© 2014 Quintiq. All rights reserved. Quintiq is a registered mark of Quintiq Holding B.V.

Scenario planning for more effective supply chain decisions

Supply Chain Network London

Cathy Humphreys

19th October 2015

22

Quintiq founding vision

Develop a single application capable of solving any type of planning puzzle

3

Quintiq solution map for Integrated Business Planning

Business Planning

Supply planning

Master Production & Distribution Scheduling

Transport scheduling

Production scheduling

Demand planning

Workforceplanning

S&OP

S&OE

Strategic

Order promisingMRP

Sales & Operations Planning

DistributeMakeSource Sell Employ

Product Lifecycle Management

Inventory Optimization

4

Quintiq market position

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70.5#4

Quintiq-Dassault Systèmes is the 4th largest SCP vendor by revenue

Quintiq + Dassault Systèmes

#5PTC

55.7

#2 Oracle

580.4

#3 JDA Software

326.0

Quintiq’s revenue numbers are derived from the combined revenue listed in for Quintiq as a private company ($53.4M) with revenue listed for Quintiq after joining Dassault Systèmes ($17.1M).

Source: Gartner. All Software Markets, Worldwide, 2014, Granetto, Bianca Francesca et al, March 31, 2015. Note: Values include license software revenue ONLY.

Market Share

All Software Markets Worldwide, 2014

Supply Chain Planning

#1SAP

1,120

5

Systems of record

NOW FUTURE

Past Performance Future Performance

ERP MES/TMS SUPPLY CHAIN PLANNING & OPTIMIZATION

Results

Best

Planning future performance – Quintiq’s DNA

Your business KPIs drive planning decisions that achieve the results you want

6

Research shows very limited use of scenario planning in practice

46%

56%

37%

28%

20%

16%

13%

0% 10% 20% 30% 40% 50% 60%

We do little scenario analysis

Change in demand versus forecast

New product volumes

Supply side changes

Supplier risks

Competitive actions

New product pricing

How much and in what areas companies are using scenario planning as part of the S&OP process

Source: Chief Supply Chain Officer Insights, 2013

7

*Only use one image per slide

• Use this cube pattern for large-sized images only • The cube pattern should only be placed at the bottom right

corner of the image

7

How, why and where to apply?

Scenarios are often talked about, but underleveraged.

What’s a scenario and how is it converted into something actionable?

8

Demand uncertainty

What-if scenarios:

• New product success (timing, quantities)

• Competitor behavior

• Sales funnel success / likelihood

• Sales price fluctuations

• Political environment

• Consumer behavior

• Promotions

• ….

Supply uncertainty

What-if scenarios:

• Quality issues arise

• Resource uptime / availability

• Supplier risks

• Yields are not improving

• Political environment

• Scarcity of key components

• Purchase price fluctuations

• ….

Scenarios are required to support decision making under uncertainty

The future is not that deterministic!

9

Which scenarios to apply?

Demand uncertainty

Low High

Sup

ply

un

cert

ain

ty LowAd-hoc in case of large

financial decisions(CASE SENSUS)

Demand scenario’s to close the gap

High

Emphasis on resource planning (allocation,

scenarios, ‘sales push’) Continuous integrated demand / supply scenario

Ad hoc

Supply disruptionimpact analysis

Demand scenarios likelihood

Continuous integrated demand / supply

alignment

1010

Assumption-based scenario modeling

Scenario C

Scenario B

Supply chain design Demand plan

Fulfillment plan

Priorities, targets

Supply plan

Inventory planCapacity plan

Product mix plan

KPIs GAPs Dashboards

Availability

CostsPerformance

Prices

Market share

Events

GrowthAssumptions

Scenario A

Contingencies, risks

Trade-offs betweencompeting goals,evaluation of options andalternatives

Analysis andpresentation of results

Generating, selectingand discarding scenarios

Targets, focus

Signposts, directions

Status quo

11

Prepare

o Only use scenarios where relevant

o identify – impact – respond

o Prepare agreed scenarios by relevant function

Present and decide

o Use a limited number of scenarios (2 – 4)

o Supported by right tools for faster, more efficient analysis

Key lessons

1212

Managing risk through scenarios

What variations to assumptions actually have a significant impact?

Model risk

Assess impact

Action!

Or can the decision be postponed?

The thing with uncertainty is that it is much bigger in the distant future than in the near future.

1313

Integrated scenario planning to meet business goals

What people with what skills do we need?

Which products do we need to spend our R&D budget on?

Are our critical supplies secured?

Where do we locate our warehouses?

How can we differentiate in our value proposition to different customers?

What demand do we satisfy and what revenue will we make?

How do we position our inventories? What is our cash conversion cycle?

Will our production capacity be sufficient?

What sustainable profit will we generate?

integratedscenarioplanning

14

How the Supply Chain sees the business?

15

How the CEO sees the business?

16

KPI driven scenarios link operations to the business strategy

Gap

Gap

Actual

Historicperformance

Operationalhorizon

What is the range? What is the probability?What are we doing to close the gap?

What is the assumption driving this spike?

Today-3 mo +3 mo +6 mo +12 mo +18 mo

1717

Generating, measuring and selecting alternative scenarios

Close gaps

Identify trade-offs

Manage risks

Select scenarios

What scenarios do you focus on

What scenarios make a difference?

18

• “How many” is the wrong question, “which scenarios” is the right one

• Key question: What is the decision?

• Discarding scenarios is easy if you have the right visibility:

o Discard scenarios that do not score significantly better on any KPI

o Discard scenarios that do not make a difference

o Know what decisions need to be addressed in pre-S&OP meetings, the exec. S&OP meeting is about tie-breaking and significant investments

• How can you be more efficient in discussing multiple scenarios?

• Do you have the right KPI’s to know which scenario outcome is best for the business ?

It’s not the number of scenarios

19

Demand & Supply

Balancing48%

Better Visibility

20%

Improve Forecast Accuracy

17%

Boost Profitability

15%

Demand & Supply Balancing Better Visibility Improve Forecast Accuracy Boost Profitability

What is the most important goal of future performance ?

20

Relevant scenarios only

o Not all business objectives can be met

o Significant risks

Not all uncertainties are risks

o Use main KPIs to quickly asses impact

o Immediate action required?

Ensure bottom-up and top-down involvement

o Build actionable scenarios collaboratively; cross-functional alignment on preferred scenarios

o Use views to present scenarios aimed at decision making

Key lessons

21

Systems of record

NOW FUTURE

Past Performance Future Performance

ERP MES/TMS SUPPLY CHAIN PLANNING & OPTIMIZATION

Results

Best

Planning future performance – Quintiq’s DNA

Your business KPIs drive planning decisions that achieve the results you want

© 2014 Quintiq. All rights reserved. Quintiq is a registered mark of Quintiq Holding B.V.

Questions

Supply Chain Network London

Cathy Humphreys

www.linkedin.com/in/cathyhumphreys

www.quintiq.com

www.youtube.com/quintiq

19th October 2015