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Transformational Steps on the Journey to Demand Driven Supply Network


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Learn how Clorox, a leader in the Consumer Products industry, maintained its well coveted customer service levels of beyond 99.5% throughout a large scale SAP SCM implementation - across 8 business units. [Presented at the 2011 ASUG Community Focus Conference]

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Transformational Steps on the Journey to Demand Driven Supply Network

  1. 1. [ Transformational Steps on the Journey to Demand Driven Supply Network Padman Ramankutty, Intrigo Systems, Inc.
  2. 2. [ Learning Points Learn how Clorox , a leader in the consumer products industry, maintained its well-coveted customer service levels of beyond 99.5%, throughout a large scale SAP Supply Chain Management (SAP SCM) implementation - across eight business units Examine how processes were enhanced to manage the variability of systems across multiple brands to enable a demand-driven foundation Learn which SAP SCM and partner components were selected to achieve a demand-driven supply network Identify key processes, technologies, and decision systems necessary to move towards a DDSNReal Experience. Real Advantage. 2
  3. 3. [ Best Practices Leverage and fine tune statistical forecasting models with a consensus based approach Planning parameters based on demand and supply characteristics (segmented approach) Focus on strategic and tactical planning to minimize firefighting in the near term Align tools, business processes, and organization Real Experience. Real Advantage. 3
  4. 4. [ About Intrigo Premier Enterprise Consultancy, focused on orchestrating Customer Value Networks at the confluence of Demand, Supply and Innovation using SAP Technologies. Respond Supply Demand Sense Create Source: AMR Innovate Provide solutions for our clients : Insights about Customers and Channels ( Sense: TPM/Channel…) Risk/Response modeling on Supply Side ( Risk Reduction: CTM/CTP/SC Risk..) Accelerate the innovation cycle that impacts the Demand and Supply equationsReal Experience. Real Advantage. 4
  5. 5. [ Intrigo Approach & Offerings Approach: Implement an integrated base line capability, reduce risk Help clients with the ability to ramp up new users and increase its business operational capabilities, eliminate prolonged change management and technological challenges including redundant interfaces Leverage common practice templates to reduce the design cycle time Iterative realization methodology to reduce time/cost and risk Offerings: Authorized SAP reseller/VAR for High-tech iSemi®: A solution for growing semiconductor companies Implementation & Support SCM, S&OP, Collaboration, SCRM, SCPM ERP, Channel, PLM SRM BI & Analytics TPM IT Strategy/Architecture Roadmaps CPG, Semiconductor, Hi-Tech, AFSReal Experience. Real Advantage. 5
  6. 6. [ The Clorox Company 1913 - Americas first commercial-scale liquid bleach factory – Oakland, CA 1914 - Product named Clorox® bleach. Owned by Procter & Gamble 1957–1968 Growth through diversification Worldwide manufacturer and marketer of consumer products- trusted & recognized brands 8300 Employees worldwideReal Experience. Real Advantage. 6
  7. 7. [ The Clorox Company - Today Primary Products House Hold & Professional Brands Laundry Cleaning Products Home Cleaning Products Specialty Products Other Businesses FY’10 Revenues of $5.2 Billion Global North Europe Asia America Middle East Africa Central America South America PacificReal Experience. Real Advantage. 7
  8. 8. [Clorox DDSN Vision & iPlan Foundation Challenges Advanced: Planning capabilities were limited by Demand Shaping system complexity and outdated Incremental: functionality Demand Sensing Planning process/system landscape Foundational: created long information flow cycle Order Sourcing Inventory Optimization times resulting in supply chain losses Demand Planning Supply Planning Deployment Objectives & Scope VMI CUSTOMER Load-building Deliver foundational capabilitiesSUPPLIER Retire Legacy Applications required to enhance product supply planning and execution processes Planning & Execution Processes Tools to deliver supplier-to- Planning & Execution Systems consumer integration Physical Network Strategy Supported by one SAP suite of tools and one set of master data Real time and visible Demand driven Synchronized end-to-end Real Experience. Real Advantage. 8
  9. 9. [ iPlan Strategy Planning supported by a single suite of tools (SAP APO) using Designed to improve efficiency and reduce cost by: one set of master data, Implementation of new supply chain planning system and process transformation reducing maintenance costs of Simplification of global supply chain network 3 highly customized systems Eliminates existing non-SAP Improve quality and reduce variability in supplier, carrier, systems (Logman, Logility, i2) and production signals and implements leading-class Increase agility/ability to react to changes in demand inventory management tools and/or supply faster and more efficiently including: Reduce 3 systems down to 1 (SAP SCM – APO module SAP APO replaces Logman, i2, and Logility) SmartOps Inventory Optimization Provide best-in-class total response time*: < 10 days LEO (Ortec) Load * Response is the time it takes for a change in demand to be translated into an actual response at a first tier supplier Building Real Experience. Real Advantage. 9
  10. 10. [ Business Units – Complexity & RequirementsBusiness AttributesUnitLaundry Multi-Plant Sourcing, Multi-Work Center Sourcing , Complex Network, Production & Storage Capacity, Mutli-Echelon Inventory, Demand CategoriesHomecare Multi-Plant Sourcing, Multi-Work Center Sourcing , Complex Network, Intermodal Shipments, Production & Storage Capacity, Mutli-Echelon Inventory, Demand CategoriesKingsford Multi-Plant Sourcing, Multi-Work Center Sourcing, Complex Network, Upstream Process Constraints, Storage Constraints, Seasonal Pre-Builds, Production & Storage Capacity, Mutli- Echelon Inventory, Demand CategoriesGlad Multi-Plant Sourcing, Multi-Work Center Sourcing , Complex Network, Upstream Process Constraints, Global Sourcing, Intermodal Shipments, Production & Storage Capacity, Mutli- Echelon Inventory, Demand CategoriesFoods Multi-Plant Sourcing, Inter-Plant sourcing, Complex Network, Shelf Life, Production & Storage Capacity, Mutli-Echelon Inventory, Demand CategoriesBrita Multi-Plant Sourcing, Inter-Plant sourcing, Complex Supply Network, Long Lead Times, Global Sourcing, Production & Storage Capacity, Mutli-Echelon Inventory, Demand CategoriesLitter Single Plant, Global Sourcing, Multi-Work Center Sourcing , Intermodal, Production & Storage Capacity, Mutli-Echelon Inventory, Demand CategoriesAuto Multi-Plant Sourcing, Multi-Work Center Sourcing , Complex Network, Intermodal Shipments, Production & Storage Capacity, Mutli-Echelon InventoryReal Experience. Real Advantage. 10
  11. 11. [ iPlan Guiding Principles Focus on servicing the business at 99.5% fill rate, while minimizing inventory levels, spoilage, logistics, and manufacturing costs Function as an integrated planning organization where there is a strong linkage between Sales & Operation planning, Demand Planning, Supply Planning, CRP, Deployment, and Load building Collaborate and communicate effectively with the commercial side of the business as well as with Manufacturing Fully leverage available tools and technology and adopt an exception based planning approach Reduce need for near term fire-fighting by focusing on the medium to long term Provide visibility to long-term (24 months) Production, Sales and Inventory plans to drive strategic decision making Drive to standardized processes across both supply and demand planning Ensure that the team is trained on supply chain planning tools and technologies Real Experience. Real Advantage. 11
  12. 12. [ Multi-Echelon Supply Chain Model Co- Finished Goods Finished Goods MFG located Plant DC Post- VMI Suppliers WIP pone RDC Orders DC Co-Pack Co- Plant Pack Customer DC OrdersManufacturing Locations: Postponement DCs: RDC Network: Real Experience. Real Advantage. 12
  13. 13. [Integrated Process Overview S&OP, Budget Planning STRATEGIC Supply Inventory Demand PLANNING Planning Planning Planning (SCM- (SmartOp (SCM- APO) s-MIPO) APO) CUSTOMER TACTICAL SUPPLIER PLANNING VMI Deployment EXECUTION (SCM-APO) (SCM-APO) PLANNING Load Building (ORTEC) ORDER EXECUTION DISTRIBUT DELIVER MAKE SOURCE E REPORTING MEASURE ANALYZE = iPlan Process Area (APO) = iPlan Process Area (ORTEC) = iPlan Process Area (SmartOps) = Execution StepsReal Experience. Real Advantage. 13
  14. 14. [ High Level Process Areas Demand Inventory Deployment Load Optimization / CRP / VMI Planning Supply Planning / Planning Building Objectives: Specify Inventory Produce a forecast Generate a Generate an Produce a forecast Levels at different of VMI / CRP deployment plan executable load nodes of customer customer shipments, that complies with plan that complies Produce a constrained generate and shipments to be used approved strategies with approved supply plan to be used execute for supply planning, and policies, strategies and for production planning, sales planning, replenishment incorporating the policies, plant budgeting tactical plan that complies supply plan incorporating financial analysis, and planning, long range planning and distribution with approved customer specific external financial planning that complies strategies and requirements reporting policies with approved strategies and policies Key Outputs: Base statistical Constrained supply VMI forecast Replenishment plan Executable load forecast plan Replenishment Plan Unconstrained consensus Inventory projection forecast Lane velocity and Metrics and Exceptions projected storage Metrics Forecast Accuracy Inventory Turns Service Levels TL Utilization TL Utilization Forecast bias (over Inventory Days on Hand Inventory Turns IM Utilization time) Capacity Utilization Customer Days of Redeployment Forecast Volatility Supply TL UtilizationReal Experience. Real Advantage. 14
  15. 15. [ A Nuanced Approach – Forecast Translation APO DP UPC/ Forecast FERT/ APO SNP ECC Ship To Translation Ship From Deployment ORTEC LEO Optimizer Keeps the demand signal clean and provides for a more accurate picture of the demand signal from the customer, aligns with Demand Driven Supply Network (DDSN) vision 1 UPC : n Products (SKU). The mapping is a function of demand source Prevents opportunistic shipments from becoming repeated as an ongoing forecast Role clarity & accountability Demand Planners – Customer Demand Supply Planners - Sourcing Decision and Supply EfficienciesReal Experience. Real Advantage. 15
  16. 16. [ A Nuanced Approach – Segmentation Cluster Analysis to Identify Segments Demand predictability Supply predictability Assuming that the higher the volume, the more secure and predictable the capacity is High Promotion-driven Supply Predictability Bread & Butter Distribution-driven Outlier Low High Low Demand PredictabilityReal Experience. Real Advantage. 16
  17. 17. [ A Nuanced Approach – Planning Parameter Definitions% of Total Volume Promotion Bread & Driven Butter Distribution Outlier Demand Predictability (Coefficient of Variation) Segmentation: Identifies SKUs that behave similarly Structured approach to support differentiated supply chain Development of business rules to drive results Mass updates of parameter maintenance Real Experience. Real Advantage. 17
  18. 18. [ iPlan Enabled Process Changes Course Demand Planning Supply Planning Where we plan today Granularity Deployment Most time and CRP/VMI energy is here Load Building Fine Near Time FarReal Experience. Real Advantage. 18
  19. 19. [ Value Drivers Demand Supply Planning Deployment Load / Inventory CRP / VMI Planning Optimization Planning Building Value Drivers: Value Drivers: Value Drivers: Value Drivers: Value Drivers: Enhanced statistical Providing a capacity Deployment plans Synchronization of Build executable forecasting constrained plan to generated based on demand planning and loads based on capabilities finite scheduling and constrained supply CRP/ VMI forecasts deployment plan Automated updates of deployment plans Improved management (includes CRP) sales and marketing Improved master plan Improved management of product intelligence into stability and reduced of product transitions demand forecasting “fire fighting” transitions Improved truckload solution Incorporation of Improved intermodal utilization Ability to plan VMI supply planning and truckload and non-VMI intelligence into utilization demand forecast Improved planning disaggregation capabilities across Improved management planning life-cycle of product transitionsCross Functional Value Drivers: Single integrated system across planning Exception based planning that is supported by customized alerts and reportingReal Experience. Real Advantage. 19
  20. 20. [Benefits Area Benefit Supporting Modules Increase Inter-Modal Utilization Deployment, Load Building (ORTEC)Transportation Increase Truckload Utilization Load Building (ORTEC) Reduce Redeployments Supply Planning, Deployment Reduce Outside Warehousing Supply PlanningWarehousing Reduce RDC Variable Operating Expenses Supply PlanningManufacturing Reduce Unplanned Overtime Spend Supply PlanningObsolescence Reduce Liquidations Demand Planning, Supply PlanningInventory Optimize inventory levels across the network MIPO (SmartOps), Supply Planning MIPO (SmartOps), APO-SCM,IS Operations Retire Obsolete Application Platforms ORTEC (Load Building)Real Experience. Real Advantage. 20
  21. 21. [Q & A For additional information, please contact us at or visit Experience. Real Advantage.
  22. 22. [ Thank you for participating. Please remember to complete and return your evaluation form following this session. For ongoing education on this area of focus, visit the Year-Round Community page at ] [ SESSION CODE: 1009Real Experience. Real Advantage. 22