OP process. I worked in the Europe, Middle-East, Africa and Asia regions so I experienced this process first hand as the owner of the forecast and the results of that forecast accuracy good or bad.Range based forecasting gave me the ability to lock down a baseline forecast and then provide low cost lever to flex that forecast up or down with extremely low and highly predictable risk. For example, say we have three different smartphones each with forecasts of 200K for the quarter shown here at 4 months out. Range based forecasting would allow me to baseline the 600K units but then provide upside flexibility to the hot seller or newest product while providing downside cushion for the mature product reaching end of life.
  • Martin McKie, Director EMEA Supply Chain at Arris - Collaboration: The key to success

    1. 1. Collaboration: The Key to Success Martin McKie Director, EMEA Supply Chain ARRIS
    2. 2. The new ARRIS transforms how service providers deliver entertainment and communications without boundaries 2
    3. 3. New ARRIS (Motorola & ARRIS) Direct presence in over 25 countries Channel presence in over 85 countries ~7,000 employees Customers Worldwide 85+ 3 25+
    4. 4. Combining for New ARRIS Segments Home Devices Modems, EMTAs, Gateways, Set-top Boxes BCS Modems, EMTAs, Gateways ATS HE Optics, Fiber Nodes RF Amplifiers MCS Assurance, Analytics Workforce Management Video on Demand Ad Insertion & Management Network Infrastructure CMTS, Edge QAMs, HE Optics Fiber Nodes, RF Amplifiers Encoders/Decoders/Transcoders Convergence Experiences Assurance, Asset Management, Content Security , Ad Insertion, Video on Demand, User Experience BCS CMTS, CCAP, Edge QAMs Encoder/Decoder/Transcoder NOWBefore Roadmap is subject to change. June 2013 4
    5. 5. An Industry Leader with Commitment to Innovations and Transformative Solutions ▪ World Leader in IP Gateways, Modems and Video Devices ▪ First whole-home headless gateway ▪ First all-digital HDTV standard ▪ First cable telephony system ▪ First wireless cable modem gateway ▪ First DOCSIS® 3.0 certified E-MTA on Wideband ▪ DOCSIS 3.0 broadband speed record with Kabel Deutschland-4.7Gig/s ▪ Designed market-leading ad insertion solutions ▪ 14 Technical Emmy® Awards ~ 2,000 Patents Approved or Pending plus a license to a wide array of Motorola Mobility patents Roadmap is subject to change. June 2013 5
    6. 6. 6 ▪ Defining our strategy ▪ Supply Chain Business Operations ▪ Business unit alignment Supply Chain Strategy & Organization
    7. 7. ARRIS – Supply Chain Model Strategy Simplify Continuous improvement Customer focused Execution excellence Obsess over product superiority Supply Chain Simplification Supply Chain Velocity Deep Supplier Relationships Operational Excellence Customer Quality Renewal Customer: On Time Delivery On Quality Cash: Inventory Turns Cost: Total Supply Chain Cost Cycle Time: New Product Introduction Supply Chain Responsiveness PLAN SOURCE BUILD DELIVER Focused to win Our strategy Our key measures 7 NPI
    8. 8. Supply Chain Business Operations Supply Chain Business Ops Supply Chain Product Marketing Sales& Marketing Customer Finance / Pricing Demand Management Supply Management Demand & Supply Balancing Consensus Planning Our functions: Customer operations | Sales & Operations planning Inventory Management | Excess & Obsolescence Our focus: Customers | Cost Cash | Cycle time & Service level Demand Supply 8
    9. 9. Motorola Mobility Supply Chain Business Cycles & Challenges 9 ▪ Typical activities and business cycle: Medium term ▪ Bullwhip affect: Short term ▪ Product mix matrix ▪ Value chain
    10. 10. Shrink Sell facilities Reduce resources Decrease prices Hold onto share Grow? Buy facilities Make new deals Chase parts Business Cycle &Typical Activities: Medium Term 10
    11. 11. Bullwhip Affect (the textbook way): short term Cancel orders Stop shipments Negotiate SOI Reduce prices Expedite orders Expedite shipments Open the floodgates Increase prices? 11
    12. 12. Competitive Environment 2008 2013 Development Time to market pressure pressure 12 A challenge for Consumer facing Enterprises and any Businesses supporting them.
    13. 13. Motorola Mobility 13 ▪ Defining it for supply chain ▪ Multi-enterprise collaboration ▪ Collaborative Planning, Forecasting and Replenishment (CPFR) - S&OP overview - Demand change - S&OP summary - Supplier S&OP range forecasting - How collaboration impacts results Collaboration 13
    14. 14. Motorola Mobility Internal XX-Month-2012© 2012 Motorola Mobility, Inc. 14 Verb 1. To work jointly with others 2. To cooperate with or willingly assist another Tactical / short term  Replenishment  Forecasting  Business process mapping  Logistics sharing  Merge in transit Strategic  Business planning  Joint product design  Joint supply chain design  Vendor managed inventory  Joint warehouse space 14 Collaborate ke-’la-be-rāt
    15. 15. Collaborative planning, forecasting and replenishment (CPFR) CPFR is a structured, inter-enterprise, business planning methodology with three key elements: 2 3Plan Forecast Replenish 15
    16. 16. Motorola Mobility CPFR Collaborative Plan ▪ Business plan between purchasing of the the customer and the supplier ▪ Contract terms ▪ New product transitions ▪ Align planning windows ▪ Mutual goals 16
    17. 17. Motorola Mobility CPFR Collaborative Forecast ▪ Developed monthly ▪ Cross-functional inputs ▪ Cross-enterprise inputs ▪ Inputs from collaborative planning team - Inventory - Sell-through - Forecast - Refurbs 2 17
    18. 18. Motorola Mobility CPFR Replenishment Plans ▪ Support forecast and inventory plans ▪ Reserve fulfillment capacity ▪ Freight space for customer ▪ Inventory for customer ▪ Observe the constraints of Collaborative Plan ▪ Measure & Refine performance - On Time Delivery - Stock-out - Inventory - Sell-out / Through 18 3
    19. 19. Customer Market Planning ARRIS Product Roadmap Customer Sales Forecast Joint Collaborative Order Forecast ARRIS Replenish Customer Customer Sell-through Measure Performance Joint Business Plan CPFR: The Customer Collaborative overview 19 Simple system supported by real time data to determine performance
    20. 20. Motorola Mobility Internal XX-Month-2012© 2012 Motorola Mobility, Inc. 20 At ARRIS: A key enabler for successful downturns and upturns Deeper integration = higher performance (Pagell, 2004) Integration inside an organization is difficult Integration across enterprises is even more difficult Commercial terms often constrain more strategic collaboration Collaborate ke-’la-be-rāt 20
    21. 21. Multi-enterprise Collaboration INTERNAL CUSTOMER SUPPLIER Integrating these ends and adding significant customer value are the essence of our deliverable 21
    22. 22. Time | Demand Change to Suppliers? How long does it take for a change in demand to reach the farthest point in your supply chain? Tier 1 Tier 2 Tier 3 Demand Change 22
    23. 23. S&OP summary Customer > Internal > Supplier ? ? Now 2009 23
    24. 24. Face-to-face Connected by procurement team Decision makers on both sides Weekly to monthly Range forecasting Material / capacity Inventory Systems Excess parts Alignment Long lead-time suppliers Constrained industry Single sourced components Supplier S&OP 24
    25. 25. 4 months 3 months 2 months I month Actual 25 Flexible Range Forecasting
    26. 26. __ weeks before supplier ships Supplier ship date“Inflection point” Long Lead Time 60% of BOM Short Lead Time 40% of BOM NPI PLAN SOURCE BUILD DELIVER Raw materials are inexpensive and common across many manufacturers and products Processed WIP is expensive and is often unique to a specific manufacturer or product PLANNING | SUPPLIER S&OP 26
    27. 27. Range Based Forecasting 0k 100k 200k 300k 400k 500k 600k 700k 800k prior Q1prior Q2prior Q3prior Q4 Q1 Q2 Q3 Q4 Actual Fcst Lock Buffer Avg Drive Range Based Forecast material to: •YQA - 100% of the average of the prior Y quarters for the next 3 quarters, or the consensus forecast, if greater. •RGP (Rolling) - % of the average of the prior Y quarters for the current quarter, or % of the next quarter’s forecast, if less. Right Goal Post X% Forecast Floating RGP Rolling Range Based Forecast YQA Y Qtr Avg. Component Lead Time • PO for Lock + Buffer • PO aligns to supply plan • RGP scheduled to sea freight cut-off Weekly - Tracking • PO support for entire RBF • Track supply cover of RBF RBF Response time • Final build schedule • Cover final build quantity with supply commit Excess RBF Supply • Deliver supply to inventory /SOI /Buffer • Push PO delivery into next quarter • Cancel PO 27
    28. 28. Motorola Mobility CPFR and Supplier S&OP GET STARTED Supplier S&OP GET STARTED ▪ Start at the top ▪ Confidentiality ▪ The good, the bad, the ugly ▪ Find decision makers ▪ Commit without fear ▪ Immediately communicate breaking news 28
    29. 29. Motorola Mobility Supplier S&OP CHALLENGE S CPFR and Supplier S&OP CHALLENGES ▪ Measurable? ▪ News isn’t always positive ▪ Communicate up and out ▪ Building relationships takes time ▪ Avoid short-term issues 29
    30. 30. Motorola Mobility ▪ Time commitment ▪ Critical expertise ▪ Level in the organizations ▪ Relationship builder CPFR & Supplier S&OP RESOURCE 30
    31. 31. June 2012© 2012 Motorola Mobility, Inc. 31 Customer  Improved supplier flexibility  Improved lead-times and better on-time delivery  Supply chain ability to deal with demand shifts  Increased Sales Inventory optimisation – confidence to “lower the water levels without exposing the rocks” Supplier  Better demand visibility  Improved responsiveness  Optimisation of inventory, cash (capacity planning)  Improved customer satisfaction  Improved sales Sub-tier suppliers  Better demand visibility  Great potential to support upsides Range-based planning  Potential to increase sales 31 Results of Cross Enterprise Collaboration
    32. 32. Thank you for listening Any questions?