Apics IBF Presentation on Customer Collaboration
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Apics IBF Presentation on Customer Collaboration

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Presentation in the afternoon on Customer Collaboration.

Presentation in the afternoon on Customer Collaboration.

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Apics IBF Presentation on Customer Collaboration Presentation Transcript

  • 1. Customer CollaborationAPICS & IBF Best of the Best Conference Supply Chain Insights
  • 2. “When it comes to driving volume, a dollarspent in working with a customer in developingcustomer programs is worth three spent intrade promotion.”North American Supply Chain Leader Supply Chain Insights, LLC © 2012, p. 2
  • 3. BRICKS Book Publishes Matter in August 2012 The Role of Supply Chains in Building Market-Driven Differentiation LORA M. CECERE CHARLES W. CHASE JR.
  • 4. Agenda Current State Pitfalls and Potholes Devil is in the DetailNew Ways to Work Together Wrap-up Supply Chain Insights, LLC © 2012, p. 4
  • 5. 5 Typical Organization CEO Chief Customer COO Officer Chief VP of Supply VP of Marketing Sales CFO Chain Manufacturing Officer Account Customer Procurement Logistics CIO Quality Teams ServiceGrowth Volume Cost Supply Chain Insights, LLC © 2012, p. 5
  • 6. A Supply Chain is a Complex System with Complex Processeswith Increasing Complexity Supply Chain Insights, LLC © 2012, p. 6
  • 7. Looking at Supply Chain as a Complex System Profitable Growth Revenue Cost of Goods Corporate Trade-offs Working Capital Corporate Social Responsibility Investment Trade-offs R&D Strategy and Investment Asset Strategy and Investment Forecast Accuracy Customer Service InventorySupply Chain Trade-offs Channel Strategy Product and Supplier Strategy Service Portfolio Sales Distribution Manufacturing Logistics ProcurementSupply Chain Policies Policies Policies Policies Policies Waste Returns Backorders First Pass Yield Empty Miles Material Yield
  • 8. Developing the Supply Chain Strategy Business strategy What are the right things to do to increase company value? Value-network strategy What are the right ways to support the business strategy?Align demand right trade-offs betweenthe What are the Right product Design value drivers for each value network? Build Align supplyrelationships platforms supply organizational relationships response systems andSupply chain strategy manage talent Effective Supply Demand Networks Design Networks Continuous Networks Improvement Joint Value Innovation Supply Chain Execution of buy- Creation Strategies Methodologies Network Design Capabilities Required side strategies Business Process How do I do the right things right?
  • 9. S&OP Process Existence & Processes Have a Sales & Operations Planning Process Not sure No 3% 10% Yes 87% # Distinct S&OP Processes 5 S&OP processes on average 59% have 3+ processes 27% 20% 19% 14% 12% 9% 1 2 3 4 5 More than 5Base: Total Sample (117)Q17. Does your company have a Sales and Operations Planning (S&OP) process? A S&OP process is a tactical planning process to forecast sales and plan operations.Base: Have a S&OP process (102)Q18. Which one of the following best defines the goal of your current S&OP process?Q19. How many distinct S&OP processes does your company currently have? Your best estimate is fine. OPEN-ENDED Supply Chain Insights, LLC © 2012, p. 9
  • 10. Multiple S&OP Processes Regional S&OP Processes Executive S&OP Supply Chain S&OP Planning Processes Processes With Key with Key Customers Suppliers Supply Chain Insights, LLC © 2012, p. 10
  • 11. Importance of S&OP Process for Agility Importance of S&OP Process to Agility 3% Not important (1-3) 7% 20% (4) (5) 90% 42% Important (6) 28% Extremely important (7)Base: Have a S&OP process (102)Q22. How important do you think your S&OP process is to improving the agility of your supply chain? Supply Chain Insights, LLC © 2012, p. 11
  • 12. Agenda Current State Pitfalls and Potholes Devil is in the DetailNew Ways to Work Together Wrap-up Supply Chain Insights, LLC © 2012, p. 12
  • 13. Organizational Alignment to Improve Value Chain Relationships P&G Efficient Consumer Response adoption as a change program…SHARED + SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP =VISION CHANGE SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSIONSHARED + INCENTIVE + RESOURCES + PLAN + LEADERSHIPVISION = ANXIETYSHARED + LEADERSHIPVISION + SKILLS + INCENTIVE + RESOURCES = FALSE STARTSSHARED + SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATIONVISIONSHARED + SKILLS + RESOURCES + PLAN + LEADERSHIP = GRADUAL CHANGEVISION J. P. KOTTER based on
  • 14. Goal Alignment Health Care Pharma BioTech ProvidersGoal: Working Capital Goal: Growth Goal: Innovation Turns True collaboration only happens when there is a sustaining win/win value proposition. Supply Chain Insights, LLC © 2012, p. 14
  • 15. Goal Alignment 3rd Party Retail CPG SupplierGoal: Working Goal: Growth Goal: CostsCapital Turns Supply Chain Insights, LLC © 2012, p. 15
  • 16. Food Value Chain Working Capital Inventory and Costs Retail Store Retail Consumer Warehouse Manufacturing Suppliers Sales Sales Sales SalesDemand Time Time Time Time Days of Working Capital 60 55 50 2009 45 40 2008 35 2007 30 25 2006 20 15 2005 10 2004 Retailers Food Manufacturers Containers and Packaging Inventory data source: CFO Magazine September 2010-2004
  • 17. The Bullwhip Effect. Retailer DC Manufacturer DC Suppliers Store Demand Signal Accurate Difficult Almost WeeklyTrivial Easy Impossible Forecasting is ...Instant 3-10 Days 10-20 Days Delay from 20-50 Days 7-20 Days 20-45 Days Purchase toVariable 45-80 Days Signal Red Represents Emerging Economies with Distributor Trade
  • 18. Traditional Supply Chains do not Respond Fast Enough with Market Data Production POS store Shipments to DC Kraft Foods Presentation MIT Supply Chain Forum, November 2011
  • 19. Trade Promotion Compliance w/ Retailers? Less than 50% 50-70% 70-90% Greater than 90% In-store advertisements 24% 22% 30% 24% Every day low price 24% 25% 24% 27% Price 26% 28% 26% 21% discounts/changes Joint marketing w/ 22% 33% 28% 17% retailers Buy one get one free 25% 30% 23% 23% Market basket or cross- 21% 36% 36% 8% category promos Coupons 31% 27% 27% 16% Custom products 24% 34% 29% 12% Floor displays or end 33% 28% 33% 6% caps Special packaging 24% 47% 20% 9%Q. What percent of your trade promotion tactics have compliance at the retail level?Sample Size = [varies by # of companies using each promotion type] Supply Chain Insights, LLC © 2012, p. 19
  • 20. Agenda Current State Pitfalls and Potholes Devil is in the DetailNew Ways to Work Together Wrap-up Supply Chain Insights, LLC © 2012, p. 20
  • 21. S&OP Plan Execution S&OP Plan Execution Execution is not connected to S&OP plan 9% We try to execute the S&OP plan, but hardly do in practice 25% We execute the S&OP plan most of the time 35% We execute the S&OP plan nearly all of the time 19% We monitor market events and adjust to S&OP Sense & plan within limits 13% RespondBase: Have a S&OP process (102)Q25. After your S&OP plan is generated, how is it executed? Please pick the one that describes it best. Supply Chain Insights, LLC © 2012, p. 21
  • 22. Supply Chain Focal Points for Next 2 Years Supply Chain Focal Points for Next 2 Years Total Primary Improving demand planning 74% 23% Saving costs 70% 21% Shortening cycles 21% 66% Top Supply Chain Focal Network design 62% 8% PointsNew product launch effectiveness 48% 10% Channel sensing 30% 3% Revenue management 26% 7% 18% “Other” Focal Points Other 7%Base: Total Sample (61)Q23. What do you expect to be your primary focus on your supply chain over the next 2 years? Please select the one that is most important.Q24. What other supply chain elements, if any, will you be focusing on over the next 2 years? Please select all that apply. Supply Chain Insights, LLC © 2012, p. 22
  • 23. Demand-side Views Supply-side Views Hole in Enterprise Architectures Account-Level VMI C A Supplier Supplier Supplier SupplierDownstream Data Distribution Distribution Distribution Network Network Network Supply Chain Insights, LLC © 2012, p. 23
  • 24. Demand-side Views Supply-side Views Demand Translation Account-Level VMI C A Supplier Supplier Supplier SupplierDownstream Data Distribution Distribution Distribution Network Network Network Supply Chain Insights, LLC © 2012, p. 24
  • 25. Connecting the Extended Supply ChainTransactional Transactional TransactionalApplications Applications Applications Trading Partner 1 Trading Partner 2 Trading Partner 3 25 Supply Chain Insights, LLC © 2012, p. 25
  • 26. Connecting the Extended Supply Chain Collaborative Collaborative Collaborative Layer Layer Layer Transactional Transactional Transactional Applications Applications ApplicationsEnterprise Data Enterprise Data Enterprise Data Warehouse Warehouse Warehouse Trading Partner 1 Trading Partner 2 Trading Partner 3Key: Demand Signal Predictive Analytics Repository Supply Signal Transactional Adapters Repository and Intelligent Rule Sets Supply Chain Insights, LLC © 2012, p. 26
  • 27. Agenda Current State Pitfalls and Potholes Devil is in the DetailNew Ways to Work Together Wrap-up Supply Chain Insights, LLC © 2012, p. 27
  • 28. Smartphone Integration 49% recipe searches 38% shopping lists 2/3 of smart phone owners use them in the grocery store Allrecipies.com Today’s Recipe Box Study April, 2010 28 Supply Chain Insights, LLC © 2012, p. 28
  • 29. “Where’s My Bud” Viral Campaign Campaign Objectives: Reduce Out of Stocks at targeted retailers by 5% Increase Shopper satisfaction and brand loyalty Validation: Identify a key leader or market that wants to pilot. 50/50 shared risk in effort and resources to pursue. Keep costs to a minimum for pilot, under $75K Concept: Execute a viral campaign focused on leveraging shoppers to identify out of stocks and potentially pricing compliance issuesLeverage a combination ofconsumer, internet, and in-store technical capabilities Supply Chain Insights, LLC © 2012, p. 29
  • 30. Retailer Experience New text message to 612-961-7802: A customer at Denny and Doug’s Liquor Emporium has just snapped a tag. You’re out of stock on Bud Light. Please contact your wholesaler. Supply Chain Insights, LLC © 2012, p. 30
  • 31. Here are some locations near you where you canfind Bud Light. Be sure to use this promotion codeto get your discount:ABBL12456 Supply Chain Insights, LLC © 2012, p. 31
  • 32. Stop & Shop and Giant Are Leveraging Mobile In Store • Twice the basket size • 16% higher store frequency rate and • 18% higher coupon redemption rate than that of general grocery shoppers 32 Supply Chain Insights, LLC © 2012, p. 32
  • 33. S&OP Responsibility Who’s Responsible for Running the S&OP Process Primary Secondary Any Responsibility Supply chain planning 61% 25% 86% Sales 36% 46% 83% Senior management 48% 33% 81% Production/manufaturing operations 36% 40% 75% Corporate strategy 43% 27% 70% Procurement 15% 52% 68% Marketing 22% 46% 67% Finance 18% 48% 66% Manufacturing outsourcing 3% 42% 45%Channel partners in the buy-side of your market 4% 23% 27%Channel partners in the sell-side of your market 5% 21% 26%Base: Do NOT Have S&OP Experience; Total Answered (135)Q5. In your organization, who takes responsibility for running the S&OP process? Supply Chain Insights, LLC © 2012, p. 33
  • 34. Agenda Current State Pitfalls and Potholes Devil is in the DetailNew Ways to Work Together Wrap-up Supply Chain Insights, LLC © 2012, p. 34
  • 35. Summary• For 90% of supply chains, customer collaboration in S&OP improves agility.• We say that we are collaborating, but we are only really sharing data. Collaboration is a sustainable win/win value proposition.• Today’s supply chains respond. They don’t sense. To be able to sense, the supply chain needs to be redefined..• S&OP is not just about product. It is about joint planning of new opportunities. Supply Chain Insights, LLC © 2012, p. 35
  • 36. “When it comes to driving volume, a dollarspent in working with a customer in developingcustomer programs is worth three spent intrade promotion management spending.”North American Supply Chain Leader Supply Chain Insights, LLC © 2012, p. 36
  • 37. Who is Lora?• Founder of Supply Chain Insights• Partner at Altimeter Group (leader in open research)• 7 years of Management Experience leading Analyst Teams at Gartner and AMR Research• 8 years Experience in Marketing and Selling Supply Chain Software at Descartes Systems Group and Manugistics (now JDA)• 15 Years Leading teams in Manufacturing and Distribution operations for Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble. Supply Chain Insights, LLC © 2012, p. 37
  • 38. Where do you find Lora? Contact Information: loracecere@gmail.com Blog: www.supplychainshaman.com (3500 pageviews/month) Twitter: lcecere 2950 followers. Rated as the top rated supply chain social network user. Linkedin: linkedin.com/pub/lora- cecere/0/196/573 (2300 in the network) Supply Chain Insights, LLC © 2012, p. 38