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Dr Pepper Snapple IBM Network Design 2012
 

Dr Pepper Snapple IBM Network Design 2012

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    Dr Pepper Snapple IBM Network Design 2012 Dr Pepper Snapple IBM Network Design 2012 Presentation Transcript

    • Dr. Pepper Snapple Makes the Most of theirSupply Chain with IBM’s Network Design SolutionJosh Buchanan: Network Optimization Manager – Dr. Pepper Snapple GroupSara Lewis: WW Supply Chain Industry Marketing Lead - IBM
    • Agenda• IBM Supply Chain Solutions and Network Design• Introduction to Josh Buchanan• Introduction to Dr. Pepper Snapple Group• What does Dr. Pepper Snapple Sell? What does its network look like? Productionand Demand Areas across the United States?• How long has the Dr. Pepper Snapple Group has been using this solution?• Structure of the team and approx value it brings to the company each year? (Whydoes Dr. Pepper value this discipline? Why with IBM?)• Regional Warehouse Rationalization Case Study• The future of Network Optimization at DPSG• Where you can find out more about this and other IBM Supply ChainApplication Solutions• Questions?2© 2011 IBM Corporation
    • CORE BUSINESS SOLUTIONS AND PROCESSESIBM’s Smarter Commerce PortfolioBuy Market Sell Service• Supplier Integration &Collaboration• Supply ChainManagement• Accounts Payable• Source to Contract• Supplier LifecycleManagement• Customer Awareness &Analytics• Social Media Marketing• Marketing InteractionOptimization• Digital MarketingOptimization• Pricing, Promotion & ProductMix Optimization• Cross-channel Selling• Order Management &Fulfillment• Customer Integration &Collaboration• Store Solutions• Payments & Settlements• Delivery, Service, &Support• Customer Self-Service• Case ManagementVALUE CHAIN STRATEGY AND SERVICESCustomer Experience andMarket StrategyAligning sales, marketing andoperations for innovationCustomerExperience DesignDesigning and delivering customerexperienceacross brand touchpointsOperations andSupply ChainDesigning operations, supply chain and theorganization model to deliver customer valueIBM SmartCloud Solutions and Smarter ComputingDelivering agility, intégration and automation to drive relevant business outcomesSmarter AnalyticsImproving customer experiences by embedding actionable insights into operational processes3 © 2012 IBM CorporationBuy•Supplier Integration &Collaboration•Supply Chain Management•Accounts Payable•Source to Contract•Supplier Lifecycle Management
    • ILOG Strategic Supply Chain Suite IBM ILOG Inventory andProduct Flow Analyst forEnterprise multi-echelon inventoryoptimization and strategic analysis:integrated inventory planning withinyour ERP system. IBM ILOG Transportation Analystfor Transportation optimization: routinganalysis, backhaul, mode selection, andfleet sizing. IBM ILOG LogicNet Plus XE forNetwork and sourcing optimization:location of facilities, assignment ofstores, managing seasonality, andcarbon foot printing.
    • IBM ILOG LogicNet Plus XE• Network and Sourcing Optimization: Location offacilities, assignment of customers, managingseasonality, and carbon foot printing.Value: 5-15% reduction in supply chain costs,better service to stores and for on-going multi-plant production sourcing and capital investmentdecisions; Enhanced S&OP capability; 2-5%reduction in ongoing manufacturing costsAn educational text book researched and written in conjunctionwith IBM’s LNP XE has also been recently released to introduceand expand modelers understanding of this complex NetworkDesign Discipline.https://www.ibm.com/developerworks/mydeveloperworks/blogs/sca/entry/new_educational_network_design_book17?lang=en_usIBM’s Network Design Solution5
    • Network Modeling:Driven by Customer Demand6© 2012 IBM Corporation
    • Value of Scenario Analysis:Which Network is Better?Optimal Network For Cost Optimal Network For ServiceSavings: $6 millionService: 40% next daySavings: $3 millionService: 80% next day7© 2012 IBM Corporation
    • IBM’s Breakthrough in Network Modeling:Multi-Objective OptimizationHow toPrioritize?CFO’s Objective• Maximize ProfitVP of Operations’Objective• Minimize Logistics CostVP of Sales’ Objective• Maximize CustomerServiceLogicNet Plus XE 7.2• Solve multiple objectives at once• Examine entire trade-off curve andsee all possible solutionsTraditional Approach• Solve only one objective at a time• Approach better solutions only by trialand error© 2012 IBM Corporation8
    • Multi-Objective Optimization:Gain invaluable insight by directly balancing customized criticalobjectivesTrade-off Examples:– Total Cost vs. Service Level– Service to Top Customers vs. Overall Service– Variable Cost vs. Capital Investment– Paid Freight Cost vs. Customer Pick-up Cost– Internal Manufacturing Cost vs. 3rd Party spend– Manufacturing Cost vs. Transportation Cost– Parent Company Cost vs. Acquired Company Cost© 2012 IBM Corporation9
    • © 2012 IBM Corporation$75/ barrel $200/ barrel10Trends in Network Design Studies Include:Tipping Point Distribution Studies
    • The excuse “how could we have known” is no longervalid in today’s regulatory environmentTrends in Network Design Studies Include:Contingency PlanningContingency plans help youthink about riskmitigation in a data-driven wayYou may be insured forrevenue loss or forextraordinary measures.And, you may be payingfor this. The insurancecompany may providediscounts if the risk isquantified (“good driverdiscount”)11© 2012 IBM Corporation
    • © 2012 IBM Corporation12Trends in Network Design Studies Include:Optimized S&OP
    • Josh Buchanan: Manager of Network Optimization at Dr. PepperSnapple Group. In this role, he is responsible for reducing costs andimproving customer service in Dr. Pepper Snapple Group’s direct storedelivery business. With over fifteen years of experience in buildingoptimization models to solve both tactical and strategic problems, Joshpreviously held positions in Anheuser-Busch InBev’s Supply ChainSystems group and PepsiCo’s Supply Chain Strategy group.Originally from Tennessee, Josh received his undergraduate degree inindustrial engineering from Tennessee Technological University and amaster’s of industrial engineering degree from the University of Arkansas.Later, he attended Washington University in St Louis where he received amaster’s of business administration.Introduction to Josh Buchanan13
    • © 2012 IBM Corporation14Dr. Pepper Snapple GroupWith a brand heritage spanning more than 200 years, Dr. Pepper SnappleGroup’s portfolio includes more than 50 brands and hundreds of flavors ofcarbonated soft drinks, juices, teas, mixers, waters and other beverages.Dr. Pepper Snapple Group, Inc. sells its products to bottlers, distributors,and retailers. The company was incorporated in 2007 and isheadquartered in Plano, Texas.
    • © 2012 IBM Corporation15Dr. Pepper Snapple GroupPackaged Beverages Division
    • © 2012 IBM Corporation16Dr. Pepper Snapple GroupNetwork Optimization TeamPrep Scenario Decision Action• Business leaderdiscussions• Data collection• Physical recons• Extensivemodeling• Real EstateSearch• Kaizen Event• Validation withstakeholders• Agreement• Planning– System /Virtual– Physical– TerritoryAlignments• Execution• Review resultsThe Sales Operations network optimization team is project oriented andalways consists of individuals from optimization, finance, and routingbackgrounds.Depending on the scope of the project it may also add individuals from realestate, warehouse design, fleet, RCI, and other business disciplines.
    • © 2012 IBM Corporation17Dr. Pepper Snapple GroupFinancial Opportunities Refined in 3 StagesInitial – Starting PointAllow the model to rununconstrained financially• Savings realize “totalsynergies”• Savings are used to high-light scenarios from arelative position• Not entirely realistic for thespecifics of our companyAssumption basedUpdate based on generalbusiness assumptions• Closer to accurate truesavings• After viewing through thislens, do we still want topursue?P&L DetailedDetailed review based oncurrent financials• Detailed and very flexible• Line item by line itemvisibility• Close as we can get topotential actual savingsPotential savings will always be a moving target – intent is toget most realistic, attainable estimate possible and execute
    • © 2012 IBM Corporation18Central IllinoisSurrounding Territories
    • © 2012 IBM Corporation192011 Demand by TerritoryRaw Case Sales
    • © 2012 IBM Corporation20Demand by Zip CodePeoria, Springfield, Champaignand surrounding territories
    • © 2012 IBM Corporation21Center of Gravity AnalysisArea bounded by current Peoria, Springfield,Champaign Territories1 Site:Minier, Illinois(between Peoria and Bloomington)Wtd Avg Distance: 54 miles2 Sites:Peoria and Champaign, Illinois( 70% / 30% split )Wtd Avg Distance: 37 miles3 Sites:Peoria, Champaign, Springfield IL( 50% / 22% / 28% split )Wtd Avg Distance: 24 miles
    • © 2012 IBM Corporation22Center of Gravity AnalysisArea bounded by current Peoria, Springfield,Champaign Territories
    • © 2012 IBM Corporation23Single Bloomington WarehouseAdding Bloomington,Removing Peoria, Springfield, and Champaign
    • © 2012 IBM Corporation24Single Bloomington WarehouseAdding Bloomington,Removing Peoria, Springfield, and Champaign
    • © 2012 IBM Corporation25Bloomington Warehouse with CrossdocksAdding Bloomington, Removing Peoria
    • © 2012 IBM Corporation26Bloomington Warehouse with CrossdocksAdding Bloomington, Removing Peoria
    • © 2012 IBM Corporation27LogicNet Scenario ResultsCustomer Distance and Volume by Warehouse
    • © 2012 IBM Corporation28Scenario ResultsDriving detailed routing solutions for Implementation
    • © 2012 IBM Corporation29Dr. Pepper Snapple GroupNetwork Optimization
    • Dr. Pepper Snapple GroupNETWORK DESIGN SUCCESSwith IBM ILOG LogicNet Plus XE© 2012 IBM Corporation30