Presentation on the Future of Supply Chains at Transplace Conference in San Antonio
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Transcript of Presentation on the Future of Supply Chains at Transplace Conference in San Antonio
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Supply Chain 2020
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Supply Chain Insights LLC Copyright © 2016, p. 2
Disclaimer: I am a Skeptic
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Supply Chain Insights LLC Copyright © 2016, p. 3
A Social Scientist
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Supply Chain Insights LLC Copyright © 2016, p. 4
A Fortune-teller of Sorts….
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I Write for the Supply Chain Leader
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Supply Chain Insights LLC Copyright © 2016, p. 6
Delivering Open Content To The Market
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15 Years Ago
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Supply Chain Insights LLC Copyright © 2016, p. 8
Looking Back
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Pressure Is On!
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Supply Chain Insights LLC Copyright © 2016, p. 10
Current State of Supply Chain
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Supply Chain Insights LLC Copyright © 2016, p. 11
Descriptors Used by Leaders
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Supply Chain Insights LLC Copyright © 2016, p. 12
Who Has a Supply Chain That Is Working Well?
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Supply Chain Insights LLC Copyright © 2016, p. 13
Since 2000, 52 percent of the companies in the
Fortune 500 have either gone bankrupt, been
acquired, ceased to exist, or dropped out of the
Fortune 500.
Activist campaigns against companies with a market
cap greater than $10 billion has more than doubled
since 2010. Activists won, partially won or settled
73% of proxy fights in 2014, up from 55% in 2010.
Increasing Pressure on Operations
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Supply Chain Insights LLC Copyright © 2016, p. 14
Productivity
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Supply Chain Insights LLC Copyright © 2016, p. 15
Technology Evolution
ERP
SRM
APS
PLM
CRM
Operational Investments Workforce ProductivityAnalytics
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Understanding the Organization
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Supply Chain Insights LLC Copyright © 2016, p. 17
Right Stuff?
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Supply Chain Insights LLC Copyright © 2016, p. 18
Supply Chain as a Function
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Supply Chain Insights LLC Copyright © 2016, p. 19
Middle Management Has Greatest
Shortage of Supply Chain Talent
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Supply Chain Insights LLC Copyright © 2016, p. 20
Growing Talent Gap
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Evolution of Visibility
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Supply Chain Insights LLC Copyright © 2016, p. 22
Increase in Outsourcing
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Supply Chain Insights LLC Copyright © 2016, p. 23
Supply Chain Visibility
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Supply Chain Insights LLC Copyright © 2016, p. 24
Evolution of Visibility
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Supply Chain Insights LLC Copyright © 2016, p. 25
Vision: Network of Networks
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Supply Chain Insights LLC Copyright © 2016, p. 26
• Bi-directional flows
• Collaborative workflows
• System of record
• Optimization and analytics
• Learning over time
• Automation of planning master data
• On-line benchmarking
What is Important?
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Supply Chain Insights LLC Copyright © 2016, p. 27
The Evolution of the Long Tail
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Supply Chain Insights LLC Copyright © 2016, p. 28
Bullwhip Effect
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Supply Chain Insights LLC Copyright © 2016, p. 29
Need for Network Ownership
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Metrics That Matter
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Supply Chain Insights LLC Copyright © 2016, p. 31
What We Expected
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Supply Chain Insights LLC Copyright © 2016, p. 32
A Supply Chain
is a Complex System
with Complex
Processes
with Increasing
Complexity
What We Learned….
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Supply Chain Insights LLC Copyright © 2016, p. 33
The Supply Chain Effective Frontier
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Supply Chain Insights LLC Copyright © 2016, p. 34
Chemical Industry a Look at Orbit Charts: Dow & DuPont(Inventory Turns and Operating Margin)
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Supply Chain Insights LLC Copyright © 2016, p. 35
A Closer Look at Orbit Charts: Automotive
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Supply Chain Insights LLC Copyright © 2016, p. 36
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014
2006
4.0
5.0
6.0
7.0
8.0
9.0
10.0
-0.10 0.00 0.10 0.20 0.30 0.40 0.50 0.60
Operating Margin
Eli Lilly and Company Novo Nordisk
2014NVO
0.31, 6.48
2014
2006
Best Scenario
LLY
0.24, 8.30
Average (Operating Margin, Inventory Turns)
Inven
tory
Tu
rns
A Closer Look at Pharmaceuticals: Novo Nordisk Making Progress
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Supply Chain Insights LLC Copyright © 2016, p. 37
2006
2014
2006
2014
6
7
8
9
10
11
12
13
0.09 0.10 0.11 0.12 0.13 0.14 0.15 0.16 0.17 0.18 0.19
Inve
nto
ry T
urn
s
Operating Margin
The Emerson Electric Company Schneider Electric SE
Best Scenario
SBGSY
0.13, 7.37
EMR
0.16, 10.95
Average (Operating Margin, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014 from YCharts
Electrical Equipment: Operating Margin vs. Inventory Turns
(2006 – 2014)
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Planning Maturity: Large Conglomerate
Application Channel Sell Deliver Make Source Suppliers
Strategic
Planning
6-18 months
Partner
Planning
Network Design Strategic
Sourcing
Tactical Planning
12-52 weeks
Sales and Operations Planning Commodity
Council Buying
Strategies
Requirements
Planning
Joint
Value
Creation
Forecasting Inventory
Configuration
Tactical
Supply
Supplier
Development
Transportation
Planning
Material
Orchestration
Operational
Planning
3-12 weeks
Demand Sensing (MDS
and DS)
Inventory Planning
DRP/Load
Planning
Deployment
Production
Planning
MRP Supplier
Sensing
Internal Visibility Supplier Visibility
Executional
Planning
0-3 Weeks
Customer VMI
Trade Promotion Execution
ATP
Supplier VMI
Transactional
Data
Transactions
Planning Master
Data
Planning Master Data
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Supply Chain Insights LLC Copyright © 2016, p. 39
• Which metrics matter?
– Growth, operating margin, inventory turns, ROIC, customer
service (in the eyes of the customer)
• How do we get unstuck?
– Focus cross-functionally on a balanced portfolio. Bonus
employees against the portfolio.
– Augment with functional metrics focused on improving
RELIABILITY.
• What are the functional reliability metrics?
– Examples include: forecasting, first pass yield, OEE, on-time
delivery, orders shipped complete, hands-free orders, schedule
attainment, safety metrics, employee turnover
Insights
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Making the Digital Pivot
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Supply Chain Insights LLC Copyright © 2016, p. 41
• Supply chains that learn as we sleep
• Multi-tier planning and automation of replenishment
• Network of networks: network inter-operability
• Embedding of sentiment analysis
• Interactive UI
• New business models: confluence of new technologies
Looking Forward
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Supply Chain Insights LLC Copyright © 2016, p. 42
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Supply Chain Insights LLC Copyright © 2016, p. 43
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Supply Chain Insights LLC Copyright © 2016, p. 44
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Supply Chain Insights LLC Copyright © 2016, p. 45
Confluence of Technologies
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Supply Chain Insights LLC Copyright © 2016, p. 46
Data Strategy for….
Clouds?
Streams?
Lakes?
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Supply Chain Insights LLC Copyright © 2016, p. 47
Big Data Supply Chains are Evolving
47
Challenges:
• Transactional
• Time phased data
Structured
Data
• Social
• Channel
• Customer Service
• Warranty
• Temperature
• RFID
• QR codes
• GPS
• Mapping and GPS
• Video
• Voice
• Digital Images
Unstructured
Data
Sensor
Data
New
Data
Types
Volume
Velocity
Variability
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Supply Chain Insights LLC Copyright © 2016, p. 48
Analytics Maturity
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Supply Chain Insights LLC Copyright © 2016, p. 49
Learning a New Language
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Supply Chain Insights LLC Copyright © 2016, p. 50
Data Types
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Supply Chains Don’t Play by the Rules
51
But,
what if
they
could?
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Supply Chain Insights LLC Copyright © 2016, p. 52
Case Study: Internet of Things
Rethinking Supply
Chain Execution
Closed Loop
Replenishment
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2:00am Emergency
Drug Call
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11:02
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11:1811:22
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SHM PowerPoint Template Guidelines 03.15.10
Intelleflex Confidential
Opportunity
• 1/3 of shipped produce wasted: $34B in annual global waste from perishable foods
• 50% is due to temperature variations from the farm to retail shelf
• Reducing temperature related shrink by half is approx. $9B opportunity.
Perishable Produce – A Closer Look
1% reduction in Shrink Increase in profit of
$1,173,555
6% reduction in Shrink Increase in profit of
$7,378,830
One Commodity: Strawberries
Case Study on Shelf life
Perishable Products: RFID Cold Chain Opportunity
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Group by First In or Shelf Life?
Having different remaining shelf life mixed on pallets, causes problems later. Sending short shelf life berries on
longer delivery cycles turns Good Berries into BAD Berries for the retailer and others. More yellow & red pallets in
Philadelphia & Southern California ~ More shrink at the retailer ~ Lower customer satisfaction
15+ 14+
13+
11+
15+ 15+ 15+
10+
<10
12+
12+
<1012+
15+
14+12+
11+14+
13+
12+
12+
10+
<10
<10
15+
15+
15+
15+
15+
15+
15+
15+
15+
15+15+
Currently berries come in from growers, pass QC, and are put on export pallets on a First In Basis (traceability control)
WHICH RESULTS IN MIXED SHELF LIFE ON MULTIPLE PALLETS….
ALL GOOD BERRIES, BUT - they have different remaining shelf life when received from growers
If we can group berries by shelf life, we avoid problems on multiple pallets – and send pallets to the right destination…
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Evolution of 3-D Printing of Human Organs
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Ultimate Ear
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Opportunity
at the Intersection
of the Social and Interest Graph(s)
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Supply Chain Insights LLC Copyright © 2016, p. 61
Listening: Lenovo
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Supply Chain Insights LLC Copyright © 2016, p. 62
0
0
0
0
0
0
0
Canada
-Customer A calls about a blue screen on a Yoga
-Customer B posts on Facebook about his X220’s AC/DC adapter issues
Large Enterprise Client experiences 5 keyboard malfunctions in their latest
shipment. Complaints received through account executive
[Critical Situation]
Brazil
-Customer F submits a service from on
esupport.lenovo.com regarding
their W530 hard drive
Morocco
-Customers G & H comment on their
X220’s electrical issues on Twitter.com
-Customer I called about Yoga screen
issues
Australia
-Customer J write a review on
NewEgg.com about AC/DC adapter
issues on X220
-Customer K had an eChat with Lenovo
about Yoga screen issues
China
-Customer L wrote on Weibo about
Yoga screen issues
-Customer M calls about a Tablet 8battery issues
Voice of Customer Comes in Many Forms
USA
-Customers C & D write X220 product
reviews on amazon.com and mention
issues with AC/DC adapters
-Customer E posts on
forums.lenovo.com that they are
experiencing blue screens on their Yoga
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Supply Chain Insights LLC Copyright © 2016, p. 63
0
0
0
0
0
0
0
Lenovo
- 6 recorded issues about X220’s
AC/DC adapter
- 5 recorded issues about
keyboard issues on X1 Carbon
- 5 recoded issues about Yoga
screen
- 1 recorded issue about W530
hard-drive
- 1 recorded issue about Tablet 8
battery
One Voice – A Single View of Perceptual Quality
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Supply Chain Insights LLC Copyright © 2016, p. 64
Traditional Digital
Project definition Large projects with
known outcomes
Small projects that evolve
Funding Licensed deployments Cloud deployments
Type of data Structured transactional
data
Unstructured and
structured data
Data characteristics Data with low velocity Data with high velocity
Leadership Led by IT Led by the business
Process focus Inside-out Outside-in
Capabilities Better response Test and learn
Technologies Large, established
vendors
Small and evolving
technology sources
Shifts
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Supply Chain Insights LLC Copyright © 2016, p. 65
Wrap-up
• Supply chains are five years
away from learning as we
sleep. Stabilize legacy
spending.
• We must learn from the past
to unlearn, and then rethink
supply chain processes. The
starting point is rewiring our
brains.
• Value network automation
has great promise: welcome
the Network of Networks.
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Supply Chain Insights LLC Copyright © 2016, p. 69
About Lora Cecere
• Founder of Supply Chain Insights
• “LinkedIn Influencer”
• Guest blog for Forbes
• Author of 4 books: Bricks Matter (2012), Shaman’s Journal (2014),
Supply Chain Metrics That Matter (2014), Shaman’s Journal (2015)
• Partner at Altimeter Group (leader in open research)
• 7 years of Management Experience leading Analyst Teams at Gartner
and AMR Research
• 8 years Experience in Marketing and Selling Supply Chain Software at
Descartes Systems Group and Manugistics (now JDA)
• 15 Years Leading teams in Manufacturing and Distribution operations for
Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and
Procter & Gamble.
Contact Information: • Email: [email protected]
• Blog: www.supplychainshaman.com (15,000 pageviews/month)
• Forbes: www.forbes.com/sites/loracecere
• Twitter: twitter.com/lcecere (7,200 followers)
• LinkedIn: www.linkedin.com/in/loracecere (86,724 followers)
• LinkedIn Influencer: www.linkedin.com/today/author/446631