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Flawless Supply Chain Execution Chicago March 8, 2011
Supply Chain Execution	Overview March 2011
TATA Motors launches $2500 Car “Nano” 1 Billion New Capitalists and Consumers New Container Shipped: Every 0.1 Second Oil crosses $100 / Barrel Increasing Numbers of Product Recalls Dow Jones drops 40% in 2008 67,000 factories in China closed EU calls for global carbon trading system to fight climate change 2008 auto sales drop by 3 million Global Bail Out Business Realities“The only constant is change itself” 2009 2008 2010 1 Billionth Phone Sold May 2007
What did 2010 bring? THE ASSOCIATED PRESS  China auto sales more than double to 1.3 million units in January 2010   Shoots of recovery are appearing…. Supply Chain Risk: It's Time to Measure It Retailers See Holiday Sales Rebound From 2008  Global companies become serious about green supply chain strategies 670,000 small companies have closed in China due to the global crisis China surpasses Germany as world's top exporter   Globalization and resulting complexity is here to stay…. 15.2m cars recalled in 2009! 15.2 million car recalls in 2009   Increased risk across the supply network   Feb 2010 2009 Infant Product Recalls Set Record High Feb 2010   Increasing focus on Sustainability / Green Supply Chains Jan 2010 Feb 2010 Jan 2010
Global Trends and their Impact on Supply Chain…are you ready for the upturn? Complex Global Networks Sustainability Increased Risk Economic Turmoil  Economic Turmoil  Economic Turmoil  Economic Turmoil  Economic Turmoil  Manage Fluctuating  Demand & Supply ,[object Object]
Demand and supply not aligned
Escalating costs and inefficient operationsLeverage Network  Wide Collaboration ,[object Object]
Ineffective capacity and asset utilization
Delayed response to customer demandImprove Visibility Across  Logistics ,[object Object]
Fluctuating transportation costs
Increased complexity & risk  across the networkDecrease Inventory and Increase Service  ,[object Object]
Escalating inventory targets across the supply chain
Buffer stocks , increased write-offs and discountsSafe & Sustainable Supply Chains ,[object Object]
Consumer trust and Brand value impacted
Need to manage safety, quality, and traceability at no additional cost,[object Object]
Manage through downturn, Position for upturnFive Tenants of a Responsive Supply Network Optimize Inventory Visibility & Collaboration Synchronize   Supply to Demand  Supply Chain Sustainability Excellence in Execution
Supply Chain Execution	EWM	TM	SNC	SCPM March 2011
Excellence in Execution paysDid you know … ,[object Object]
…you can lower your carrier contracts by 10% when complying with your routing guide?
…overall shipment volumes are down by 18-20% this year impacting capacity, cost and service?
… you can reduce your transportation spend by 10-20% by automating transportation processes?
…you can increase inventory turns by 30% when more accurately allocating inventory based on current and future demand?
…you can increase employee productivity by 20% when streamlining operations and reducing exceptions and expedites? Source:  CAT Logistics Source:  ARC Source:  ARC Source:  Empresas Polar  Source:  Gartner Source:  SC Digest
Logistics and Fulfillment Management is  an end-to-end, cross-functional process VP of Supply Chain Effective Logistics and Fulfillment Management requires alignment between several stakeholders with differing objectives Logistics Logistics Customer Service Inbound Freight Management Global Trade Management Logistics Distribution Customer Commitment Outbound Freight Management Storage and Fulfillment Sales Delivery Commitment Order Capture Finance Customer Invoice Processing AR Processes Supplier Invoice Processing AP Processes Procurement PO Management Distribution Logistics Outbound Delivery Creation ASN / Inbound Delivery Creation Inventory Management Order Fulfillment Sourcing and Supply Commitment Transportation Execution Inbound Trans. Planning / Optimization Transportation Execution Outbound Trans. Planning / Optimization Logistics Freight Settlement Freight Settlement Risk / Compliance Import Management Export Management Cross-Dept  Supply Chain Mgt Global Supply Chain Visibility, Event  Management, Alerting, Reporting, Traceability, RFID / Auto-ID

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Best Run Supply Chain Practices

  • 1. Flawless Supply Chain Execution Chicago March 8, 2011
  • 3. TATA Motors launches $2500 Car “Nano” 1 Billion New Capitalists and Consumers New Container Shipped: Every 0.1 Second Oil crosses $100 / Barrel Increasing Numbers of Product Recalls Dow Jones drops 40% in 2008 67,000 factories in China closed EU calls for global carbon trading system to fight climate change 2008 auto sales drop by 3 million Global Bail Out Business Realities“The only constant is change itself” 2009 2008 2010 1 Billionth Phone Sold May 2007
  • 4. What did 2010 bring? THE ASSOCIATED PRESS China auto sales more than double to 1.3 million units in January 2010 Shoots of recovery are appearing…. Supply Chain Risk: It's Time to Measure It Retailers See Holiday Sales Rebound From 2008 Global companies become serious about green supply chain strategies 670,000 small companies have closed in China due to the global crisis China surpasses Germany as world's top exporter Globalization and resulting complexity is here to stay…. 15.2m cars recalled in 2009! 15.2 million car recalls in 2009 Increased risk across the supply network Feb 2010 2009 Infant Product Recalls Set Record High Feb 2010 Increasing focus on Sustainability / Green Supply Chains Jan 2010 Feb 2010 Jan 2010
  • 5.
  • 6. Demand and supply not aligned
  • 7.
  • 8. Ineffective capacity and asset utilization
  • 9.
  • 11.
  • 12. Escalating inventory targets across the supply chain
  • 13.
  • 14. Consumer trust and Brand value impacted
  • 15.
  • 16. Manage through downturn, Position for upturnFive Tenants of a Responsive Supply Network Optimize Inventory Visibility & Collaboration Synchronize Supply to Demand Supply Chain Sustainability Excellence in Execution
  • 18.
  • 19. …you can lower your carrier contracts by 10% when complying with your routing guide?
  • 20. …overall shipment volumes are down by 18-20% this year impacting capacity, cost and service?
  • 21. … you can reduce your transportation spend by 10-20% by automating transportation processes?
  • 22. …you can increase inventory turns by 30% when more accurately allocating inventory based on current and future demand?
  • 23. …you can increase employee productivity by 20% when streamlining operations and reducing exceptions and expedites? Source: CAT Logistics Source: ARC Source: ARC Source: Empresas Polar Source: Gartner Source: SC Digest
  • 24. Logistics and Fulfillment Management is an end-to-end, cross-functional process VP of Supply Chain Effective Logistics and Fulfillment Management requires alignment between several stakeholders with differing objectives Logistics Logistics Customer Service Inbound Freight Management Global Trade Management Logistics Distribution Customer Commitment Outbound Freight Management Storage and Fulfillment Sales Delivery Commitment Order Capture Finance Customer Invoice Processing AR Processes Supplier Invoice Processing AP Processes Procurement PO Management Distribution Logistics Outbound Delivery Creation ASN / Inbound Delivery Creation Inventory Management Order Fulfillment Sourcing and Supply Commitment Transportation Execution Inbound Trans. Planning / Optimization Transportation Execution Outbound Trans. Planning / Optimization Logistics Freight Settlement Freight Settlement Risk / Compliance Import Management Export Management Cross-Dept Supply Chain Mgt Global Supply Chain Visibility, Event Management, Alerting, Reporting, Traceability, RFID / Auto-ID
  • 25. Integrated Supply Chain Platform CDSP – provides the processes and tools to match supply with demand LFM – provides the execution framework required to serve the customer
  • 26. SAP Extended Warehouse ManagementSolution Overview Inbound Processing Storage and Operations Outbound Processing Receive ASN data Rearrangement Order deployment ASN Validation & Correction Inventory Counts / Record Accuracy Route Determination Transporation Unit Arrival Replenishment Wave Management Manage Transportation Unit Picking Bin Determination Freight Order Management Goods Receipt Warehouse Order Creation Kit-to stock Work Assignment Putaway Bin determination Picking Unload Transportation Unit Core Warehouse Operations and Inventory Management Packing Internal Routing Staging Slotting EWM Loading & Goods Issue Deconsolidation ERP Kit-to order Putaway Manual outbound deliveries Returns / Reverse Logistics Production Supply Goods Receipt - Optimization SAP SCM-EWM 5.0. Transportation Cross Docking Labour Management Task Interleaving Cross Processes SAP SCM-EWM 5.1. Picking fr. Inb./ Push Deployment Opportunistic Cross Docking Execution Constraint SAP SCM-EWM 7.0. Yard Management Merchandise Distr. X-Docking Semi-System-Guided work Packaging Specification Integration to QIE RFID Enablement GTS Integration RF support for all exec.processes Material Flow System Supporting Functions EH&S Integration Batch Management Warehouse Cockpit Serial Numbers eSOA enablement Graphical Warehouse Layout Catch Weight
  • 27. SAP EWM has closed the gap with Best of Breeds and is the way to go for SAP customers “Some of these [SAP EWM] customers claim that the functionality is on par or exceeds that of well known best of breed solutions. They [SAP] are poised for very fast growth as they penetrate their installed base.” “Warehouse Management Systems Worldwide Outlook” by Steve Banker, ARC Advisory Group , 07/2010 “From this retail customer's perspective [Indigo Books], SAP has narrowed (closed?) the functionality gap with best-of-breed WMS solutions. This milestone is reflected in the hockey-stick growth in EWM implementations SAP experienced in 2009 compared to previous years.” “Case Studies from SAP Insider: Indigo Books and Newell Rubbermaid” by Adrian Gonzalez, ARC in Logistics Viewpoints Blog, 03/2010 “For SAP users considering upgrading WMS, the Extended Warehouse Management (EWM) application is to the point where it at least deserves to be put on the short list. EWM has more functionality, and is far more flexible.” Dwight Klappich, Gartner quoted in article “SAP shops holding onto SAP WMS, but there are benefits to upgrading” by Marc Fortier, Search SAP 07/15/2010 “The offering was designed to provide functionality for complex warehouses and increasingly broad capabilities, such as yard management, slotting, material flow solutions and engineered labor standards.” “Magic Quadrant for Warehouse Management Systems” by Dwight Klappich, Gartner, 07/29/2010
  • 28. SAP Extended Warehouse ManagementSelected implementing Customers
  • 29.
  • 34. TCO
  • 36. Coverage: Shipment execution
  • 38. No shipments combining in/outbound movements
  • 40. No transportation capacity planning
  • 41. Coverage: Comprehensive transportation mgmt.
  • 43. For shipper industries & foundation for freight forwarders
  • 45. Usability & configurability
  • 46. Performance & process simplification
  • 47. Customer & SAP TCO
  • 48. Coverage: Shipping planning & optimization
  • 50. Integrated with ERP LE-TRA
  • 52.
  • 53.
  • 54.
  • 55. Implementation:SAP TM 7.0ca. 50 sites with 300 shipping points
  • 56. Goal: Efficient, accurate transportation settlement and invoicing
  • 57.
  • 59. Goal: A common transportation mgmt. system to eliminate legacy TM systems. Transportation spend reduction & operational efficiency increase.
  • 60. Implementation Scope:Full TM implementation across freight order mgmt., transportation planning & carrier selection, tendering, subcontracting and freight settlement.
  • 61. Company:Consumer packaging for beverage, personal care, healthcare, food
  • 63. Goal: Complete automation of thetendering process (subcontracting)
  • 64. Implementation Scope:Transportation optimization - freight unit building, truck planning, carrier selection. Sales order processing in SAP ERP.Transportation planning in SAP TM. Logistics execution in SAP LES(ERP-Logistic Execution System). Selected Transportation Management ProjectsSAP Transportation Management 6.0, 7.0 & 8.0
  • 65.
  • 72.
  • 73. Philips: One central SNC instance manages collaboration for several divisions to have a single Philip’s interface to the outside world, including multiple tiers of suppliers.
  • 74.
  • 75. Customers Benefit from SNC 66% reduction in early shipments 100% improvement in errors associated with direct material invoice discrepancies Acknowledgement rate increased from 40 – 80 % Inbound decreasing for Stock/JIT : - 30 % Reduced inventory by 50 – 70%Improved on-time delivery by 70% Purchase order processing productivity gains 3–5 times Reduction in nonqualified returns 20% Live in 4 Months 10-15% stock reduction in the chain using supplier managed inventory 50% FTE reduction at GR processing
  • 76. Supply Chain Costs Reduce Working Capital Supply ChainReliability Supply Chain Performance Management CEO / CFO financial impact strategic impact compliance impact Inter-enterprise end-to-end processes STORE SELL DESIGN SOURCE MAKE SERVICE MOVE Strategic Collaborative Demand and Supply Planning VP Supply Chain Tactical Logistics Manager Manufacturing Network Planning & Execution Logistics and Fulfillment management Execution Supply Chain Performance ManagementPulling it all Together SC Analyst © SAP 2010 / Page 22
  • 77.
  • 78. Gain insights and control, by focusing on metrics that matter (based on best practices such as SCOR, or company specific metrics)
  • 79.
  • 80.
  • 81. Thank You! Cameron Russell cameron.russell@sap.com

Editor's Notes

  1. Talking points:Given what we saw on the previous slide, and what companies are focusing on achieving, there is lots of opportunity as shown here. Remember, there are a lot of ways to get savings (e.g. redefine processes, technology enhancements, collaboration with trading partners to name a few), but ultimately you need the platform to which you can build your supply chain tools enabling the business processes identified within and outside the enterprise. These numbers are not generic instances of savings, but customers taking advantage of SAP solutions to enable the transformation they are looking to execute to better serve their customer while decreasing unnecessary spend. First point is EWM and came from a ASUG presentation Cat Logistics did.Second is from a ARC Viewpoint e-mail talking about savings. I can talk you thru this one if you like since we don’t really have a Trans Procurement solution.Third was from an article I read somewhere last week I have not been able to find.Fourth is a TM ASUG presentation and took a stat from empress Polar.I am trying to recall where I got 5 and 6, but I would not have made them up.