presentation on the supply chain triangle as given at the ICT & logistiek fair in Utrecht on 29/11/2017, discusses the need to balance service cost and cash, the need for benchmarking in multiple dimensions, and how strategy affects key financial and supply chain KPIs

1. Mini supply chain MBA in three days

2. Dinsdag 28 november
Supply Chain Strategie BLMC Supply Chain Optimization
Klant- en productsegmentatie Solventure S&OP tooling-analytics
Woensdag 29 november
Sales & Operations planning BLMC Supply Chain Optimization
Demand Management Solventure S&OP tooling-analytics
Donderdag 30 november
Supply chain processen en kpi’s BLCM Supply Chain Optimization
Supply chain driehoek Solventure S&OP tooling-analytics
Programma

3. WORKSHOP
Supply Chain Strategie
INTRODUCTION
SOLVENTURE

5. Solventure uses the power of Sales & Operations Planning
to turn your supply chain into a competitive edge.

6. We provide a full range of S&OP solutions that are a combination of
analytics, advice, tooling and implementation.

7. servic
e
cash
ROCE
cost
PEOPLE PROCESS
TOOLSANALYTICS

8. SEGMENTATION
Customer-product
segmentation
Customer-product
segmentation
Service
differentiation &
impact analysis
Service
differentiation &
impact analysis
Upgrade/
downgrade by sales
Upgrade/
downgrade by sales
Performance
follow-up of
individual clients/
products
Performance
follow-up of
individual clients/
products
PRODUCT
MANAGEMENT
NPI mgmt &
forecasting
NPI mgmt &
forecasting
End-of-Life mgmt /
SKU rationalization
End-of-Life mgmt /
SKU rationalization
Promo & Event Management
(incl. tenders, projects, price increases, …)
Promo & Event Management
(incl. tenders, projects, price increases, …)
Product Portfolio
Performance
Management
Product Portfolio
Performance
Management
COLLABORATIVE
DEMAND PLANNING
& OPTIMIZATION
Statistical
forecasting /
leading indicators
Statistical
forecasting /
leading indicators
Collaborative
forecasting
(intra/inter
company)
Collaborative
forecasting
(intra/inter
company)
Forecast
performance
follow-up (e.g.
forecast value add)
Forecast
performance
follow-up (e.g.
forecast value add)
INVENTORY
PLANNING &
OPTIMIZATION
MTS/MTO,
Stock/Non-stock,
Central/Decentral
MTS/MTO,
Stock/Non-stock,
Central/Decentral
Inventory
parameters
(safety stocks, lot
sizes, …)
Inventory
parameters
(safety stocks, lot
sizes, …)
Multi-echelon
inventory
optimization
Multi-echelon
inventory
optimization
Inventory reporting
and follow-up
(e.g. slow moving)
Inventory reporting
and follow-up
(e.g. slow moving)
Rough Cut Capacity
Planning &
Scenario Mgmt
Rough Cut Capacity
Planning &
Scenario Mgmt
Distribution
Requirements
Planning & Scenario
Mgmt
Distribution
Requirements
Planning & Scenario
Mgmt
Master Planning &
Scenario Mgmt
Master Planning &
Scenario Mgmt
Detailed Scheduling
& Scenario Mgmt
Detailed Scheduling
& Scenario Mgmt
SUPPLY PLANNING
& OPTIMIZATION
EXEC S&OP
What-if scenario
mgmt & decision
making
What-if scenario
mgmt & decision
making
Business
performance review
& gap analysis
Business
performance review
& gap analysis
Exec S&OP
coaching
Exec S&OP
coaching
Financial (rolling)
budgeting
Financial (rolling)
budgeting
A R K I E V A C O N N E C T O R F O R E A S Y I N T E G R A T I O N

9. Chemical & process Discrete & high-tech Food & CPG

10. WORKSHOP
Supply Chain Strategie
WORKSHOP
Supply Chain Triangle

11. My name is Bram …
Academic
- 1998, Master in Mathematics, Gent
- 2002-2004, Executive MBA, Vlerick Business School, Gent
- 2006-2009, PhD in Operations Research, University Gent, “safety stock optimization
in multi-echelon supply chains”
- 2010-…, Adjunct Professor at the Vlerick Business School, teaching ‘statistics’,
‘decision sciences’, ‘supply chain’ in Masters and MBA courses in Belgium, Russia,
China
Business
- 1998 - 2003: IT manager, Arcelor-Mittal, Gent (Sidmar)
- 2003 - 2016: Partner Strategy – SupplyChain – Operations, MÖBIUS Consulting
- 2010 - …: CEO, Solventure, S&OP software and advanced analytics
- Sector experience: aftermarket, chemical/pharma, consumer goods, discrete/high-
tech, metals, retail, recycling, SME's (+50 companies)
Contact info
- bram_desmet@solventure.eu, +32.497.58.28.60
- be.linkedin.com/pub/bram-desmet/1/788/823/
- @bram_desmet

12. Available May 5th, 2018
More info soon available on
www.supplychaintriangle.com

13. How much inventory do
we really need??

17. Company 2: strong in
inventory turns but out
of balance
Company 3: better
balanced but did not
recover to pre-crisis levels
Company 1: better
balanced & good
rebound after crisis

18. STRENGTH
BALANCE
RESILIENCE

19. 3 Questions
1. Which metrics to balance?
2. How to set targets?
3. How to account for strategy?

21. e.g. reduce cost by
sourcing in far East

22. e.g. increase market
share by extending
product portfolio

23. e.g. reduce inventory
by lowering safety
stocks

24. Focus/incentives in a
typical production
company …

25. Resulting pressure in
the triangle

26. Aligning the triangle is
about maximizing
ROCE
Top-line
EBIT
ROCE

27. 3 Questions
1. Which metrics to balance?
- service, cost, cash
- in 2 dimensions, this leads to
• Y-axis: margin metrics like EBIT
• X-axis: cash metrics like inventory turns
2. How to set targets?
3. How to account for strategy?

28. (Max) Bang-for-the-buck line (for company 2)
(combinations of EBIT% and inventory turns
leading to the same bang-for-the-buck)

29. (Max) Bang-for-the-buck line (for company 2)
(combinations of EBIT% and inventory turns
leading to the same bang-for-the-buck)
(Median) Bang-for-the-buck line (for company 2)
(Min) Bang-for-the-buck line (for company 2)

30. Notice the dropback in performance for Company 2 in 2014
How to set targets for 2015?

31. Take the max line as the reference for setting targets.
Which one of the two options would you choose?

32. 3 Questions
1. Which metrics to balance?
2. How to set targets?
- Use the ‘max’ line of your company (or the
best-in-class of your industry)
- Connect your AS IS to the ‘max’ line to define
‘balanced targets’
3. How to account for strategy?

33. Market leaders are
‘extremely disciplined
and focused’ on 1 of 3
strategic options
Treacy &
Wiersema, 1995
Operational Excellence Product Leadership Customer Intimacy
• ‘Best price’ and/or
• ‘Best access’ (‘fast, easy,
painless’)
• ‘Best product’ • ‘Best service’ and/or
• ‘Best connectivity’
(‘relationship orientation’)
• Efficiency through process
thinking
• Zero-defect service
• Best product through
continuous product
innovation
• Clear innovation strategy:
where to place the bets?
• Understanding the broader
problem
• Having expertise about the
customer’s business
• Customers carefully
selected
• The operations department
drives the company
• Attention is paid to process
speed and quality
• R&D is key: idea
management
• Marketing is also key:
educate people with a
missionary zeal
• Get engineers, designers,
and marketers
systematically together
• Demonstrate expertise and
experience
• Strengthen the relationship
• Build loyalty: focus on
customer retention

34. Product Leadership
highest cost in R&D, marketing, supply chain
Customer intimacy
the extra mile comes at an extra cost
Operational Excellence
cost leader in every fibre of the organization
service
inventory cost
Higher
turns
Lower
cost
Higher
service

35. Product Leadership
highest complexity, highest risk
Customer intimacy
controlled complexity
Operational Excellence
simplicity drives efficiency
service
inventory cost
Higher
turns
Lower
cost
Higher
service

36. Product Leadership
emotion beyond functional service
Customer intimacy
an extra mile for a premium
Operational Excellence
excel in the basics
service
inventory cost
Higher
turns
Lower
cost
Higher
service

37. Product Leadership
highest risk with highest potential payoff
Customer intimacy
an extra mile at an extra cost and premium
Operational Excellence
excel in cost and the service basics
service
inventory cost
Higher
turns
Lower
cost
Higher
service
EBIT
Remember ROCE principle: lower turns require a higher EBIT!
EBIT of product leader should be the highest!!

44. 3 Questions
1. Which metrics to balance?
2. How to set targets?
3. How to account for strategy?
- The strategy defines the position on the Max
or best practice curve!

45. Key Takeways
• Never benchmark in only 1 dimension
• Make sure to balance Service, Cost and Cash:
the Supply Chain Triangle
• Different strategies lead to different targets
• Remember ROCE principle: lower turns should
be compensated by a higher EBIT!

46. WORKSHOP
Supply Chain Strategie
Questions?
Supply Chain Triangle