Supply Chain It Convergence MBA talk

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Presentation at Schulich School of Business MBA course on SCM and IT convergence

Presentation at Schulich School of Business MBA course on SCM and IT convergence

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  • 1. Supply Chain + IT Arpad Hevizi – Celestica VP IT Supply Chain Solutions Notes form a transformational journey http://twitter.com/ahevizi
  • 2. Sea Land Component 3PL Distribution 3PL Service Manufacturing OEM Supplier Center Provider Air LATENCY Design Retail Center Outlet MISALIGNED METRICS INFORMATION 3PL 3PL Repair Returns LEADTIME Service Consolidation Center Center THE PROBLEM
  • 3. WHY? 3 CRITICAL SHIFTS
  • 4. Supply Chain is no longer about moving parts… 1 7 7 7 7 DAY DAYS DAYS DAYS DAYS REAL LEADTIME
  • 5. An Often Overlooked Obstacle to Supply Chain Integration and Excellence Pressure Center – Customers Other Other Other Other Other TSMC TI CLS Cisco Ingram The ‘forgotten’ Customers Customers Customers Customers Customers End Customer Value Chain View TSMC TI CLS Cisco Ingram Walmart Pressure Center – Wall Street TSM TXN CLS CSCO IM WMT 5 SCOR Benchmarking - Presentation ALIGNMENT?
  • 6. Technical Success Operational Success Business Success • Solution Implemented • The solution is in • The solution lead to within budget and productive use measurable business resource constraints supporting core benefits business functions • Business capabilities • There is a clear are delivered and • The organizational connection between tested as an and process changes solution performance integrated solution are implemented and and key business metrics accepted • User and support • Key performance resources are • The solution reached indicators are monitored identified and trained maturity (stabilization and the solution is phase completed) refined to maximize value realization IT IS NOT TOOLS
  • 7. WHAT? THE ANSWER
  • 8. The primary supply chain challenge is to balance a variable demand profile with a variable supply at the lowest cost to serve while achieving customer expectations Customers Company Domain Suppliers Plan Deliver Make Source Demand Management Supply Management and and Fulfillment Activities Purchasing Execution Controlling Demand Variability FOCUS: Supply Chain Control Today Controlling Supply Variability Extended Supply Chain Replenishment Forecast Collaboration VMI & Supply Collaboration Planning (ROP) FRAGILE BALANCE
  • 9. Supply Chain Networks / Integration 2010s IT: Value Chain Planning solutions 2000s Demand Side Partner Optimization IT: Collaborative Demand Planning, DDSN 1990s Supply Side Partner Optimization IT: Collaboration Solutions, Supply eHubs 1980s Cross Operations Excellence / Enterprise Level IT: ERP revolution 1970s Operations Excellence / Local Level IT: Statistical Process Control Solutions, MRP II 1960s Process Excellence / Local Level IT: CAM, MRP Solutions THE EVOLUTION
  • 10. Managing extended supply Demand driven chains as one synchronous Supply Network network. Integration… TRUE INTEGRATION
  • 11. HOW? NOT THAT EASY
  • 12. Real life is lagging behind the theory… Customers Company Domain Suppliers Demand Management Supply Management Typical Supply LOAD CHASE Chain Planned Supply ORDER LOAD CHASE Chain CHECK Advanced VALIDATE PLAN Supply SIMULATE Chain LOAD CHASE SCENARIOS COLLABORATIVE PLAN Supply SHARED ALIGNED Chain DEMAND / SUPPLY VISIBILITY SCENARIOS ORDERS Vision COLLABORATIVE REPLENISHMENT Extended Supply Chain REAL EVOLUTION
  • 13. Sea Land Component 3PL Distribution 3PL Service Manufacturing OEM Supplier Center Provider Air LATENCY Design Retail Center Outlet MISALIGNED METRICS INFORMATION 3PL 3PL Repair Returns LEADTIME Service Consolidation Center Center CONTROL PROBLEM
  • 14. Customers Company Domain Suppliers Collaborative Collaborative Plan Planning Planning & Forecasting Sell Design for Supply Design Chain Collaborative Replenishment Deliver Make Hub Management Service Source & Collaborative Integration Service Fulfillment Extended Supply Chain – out of scope for most companies today !!! SUPPLY CHAIN SCOPE
  • 15. WHERE TO START? CHANGE FOCUS
  • 16. VALUE FIRST
  • 17. Attribute Metric (Strategic) Reliability Perfect Order Fulfillment Customer Responsiveness Order Fulfillment Cycle Time Agility Supply Chain Flexibility Supply Chain Adaptability† Cost Supply Chain Management Cost Internal Cost of Goods Sold Assets Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital VALUE DRIVERS
  • 18. "Go where the money is... and go there often." 18 HISTORY LESSON SCOR Benchmarking - Presentation
  • 19. Understand & use 1 simple equation… 1 7 7 7 7 DAY DAYS DAYS DAYS DAYS CCC = DSO + DSI - DPO FOCUS ON CASH
  • 20. NEXT PROCESS
  • 21. Collaborate & Communicate with Customers Suppliers , Collaborative Planning Network Inventory Optimization Strategize Develop Sell Plan Source Make Deliver Return Service Integrated Business Planning and Analytics Idea to Product Quote to Cash Issue to Resolution Market to Sell Plan to Deliver Procure to Requirement Pay to Resource Supply Chain Performance & Risk Management Legend: CORE ENTERPRISE Ready to support external service offerings PROCESSES IT CAPABILITY MATURITY Empowers internal operations EXTENDED ENTERPRISE Gap area EXTENDED PROCESS
  • 22. Sea Land Component 3PL Distribution 3PL Service Manufacturing OEM Supplier Center Provider Air Perfect Launch Design Retail Center Outlet Synchronized Supply Chain Prevent 3PL 3PL Repair Returns Returns Service Consolidation Center Center LIFECYCLE FOCUS
  • 23. Component Supplier EMS Brand Owner Retailer Customer Variability Dependency Mitigating these 2 attributes is a pre-requisite to a touchless supply chain Current Model (Silo’ed) ‘Managed’ Collaborative Model Qty / Mix Qty / Mix Noise Noise Baseline Baseline Supply Chain Spectrum Supply Chain Spectrum REDUCE NOISE
  • 24. Critical Items Shortage Report Qty C C C C B B B B C A A B A A A Time Week 1 Week 2 Week 3 Week 4 Week 5 CLS Planning CLS Operations 3PL Partners Sales Production Planning Quality Sourcing Logistics Supply Chain Command Center - Conference Room MANAGE EXCEPTIONS
  • 25. ENABLE IT
  • 26. Key Supply Chain Performance Metrics Supply Chain Characteristics Supply Chain Design Agility / Flexibility {Efficient} {Responsive} {Supply Chain Response Time; Production Flexibility} {Low} {High} SCOR – Customer Facing Supply Chain Value-Add Services {Cost Containment} {Innovation Focus} Responsiveness {Order Fulfillment Lead Time} {Low} {High} Analysis Approach {Gut Feel} {Data Driven} Reliability {Delivery Performance; Fill Rate; Perfect Order Fulfillment} Ability to Influence Demand {Limited} {Powerful} {Low} {High} Influence on Critical Suppliers Supply Chain Management Cost {Limited} {Powerful} SCOR – Internal Facing {Supply Chain Management Cost; Value-Added Productivity} {High} {Low} Operational Execution {Local Autonomy} {Global Standardization} Assets Utilization Performance {Cash-to-Cash Cycle Time; Inventory Days of Supply; Asset Turns} Planning & Execution Tools {Low} {High} {On-line} {Off-line} Legend: Current position Desired Supply Chain Characteristics ALIGN ON VISION
  • 27. DESIGN Customers Visibility & Analytics Partners Design & Product Data Material Supply Perfect Network Collaboration Management Quotation & Launch Collaboration Services Services Pricing (launch) Design Partners Supply / Supply EMS & FULFILLMENT Synchronized Forecast Network & Materials Network Demand Supply Chain Inventory Planning Collaboration Analysis, ATP/CTP Optimization & IPC (planning) Components Partners Supply Capability Manufacturing & Fulfillment Order Logistics, Supply System Assy. Partners Demand Pull Replenish & Order Management Transport. & Network Demand Collaboration Fulfillment & Commit Warehouse Pull (execution) Mgmt Shipment Logistics Partners AFTER MARKET Triage / Service Supply Prevent Returns Repair / Returns Parts Logistics Network Redemption Collaboration Planning Recycle (returns) Recycling Partners Shipment ALIGN ON TARGET
  • 28. Define improvement roadmap and initiatives… Jan Feb Mar April May June July Aug Sep Oct Nov Dec Status: Strategic Already Started Team Engaged 7 Scope definition Supply Chain Command Center 3 Supply Demand Analytics & Supply Chain Simulation, Inventory Optimization Tactical 6 Forecast Netting, Split & This initiative will be a customer facing sub-process for ATP & Order Commit Collaborative allocation (5) initiative 1 Automatic Supplier Forecast & Commit Process 2 Automatic Inter-Factory Forecast & Commit Process Operational 4 Production Scheduling and Execution optimization 5 Global ATP Check & Order Commit LAUNCH PROJECTS
  • 29. WHAT NEXT? 3 PRACTICAL TIPS
  • 30. IQ FOCUS ON VALUE
  • 31. Understand Supply Chain ClockSpeed… IQ UNDERSTAND CYCLES
  • 32. Career Insight #1 It’s Not What You Know. It Never Was. •Relationships •Execution •Transformation
  • 33. I asked executives on my LinkedIn Network in a poll on What is the most important executive skill to focus on in these times. 180 responded to the survey and 45 followed up with detailed comments Execution is the most important focus. Business Expertise is the least. XQ EQ IQ Full Survey: http://is.gd/qz0G SOBERING DATA
  • 34. Science of influence & Strong Relationships EQ IT’S NOT MAGIC
  • 35. Execution Excellence & Leadership Skills XQ LEARN FORM THE BEST
  • 36. Career Insight #2 Status Quo is Shifting. Break New Ground. •Entire Industries Redefined •New Businesses Born •New Jobs Emerging
  • 37. Understand the Future & Create the Future Organization Structure LEAD TRANSFORMATION
  • 38. Career Insight #3 Your Career Will Take Longer. Unless… •Change / Rotation •Mentorship •Transformational Projects
  • 39. ahevizi@me.com ANY QUESTIONS?
  • 40. Arpad Hevizi – Vice President IT Supply Chain Solutions Arpad brings a unique blend of IT executive leadership and strategic business transformation and operations experience. He has spent the last 15 years helping clients to maximize value from their global transformation initiatives. He led the implementation of global Supply Chain and enterprise solutions, developed strategies related to emerging market growth, mergers and acquisitions and value added service operations. GLOBAL TRANSFORMATION EXPERIENCE: Global Beverage Manufacturer – As strategic advisor helped the company to develop an effective IT operating model to reduce cost and increase responsiveness of the ‘global shared application service organization’. Lead the ‘IT Value Assessment’ effort that helped to develop a cost baseline for all key IT applications and identified areas of support cost reduction. Applied SCM principles to increase the effectiveness of their global development and support operations. Sony-Ericsson – As strategic advisor helped Sony Ericsson to develop a global commercial strategy to increase market share in high-growth markets and enable profitable growth. Helped Sony Ericsson to develop tailored fulfillment models and differentiated service offerings to high-growth and mature markets to optimize cost-to-serve and improve profitability. Reduced fulfillment time in Indonesia from 20+ days to consistent 7 days and reduced channel inventory by 14 days. Motorola – Engagement Manager and Business Architect of the $35M Global Supply Chain Transformation initiative. Lead the global implementation of Collaborative Planning and Forecasting, Advanced Global Planning and Flexible Fulfillment Execution Solutions. Helped the process reengineering effort at Fort-worth Customer Fulfillment Center to enable rapid ramp-up of operations and to become the highest performing DC for the company within 12 months. Lead the ‘Supply Chain Value Assessment’ effort that helped to develop operational baseline for the companies newly established Supply Chain Service operation. Global Wireless Manufacturer –Business Architect and Program Manager of the Global Supply Chain Transformation initiative. Lead the global implementation of Collaborative Planning and Forecasting, Advanced Global Planning and Flexible Fulfilment Execution Solutions that enabled the company to support 100% increase in shipping volume while reducing operational spend.