Deloitte Supply Chain - SCC 2013

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  • 1. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 1 | 6 April 2013SCC Global Member Meeting andSupply Chain World North AmericaSt. Louis, MissouriApril 8-10, 2013Creating Value with Business AnalyticsAshwin Patil – Director, Business Analytics
  • 2. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 2 | 6 April 2013Several trends are reshaping today’s supply chains,creating a challenging operating environment  Decreased visibility as supply chain layersincrease (e.g. suppliers, distributors,geographies)‒  78% of Chief Supply Chain Officers identifyvisibility as a top priority  Increased regulatory complexity as supplychains operate in additional geographies  Continued pressure to operate lean, costefficient supply chains  Amplified focus on integrating supply chainfunctions and information to gain acompetitive advantage  Increased exposure to adverse externalevents including natural disasters andeconomic or political instabilityImpacts onSupply Chains1 World Economic Forum, “The Future of Manufacturing” report: For select countries; 2IDC Marketing Insights, “Reducing Overall Supply Chain Costs is #1 Priority Among Manufacturers, According to IDCManufacturing Insights 2012 US Supply Chain Survey”; 3Los Angeles Times, “Odd odor prompts drug recall – again”; 4The New York Times, “Automakers Adjust Production to Quake-Related Shortages”; 15CompanyPress Releases
  • 3. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 3 | 6 April 2013The convergence of several forces created thegrowing analytics marketForces Creating the Analytics Opportunity1 EMC2, “Worlds Data More Than Doubling Every Two Years—Driving Big Data Opportunity, New IT Roles”; 2What’s Next: Top Trends, “Cost of data storage”; 3UT San Diego, “Newinstrument maps genes in 2 hours”; 4Internet World Stats, “And the "Global Village" became a Reality”; 5Sci Verse, “Estimated Total Annual Building Energy Consumption at the Blockand Lot Level for NYC”Analytics allow companies to draw uncommon insights from mountains of dataCheaper Data Storage2From 2000 to2008, storing amegabytebecame 100Xcheaper01002003002000 2006 2012Faster Processing Power3Processing power increased256X since 2000In 2011, 1.8 zettabytes ofdata was created, enough tofill 57.5 billion 32GB iPadsProliferation of Data1Global Connectivity4Analysis occurs anytime, anywhere0121995 2000 2005 2010Worldwide InternetUsers1995 2000 2005 201001B2BBetter ToolsNew tools make analysis easierAdvanced Visualization5Visualizationallows us todetect patternsin huge volumesof dataNYC EnergyConsumption
  • 4. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 4 | 6 April 2013Analytics can help address several major challengesfacing today’s supply chainsSpecific Supply Chain Challenges Addressed by AnalyticsProduct VisibilityReact efficiently to product driven challenges and opportunities including recalls, regulatory changes, and drasticdemand shiftsEvent Driven Risk ManagementHighlight risks and plan for potentials shocks to supply chainsBusiness Relationship ManagementHeighten relationships with trading partners and manage performance, compliance, and information flowDemand PlanningImprove forecasting accuracy to handle faster product lifecycles and changing customer demandsMargin & Asset OptimizationPromptly understand true cost and value drivers throughout complex supply chains; includes commodities, inventory andworking capital, and logistics and transportation networksFunctional IntegrationUnlock new opportunities by sharing information between supply chain groups and corporate functions, includingproduct innovation, quality improvement, and after-market demandBuilding Analytics CapabilitiesBuild effective internal capabilities to leverage the power of analytics on an ongoing basis
  • 5. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 5 | 6 April 2013Organizations want more predictive capabilities toproactively manage and enhance supply chainsOptimization algorithmsSimulation and modelingAdvanced forecastingPredictive andPrescriptiveMoreForwardLookingRole-based performance reportingExceptions and alertsSlice & dice queries and drill downsDescriptive andDiagnosticMoreBackwardLookingInformation ManagementTable-StakesThe Analytics SpectrumHowever, significant opportunities exist to help make existing “reactive” analysis moretargeted and real-time
  • 6. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 6 | 6 April 2013BusinessIssueFunctionalExpertiseIndustryExpertiseDataManagementQuantitativeTechniquesQualitativeAnalysisVisualizationApplyingmathematicaltechniques toanalyze thesituationBringingtogethercompany andexternal data toanalyzeUsing qualitativemethods to assessthe situationDisplaying theanalysis in aneasy tounderstand wayRequired Capabilities to Create Advanced AnalyticsUnderstanding thebusiness issue inthe context of afunction andindustryInformedDecisionMakingKeyEnablersTalent Process TechnologyThe Analytics Value ChainAreas thathave evolvedBusiness analytics uses data to manage informationand performance to make smarter decisions
  • 7. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 7 | 6 April 2013Report Key-•  Color: CommodityType / Director•  Size of Node:Annual SpendData Filters:•  Commodity Type /Director•  Modular Suppliers•  PlantMitigateOverview – Supplier Risk ProfileThe Risk Profile scores suppliers holistically, based on complexity and risk / performancecharacteristics, and proactively prioritizes the highest risk suppliersSupplier Complexity•  Commodity Criticality•  Annual Spend•  # of Parts•  # of Programs•  # of FacilitiesBy prioritizing suppliers, risk monitoring can be focused and mitigation activitiescan be proactively launched where they are most criticalTransfer/ ExitAccept &SustainAccept &Monitor  Consolidated risk view of suppliers  Easy prioritization of suppliers  Strategic and holistic supplier evaluation  Instant root cause analysis of risky suppliers  Forward looking / predictive view of supplier riskBenefits Potential Report Users  Purchasing (StrategicSourcing)  Supplier Risk  Supplier Quality  Plants  Product groupsConsolidated Supplier RiskCapacity Demand DeltaVariance Occurrence*Degree of Variance*SupplierPerformanceQualityWarrantyPurchasing SupportSustainabilityDelivery DeliveryAverage Lead TimeNumber of ExpeditesSpend on ExpeditesPoint-of-Use HitsStructural Financial Viability# of Crisis Zones* Variance is defined as the differencebetween release and supplier capacity
  • 8. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 8 | 6 April 2013Demand Delta: Percentage change between theprevious 12 month’s quantity & next 12 month’squantityOverview – Supplier Capacity Risk ManagementThe report prioritizes suppliers based on high complexity, % increase in demand, degree of variancewith available capacity and overall risk profile of the supplierReport Key:•  Color: Total RiskScore•  Size of Node:Variance ScoreData Filters:•  Commodity Type•  Risk Score Range•  Variance ScoreRange•  PlantBy prioritizing suppliers, supplier capacity risk monitoring efforts can be focusedand mitigation cases can be proactively launched where they are most critical  Consolidated supplier capacity view  Easy prioritization of suppliers for capacity risk  Instant root cause analysis using drill-downsBenefits Report Users  Purchasing (StrategicSourcing)  Supplier Risk  Supplier Quality  Plants  Product groupsSupplierComplexity:•  CommodityCriticality•  Annual Spend•  # of Parts•  # of Programs•  # of Facilities
  • 9. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 9 | 6 April 2013Overview – Supplier Risk FootprintThe Supplier Footprint lays out suppliers and client’s plants on the map, allowing easy visualization ofthe global supply footprint for supplier risk analysisReport Key:•  Color: Risk Score•  Size of Node:Annual SpendData Filters:•  Supplier Risk Rank•  Commodity Type•  Plant•  Crisis ZonesBy proactively mapping the supply chain, at-risk suppliers can be identified by crisiszone so that the client can ensure the required contingency plans are established  Consolidated supplier and plant footprint  Visualized risk by region  Highlights supplier’s vulnerability by regionBenefits Report Users  Purchasing (StrategicSourcing)  Supplier Risk  Supplier Quality  Plants  Product groups
  • 10. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 10 | 6 April 2013Many techniques can be applied to analytics projectsSample Analytics Projects:• Supplier Risk and Analytics• Global Supply chain visualization• Product complexity – matching inventory todemand during promotions• Risk based MRP Analytics to reduce lead time andmanage inventory on-hold• Product Failure Analytics• Simulation Modeling & Multivariate regression forSourcing & Procurement• Plant and Manufacturing Productivity• Sourcing & Procurement Analytics• Tooling Visibility and Financial Management• Logistics and Distribution – Freight Analytics andSourcing AnalyticsQuantitative techniques in SC Analysis: Foundational Statistics Univariate Regression Time Series Analysis Logistic Regression Probability Distribution Statistical Decision Tree Multivariate Analysis Simulation Models Cluster Analysis Bayesian Network Support Vector Machine Neural Network Gradient Boosting Ensemble Forecasting Digital Signal Processing Markov Chains Linear Programming Integer Programming Collaborative Filtering PCA Analysis Discriminant Analysis Nonlinear Programming Dynamic Programming Genetic Algorithm
  • 11. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 11 | 6 April 2013Getting started using analytics – a few lessonslearnedData is King  Obtaining high-quality data at the required level of detail is often harder than it seems‒  Integrating and synthesizing data from multiple sources is a critical step  External data (i.e. 3rd party) can take supply chain analytics to the next levelCrawl, Walk,Run  Significant value can be unlocked by improving descriptive analytic capabilities before movinginto more advanced, predictive solutionsVisualize Earlyand Often  Visualization allows users to touch and understand data in new ways  Companies can rapidly test hypotheses early in the problem-solving processLessons LearnedAdditionally, new tools and technologies can be best utilized after thoroughlyunderstanding the problems to be addressedIt’s AllAbout People  Identifying the leading talent to perform ongoing analytics should be required for sustainedresults  Extensive change management is often required when deploying analytics since new metricsand processes are often created as a result of new analytical solutions
  • 12. Copyright © 2013 Deloitte Development LLC. All rights reserved| Slide 12 | 6 April 2013This presentation contains general information only and Deloitte is not, by means of thispresentation, rendering accounting, business, financial, investment, legal, tax, or otherprofessional advice or services. This presentation is not a substitute for such professional adviceor services, nor should it be used as a basis for any decision or action that may affect yourbusiness. Before making any decision or taking any action that may affect your business, youshould consult a qualified professional advisor. Deloitte shall not be responsible for any losssustained by any person who relies on this presentation.About DeloitteDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each ofwhich is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte ToucheTohmatsu Limited and its member firms. Please see for a detailed description of the legal structure of Deloitte LLP and itssubsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.Copyright © 2013 Deloitte Development LLC. All rights reserved.Member of Deloitte Touche Tohmatsu Limited