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Finding Opportunity in Supply Chain Complexity
 

Finding Opportunity in Supply Chain Complexity

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Today's global supply chains and hyper-connected consumers create unprecedented challenges for businesses in every industry, from food service to high tech to CPG to retail. RedPrairie CEO recently ...

Today's global supply chains and hyper-connected consumers create unprecedented challenges for businesses in every industry, from food service to high tech to CPG to retail. RedPrairie CEO recently delivered this presentation to the 1,200 attendees of the Georgia Logistics Summit, where he described the challenges inherent in the ecosystem and highlighted opportunities within these challenges to earn competitive advantage.

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  • KEY TALKING POINTS-Recent events in the Middle East have also highlighted the need for flexible, agile supply chains that give us options when geopolitical turmoil interrupts the flow of goods -Egypt was one of the first countries this year to experience political unrest that eventually led to dramatic change in the government-Earlier widespread concerns were centered around the Suez Canal and the flow of oil out of the Middle East, but anyone in the apparel industry also had to keep a watchful eye on the flow of Egyptian cotton, as many brands/retailers depend on Egyptian cotton for high-end garments and textiles -Shortly after the crisis unfolded, cotton futures rose to prices 171% higher than one year prior -As most analysts don’t expect consumers to pay double for items made from cotton, will this signify a fundamental shift in the market, and if so, who will be there to take advantage of the shift?THE OPPORTUNITY-How do we find opportunity in a world where unrest appears to be a permanent part of the geopolitical landscape?-We must strive for agility and flexibility and look to balance our network between local and global resources -We must constantly monitor and evaluate geopolitical situations in geographies that are part of our ecosystem -We must develop networks and plans that build in contingency plans and potentially even safety stocks for mission critical components -We must strive for a manageable balance of global and local operations that manage both costs and risks-In short, we must strive for operational dexterity. Because that is where we can find competitive advantage and opportunity-The best-run supply chains already recognize the importance of finding the right balance -A recent CEO Survey found that companies that were found to have “operational dexterity” have a commitment to striking the right balance, and manage that balance as a daily part of their operations****ADD SECOND RESULT/PAYBACK DATA POINT FROM CEO STUDYBACKGROUNDhttp://public.dhe.ibm.com/common/ssi/ecm/en/gbe03297usen/GBE03297USEN.PDFGeo-Political Turmoil is another reality in today’s supply chains.Recent events in the middle east have highlighted the need for flexible, agile supply chains that give us options when the flow of goods is interrupted or prices move beyond tolerable fluctuation points. It is important to plan contingencies and strike the right balance between local, regional and global dependencies and resources. DHL (one of our customers) in February was impacted like everyone else in region, but services were only interrupted for one day.

Finding Opportunity in Supply Chain Complexity Finding Opportunity in Supply Chain Complexity Presentation Transcript

  • Thriving in a Changing Ecosystem
    Finding Opportunity in Complexity
  • Source: Aberdeen Group, February 2011
    Our Rapidly Evolving Ecosystem
    Global, Volatile, Unpredictable
  • And CEO’s Expect it to Get Tougher…
    Source: 2010 IBM Global CEO Study
    Source: Aberdeen Group, February 2011
    Our Rapidly Evolving Ecosystem
    Global, Volatile, Unpredictable
  • Where There is Chaos…Opportunity
  • Caldwell’s
    28%
    of 2011 US holiday sales will include Smartphones in the shopping journey
    Source: Logistics Viewpoints
    Source: IDC Retail Insights
    Consumers Expect Mobile Options
    Unprecedented Opportunities for those that Can Adapt Quickly to Changing Shopping Patterns
  • Case in Point:
    J&R Music recently introduced a mobile app to support shopping on the go and enhance the store experience…
    Caldwell’s
    Technology Enabler
    All-Channel Platform
    • 320,000 Items
    • Customer Reviews
    • Video Demos
    • Deal of the Day
    • Store Locator
    • Order History
    Source: Logistics Viewpoints
    Source: IDC Retail Insights
    Consumers Expect Mobile Options
    Unprecedented Opportunities for those that Can Adapt Quickly to Changing Shopping Patterns
  • the top ten Facebook brands added
    115 MILLION FANS
    Source: Logistics Viewpoints
    in 2010
    Source: IDC Retail Insights
    Consumers Expect Social Options
    Unprecedented Opportunities for those that Can Adapt Quickly to Changing Shopping Patterns
  • Case in Point:
    Late last year, Proctor & Gamble began selling Pampers directly through Facebook…
    Technology Enabler
    All-Channel Platform
    31,913 fans/month
    1,000 orders/day
    the top ten Facebook brands added
    115 MILLION FANS
    …and the results were impressive
    Source: Logistics Viewpoints
    in 2010
    Source: IDC Retail Insights
    Consumers Expect Social Options
    Unprecedented Opportunities for those that Can Adapt Quickly to Changing Shopping Patterns
  • “I’ll have a medium triple-shot, half-caff, no whip mocha… extra hot.”
    Consumers Expect Personalization
    From Coffee to Tennis Shoes, Everyone Wants to Express their Own Sense of Style
  • “I’ll have a medium triple-shot, half-caff, no whip mocha… extra hot.”
    Technology Enablers
    • Configurable Workflows
    • Collaboration
    Consumers Expect Personalization
    From Coffee to Tennis Shoes, Everyone Wants to Express their Own Sense of Style
  • Relentless Globalization
    Technology Enabler
    All-Channel Platform
    70M People
    cross the threshold to the middle class each year,and virtually all are in emerging economies
    Source: Goldman Sachs
    More Countries, More Complexity…More Customers
  • Consumer Responsiveness: 1958
    Lag Time for Significant Changes in Store Demand to Cascade Across the Extended Supply Chain?
    6 Months
    8-10%
    Typical Out of Stocks at the Retail Shelf?
    Source: Logistics Viewpoints
    The Need for Speed -- and Accuracy
    While Velocity has Improved, Unprecedented Opportunities Exist for those that Can Anticipate Demand Accurately
  • Consumer Responsiveness: Today
    Lag Time for Significant Changes in Store Demand to Cascade Across the Extended Supply Chain?
    3-6 Weeks
    Technology Enablers
    • Collaborative Forecasts
    • CPFR
    Source: Logistics Viewpoints
    Typical Out of Stocks at the Retail Shelf?
    The Need for Speed -- and Accuracy
    Still 8-10%
    While Velocity has Improved, Unprecedented Opportunities Exist for those that Can Anticipate Demand Accurately
  • More and More Links in the Chain
    And still only
    7%
    of manufacturers diligently optimizetheir global supply chain networks
    Technology Enablers
    • Visibility/Collaboration
    • Data Integration Portals
    Manufacturers who diligently optimize their global supply networks are
    73%
    more profitable than their peers
    Source: Deloitte
    Manufacturers, Suppliers, Transporters, Wholesalers, Retailers, Consumers, Lenders…
  • Supply Chain “Masters”Manage
    75%
    of their Supply Base througha Formal Process
    Source: Accenture
    A Proliferation of Partners and Outsourcers
    More Complexity, and (Possibly) More Stability through Better Processes
  • 84%
    Employ a Supply-BaseSegmentation Approach
    83%
    Automate Tracking/Reporting of Supplier Performance
    80%
    Centrally Log and ProactivelyManage Supplier Contracts
    Source: Accenture
    A Proliferation of Partners and Outsourcers
    More Complexity, and (Possibly) More Stability through Better Processes
  • Technology Enablers
    • Supplier Performance
    • Scorecards
    A Proliferation of Partners and Outsourcers
    More Complexity, and (Possibly) More Stability through Better Processes
  • Supply Chain Shocks: Mother Nature
    Highlighting the Importance of Planning for the Unplanned
    “The damage to production facilities and on export goods themselves will likely continue for the next several months.”
  • Supply Chain Shocks: Mother Nature
    Highlighting the Importance of Planning for the Unplanned
    “Due to power supply constraints expected in the summer, a full pickup in exports is unlikely until at least the end of this year”
    Technology Enablers
    • Contingency Planning
    • Configurable Workflow
  • After the political unrest in Egypt, cotton prices were
    171%
    higher than the year prior
    Source: Wall Street Journal
    Supply Chain Shocks: Geo-Political Turmoil
    Striking a Balance between Global Integration and Local Relevance Leads to Agility
  • CEO’s of Companies with “Operational Dexterity” are
    23%
    more intent on achieving an optimal balance between global and local markets
    Source: IBM CEO Study 2010
    Supply Chain Shocks: Geo-Political Turmoil
    Striking a Balance between Global Integration and Local Relevance Leads to Agility
  • 5,678,000
    The 124M product recalls in 2010 included…
    pounds of beef
    Supply Chain Shocks: Product Recalls
    Consumer Product Safety Improvement Act (2008), Food Safety Modernization Act (2011) Indicate Compliance and Recovery Plans are Now Table Stakes
  • 93%
    of consumers believe that recalls indicate whether companies care more about their own profits than they do about customer safety
    Source: Princeton University
    Supply Chain Shocks: Product Recalls
    Consumer Product Safety Improvement Act (2008), Food Safety Modernization Act (2011) Indicate Compliance and Recovery Plans are Now Table Stakes
  • 87%
    of consumers are more likely to purchase products from companies that manage recalls in an “honest and responsible” way
    Technology Enablers
    • Supplier Segmentation
    • Track and Recover
    Source: Princeton University
    Supply Chain Shocks: Product Recalls
    Consumer Product Safety Improvement Act (2008), Food Safety Modernization Act (2011) Indicate Compliance and Recovery Plans are Now Table Stakes
  • The Mandate for Sustainability
    93%
    25%
    of CEO’s View Sustainabilityas Critical to Success
    of Consumers WouldSwitch Brands Givenan Ethical Alternative
    Source: Accenture
    Source: IBM Institute for Business Value
    Future Guardianship, Risk Mitigation, Competitive Opportunity
  • The Mandate for Sustainability
    However…
    32%
    Conserving to Reduce Needfor Natural Resources
    Technology Enabler
    Green Dashboards
    30%
    Innovating to Shift Needfor Natural Resources
    30%
    Are Doing Nothing
    Source: McKinsey Quarterly
    Future Guardianship, Risk Mitigation, Competitive Opportunity
  • Collaboration, Workforce Management, Workflow, All-Channel Commerce
    Logistics Technologies Are Critical to Thriving in Today’s Ecosystem
  • Real-World Example: Integrating a Highly Complex Supply Chain – from Farm to Table…
    WORLD’S LARGEST MEAT PRODUCER
    LARGEST US THIRD-PARTY COLD STORAGE
    SECOND-LARGEST U.S. WHOLESALE GROCER
    • 140 Facilities
    • 5,000 Trucks
    • 182 Warehouses
    • 1.1B Cubic FT
    • 2,500 Outlets
    • 24 States
  • Real-World Example: Integrating a Highly Complex Supply Chain – from Farm to Table…
    WORLD’S LARGEST MEAT PRODUCER
    LARGEST US THIRD-PARTY COLD STORAGE
    SECOND-LARGEST U.S. WHOLESALE GROCER
    COLLABORATION & CONTROL
    Raw material tracking
    Finished goods tracking
    Lot and batch control
    Fresh Item Management
    Inventory accuracy
    Workforce Management
    Workforce Management
    3PL Billing
  • Real-World Example: Minimizing Disruption in the High-Stakes World of High-Tech…
    WORLD’S SECOND-LARGEST CONTRACT MANUFACTURER
    WORLD’S LARGEST THIRD-PARTY LOGISTICS PROVIDER
    WORLD’S LARGEST ELECTRONICS RETAILER
    • 48M SQ FT
    • 30 Countries
    • 500 Sites
    • 15 Countries
    • 1,000 Stores
    • 10 Retail Brands
  • Real-World Example: Minimizing Disruption in the High-Stakes World of High-Tech…
    WORLD’S SECOND-LARGEST CONTRACT MANUFACTURER
    WORLD’S LARGEST THIRD-PARTY LOGISTICS PROVIDER
    WORLD’S LARGEST ELECTRONICS RETAILER
    VISIBILITY & COLLABORATION
    Component leveltracking
    Serialization
    Store Execution
    Value added services
    Bill of material
    TransportationManagement
    Order accuracy
    Inventory accuracy
    Workforce Management
    Workforce Management
    3PL Billing
  • Greatest Positive Impact on Profits Next 5 Years?
    51%
    64%
    Growth of Consumersin Emerging Economies
    Shift of EconomicActivity Between Regions
    63%
    50%
    Technologies that EmpowerConsumers & Communities
    Increasingly GlobalMarkets for Labor/Talent
    32%
    52%
    Consumer Demand for Corporate Responsibility
    Increased Labor Productivityin Developing Markets
    Source: McKinsey Quarterly, January 2011
    Where There is Chaos…Opportunity
  • RedPrairie At-a-Glance
    Largest supply chain and retail optimization company in the world
    Facilitating the flow of trillions of dollars of goods through the world’s most expansive supply chains
    60,000 client sites/50 countries
    Warehouse Management, Workforce, Inventory, Transportation, Logistics and e-Commerce solutions
  • Thank You
    Michael MayorasCEO, RedPrairie