Consumer driven supply chain with ONE network

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Why Every Company in the Value Chain Should Care About the End-Consumer
One Network can help your company become consumer-driven.
Why is that important?
Let’s begin with today’s consumer. There’s you, me, and about 7 billion others...
Today’s consumers want the right price, the best quality, and they want it now. What does that mean for your business?
Consider that your success - or failure - eventually depends on whether your end consumers are satisfied. This is true for all companies, in every industry, delivering every kind of product or service. They all exist to eventually serve an end consumer.
Shouldn’t your company be doing all of the right things to ensure success – and the consumer’s satisfaction?
The problem is, you've inherited a tangled mess of disconnected software system that focus on your internal processes and immediate trading partners. This is actually IGNORING the end consumer!

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  • I share our guiding principles just to give you a feel for the premise for the design of our solutions. It is a differentiation in it is the only solution available today designed specifically as a multi-enterprise, supply network solution from shelf to suppliers’ suppliers. Everything else really focuses within the enterprise, or just the business unit or function. DK Notes: Project
  • Companies operate in networked fashion Demand signal is synchronized across all companiesElimination of information latencyReal time visibility to changes in demand and supply
  • A demand driven model provides all suppliers with visibility to the actual demandParticipants can plan to forecast while executing to actual demand and consumption patternsPlanning is handled through oversight and exception management and occurs on a daily cadence as opposed to a weekly batch processThe reduction in information latency requires less inventory to be carried as the amount of uncertainty is reducedThere is real time visibility to in stock levels allowing the ability to act on potential out of stock situations before they happenProvides improved cash flow and better working capital efficiencyImproved execution reduces the number of shipments and miles travelled as trucks are better utilized and can carry goods for both in and out bound
  • Our branded portfolio works well together.Our Pet Products segment achieved ~$1.7B in sales last year, with strong ~20% operating margins. This segment is an earnings accelerator.Our ~$2.0B Consumer Business is a solid cash flow generator. It has steady growth and dependable operating margins of ~11%. The portfolio combines a very solid foundation in the Consumer business with the higher margin and higher growth driver of the Pet category, while providing portfolio diversification. Importantly, while these segments share similar consumer marketing disciplines - each are led by a dedicated marketing team. Together they both benefit from the scale of an integrated supply chain and sales force.
  • Consumer driven supply chain with ONE network

    1. 1. THE CONSUMER DRIVEN SUPPLY CHAIN Achieving a Real Time Value Network
    2. 2. Let’s set a baseline
    3. 3. Traditional Sales and Supply Chain Approach  Organizations are segmented and “silos” within and across companies  Long term planning not connected to Short Term  Planning is disconnected from execution CUSTOMERS SUPPLY CHAIN RETAILERS SALES CPG MARKETING MANUFACTURERS CATEGORY MANAGEMENT SUPPLIERS MERCHANDISING
    4. 4. What is Consumer (demand) Driven? Being demand driven means everyone in the supply chain is focused on the end consumer.
    5. 5. Consumer-Driven Guiding Principles  A supply chain is actually a “community of trading partners” » »  Demand-driven means you must start at point of demand » »  Everyone wants to drive value for their business Everyone should focus on actual sales. It is the only thing that matters Must be able to model store (point of consumption), SKU, Day Must be able to adjust based on actual consumer demand Never forecast what you can compute » » The only sales forecast should be the further most forward node Everything else should be a calculated order forecast  To optimize the network you must concurrently deal with demand variability, supply variability, constrained capacity and lead-time variability  Continuous, incremental and interactive planning, execution, and performance management must reside within the shared community » Provides the ability to sense change, rapidly create intelligent responses, execute the responses, and then analyze performance enabling process improvements
    6. 6. Barriers To Achieving Consumer Driven Inadequate information sharing Planning to multiple and disparate forecasts Organizations are dispersed and not focused together on lowest cost and highest service Change management Systems are batch and supply chains are real time
    7. 7. Trends in the Consumer Driven Supply Chain  Visibility has become increasingly important as companies pay more attention to supply chain risk, such as natural disasters, human rights abuses, raw material shortages, etc.  Cloud solutions have found wide application in certain industries such as retail and consumer goods in North America.  Planning cycles are becoming shorter.
    8. 8. Six Benefits Of Supply Chain Visibility Improve in-store availability, reduce end-of-season markdowns, and increase supply chain operations efficiency. Make more profitable decisions, match your strategic and tactical plans with local customer preferences, and drive overall profitability. Shorten end-to-end pipeline time. Reduce uncertainty and the need for safety stock. Stop missing opportunities when customer orders with short lead times can't be met – be ready and able to profit. Increase the quality of information sharing, and build an “informationenriched” supply chain.
    9. 9. LeadTime & LeadTime Variability Eliminate Bullwhip Effect The longer it takes to propagate a supply or demand shift the longer people are doing the wrong thing Inventory Overstock Under stock Time Store DC DC DIST/TMS MFG Teir1 Tier 2
    10. 10. Coping with Bullwhip within 4 Walls Variability Poor visibility to real-time demand signals from foremost consumption locations Your ERP/APS work very hard trying to cope with the variability Lead-time to respond Your Enterprise Demand Signal Response Signal Poor visibility to realtime supply signals from multi-tier suppliers
    11. 11. Your Current Value Network Demand Signal Response Signal Variability Customers Your Enterprise Suppliers
    12. 12. In a Real Time Value Network (RTVN) Demand Signal Response Signal Variability Customers Your Enterprise Suppliers
    13. 13. RTVN Time Compression Demand Signal Response Signal Variability Customers Your Enterprise Suppliers
    14. 14. RTVN Dramatic Variability Reduction Demand Signal Response Signal Variability Customers Your Enterprise Suppliers
    15. 15. Dramatically Improve the Productivity of Your Investments Network View of Variability Consumer Demand Peak sales at 9am, 1pm, 8pm Your Enterprise (IBP) Networked View of Demand Signal Supply Response Signal Reduce data staleness from 19 hours to 7 hour POS 1 – 9 pm End to End Lead Time and Flow* POS 2 – 10.am POS 3 – 2 pm Approach Material Lead Time Information Lead Time BOH Traditional 33 days 29 days Othe Network Enabled < 33 days 0 - 1.5 days ERP / APS Customers Your Enterprise Suppliers
    16. 16. Traditional supply chain models are challenged by having all parties work with linear planning and replenishment processes  Push model with all participants planning and replenishing to forecasts instead of actual demand/real time consumption  Business rules do not evaluate the supply chain as a single system but as individual nodes each operating asynchronously. Each node has its own view of demand and inventory with no visibility beyond the next tier.  Demand and information signals are received by each supply chain partner sequentially, therefore it can take suppliers weeks and even months to react to changes, promotions and stock outs felt by the consumer Batch Systems Skewed Demand Signals Siloed Supply Chain 3 Days Stores Retail DCs 21 Days MFG DCs 3 Days Factories 3 Days T1 Suppliers T2 Suppliers 3 Days Consumers 1 Day/Hours Legend: 7 Days Material Lead Time & Flow 7 Days 7 Days 7 Days Information Lead Time & Flow Traditional Approach with Information Latency and Demand Distortion
    17. 17. What is Required to Eliminate Information Latency Across the Value Network, Reduce Variability & Enable a Demand Driven Replenishment in Real Time ? End to End Lead Time and Flow* Approach Material Lead Time Information Lead Time Traditional < 33 days Regional/ Customer Facing DCs 0 - 1.5 days Companies operate in networked fashion  Elimination of information latency  Mins-Hours Mins-Hours Mins-Hours Freight Forwarder National/ MFG DCs Mins-Hours Mins-Hours Mins-Hours Mins-Hours Demand signal is synchronized across all companies  T2/ Intl Suppliers Initial Demand Incremental Change Actual Forecast 29 days Network Enabled  33 days Stores/ Dealers/ Distributors Real time visibility to changes in demand and supply Mins-Hours EMS/ ODM Brand Owner/ Manufacturing 3PL’s/ VMI Legend: Collaborative Response Network Planning The VALUE Network in REAL TIME
    18. 18. Put Your Supply Chain on Auto Pilot – Decision Making         Real Time Many to Many Multi-echelon Consumer Driven Decision Making with Monitoring Planning married to Execution Subscription based Embrace valued systems
    19. 19. Integrated Business Planning (IBP) Plan out variability. Plan for Profitability and Business Continuity IBP provides a single version of the truth for forecasting, promotions, new product introductions, contracts and financial plans. It supports all areas of the business: finance, merchandising, supply chain, etc.
    20. 20. Continuous Forecast Management Continuous Forecast Management for forecasting, replenishment, promotions, new product introductions and financial plans. It supports all areas of the business: finance, product-
    21. 21. Gartner’s 4 Stages to Implementing DDVN REACTING Stores Co-Packer Supplier Fwd DC Factory Suppliers Retailer DC INTERNALLY FOCUSED NO VISIBILITY ANTICIPATING Stores Co-Packer Supplier Fwd DC Factory Suppliers Retailer DC INTERNALLY FOCUSED VISIBILITY COLLABORATING Stores Co-Packer POS Driven Forecast POS and Network Inventory Calculated Replenishment Factory Suppliers Supplier Fwd DC EXTERNALLY AWARE Retailer DC VISIBILITY ORCHESTRATING Stores Co-Packer Suppliers Factory COORDINATED INTERNALLY Supplier Fwd DC Retailer DC VISABILITY AND INFLUENCE
    22. 22. Smaller Steps to Becoming Consumer Driven Increase Visibility by 1. Utilizing POS and shelf data 2. All nodes in the chain should be supplied with customer demand. 3. More frequent down-stream communication. Improve Planning by 1. Increased planning frequency 2. S&OP 3. Decrease the amount of stock pushed out to stores
    23. 23. High Impact Results (US examples) A consumer-driven approach achieves balanced cash flow through increased sales, reduced operating expenses, and working capital improvements. 5% – 10% reduction in operating expense 1% – 4% improvement in sales Transportation Headcount Transportation Headcount Sales Sales* CoGS traditional model SALES LEVELS 20% – 30% reduction in inventory consumerdriven traditional model CoGS consumerdriven EXPENSE LEVELS * lift from out of stock and forecast accuracy improvements resulting in recoverable sales Buffer† Promotional Demand Buffer† Promotional Demand Forecasted Demand Actual Demand traditional model consumerdriven † buffer = safety stock adjustment for reduced uncertainty and information latency INVENTORY LEVELS
    24. 24. Del Monte nourishing families, enriching lives, every day Annual Revenues of $3.7B consumer products manufacturer producing canned fruits/vegetables and pet food dedicated marketing integrated supply chain / sales force Source: Reflects F10 Data
    25. 25. Del Monte Grocery Eco-System RETAILER STORES RETAILER DCS 1 DEL MONTE DCS 3 4 5 6 7 8 DEL MONTE PLANTS DEL MONTE SUPPLIERS 2 9 12 10 11 CO-PACKERS RETAILER PARTNER FOCUS 1 • Retailer Order Forecast SUPPLIER PARTNER FOCUS 7 • Contact Management/AVL 2 • Deployment (DRP) 8 • Purchase Order Management 3 • Transportation Optimization 9 • Supplier Portal, Shipment, Invoicing 4 • Inventory Planning 10 • Consignment and VMI 5 • DC Capacity Management 11 • CoMFG Planning, Order Execution 6 • Automated Carrier Scheduling 12 • EDI & Supplier Scorecarding  initial focus was customer order fulfillment and use of retailer data  incorporated transportation and appointment scheduling  migrated focus to production planning and supplier collaboration
    26. 26. Del Monte What does high-impact look like? Network Capabilities Gained:     Improved End to End Network-wide Visibility – Store shelf to Production and Inbound Supply Deployment Planning – Replenishment to forward DC based on actual demand Incremental planning integrated with execution – Provides adjustment to execution with a change in demand – POS or PO Decision Making vs. Decision Support – enables scalability while increasing the granularity of the planning parameters Benefits For Del Monte:      Improved customer order fill rate to 99+% Decreased inventory by 27% Invested in strategic projects with 2 year payback Received Supplier of Year awards and Gold status from multiple retail customers Significant headcount reduction Benefits For Their Customers:   Improved store in stocks to 99+% Decreased inventory for Del Monte products by 30+% “game changing” service levels – WHILE lowering cost and improving balance sheet
    27. 27. Value of the Network Effect  Drive sales and revenue  Sense problems before they happen with predictive analytics  Collaborate with customers for demand forecast  Dramatically improve service levels and on-shelf availability  SaaS/Cloud means lower IT costs  Synchronize your real-time demand data eloquently with your PLM for faster bring-to-market of new products
    28. 28. ONE NETWORK SCOPE 40k+ 480 M TRANSACTIONS LOGISTICS TRANSACTIONS MANAGED IN ONE COMPANIES TRANSACTIONS 52 M+ CONNECTED IN ONE NETWORK GROCERY CONSUMER GOODS ON ONE 3 OUT OF TOP 5 ORDERS INVOICES APPTS. SHIPMENTS TRANSACTION FLOW VIA ONE NETWORK U.S. GROCERY RETAILERS EXECUTING I N O N E N E T W O R K ONE NETWORK CENTERS HQ; DALLAS, TEXAS USA LONDON, UK SHANGHAI, CHINA BOPODI , PUNE, INDIA CAPETOWN, S.A. SINGAPORE 1.3M PER DAY 55k PER HOUR 15 PER SECOND 2 OUT OF 3 LARGEST GLOBAL DEFENSE CONTRACTORS LARGEST HI-TECH SUPPLIER COMMUNITY TOP 2 AUTO OEM

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