Role of finance final june 14
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Transcript of Role of finance final june 14
BRICKSMatterThe Role of Supply Chains
in Building Market-Driven
Differentiation
LORA M. CECERE CHARLES W. CHASE JR.
BookPublishes in
August 2012
5
• Current State
• Alignment and Measurement
• Process Maturity
• Agility
• Governance
• Wrap-up
Agenda
8
• Current State
• Alignment and Measurement
• Process Maturity
• Agility
• Governance
• Wrap-up
Agenda
Looking at Supply Chain
as a Complex System
Profitable Growth
Revenue Cost of Goods
Working Capital
Corporate Social Responsibility
CorporateTrade-offs
R&D Strategy and Investment Asset Strategy and Investment
InvestmentTrade-offs
SalesPolicies
DistributionPolicies
ManufacturingPolicies
LogisticsPolicies
ProcurementPolicies
Returns Backorders First Pass Yield Empty Miles Material Yield
Supply ChainWaste
Forecast Accuracy Customer Service Inventory
Channel Strategy Product andService Portfolio
Supplier Strategy
Supply ChainTrade-offs
Growth Profitability Cycle Complexity
R&D Margin Cash on Hand C2C Cycle Altman Z
R&D to COGS Ratio Free Cash Flow Ratio Days of Finished Goods Capital Turnover
SGA Margin Gross Margin Days of Inventory Current Ratio
SGA/COGS Net ProfitDays of Payables Outstanding
Quick Ratio
COGS as Percent of Net Sales
Operating Margin Days of Raw Materials Return on Assets
Pretax Margin (EBIT)Days of Sales Outstanding
Return on Equity
YoY Sales GrowthDays of Work in Progress
Return on Invested Capital
Operating Margin DPO/DSO Return on Net Assets
Inventory Turns Revenue/Employee
Receivables Turns Cost of Sales
Useful Ratios
Evolution of Supply Chain Process Excellence
Align
ResilientReliable
Adapt
Efficient
Building Horizontal Process Connectors
ContinuousTesting
LearningImprovingIn Market
OrchestrateDemand and Supply
Sense Demand
and Supply
Shape Demand andSupply based
on Market
DemandVolatility
Supply Volatility
Right Product
Right Place
Right Time
Right Cost
Cost
Procure to pay/order to
cash
Strategic Planning
Network Design
Rethinking Planning
Tactical Planning: HorizontalProcesses
Revenue ManagementSales and Operations
PlanningSupplier Development
Tactical Planning: Vertical
Processes
Sales Forecasting
Global Demand Planning
Tactical Supply Planning
Procurement Planning
ProductPlanning
Product PlatformsNew Product Launch
OperationalPlanning
Regional Sales
Execution
Regional Demand Planning
Distribution Requirements
Transportation Requirements
Manufacturing Planning
MaterialRequirements
Contract Manufacturing
Planning
Common Practice Market-driven Focus
S Ask salesFocus on market drivers:How do we best shape demand?
& Direct integration to supplyDesign of the value chain to optimizetrade-offs, minimize risk, balance cycles, and orchestrate demand
OP Manufacturing planTrade-offs between make, source and deliver
Getting to Letter Perfect
20
S&OP Evolution
Manufacturing-Driven
Deliver a Feasible Plan for Operations
Match Demand with Supply
Sales Driven
Match Demandwith Supply
Business-planning Driven
Maximize Profitability
Demand Driven
Maximize Opportunity Sense and
ShapeDemand
Market Driven
Maximize Opportunity and
Mitigate Risk. Orchestrate
DemandMarket to Market
Greater Benefit
• Growth
• Resilience
• Efficiency
• Volume to mix to revenue/profitability
• Equivalent units
• Reward systems
• Alignment on “What good looks like”
Modeling Challenges
25
• Current State
• Alignment and Measurement
• Process Maturity
• Agility
• Governance
• Wrap-up
Agenda
31
• Current State
• Alignment and Measurement
• Process Maturity
• Agility
• Governance
• Wrap-up
Agenda
Multiple S&OP Processes
Executive S&OP
Regional S&OP
Processes
Supply Chain Planning Processes with Key Suppliers
S&OP Processes With Key
Customers
• 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 networks.
• Focused inside-out, not outside-in.
• Rewarded the urgent, not the important.
Historically, we have…
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