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  • 1. Supply Chain InsightsDelivering Insights to Line of Business Leaders Supply Chain Insights, LLC 2012
  • 2. BRICKS Book Publishes Matter in August 2012 The Role of Supply Chains in Building Market-Driven Differentiation LORA M. CECERE CHARLES W. CHASE JR.
  • 3. Who does it Best? Dell Toyota Procter & Gamble 3 Supply Chain Insights, LLC 2012
  • 4. 4 Who does it Best? SC Excellence 38% 21% 17% 4% 4%P&G Apple Dell Wal-Mart Toyota Supply Chain Insights, LLC 2012
  • 5. 5What were the Tipping Points? Tipping Points 52% 36% 20% 16% 8% Supply Chain Insights, LLC 2012
  • 6. What is Supply Chain Excellence? Supply Chain Insights, LLC 2012
  • 7. Supply ChainA supply chain is a complex system withcomplex processes with increasingcomplexity. Supply Chain Insights, LLC 2012
  • 8. Alignment to Strategy Business strategy What are the right things to do to increase company value? Value-network Supply Chain Strategy What are the right ways to support the business strategy? What are the right trade-offs between value drivers for each value network?Align Demand Right Product Design the Build Align SupplyRelationships Platforms Supply Organizational RelationshipsSupply chain strategy Response Systems and Manage Talent Effective Supply Demand Networks Design Networks Continuous Networks Improvement Joint Value Innovation Supply Chain Execution of buy- Creation Strategies Methodologies Network Design Capabilities Required side strategies Business Process How do I do the right things right? Supply Chain Insights, LLC 2012
  • 9. 9 Typical Organization CEO Chief Customer COO Officer Chief VP of Supply VP of Marketing Sales CFO Chain Manufacturing Officer Account Customer Procurement Logistics CIO Quality Teams ServiceGrowth Volume Cost Supply Chain Insights, LLC 2012
  • 10. A Look Back Supply Chain Insights, LLC 2012
  • 11. Supply Chain Tipping Points1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 JIT Supply Chain Internet/Email RFID Organization Evolution of eProcurement the PC Re-Engineering the Total Quality S&OP Organization Management Theory of Constraints (Michael Hammer)Supply Chain Excellence = Supply Chain Excellence = Islands of Manufacturing Vertical Silo Efficient Order to + + Excellence Excellence Excellence Cash Processes Inside-Out Inside-Out Supply Chain Insights, LLC 2012
  • 12. Supply Chain Tipping Points 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 .com Social Responsibility Y2K Demand Driven Concepts CSCO Lean Six Sigma Market-Driven Value NetworksSupply Chain Excellence = Supply Chain Excellence = Vertical Silo Outsourcing Value-Based Outcomes + Excellence Effectiveness Delivered by Horizontal Processes Inside-Out Outside-In Supply Chain Insights, LLC 2012
  • 13. The Long Tail: Growing ComplexityVolume Level of Predictability Predictability based on forecast accuracy vs Actual Order Profiles Supply Chain Insights, LLC 2012
  • 14. Commodity Price Pressure 400.00 350.00 300.00 250.00 Corn (metric Ton) Wheat (metric Ton) 200.00$/LB Coffee, Robusta (Pound) 150.00 Sugar (Pound) 100.00 Beef (Pound) Crude Oil (Barrel) 50.00 0.00 Source: Index Mundi 14 Supply Chain Insights, LLC 2012
  • 15. Days of Inventory6560555045403530 2002 2003 2004 2005 2006 2007 2008 2009 2010 Household Products Chemical Pharma Average Data Source: CFO Magazine Supply Chain Insights, LLC 2012
  • 16. Days of Working Capital95857565554535 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Household Products Chemical Pharma Average Data Source: CFO Magazine Supply Chain Insights, LLC 2012
  • 17. Evolution of Supply Chain Excellence ContinuousAlign Building Horizontal Connector Testing Learning Orchestrate Improving Adapt Resilient Reliable Right Product Efficient Sense Demand Demand Volatility and Supply Right Place Cost Shape Right Time Procure to Demand and Supply pay/order to Supply based Volatility cash on Market Right Cost Supply Chain Insights, LLC 2012
  • 18. What is a Market-driven Value Network?An adaptive network focused on a value-based outcome that senses and translatesmarket changes (buy and sell-side markets)bi-directionally with near-real time datalatency to align sell, deliver, make andsourcing operations. 18 Supply Chain Insights, LLC 2012
  • 19. Great Recession:Leaders sensed Market Changes 5x Faster Supply Chain Insights, LLC 2012
  • 20. What is a Value-based Outcome?Industry Today TomorrowAirspace and Selling aircraft Performance-Defense based logisticsAutomotive Efficiency: sale and Safe transportation life of a carConsumer Right product, right Effectiveness atProducts time, right place the moments of truthHealthcare Efficient sickness Long life and wellness 20 Supply Chain Insights, LLC 2012
  • 21. Sales and Operations Planning Supply Chain Insights, LLC 2012
  • 22. In 2011 Supply chains are grappling with 90% skyrocketing costs and supply volatility. Struggling with the integration of business 87% planning and supply chain planning technologies. 85% Supply chains experienced a disruption. 62% Companies have multiple S&OP processes. ! Industry progress on working capital has stalled.Source: Supply Chain Resilience 2011 2011 The Business Continuity Institute. All Rights Reserved. Supply Chain Insights, LLC 2012
  • 23. S&OP Evolution Greater Benefit Business- GrowthSales Driven Resilience planning DrivenMatch Demand Efficiency Coordination with Supply of Plans Manufacturing- Demand Market Driven Driven Driven Orchestrate Deliver a Feasible Sense and Demand Plan for Operations Shape Demand Market to Market Supply Chain Insights, LLC 2012
  • 24. 24Aligning for Balance S: Go-to- OP: Demand Market Strategies & Orchestration Goal Supply Chain Insights, LLC 2012
  • 25. Image by felixj used with Attribution as directed by Creative Commons http://www.flickr.com/photos/felixj/462022653 Where we are Headed 2011 Altimeter Group Supply Chain Insights, LLC 2012
  • 26. Historically, we have: Tried to get precise on inaccurate data Believed that the most efficient supply chain is the most effective supply chain Built efficient chains, but not effective or adaptive networks Wrongly defined the Rs Focused inside-out, not outside-in. Rewarded the urgent, not the important Responded without sensing. 26 Supply Chain Insights, LLC 2012
  • 27. Supply Chain Insights, LLC 2012
  • 28. Supply Chains Dont Play by the Rules But, wh at if they could? 28 Supply Chain Insights, LLC 2012
  • 29. Big Data Supply Chains are Evolving Challenges: Structured Transactional Data Time phased data Volume SocialUnstructured Channel Data Customer Service Warranty Velocity Temperature Sensor RFID Data QR codes GPS Variability New Mapping and GPS Video Data Voice Types Digital Images 29 Supply Chain Insights, LLC 2012
  • 30. Connecting the Extended Supply Chain Transactional Transactional Transactional Applications Applications ApplicationsTrading Partner Trading Partner Trading Partner 1 2 3 30 Supply Chain Insights, LLC 2012
  • 31. Evolving Supply Chain Architectures Collaborative Collaborative Collaborative Layer Layer Layer Transactional Transactional Transactional Applications Applications ApplicationsEnterprise Data Enterprise Data Enterprise Data Warehouse Warehouse WarehouseTrading Partner Trading Partner Trading Partner 1 2 3 Key: Supplier Signal Predictive Analytics Repository Demand Signal Transactional Adapters Repository and Intelligent Rule Sets 31 Supply Chain Insights, LLC 2012
  • 32. Wrap-up Move the puck. Supply chain excellence is about more than supply and cost. Make it about value and growth. Invest in new technologies to harness growth: make it count. For manufacturers and retailers, supply chain is business. 32 Supply Chain Insights, LLC 2012
  • 33. 33Thank you! Lora Cecere [email protected] Blog: www.supplychainshaman.com Twitter: lcecere Linkedin: linkedin.com/pub/loracecere/0/196/573 Supply Chain Insights, LLC 2012