Most Significant Trends Impacting Global Supply Chain and Manufacturing Teams
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Transcript of Most Significant Trends Impacting Global Supply Chain and Manufacturing Teams
1
Most Significant Trends Impacting Supply
Chain and Manufacturing Teams
Bob Ferrari, Executive Editor- Supply Chain Matters Blog
Managing Director- The Ferrari Consulting Group LLC
Presented to: 2013 Prism User Group Meeting
October 20, 2013
Disruptive Mega-Trends
Slide 2
Industry and
Business
Environments
The Third IT
Platform &
Engineered
Systems
Industry
Supply Chain
Shifts
The Third
Industrial
Revolution
The Interplay of Significant
Mega-Trends Over the Next 5 Years
Talent
Management
Mega-Trend Convergence
Slide 3
Industry and
Business
Environments
The Third IT
Platform and
Engineered
Systems
Industry
Supply Chain
Shifts
The Third
Industrial
Revolution
Many Implications for Talent Management
Copyright 2013 The Ferrari Consulting and Research Group LLC Slide 4
Presentation Outline- Implication of
Convergence
Today’s industry and business environments
The Third Platform of information, IT infrastructure
and engineered system changes
Industry supply chain business process changes
The Third Industrial Revolution and the digitization
of manufacturing
The cited common denominator- impacts to talent
management
Takeaways and recommendations
Final thoughts
Copyright 2013 The Ferrari Consulting and Research Group LLC Slide 5
Introduction
• Independent supply chain and B2B
industry analyst- previous leadership
roles at AMR Research and IDC
• Multiple years of supply chain
business planning, operational and IT
systems implementation experience
• Recognized supply chain strategic and
tactical thought leader, technology
market influencer
• Consultant in supply chain strategy,
business process, and information
technology deployment
• Founder and Executive Editor Supply
Chain Matters blog
Top Ten SCM Blogs Top 25 Most Influential
SCM Blogs
Logistics Degree.net
Copyright 2013 The Ferrari Consulting and Research Group LLC
Industry Environments
More technology-empowered customers and
consumers (The Amazon Effect)
Growth and profitability from newer products,
bundled services and emerging markets
All forms of business conducted 24 by 7
Wall Street relentless focus on short-term
results
Increased awareness as to the critical
importance of the firm’s value-chain strategies
Unprecedented increase in significant risk
events with major business impacts
Slide 6
2010-2012: A Watershed for Disruptive Supply Chains
Slide 7
Earthquakes Floods Volcanos
Product Recalls
Counterfeit
Products
Major Supply
Disruptions
Major Accidents
Copyright 2013 The Ferrari Consulting and Research Group LLC
Supply Impacts from 2011 Japan Disaster
Hitachi: 60 percent of global supply of airflow sensors
used in production of cars and trucks
Renesas Electronics: 30 percent of global supply of
micro-controllers in automotive engines and consumer
electronics
MGC: 85 percent global supply of BT resin used for
semiconductor substrate attachment
Shin-Etsu: 50 percent of supply semiconductor silicon
substrate
Kurreha Corp.: 70 percent of supply of PVDH
Polymer Resin used in production of Apple iPad2
Slide 8
Disaster Loses-2011
Slide 9
$35 Billion
$14 Billion
$8-11 Billion
Estimated Total Loses: $350 Billion
Estimated Insurance Coverage: $108 Billion
Source: Wall Street Journal and Munich Re December 2011
Highlights Thus Far in 2013
Slide 10
• The ongoing European economic crisis
• The temporary grounding of all operational
Boeing 787 Dreamliner aircraft
• Port of Hong Kong dockworkers strike
• Threat of both a west coast and an east coast
dockworkers strike
• Appearance of horse meat in Europe’s food
supply chains
• Counterfeit cancer and other drugs
• More contaminated milk powder in China
• SK Hynix DRAM production facility fire
• Major fire at sugar warehouse complex
• Continued extraordinary storms and weather
patterns - $56 billion in loses in first half
The New Normal
Slide 11
Risk Complexity Unpredictability
Balancing Efficiency – Agility - Responsiveness
In a 7 Day by 24 Continuous Cycle
C-Suite Concerns and Objectives
Slide 12
“ As a group, CEO’s are investing more in customer insights than any
other functional area. They are seeking a better understanding of
individual customer needs and improved responsiveness”
2012 IBM Global Chief Executive Officer Study of over 1700 CEO’s Across 18 industries
Top CFO and Finance priorities over next 2-3 years:
73 percent cite lowering costs and increasing productivity
61 percent cite investing in analytics, planning, budgeting/forecasting
44 percent cite needs for upgrading organizational skills
2013 Accenture CFO Survey of 1250 Senior Finance Executives from Multiple Industries
Top Cited Concerns:
• Our inability to predict future performance in the new normal of
permanent market volatility (70 percent)
• Worried about the resilience of their supply chains (80 percent)
March 2012 Accenture Outlook: Preparing for the Unpredictable
Copyright 2013 The Ferrari Consulting and Research Group LLC
Implications
Accepting risk as the norm with emphasis on:
Business Agility- Responsiveness-Resilience
Rethink historic-based business planning and
execution in favor of more predictive
capabilities to improve responsiveness
Deeper business intelligence
Constant innovation in multiple dimensions
Continue to do more with less
Continue to breakdown organizational silos
Revisit value-chain strategies in the light of
customer responsiveness, innovation and risk
(vs. cost)
Slide 13
Copyright 2013 The Ferrari Consulting and Research Group LLC
Analytics and Big Data
An Analytically-Driven Process
“Big-Data” term often over-hyped and used to convey
all sorts of concepts
Organizations are literally drowning in data but lack
meaningful insights
Analytics is essentially how to process, analyze and
visualize vast arrays of information in more
innovative ways
Analytics-enabled decision-making in speed, quality
and proper context
Both a qualitative and quantitative mindset:
What do we know vs. what do we think we know
Requirement of augmented or new skills
Slide 14
Convergence in Information and IT
Infrastructure Technologies
Slide 15
The Third IT
Platform &
Engineered
Systems
IDC- The Third IT Platform
Slide 16
Millions
of Users
Thousands
of Apps 1st Platform
Mainframe Terminal
Source: IDC Predictions 2013- Competing on the Third Platform
Hundreds
of Millions
of Users
Tens of
Thousands
of Apps
2nd Platform
The Internet Client/Server PC
Billions
of Users
and
Devices
Millions of…
Apps
Services
Experiences
Content
Information
3rd Platform
Mobile Broadband
Mobile Devices & Apps
Big Data / Analytics
Cloud Services
Social Business
90 Percent of IT Industry Growth 2013 – 2020 by Investment in the 3rd Platform
Copyright 2013 The Ferrari Consulting and Research Group LLC
Hardware and Software Convergence= More
Engineered Systems
Applications define required service
level needed and expected
Virtual pools of CPU-Memory-
Services modularized and on-
demand- the new cloud utility model
New advances: in-memory database,
memory architected systems and
OLAP
Slide 17
Software Defined
• Cloud
• Data Center
• Appliance
• Device
Copyright 2013 The Ferrari Consulting and Research Group LLC
Moore’s Law of Innovation Continues
Advances in more predictive analytics and data
visualization applications and tools
Explosion of smarter mobile computing platforms
and the ability to leverage more real-time mobile data
Incorporation of structured and unstructured data in
decision-support needs
Advances in item tracking and sensor technologies
(application logic on a miniature chip)
Slide 18
Just Last Week
Slide 19
Demonstration of First Stand Alone
Sensor in Printed Electronics
Announced October 17, 2013 by
ThinFilm Associates ASA
Low power Smart Sensor Label built from printed
and organic electronics with potential application to:
• Assuring temperature-sensitive pharmaceutical
products are safe and effective while preventing
unnecessary destruction of usable products
• Instant insight on both shelf-life, temperature
and other status factors of perishable food
products
Copyright 2013 The Ferrari Consulting and Research Group LLC
Engineered Systems and New Opportunities
o Data attached to an application to de-coupled
streaming planning and execution data feeding
an information utility
o OLTP central data warehouse to in-memory,
highly engineered, OLAP “apps”
o Data aligned to business constraints, insights and
predictive decision-support capabilities
o More emphasis on data visualization / simulation
and planning scenario tools
o Augmenting existing IT investments with more
predictive and business intelligence capabilities
o Mobile and social based information and
applications addressing the mobile professional
Slide 20
Leverage Current Converging Forces of Advanced Technology
Industry Supply Chain Business
Process Convergence
Slide 21
Industry
Supply Chain
Shifts
22
Supply Chain Business Process Evolution
Supply
Chain
Business
Process
Classic Era
Inside-Out Orientation
Transitional Era
Lean JIT Concepts
Networked Era
Outside-In Orientation
• APICS sequential MPS-
MRP planning processes
• Primarily push-driven
• Historic and transactional
based information flows
• Four walls focused
• Planning & execution
distinctly different
• Reporting/decision-
making driven by historic
data
• Functional stovepipes
• Client-Server ERP
• Enterprise Data Warehouse
• Demand drives the
networked supply chain
• Combination push-pull
supply chain network
• More dynamic business
cycles/events
• Planning and execution
cycles merge together
• Forward-looking
analytics and decision-
making
• Connected / informed /
responsive network
• Major emphasis on cost
reduction and control
• Outsourced production
and component supply
• Lean/JIT/Six Sigma /
continuous improvement
• Pull-driven supply chain
orientation
• Transition to demand
focused planning and
decision-making concepts
• Breaking down of
functional stovepipes
• ERP coupled to Specialty
Best-of-Breed Applications
• Collaborative Applications
IT
Enablers
• Business Intelligence
• In-memory analytics
• Cloud-based applications
Industry Supply Chains
Slide 23
Navigating Capabilities, Resources and Supply
Chain Response in the New Normal
Overcome Complexity – Respond to Constant Change
Exception Driven – Insure Resiliency
Copyright 2013 The Ferrari Consulting and Research Group LLC 24
End-to-End Supply Chain
24
Supplier Customer Suppliers’
Supplier
Source
Internal or External Internal or External
Your Company
Return
Deliver Make Source
Return
Plan
Deliver
Return
Source
Return
Make Source
Return
Plan
Deliver
Return
Deliver Make
Plan
Return Return
Customers
’
Customer
Physical, Information, and Financial Flow
25
Today’s Supply Chains
• Complex, global-based value-chains
• Segmented-Open-Closed-Vertically Integrated-
Outsourced
• Servicing more demanding customers:
• Increased product complexity
• Technology-enabled online consumer
• Shorter product development cycles
• Multiple years of cost-cutting, lean and demand-
driven initiatives
• Explosion in data- drowning in data – need for
smarter data
• Much broader umbrella of influence and
responsibilities associated with products and
services
Balancing Supply Chain Performance Objectives
Customer Service and Responsiveness
Asset Utilization Efficiency
Perfect Order Fulfillment
Fill Rate
Facility Utilization
Outsourcing
Third-party service
Supply Network Costs
Labor Productivity
Integrated Planning
and Execution
Source: MIT Supply Chain 2020 Program, Adapted by Ferrari Research Group
Top Line Revenue Growth
Cost Reduction, Productivity
and Profitability Growth
Return on Assets (ROA)
Copyright 2013 The Ferrari Consulting and Research Group LLC
A CSCO Perspective
His articulation for the supply chain winners of tomorrow:
Speed Rules – Fast Wins
Predictability becomes the competitive advantage
Customer responsiveness becomes fundamental
Supply chain ecosystems focus on balance for success
End-to-end solutions create new value for customers
Slide 27
Tom Linton, Chief Supply Chain Officer, Flextronics
Responsible for 121 global manufacturing sites and 10K people
Hundreds of OEM customers
Copyright 2013 The Ferrari Consulting and Research Group LLC
Implications Translated to CSCO Objectives
Align supply chain strategies to required product,
customer service and financial outcomes
Supply chain response and segmentation strategies
Global sourcing no longer one-dimensional
Invest in augmented capabilities:
Deeper supply chain wide visibility (vertical and horizontal)
Harnessing smarter data, process and business intelligence
Predicting events or possible outcomes via deeper analytics,
continuous planning, what-if and simulation based planning
Finding and retaining required talent
Slide 28
Copyright 2013 The Ferrari Consulting and Research Group LLC
Advanced Technology Offers Enhanced Tools
The ability to extract insights at sophistication levels not
easily achieved in the past:
From historic sequential to more predictive and near real-time
planning and fulfillment information insights
Leverage advancements in in-memory computing, data
visualization to support simulation and what-if needs
Mobile and social enabled applications to accommodate
virtual mobility, deeper collaboration and time-critical needs
Analysis of both structured and unstructured data
Broader horizontal and vertical visibility to physical,
operational and most optimal needs of the supply chain
Relate external information and market conditions to
anticipated product demand or areas of potential risk
Slide 29
Standard Reports
Ad Hoc Reports
Query / Drill Down
Alerts
Statistical Analysis
Randomized Testing
Predictive Modeling
Optimization “What’s the best that can happen?”
“What will happen next?”
“What happens if we try this?”
“Why is this happening?”
“What actions are needed?”
“What exactly is the problem?”
“How many, how often, where?”
“What happened?”
Predictive and
Prescriptive
Analytics
Descriptive
Analytics
(the “what”)
Degree of
Intelligence
Source: Analytics At Work, Thomas H. Davenport, Babson College
Analytics Defined- Tom Davenport
Supply Chain Analytics- Davenport
Slide 31
What will happen?
(Prediction /
Simulation)
What’s the best
that can happen?
(Optimization)
What
happened?
(Reporting)
How and why
did it happen?
(Modeling)
Information Insight
Content Types Yield
management,
product mix,
scheduling,
routing
optimization
Process
control,
bottleneck
analysis
Product quality,
delivery
performance, asset
utilization
Source: Analytics At Work, Thomas H. Davenport, Babson College, 2011
Demand
forecasting
Copyright 2013 The Ferrari Consulting and Research Group LLC
Analytics Within Supply Chain Processes
Deployed in supply chain process for
quite some time
Supply chain planning and optimization
Transportation scheduling and routing
Factory and production process scheduling
Multi-echelon inventory optimization/ network
design
New advances in information technology
now open opportunities and awareness
Slide 32
Example- Anticipate and Exploit
Slide 33
Source: Weather Channel Now Forecasts What You’ll Buy, The Wall Street Journal, August 14, 2013
From Cable
Network to
Business of
Forecasting
Consumer
Behavior
The
Weather
Company
Copyright 2013 The Ferrari Consulting and Research Group LLC
Supply Chain Process Convergence
A re-look at sequential planning and execution
processes in favor of:
Converging planning with execution processes and shift the
focus toward response management
Augment planning with predictive analytics and shift
emphasis toward: predict – sense – intelligent response
More real-time sensing of the demand for products in
context to physical items, assets, resources, suppliers
True decision support fueled by embedded intelligence
Slide 34
The Holy Grail of
Supply Chain Insights-Enabled
Execution
The Digitization of Manufacturing
Product and Service Convergence
Slide 35
The Third
Industrial
Revolution
The Third Industrial Revolution
Slide 36
Articulated by The Economist – April 2012
A Potential Revolution in Manufacturing
Online Collaborative Manufacturing Services
The Economist- The Third Industrial
Revolution
Slide 37
Millions of
artisans
brought
together
The Age of
Mechanization First Revolution
Late 18th Century- Mechanization of
the Textile Industry
Source: The Economist magazine, April 21, 2012
Large
factories and
leveraged
economies of
scale
The Age of
Mass
Production
Second Revolution
Early 20th Century- Henry Ford’s moving
assembly line
Leveraging
of Digitally
Connected
Devices
The Age of
Mass
Customization Third Revolution
Sophisticated Software
New Materials
Dexterous Robots
New Processes
The digitisation of manufacturing will transform the ways goods are made
Copyright 2013 The Ferrari Consulting and Research Group LLC
Continued Technology Breakthroughs
Additive Manufacturing and 3D Printing techniques
Faster and more sophisticated 3D based production
simulation (virtual reality)
Next generation of smarter, cheaper, more
dexterous robots addressing human assembly
applications and needs
Item level tracking, mobile computing and the
“Internet of Things”
Slide 38
Copyright 2013 The Ferrari Consulting and Research Group LLC
Advanced or Substitute Materials
Lighter, Stronger, More Durable…
Steel or aluminum to carbon based fiber
Steel castings to lighter weight aluminum
Gorilla Glass to Sapphire
Ceramics in high temperature applications
Next Generation Technology Advancements
Nanoscale engineered compounds and components
Virus or bacteria based energy generation
Sustainably-focused compounds and materials derived
from recycled plastics or re-engineered waste systems
Slide 39
GE Invests in Industrial Internet
Slide 40
By next year, almost all new equipment made by General
Electric will include sensors and Big Data software
“The ideas of speed, of information velocity, is what will
differentiate the winners from the losers”
Copyright 2013 The Ferrari Consulting and Research Group LLC
Resurgence of Social Collaborative Manufacturing
Communities or highly specialized
manufacturing clusters offering local and
global design and production services
Online collaborative design and
manufacturing services firms
Slide 41
Consistently Identified Impact is Talent
Slide 42
Talent Management
Augmenting Skills Gap
Sourcing and Retention
Copyright 2013 The Ferrari Consulting and Research Group LLC
Consider
43 Percent of Baby Boomers Will Retire in the Next
Five Years
The talent management challenge has global wide
dimensions especially in emerging markets
Next Year’s Average Bachelor’s Degree Candidates
were Born in 1990
Have paralleled explosions in technology
Always lived in a tech-based and gaming culture
Experienced smaller-faster-better
Communicate through social networks and buy
exclusively online
Slide 43
The Profound Gap in Manufacturing Productivity
Slide 44
Source: IDC Manufacturing Insights and Government Data
Copyright 2013 The Ferrari Consulting and Research Group LLC
Various Skill Gaps Articulated
Supply Chain End-to-end process knowledge- broad based functional and
business knowledge
Deep analytical and information analysis- complimented by a
qualitative mindset
Ability to build strong internal/external relationships
Comfortable in rapidly-changing ad-hoc environment
Constructively challenge the status-quo
Manufacturing (The above plus) Advanced math, reading, writing, computer skills
Hands-on training and experience
Ability to manage face-to-face and distant relationships
Slide 45
Takeaways and
Recommendations
Slide 46
Copyright 2013 The Ferrari Consulting and Research Group LLC
In Summary
Change is a given in today’s rapid clock speed of business
Global supply chains constantly challenged with complexity /
variability / volatility and risk
Teams drowning in data but lacking important insights
Senior management converging on need for improved business
responsiveness and more predictive decision-making
Business, technology and supply chain process convergence will
open new opportunities in more predictive capabilities
Manufacturing and services are converging as the best means
to remain globally competitive
Talent management has become the critical determinant and
challenge for desired new capabilities
Slide 47
Copyright 2013 The Ferrari Consulting and Research Group LLC
Today’s Key Takeaways
Every organization needs to have a cohesive roadmap that
can leverage these converging mega-trends:
Business and C-level Objectives
Information Technology Convergence
Industry Supply Chain Process Convergence
Digitization & Convergence of Manufacturing with Services
Every individual needs to consider how these trends will
impact your personal and organizational team skills
More than ever, the planets are aligning and timing is right for
active management support for both of the above objectives.
Slide 48
Copyright 2013 The Ferrari Consulting and Research Group LLC
Plan for Impact on Existing People and Process
Recognize the growing awareness of the
power of a predictive analytics driven process
Be cognizant that many of these new
capabilities are still evolving but will occur
Begin the re-skilling process individually and
within your teams
Encourage academic institutions, internal
training and other groups to develop
curriculum that provides students broader
analytical,, functional and business skills
Slide 49
Copyright 2013 The Ferrari Consulting and Research Group LLC
Other Recommendations
The primary goal remains enhancing process capabilities;
secondary goal is to leverage new advances in IT
Supply chain and manufacturing leaders must consistently
foster strategic and collaborative relationships with internal /
external business, product management and supplier teams
Begin transformation in small, managed scope and expand
Tailor predictive analytics tools to support specified
opportunities based on business priorities
Include the change management and skills impacts in your
milestones. Consider centralization of capability
Critical to strive for high data quality and well understood
information taxonomy
Not a rip and replace of existing systems but rather an insertion
of augmented capability
Slide 50
Copyright 2013 The Ferrari Consulting and Research Group LLC
Final Thoughts
Slide 51
Seize the opportunity for the alignment
of business, supply chain and IT
planets within the next five years
Even the most sophisticated products
and technology still require a human to
look out the windshield and make
exception-based decisions and required
course corrections
Seize the opportunity for the alignment
of business, supply chain and IT
planets within the next five years
Even the most sophisticated products
and technology still require a human to
look out the windshield and make
exception-based decisions and required
course corrections
Slide 52
That’s a Wrap- Questions ?
Thank You
Contact Information: Bob Ferrari
Email: [email protected]
Twitter: @Bob_Ferrari
Web Site: http://www.theferrarigroup.com