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Managing Supply Chainsin a Complex World
Pete SinisgalliPresident & CEOManhattan Associates
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2Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
U.S. Logistics Costs in 2008
• Total logistics costs as a percentage of sales: more than 9%
• Total U.S. logistics costs: $1.4 trillion
Transportation 5%
Warehousing 2%
Inventory 2%
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3Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
SCM Ecosystem
Sel
l-Sid
e C
olla
bora
tive
Pla
nnin
g
Buy-S
ide Collaborative P
lanning
TransportationPlanning
WarehouseManagement
ProductionScheduling
ProductionPlanning
Deployment /Allocation Planning
OrderPromising
InventoryPlanning /
Optimization
SupplyPlanning
Demand / EventPlanning
NetworkPlanningForecast
Error
Forecast
TransportationConstraints
Work Constraints
Production Constraints
NetRequirements
Available to Promise
Forecast
Demand Constraints
Ord
ers
Fo
reca
sts
Source: Gartner (December 2008)
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4Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Frozen Peas . . .
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5Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Global Market Statistics
• The global out-of-stock rate is 8.3 percent
• About a third of all products are sold at a discount
• There is about $5.5 Trillion in global inventory
• The cost of moving freight has gone up 20% in the last decade and is expected to increase by 65-70% by year 2020
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6Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Today’s Challenges
emerging technologies
shorter product lifecycles
regulations
globalization & outsourcing
integration rising fulfillment costs & agility
channelconvergence
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7Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Manhattan Associates’ Vision
To be the global leader
providing technology-based
solutions that optimize supply
chain effectiveness & efficiency
for our customers.
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8Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
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9Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Investment in Research & Development
Cumulative R&D (Millions)
$34$76
$123$171
$208
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10Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Atlanta
MishawakaIndianapolisLondon
Bangalore
Paris
Shanghai
Singapore
Tokyo
Amsterdam
Sydney
Melbourne
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11Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Customers in All Segments are Market Leaders
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12Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Grocery Retail
Retailer
%Out of Stock
$ Lossfor Every
Customer
7.4% $0.31
9.1% $0.38
14.7% $0.61
21.6% $0.89
22.8% $0.94
22.8% $0.94
The Impact of Out of Stocks
Consumer Electronics
Retailer
%Out of Stock
$ Lossfor Every
Customer
13.1% $0.84
18.1% $1.16
22.7% $1.46
25.7% $1.65
26.0% $1.67
30.6% $1.96
Source: IHL Group, Dec 2008
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13Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Source: Retail Out of Stock, A Worldwide Examination of Extent,Causes and Consumer Responses
Total Upstream Causes
Store ordering & Forecasting
In the Store, Not on the Shelf
Out Of Stock Causes
28%
47%
25%
Grocery Retail
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14Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Source: Retail Out of Stock, A Worldwide Examination of Extent,Causes and Consumer Responses
Buy Item at Another Store
Delay Purchase
Substitute - Same Brand
Substitute - Different Brand
Do Not Purchase Item
Worldwide Consumer Responses to OOS
31%
15%19%
26%
9%(Average across eight categories)
Grocery Retail
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15Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
ThePerfect Order
The Perfect Order
10-20% improvementin operating efficiency
10-20% transportation savings
15-25% lower labor costs
5-30% improvement in real estate utilization, through better use of distribution centers
5-10% lower fulfillment cost
10-20% better utilization of equipmentin the warehouse and on the road
10-15% increases in revenue
10-15% fewer markdowns
10-20% improvementin promotion effectiveness
10-20% fewer lost sales
15-20% inventory reductions
2-4% margin improvements
10-20% fill rate improvements
1-3% increase in service levels
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16Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Supply Chain Executives Must Follow This Path
2012
2010
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Improve Efficiency Reduce Op Costs Improve Service Drive Business Growth
Improve Revenues Optimize Cash to Cash Cycle Manage Risk Reduce Headcount
Growth/Customer Focus:54%
Cost/Risk Focused:59%
Source: Gartner, 2010
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17Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Intelligent & Interconnected Consumers
Return
• Return items where it’s convenient for me
Buy• View available inventory across channels/stores
• Buy/reserve online, pick up in store
• Choose among cost-effective shipping options
Receive• Check my order status from any touch point
• Be notified when my order is ready for pick up
• Receive items from a store if not in-stock online
• Pick up in a store near me a gift someone orders online
Browse
• Check store item availability online
• Be notified when new stock arrives in store
• Remotely schedule an in-store consultation
• Access my order history from any touch point
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18Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
Plan Execute
Adapt
Supply Chain Planning Supply Chain Execution
Global Supply Network Collaboration
Integrated Information Technology
Math & Science
Global Visibility & Business Intelligence
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19Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.
CustomerEvery Every EveryEmployee Day