Are You Ready for the Sea Change in Supply Chain Strategy?

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Steelwedge Agility Webinar Series

Featuring Roddy Martin, Supply Chain analyst and researcher with Nari Viswanathan, Steelwedge

Most businesses are organization-driven: built to move supply to customers. Yet in today’s highly volatile global business environment, successful businesses are realigning to become much more agile to adjust to change, with a focus on becoming demand-driven: starting with the customer. This transformational sea change in Supply Chain strategy needs to be driven top down. It must be collaborative. It must have an end-to-end S&OP process. And, it should have process-enabling planning technology.

Roddy Martin, SVP Global Supply Chain & Manufacturing Transformation at Competitive Capabilities International and former Supply Chain leader and distinguished analyst at AMR, will lead this interactive session with examples from some of the best demand-driven organizations such as Proctor & Gamble. He’ll also offer insights for businesses at any stage of demand-driven transformation, including:

• Recognizing the new Supply Chain leadership requirements
• Syncing business with the right information
• Powering agility with integrated business planning solutions

Nari Viswanathan, VP of Product Marketing and Management at Steelwedge, a former Supply Chain analyst at Aberdeen Group, will add perspective on S&OP solutions to jump start the journey to end-to-end demand driven process.

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  • Key PointTransformation initiatives have not differentiated 4 layers of “Management System” and are confused in the clarification and direction of organization design, change leadership, and especially IT and Data Management Strategies . This has implications for the reduction of complexity and building compliance capabilities Session PointsMany companies have deployed their IT and Master Data Management without due consideration of evolving maturity
  • Key PointTransformation initiatives have not differentiated 4 layers of “Management System” and are confused in the clarification and direction of organization design, change leadership, and especially IT and Data Management Strategies . This has implications for the reduction of complexity and building compliance capabilities Session PointsMany companies have deployed their IT and Master Data Management without due consideration of evolving maturity
  • Are You Ready for the Sea Change in Supply Chain Strategy?

    1. 1. Are You Ready for the Sea Change in Supply Chain Strategy? Roddy Martin SVP Supply Chain Transformation Competitive Capabilities International April 2012
    2. 2. Roddy Martin SC Transformation Thought Leader Executive South African Breweries (SABMiller) – Engineering Leadership – Manufacturing Strategy – IT Leadership AMR Research – Gartner SC leadership CCI SVP SC Competitive Capabilities International (CCI) © Competitive Capabilities International
    3. 3. Starting ThoughtsSC and IT Alignment: So, what’s new?• IT Alignment, IM Capabilities & Architecture• Prioritized and Synchronized to Support End to End Digitization of the Demand–driven Value Network4 Management Systems: Decoupling Layer The End to End Supply Chain Starts at the “Buyer:” Shopper/Customer• The Journey : Readiness to Change / Performance Improvement Maturity is a Critical Factor.• Not Just “One Supply Chain” Demand-driven Segmentation Reduces Complexity!Supply Chain Strategy is the Business Operating Strategy• Top Down Change Leadership is Fundamental to Sustainable Transformation.• Supply Chain Undergoing Sea Change Transformation – from Functional Outputs to Business OutcomesBuilding End to End Process Capability is More Than a Set of Projects• Building Sustainable Process Capabilities while Managing Day to Day Business Performance – More Than “Integration” Competitive Capabilities International (CCI) 3 © Competitive Capabilities International
    4. 4. Today,Tomorrow, 2020 Capabilities Challenge: Future Proofing Requires “More” than Projects“Real” Money & Integration”………… Costs ? Growth Process capability to be agile across end to end Demand-driven Value Network Journey to build agility Today 2020 Competitive Capabilities International (CCI) 4 © Competitive Capabilities International
    5. 5. “Linear Supply Chains Lack Scale Process & Visibility” --P&G Chief Supply Chain Officer “Change” Suppliers Manufacturers Distributors Consumers Partners Assemblers Wholesalers Customers Users; Buyers New Product or Service Merges to the Base Supply Process Manufacturer Customers Patients Projects and Programs Consumers Suppliers Materials Risk Risk Mgmt Manufacturing Distribution Risk Risk Risk Risk Risk Risk 5 day demand change 90 day response timeDisconnects… Silo’d & Functional Focus vs End to End Demand–Driven Processes •Agility and responsiveness X •Sustainable performance improvement •End to end process capabilities •Managed complexity & risk •Structure for “global operations” •End to end talent & skills, people development •Enabling end to end process "information” “Agility to Change” Competitive Capabilities International (CCI) © Competitive Capabilities International
    6. 6. Gartner, AMR Research Outside In view End to End Supply Chain Process Technology Fundamental Aligned Cross Functional Goals Change Leadership & Objectives ContinuousMeasurement Improvement Aptitude Culture Risk Management Power Competitiveness Demand Management “East-West” Through Process Process (e.g. S&OP) Global Network Management Performance “North-South” Goal Cost Optimized Supply Chain Alignment Align to customer value Differentiators Sustainability Services Profitable Trade Offs Competitive Capabilities International (CCI) © Competitive Capabilities International
    7. 7. “Supply Chain” Starts with the Buyer Choice; Is Outside-In; End to End & An Interdependent Network …& Impacts Point of Capabilities Here Starts here ….. Purchase Stock Outs “Integrative ImprovementConsumers, Shoppers Actions & & Buyers Trade Offs” Product Quality Make Choices Demand Supply On The Shelf Product Winning in New Costs to Serve Open MarketsAccount Profitability Innovation Complexity Costs or Embedded Risk Differentiates Risk Management Competitive Capabilities International (CCI) © Competitive Capabilities International
    8. 8. The Demand-driven Value Network Framework: P&G “CDSN “Thought Leadership Adapted from Product & Service Innovation AMR Research Demand Visibility Supply Visibility Customer – Patient backCustomers , Buyers, Users, Integrated Strategy, Business design Sufficiency & Value Network Suppliers & Partners Planning & Consumers Reliable, Channel User/ Profitable Demand Demand Consumer/ Response from & Translation Demand Supply Demand & Insights Network Based Management Trade Offs on Demand decoupling Segmented Pull Segmented Push Competitive Capabilities International (CCI) 8 © Competitive Capabilities International
    9. 9. The 5 Stages of Performance Improvement Maturity Leaders ”The Promise Of IT”Impact Learning End-to-end Network Average Integrative Improvement System Culture of Integrated Innovation and Functional Sharing Excellence Codified Expert (Situational, Led /Based Integrative Systemic and Projects Structured Improvement Strategic) Reactive Integration Within Fixes Implementation Core Functions (Situational and Stage 5 Systemic) of (Systemic – Limited Integrated of No Systemic Improvement Functions ) Stage 4 Continuous Projects led by Improvement ExpertsPlans or structure. (Ad Hoc - Projects) Stage 3 Fire Fighting Stage 2 Stage 1 Stages Of Performance Improvement Maturity Competitive Capabilities International (CCI) 9 © Competitive Capabilities International
    10. 10. IISd Scores ( April 2012) Competitive Capabilities International (CCI) © Competitive Capabilities International
    11. 11. Polling QuestionWhere do you think your maturity level is ?1. Stage 1: Reactive2. Stage 2: Expert-Led Projects3. Stage 3: Integrated Functional Excellence4. Stage 4: End-to-End Improvement System5. Stage 5: Learning Network Competitive Capabilities International (CCI) 11 © Competitive Capabilities International
    12. 12. Transformation - Two Core Thrusts of Work; Today and Tomorrow! Vision Strategic Intent Leadership Role Managing The Change Business Strategy, Intent, & Focus Areas Business Prioritized Management Work Role Future-ize The Business Control & Build Sustainable Manage the Business Improvement & Compliance & Compliance Capabilities Compliant Sustained & Controlled Change Management & Compliant Business & Alignment AgilityPerformance Capabilities Competitive Capabilities International (CCI) © Competitive Capabilities International
    13. 13. The Ultimate Goal… Sustainable, Anchored CapabilitiesUnsustainable Performance Sustainable Business Performance Improvement Excellence in Results •Balance “silo cost focus ” •Capabilities •Processes •Change Leadership “ lean and efficiency improvements” Necessary but not Sufficient Excellence in Work Practices Competitive Capabilities International (CCI) © Competitive Capabilities International
    14. 14. 4 Layers of “Management Systems”….illustrative process examples only Stages of Process-based Operating & Performance Improvement Maturity to Demand Driven Value Network Sufficiency Business Operating Improvement Goals & Projects Functional Process Integration Demand-driven end- end SC process integration Value driven Business tradeoffs & network System of Venture and 1 2 3 4 5 High Sufficiency Performance Demand Forecast Accuracy & Planning S & OP Balancing Business The end to end Innovation & Value driven Business Process & Profitability Sufficiency Business Tradeoffs way the business Supply Reliability & Supply Planning Planning Operating4 Analyses actually operates System Integrative Improvement System Deployment & Capability DevelopmentBusiness Operating Strategy, Execution, & Culture Performance Maturity – based Process – Model Based Decision Support context of data & informationTechnology Enabled Work Flow Processes & Data Management Integrated High Performance RFID S & OP Quality Information Traceability & compliance ? Technology Technology modeled workflows and Logistics Enabled Work Flow business processes using business &3 System of VMI & System & Business Planning Sourcing Distribution transactional data Process & Process Management CPFR Procurement Master data & process-based context of data2 Systems of Record High Performance CRM PLM SRM ? Transaction Technology based applications, data Processing ERP processing & data management Application SCM/E WHM Architecture “MES” Systems of1 Real time & Process Control Process and Data High Performance Control Automation Machines Controls Measurements Architecture Competitive Capabilities International (CCI) 14 © Competitive Capabilities International
    15. 15. Layers of “Management Systems”….illustrative process examples only Stages of Process-based Operating & Performance Improvement Maturity to Demand Driven Value Network SufficiencyBusiness Operating Business Operating System Improvement Goals & Projects Functional Process Integration Demand-driven end- end SC process integration Value driven Business tradeoffs & networkSystem of Venture and Integrative Improvement System5 1 2 3 4 High Sufficiency Performance Demand Forecast Accuracy & Planning S & OP Balancing Business The end to end Innovation & Value driven Business Process & Profitability Sufficiency Business Tradeoffs way the business Supply Reliability & Supply Planning Planning Operating Analyses actually operates System Flexible Decoupling Information &Business Operating Strategy, Integrative Improvement System Deployment & Capability Development Analytics Model Layer – Decision Support Models Execution, & Culture Performance Maturity – basedTechnology Enabled Work Flow Processes context of data & information & Data Management Integrated High Performance RFID S & OP Quality Information Traceability & compliance ? Technology Technology modeled workflows and Logistics Enabled Work Flow business processes using business & System of System & Business VMI Planning Sourcing & Distribution transactional data Process & Process Management CPFR Procurement Master data & process-based context of data Systems of Application, Data and IT Process Architecture High Performance CRM PLM Record SRM ? Transaction Technology based applications, data Processing ERP processing & data management Application SCM WHM Architecture “MES” Systems of Real time & Process Control Process and Data High Performance Control Automation Machines Controls Measurements Architecture Competitive Capabilities International (CCI) © Competitive Capabilities International
    16. 16. Polling Question• Is the “Decoupling Information Layer” a priority ? – Yes – No – Already in placeIs your IT deployment strategy aligned and synchronized to your Supply Chain performance development strategy ? – Yes – No Competitive Capabilities International (CCI) 16 © Competitive Capabilities International
    17. 17. The Integrative Performance Improvement System (IIS) Connects the Dots in Supply Chain Transformation from Traditional to Demand-Driven The Execution Challenge ! Transformation COE S & OP Demand INTEGRATED PROCESSES Supply A Strategic Projects > Processes > Demand-driven Value Network EnterpriseInitiative to 1 2 3 4 5 Lead Alignment & Develop Strategy “Evolving READINESS”Capabilities Using IIS Metrics Process –based Performance Platform Analytics Organization & Decision Support IT GOAL ALIGNMENT Competitive Capabilities International (CCI) © Competitive Capabilities International
    18. 18. Practice based Performance 1.9 2.3 3.1 New Product Launch and Introduction Inventory Level Optimization S & OP© Competitive Capabilities International Manufacturing Gate Quality Integrative Improvement Perfect Order performance Teamwork & - Change Management Business Goal: Eliminate Stock Outs Demand Forecast Accuracy Sourcing and Procurement Costs Knowledge management and Standards Competitive Capabilities International (CCI) Information and Technology Asset Reliability & performance + + + + + + + + + + + 5% 20% 10% 18 Stock Out Performance
    19. 19. S & OP Competitive Capabilities International (CCI) 19© Competitive Capabilities International
    20. 20. S&OP must Confront Conflicting Goals Goal: Make the financial budget. Tops-down Focus. Desires control and wants predictability of operations. Forecast definition: The budget FinanceGoal: Maximize Goal: Factory revenue & optimization,market share, Sales and improve costs wants Demand-side Supply-side Operations and minimize guaranteed Marketing demand product uncertainty availability Forecast Forecast definition: definition: Mold, color, ship- Supply Mold, color, Manufacturing Sales plan to at the Chain manufacturing Plan customer level location Goal: A feasible plan. Bottoms-up focus. Wants to minimize risk and disruption Forecast definition: The demand plan Adapted from AMR Research Competitive Capabilities International (CCI) © Competitive Capabilities International
    21. 21. Planning Integration Evolves Through Stages of Maturity Projects Integrated Processes & IT End -End SC Improvement Demand-driven Value Network Stage 2 Stage 3 Stage 4 Stage 5 Demand Planning Demand Planning Integrated Integrated Supply Planning Supply Planning Business Business Planning Planning S&OP S&OP Supply Supply Chain Supply Chain Supply Chain Alignment Alignment Chain Alignment AlignmentRisk, Complexity, Organization Design, Leading and Managing Change, Enabling IT Competitive Capabilities International (CCI) © Competitive Capabilities International
    22. 22. Conclusion Competitive Capabilities International (CCI) 22© Competitive Capabilities International
    23. 23. Closing ThoughtsThe End to End Supply Chain Starts at the “Buyer:” Shopper/Customer• The Journey : Readiness to Change / Performance Improvement Maturity is a Critical Factor.• Not Just “One Supply Chain” Demand-driven Segmentation Reduces Complexity!Supply Chain Strategy is the Business Operating Strategy• Top Down Change Leadership is Fundamental to Sustainable Transformation.• Supply Chain Undergoing Sea Change Transformation – from Functional Outputs to Business OutcomesBuilding End to End Process Capability is More Than a Set of Projects• Building Sustainable Process Capabilities while Managing Day to Day Business Performance – More Than “Integration”SC and IT Alignment: So, what’s new?• IT Alignment, IM Capabilities & Architecture• Prioritized and Synchronized to Support End to End Digitization of the Demand–driven Value Network• 4 Management Systems: Decoupling Layer Competitive Capabilities International (CCI) 23 © Competitive Capabilities International
    24. 24. Transformation - Aligned Through a Transformation “Office” Vision Strategic Intent Leadership Role Managing The Change Business Strategy, Intent, & Focus Areas Business Prioritized Management Work Role Future-ize The Business Control & Build Sustainable Manage the Business Improvement & Compliance & Compliance Capabilities Learning Integrative Network Improvement C System Functional od ifi Stage 5 ed Vision an Impact Excellence d St int ru Culture of Innovation eg ct and Sharing of ra I Production Know How Stage 4 ur te m ed d pl im im Expert based e pl (Situational, Systemic pl m e and Strategic) e Strategic Intent en m m ta en Stage 3 en No Cont. Imp. tio ta ta n tio tio ap n n pr ap N oa pr (S o ch itu Stage 2 oa C ba ch ati on se wi on tin d thi al uo on n an us th d Stage 1 th I e e Sy m ca fu st pr pa nc e ov bil tio mi e ity ns c) m of en th (S t e ys Pl lo te an ca mi s l c) or ex Compliant str pe uc rt tu (A re d Sustained . H Managing The Change oc ) & 1950 2010 2013 & Controlled Sustainable & Compliant Performance Improvement Culture Compliant Business AgilityPerformance Change Management Capabilities & Alignment COE Competitive Capabilities International (CCI) © Competitive Capabilities International

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