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Best Run Supply Chain Practices

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  • Talking points:Given what we saw on the previous slide, and what companies are focusing on achieving, there is lots of opportunity as shown here. Remember, there are a lot of ways to get savings (e.g. redefine processes, technology enhancements, collaboration with trading partners to name a few), but ultimately you need the platform to which you can build your supply chain tools enabling the business processes identified within and outside the enterprise. These numbers are not generic instances of savings, but customers taking advantage of SAP solutions to enable the transformation they are looking to execute to better serve their customer while decreasing unnecessary spend. First point is EWM and came from a ASUG presentation Cat Logistics did.Second is from a ARC Viewpoint e-mail talking about savings. I can talk you thru this one if you like since we don’t really have a Trans Procurement solution.Third was from an article I read somewhere last week I have not been able to find.Fourth is a TM ASUG presentation and took a stat from empress Polar.I am trying to recall where I got 5 and 6, but I would not have made them up.
  • Transcript

    • 1. Flawless Supply Chain Execution
      Chicago
      March 8, 2011
    • 2. Supply Chain Execution Overview
      March 2011
    • 3. TATA Motors launches $2500 Car “Nano”
      1 Billion New Capitalists and Consumers
      New Container Shipped: Every 0.1 Second
      Oil crosses $100 / Barrel
      Increasing Numbers of Product Recalls
      Dow Jones drops 40% in 2008
      67,000 factories in China closed
      EU calls for global carbon trading system to fight climate change
      2008 auto sales drop by 3 million
      Global Bail Out
      Business Realities“The only constant is change itself”
      2009
      2008
      2010
      1 Billionth Phone Sold
      May 2007
    • 4. What did 2010 bring?
      THE ASSOCIATED PRESS
      China auto sales more than double to 1.3 million units in January
      2010
      Shoots of recovery are appearing….
      Supply Chain Risk: It's Time to Measure It
      Retailers See Holiday Sales Rebound From 2008
      Global companies become serious about green supply chain strategies
      670,000 small companies have closed in China due to the global crisis
      China surpasses Germany as world's top exporter
      Globalization and resulting complexity is here to stay….
      15.2m cars recalled in 2009!
      15.2 million car recalls in 2009
      Increased risk across the supply network
      Feb 2010
      2009 Infant Product Recalls Set Record High
      Feb 2010
      Increasing focus on Sustainability / Green Supply Chains
      Jan 2010
      Feb 2010
      Jan 2010
    • 5. Global Trends and their Impact on Supply Chain…are you ready for the upturn?
      Complex Global Networks
      Sustainability
      Increased Risk
      Economic Turmoil
      Economic Turmoil
      Economic Turmoil
      Economic Turmoil
      Economic Turmoil
      Manage Fluctuating
      Demand & Supply
      • Poor demand visibility and responsiveness
      • 6. Demand and supply not aligned
      • 7. Escalating costs and inefficient operations
      Leverage Network
      Wide Collaboration
      • Lack of visibility across distributed network
      • 8. Ineffective capacity and asset utilization
      • 9. Delayed response to customer demand
      Improve Visibility Across Logistics
      • Increased inventory and warehousing costs
      • 10. Fluctuating transportation costs
      • 11. Increased complexity & risk across the network
      Decrease Inventory and Increase Service
      • Increasing products and supply chain complexity
      • 12. Escalating inventory targets across the supply chain
      • 13. Buffer stocks , increased write-offs and discounts
      Safe & Sustainable Supply Chains
      • Government and Retailer regulations
      • 14. Consumer trust and Brand value impacted
      • 15. Need to manage safety, quality, and traceability at no additional cost
    • Is your Supply Network ready for the upturn?
      Long Term Forces
      Short Term
      Realities
      “CEO and senior executive top priorities are changing — with revenue growth becoming more important than cost cutting for most in 2010.”
      The “New” Normal
      Source: 2010 Gartner CEO and Business Executive Survey
    • 16. Manage through downturn, Position for upturnFive Tenants of a Responsive Supply Network
      Optimize Inventory
      Visibility & Collaboration
      Synchronize Supply to Demand
      Supply Chain Sustainability
      Excellence in Execution
    • 17. Supply Chain Execution EWM TM SNC SCPM
      March 2011
    • 18. Excellence in Execution paysDid you know …
      • …you can increase on-time delivery to customer 10-30% by automating warehouse processes?
      • 19. …you can lower your carrier contracts by 10% when complying with your routing guide?
      • 20. …overall shipment volumes are down by 18-20% this year impacting capacity, cost and service?
      • 21. … you can reduce your transportation spend by 10-20% by automating transportation processes?
      • 22. …you can increase inventory turns by 30% when more accurately allocating inventory based on current and future demand?
      • 23. …you can increase employee productivity by 20% when streamlining operations and reducing exceptions and expedites?
      Source: CAT Logistics
      Source: ARC
      Source: ARC
      Source: Empresas Polar
      Source: Gartner
      Source: SC Digest
    • 24. Logistics and Fulfillment Management is an end-to-end, cross-functional process
      VP of Supply Chain
      Effective Logistics and Fulfillment Management requires alignment between several stakeholders with differing objectives
      Logistics
      Logistics
      Customer Service
      Inbound Freight Management
      Global Trade Management
      Logistics
      Distribution
      Customer Commitment
      Outbound Freight Management
      Storage and Fulfillment
      Sales
      Delivery Commitment
      Order Capture
      Finance
      Customer Invoice Processing
      AR Processes
      Supplier Invoice Processing
      AP Processes
      Procurement
      PO Management
      Distribution
      Logistics
      Outbound Delivery Creation
      ASN / Inbound Delivery Creation
      Inventory Management
      Order Fulfillment
      Sourcing and Supply Commitment
      Transportation Execution
      Inbound Trans. Planning / Optimization
      Transportation Execution
      Outbound Trans. Planning / Optimization
      Logistics
      Freight Settlement
      Freight Settlement
      Risk / Compliance
      Import Management
      Export Management
      Cross-Dept
      Supply Chain Mgt
      Global Supply Chain Visibility, Event Management, Alerting, Reporting, Traceability, RFID / Auto-ID
    • 25. Integrated Supply Chain Platform
      CDSP – provides the processes and tools to match supply with demand
      LFM – provides the execution framework required to serve the customer
    • 26. SAP Extended Warehouse ManagementSolution Overview
      Inbound Processing
      Storage and Operations
      Outbound Processing
      Receive ASN data
      Rearrangement
      Order deployment
      ASN Validation & Correction
      Inventory Counts / Record Accuracy
      Route Determination
      Transporation Unit Arrival
      Replenishment
      Wave Management
      Manage Transportation Unit
      Picking Bin Determination
      Freight Order Management
      Goods Receipt
      Warehouse Order Creation
      Kit-to stock
      Work Assignment
      Putaway Bin determination
      Picking
      Unload Transportation Unit
      Core Warehouse Operations and Inventory Management
      Packing
      Internal Routing
      Staging
      Slotting
      EWM
      Loading & Goods Issue
      Deconsolidation
      ERP
      Kit-to order
      Putaway
      Manual outbound deliveries
      Returns / Reverse Logistics
      Production Supply
      Goods Receipt - Optimization
      SAP SCM-EWM 5.0.
      Transportation Cross Docking
      Labour Management
      Task Interleaving
      Cross
      Processes
      SAP SCM-EWM 5.1.
      Picking fr. Inb./ Push Deployment
      Opportunistic Cross Docking
      Execution Constraint
      SAP SCM-EWM 7.0.
      Yard Management
      Merchandise Distr. X-Docking
      Semi-System-Guided work
      Packaging Specification
      Integration to QIE
      RFID Enablement
      GTS Integration
      RF support for all exec.processes
      Material Flow System
      Supporting
      Functions
      EH&S Integration
      Batch Management
      Warehouse Cockpit
      Serial Numbers
      eSOA enablement
      Graphical Warehouse Layout
      Catch Weight
    • 27. SAP EWM has closed the gap with Best of Breeds and is the way to go for SAP customers
      “Some of these [SAP EWM] customers claim that the functionality is on par or exceeds that of well known best of breed solutions. They [SAP] are poised for very fast growth as they penetrate their installed base.”
      “Warehouse Management Systems Worldwide Outlook” by Steve Banker, ARC Advisory Group , 07/2010
      “From this retail customer's perspective [Indigo Books], SAP has narrowed (closed?) the functionality gap with best-of-breed WMS solutions. This milestone is reflected in the hockey-stick growth in EWM implementations SAP experienced in 2009 compared to previous years.”
      “Case Studies from SAP Insider: Indigo Books and Newell Rubbermaid” by Adrian Gonzalez, ARC in Logistics Viewpoints Blog, 03/2010
      “For SAP users considering upgrading WMS, the Extended Warehouse Management (EWM) application is to the point where it at least deserves to be put on the short list. EWM has more functionality, and is far more flexible.”
      Dwight Klappich, Gartner quoted in article “SAP shops holding onto SAP WMS, but there are benefits to upgrading” by Marc Fortier, Search SAP 07/15/2010
      “The offering was designed to provide functionality for complex warehouses and increasingly broad capabilities, such as yard management, slotting, material flow solutions and engineered labor standards.”
      “Magic Quadrant for Warehouse Management Systems” by Dwight Klappich, Gartner, 07/29/2010
    • 28. SAP Extended Warehouse ManagementSelected implementing Customers
    • 29. SAP Transportation Solution History Strong, Continued Investment to Deliver
      SAP Transportation Mgmt. combines a long history of transportation business, process and IT expertise
      Transportation Management (TM 6.0 & 7.0)
      APO – Transport. Planning/ Vehicle Scheduling (TP/VS)
      ERP - Logistics Exec. Transportation (LE-TRA)
      Transportation Management (TM 8.0)
      • Coverage: Integrated transportation planning & execution
      • 30. Stand-alone solution
      • 31. Inbound & outbound transp.
      • 32. Central transportation chargeengine
      • 33. Limitations:
      • 34. TCO
      • 35. Restricted availability
      • 36. Coverage: Shipment execution
      • 37. Limitations:
      • 38. No shipments combining in/outbound movements
      • 39. Delivery-based only
      • 40. No transportation capacity planning
      • 41. Coverage: Comprehensive transportation mgmt.
      • 42. For core operations
      • 43. For shipper industries & foundation for freight forwarders
      • 44. Focus:
      • 45. Usability & configurability
      • 46. Performance & process simplification
      • 47. Customer & SAP TCO
      • 48. Coverage: Shipping planning & optimization
      • 49. Order-based planning
      • 50. Integrated with ERP LE-TRA
      • 51. Limitations:
      • 52. No combined in-/outbound movements ….
    • Overview SAP Transportation Management Solution Coverage
      SAP Transportation Management
      TransportationCharge Clerk
      Transportation Planner
      TransportationDispatcher
      Specialist(i.e.Tendering)
      OrderManagement
      Freight Settlement
      Freight Planning &Tendering
      Freight Execution &Monitoring
      Analytics & Reporting
      Event Management
      Import / Export, Dangerous Goods & Compliance
      Document & Output Management
      Integration & Connectivity
    • 53.
    • 54. Chemicals
      Consumer Products
      Consumer Products
      • Company:Chemicals company specializing in silicone-based materials
      • 55. Implementation:SAP TM 7.0ca. 50 sites with 300 shipping points
      • 56. Goal: Efficient, accurate transportation settlement and invoicing
      • 57. Implementation Scope:Transportation charge management, with extensive charge calculation, invoice creation and verification 
      Shipment creation in SAP ERP. Charge calculation with carrier verification & freight settlement in TM. Automated invoicing in SAP ERP.
      • Company:World leading company for food and beverages, health & performance nutrition
      • 58. Implementation:SAP TM 8.0
      • 59. Goal: A common transportation mgmt. system to eliminate legacy TM systems. Transportation spend reduction & operational efficiency increase.
      • 60. Implementation Scope:Full TM implementation across freight order mgmt., transportation planning & carrier selection, tendering, subcontracting and freight settlement.
      • 61. Company:Consumer packaging for beverage, personal care, healthcare, food
      • 62. Implementation:SAP TM 6.0
      • 63. Goal: Complete automation of thetendering process (subcontracting)
      • 64. Implementation Scope:Transportation optimization - freight unit building, truck planning, carrier selection.
      Sales order processing in SAP ERP.Transportation planning in SAP TM. Logistics execution in SAP LES(ERP-Logistic Execution System).
      Selected Transportation Management ProjectsSAP Transportation Management 6.0, 7.0 & 8.0
    • 65. Supply Network Collaboration
      My Company
      Customers
      Contract Manufacturers
      Enterprise-Wide Strategic Platform for All Supply Chain Collaboration Needs
      Central hub to share real-time supply / demand data across the holistic supply network
      Typical collaboration flows:
      • VMI
      • 66. Forecasting
      • 67. Order sharing/acknowledgement (POs, Releases, Kanban)
      • 68. Shipping
      • 69. Invoicing
      • 70. Quality reporting
      • 71. Work order tracking
      • 72. Multi-tier supply and demand visibility
      Suppliers
      Supplier Collaboration
      Customer Collaboration
      SNC
      Outsourced Manufacturing
      • Flextronics: One strategic SNC system services 13 countries, 14 ERP systems (non-SAP) and transacts with 12 000 suppliers, 16 000 users, 300K transactions/week
      • 73. Philips: One central SNC instance manages collaboration for several divisions to have a single Philip’s interface to the outside world, including multiple tiers of suppliers.
      • 74. Johnson & Johnson: A single corporate SNC platform for internal collaboration between different regions and line of businesses (Consumer, Pharma, Medical Devices, etc)
    • SNC is really a “3-in-1 Solution” Supplier Collaboration, Outsourced Manufacturing, Customer Collaboration
      Suppliers
      Customers
      My company
      Contract mfg.
      “3-in-1 Solution” allows for flexible deployment with ability to grow
      One Platform for Many Needs Equals Lowered TCO
      Supplier Collaboration Supply chain efficiencies for raw materials and components
      Customer Collaboration Automated replenishment of finished goods
      Outsourced Manufacturing Visibility to production progress
      SNC
    • 75. Customers Benefit from SNC
      66% reduction in early shipments
      100% improvement in errors associated with direct material invoice discrepancies
      Acknowledgement rate increased from 40 – 80 %
      Inbound decreasing for Stock/JIT : - 30 %
      Reduced inventory by 50 – 70%Improved on-time delivery by 70%
      Purchase order processing productivity gains 3–5 times
      Reduction in nonqualified returns 20%
      Live in 4 Months
      10-15% stock reduction in the chain using supplier managed inventory
      50% FTE reduction at GR processing
    • 76. Supply Chain Costs
      Reduce
      Working Capital
      Supply ChainReliability
      Supply Chain
      Performance
      Management
      CEO / CFO
      financial impact
      strategic impact
      compliance impact
      Inter-enterprise
      end-to-end processes
      STORE
      SELL
      DESIGN
      SOURCE
      MAKE
      SERVICE
      MOVE
      Strategic
      Collaborative Demand and Supply Planning
      VP Supply Chain
      Tactical
      Logistics Manager
      Manufacturing Network
      Planning & Execution
      Logistics and
      Fulfillment management
      Execution
      Supply Chain Performance ManagementPulling it all Together
      SC Analyst
      © SAP 2010 / Page 22
    • 77. Excellence in ExecutionPerformance Management
      Gain visibility and control across network
      • Measure, monitor and control KPIs across trading partners to proactively manage risk and performance
      • 78. Gain insights and control, by focusing on metrics that matter (based on best practices such as SCOR, or company specific metrics)
      • 79. Powerful visualization and Drill-down via cascading metrics hierarchies
      Align stakeholders
      • Measure and visualize impact between metrics, across supply chain network
      • 80. Metric management functionality provides flexibility to define department-specific metrics, and assign accountability
      Automate data collection & analysis
      • Timely insights, with tight operational application integration
    • 7 Key Points to Take Home
      Logistics and Fulfillment are key drivers of today's supply chain
      It is critical to streamline internal organizations and processes to maximize assets (labor, inventory, etc.) while minimizing costs
      It is critical to align the enterprise with your trading partners and share information seamlessly, allowing for more effective and cost conscious decisions to be made and executed
      SAP has the key business processes on a single platform to deliver an integrated supply chain from the point of origin to the point of consumption
      SAP’s customers are leveraging these solutions to execute an integrated supply chain with successful results
      Your supply network can have significant impact on providing the ultimate customer experience
      Companies can either use their supply chain as a differentiator from the competition or not – it’s up to you!
    • 81. Thank You!
      Cameron Russell
      cameron.russell@sap.com

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