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.
  • Best Run Supply Chain Practices

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