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Presentation for ism webinar april 12 Presentation for ism webinar april 12 Presentation Transcript

  • Supply Chain InsightsDelivering Actionable Advice to the Supply Chain Leadership Team Supply Chain Insights, LLC © 2012
  • BRICKS Book Publishes Matter in August 2012 The Role of Supply Chains in Building Market-Driven Differentiation LORA M. CECERE CHARLES W. CHASE JR.
  • 3Current State Supply Chain Insights, LLC © 2012
  • Supply Chain Pain Points: All vs. Largest Any Pain Largest Pain Dirty data 67% 18% Product proliferation 62% 13% 62% Top Supply Rising commodity prices 25% Chain Pain Talent shortage 51% Points 16% Changing market preferences 33% 2% Cost of IT 33% 2% Compliance and legislation 28% 3% Competition 26% 5% Other 28% 16% Base: Total Sample (61) Q18. What is your single largest pain point in the supply chain, at this point in time? Supply Chain Insights, LLC © 2012Q19. What other pain points, if any, are you currently experiencing with your supply chain?
  • The Long Tail: Growing ComplexityVolume Level of Predictability Predictability based on forecast accuracy vs Actual Order Profiles Supply Chain Insights, LLC © 2012
  • Commodity Price Pressure 400.00 350.00 300.00 250.00 Corn (metric Ton) Wheat (metric Ton) 200.00$/LB Coffee, Robusta (Pound) 150.00 Sugar (Pound) 100.00 Beef (Pound) Crude Oil (Barrel) 50.00 0.00 Source: Index Mundi 6 Supply Chain Insights, LLC © 2012
  • Days of Working Capital95857565554535 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Household Products Chemical Pharma Average Data Source: CFO Magazine Supply Chain Insights, LLC © 2012
  • Days of Inventory6560555045403530 2002 2003 2004 2005 2006 2007 2008 2009 2010 Household Products Chemical Pharma Average Data Source: CFO Magazine Supply Chain Insights, LLC © 2012
  • 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% Top Supply 21% 66% Chain Focal Shortening cycles 21% Points Network design 62% 8% New product launch effectiveness 48% 10% Channel sensing 30% 3% Revenue management 26% 7% Other 18% 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. Supply Chain Insights, LLC © 2012
  • 10 Typical Organization CEO Chief Customer COO Officer Chief VP of Supply VP of Marketing Sales CFO Chain Manufacturing Officer Account Customer Logistics CIO Procurement Quality Teams ServiceGrowth Volume Cost Supply Chain Insights, LLC © 2012
  • Supply Chain Organization Functions Reporting Through Supply Chain Supply Chain Planning (Supply) 95% Inventory 90% Supply Chain Planning (Demand) 89% Deliver (Distribution) 77% Transportation 77% Customer Service 66% Source (Procurement) 61% Make (Manufacturing) 39% functions reporting through 6 the supply chain on average Base: Total Sample (61) Q6. How many people overall currently report to you or your staff? Supply Chain Insights, LLC © 2012Q7. Please tell us how you define your company’s supply chain organization by selecting
  • 12Pitfalls and Potholes Supply Chain Insights, LLC © 2012
  • A forecast is not a forecast is not a forecast. Supply Chain Insights, LLC © 2012
  • A Forecast is not a Forecast is not a Forecast Increasing need for value network strategy alignment Business Planning Forecasting Constrained Forecast Increasing levels of granularity 14 Supply Chain Insights, LLC © 2012
  • One Number Forecasting. Supply Chain Insights, LLC © 2012
  • 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
  • 17The Role of Forecasting Supply Chain Insights, LLC © 2012
  • A Supply Chain is a Complex Systemcomposed of Complex Processes withIncreasing Complexity Supply Chain Insights, LLC © 2012
  • Looking at Supply Chain as a Complex System GrowthCorporate Revenue Cost of GoodsTrade-offs Working Capital Corporate Social ResponsibilityInvestment Trade-offs R&D Strategy and Investment Asset Strategy and Investment Forecast Accuracy Customer Service Inventory Supply Chain Product and Service Channel Strategy Supplier Strategy PortfolioTrade-offs Sales Distribution Manufacturing Logistics Procuremen Policies Policies Policies Policies t Policies Supply Chain Backorders First Pass Material Returns Empty Miles Waste Obsolescence Yield Yield
  • Supply Chain Tipping Points1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 JIT Supply Chain Internet/Email RFID Organization Evolution of eProcurement the PC Re-Engineering the Total Quality S&OP Organization Management Theory of Constraints (Michael Hammer)Supply Chain Excellence = Supply Chain Excellence = Islands of Manufacturing Vertical Silo Efficient Order to + + Excellence Excellence Excellence Cash Processes Inside-Out Inside-Out Supply Chain Insights, LLC © 2012
  • Supply Chain Tipping Points 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 .com Social Responsibility Y2K Demand Driven Concepts CSCO Lean Six Sigma Market-Driven Value NetworksSupply Chain Excellence = Supply Chain Excellence = Vertical Silo Outsourcing Value-Based Outcomes + Excellence Effectiveness Delivered by Horizontal Processes Inside-Out Outside-In Supply Chain Insights, LLC © 2012
  • What is a Market-driven Value Network?An adaptive network focused on a value-based outcome that senses and translatesmarket changes (buy and sell-side markets)bi-directionally with near-real time datalatency to align sell, deliver, make andsourcing operations. 22 Supply Chain Insights, LLC © 2012
  • Evolution of Supply Chain Excellence ContinuousAlign Building Horizontal Connector Testing Learning Orchestrate Improving Adapt Resilient Reliable Right Product Efficient Sense Demand Demand Volatility and Supply Right Place Cost Shape Right Time Procure to Demand and Supply pay/order to Supply based Volatility cash on Market Right Cost Supply Chain Insights, LLC © 2012
  • At a High Level: Becoming Market Driven Sell Deliver Make SourceTactical Category Sales and Operations CategoryPlanning Management Planning Management New Product LaunchTrading Contract Corporate Social ContractPartner Policy Management Responsibility Management Revenue ManagementTransactional Order Order-to-Cash Purchase OrderProcessing Management Procure-to-Pay Management Supply Chain Insights, LLC © 2012
  • Definitions• Demand Sensing: Shortening the time to sense “true” market data to understand “true” market shifts in the demand response. This is in contrast to the use of order to shipment data that can have 1-3 weeks latency in translating “true” market demand.• Demand Shaping: The use of techniques to stimulate demand. This includes new product launch, price and revenue management, assortment, merchandising, placement, sales incentives and marketing programs.• Demand Translation: The translation of demand outside-in from the market to each role within the organization. Recognizing that the requirements for distribution, manufacturing and procurement are different.• Demand Orchestration: The process of making trade-offs market-to- market based on the right balance of demand risk and opportunity.• Demand Shifting: The shifting of demand from one period to another through advanced shipments, and moving more products into the channel without stimulating base demand. Supply Chain Insights, LLC © 2012
  • S&OP Evolution Greater Benefit Business- • GrowthSales Driven • Resilience planning DrivenMatch Demand • Efficiency Coordination with Supply of Plans Manufacturing- Demand Market Driven Driven Driven Orchestrate Deliver a Feasible Sense and Demand Plan for Operations Shape Demand Market to Market Supply Chain Insights, LLC © 2012
  • Technology Goal A feasible plan • Model the network • Recognize and respect constraints • Gain plan visibility Match demand with supply • What-if analysis • Multi-tier inventory analysis • Network design Deliver the most profitable • Demand translation • Supply orchestration Plan • Optimize financial drivers Demand-driven • Sense channel demand • Shape demand • Drive the most profitable response Market-driven • Sense buy and sell-side market conditions • Bi-directionally orchestrate demandKey: Demand Planning Supply Planning Inventory Planning Financial Planning Demand Translation Market Sensing 27 Platform
  • Historically, we have: • Tried to get precise on inaccurate data. • Believed that the most efficient supply chain is the most effective supply chain. • Built efficient chains, but not effective networks. • Focused inside-out, not outside-in. • Rewarded the urgent, not the important. 28 Supply Chain Insights, LLC © 2012
  • 29Where are we headed? Supply Chain Insights, LLC © 2012
  • Supply Chains Don’t Play by the Rules But, wh at if they could? 30 Supply Chain Insights, LLC © 2012
  • Big Data Supply Chains are Evolving Challenges: Structured • Transactional Data • Time phased data Volume • SocialUnstructured • Channel Data • Customer Service • Warranty Velocity • Temperature Sensor • RFID Data • QR codes • GPS Variability New • Mapping and GPS • Video Data • Voice Types • Digital Images 31 Supply Chain Insights, LLC © 2012
  • Connecting the Extended Supply Chain Transactional Transactional Transactional Applications Applications ApplicationsTrading Partner Trading Partner Trading Partner 1 2 3 32 Supply Chain Insights, LLC © 2012
  • Evolving Supply Chain Architectures 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 33 Supply Chain Insights, LLC © 2012
  • Wrap-up Demand planning is the largest gap in supply chain planning To fix it, we have to redesign the process to focus end-to-end and outside-in This requires a re-implementation of most architectures Supply Chain Insights, LLC © 2012
  • Who is Lora? •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
  • Where do you find Lora? Contact Information: loracecere@gmail.com Blog: www.supplychainshaman.com (3500 pageviews/month) Twitter: lcecere 2900 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