Best Run Supply Chain Practices Presentation Transcript
Flawless Supply Chain Execution Chicago March 8, 2011
Supply Chain Execution Overview March 2011
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
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
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
Demand and supply not aligned
Escalating costs and inefficient operations
Leverage Network Wide Collaboration
Lack of visibility across distributed network
Ineffective capacity and asset utilization
Delayed response to customer demand
Improve Visibility Across Logistics
Increased inventory and warehousing costs
Fluctuating transportation costs
Increased complexity & risk across the network
Decrease Inventory and Increase Service
Increasing products and supply chain complexity
Escalating inventory targets across the supply chain
Buffer stocks , increased write-offs and discounts
Safe & Sustainable Supply Chains
Government and Retailer regulations
Consumer trust and Brand value impacted
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
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
Supply Chain Execution EWM TM SNC SCPM March 2011
Excellence in Execution paysDid you know …
…you can increase on-time delivery to customer 10-30% by automating warehouse processes?
…you can lower your carrier contracts by 10% when complying with your routing guide?
…overall shipment volumes are down by 18-20% this year impacting capacity, cost and service?
… you can reduce your transportation spend by 10-20% by automating transportation processes?
…you can increase inventory turns by 30% when more accurately allocating inventory based on current and future demand?
…you can increase employee productivity by 20% when streamlining operations and reducing exceptions and expedites?
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
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
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
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
SAP Extended Warehouse ManagementSelected implementing Customers
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)
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
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:
Order sharing/acknowledgement (POs, Releases, Kanban)
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
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.
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
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
Excellence in ExecutionPerformance Management Gain visibility and control across network
Measure, monitor and control KPIs across trading partners to proactively manage risk and performance
Gain insights and control, by focusing on metrics that matter (based on best practices such as SCOR, or company specific metrics)
Powerful visualization and Drill-down via cascading metrics hierarchies
Measure and visualize impact between metrics, across supply chain network
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!
Thank You! Cameron Russell firstname.lastname@example.org