APICS PDMBig Data in Supply Chains

Uses & Challenges

cliff allen

Agenda: Big Data & SCM• What is Big Data and how does it relate to SCM?• Using Data on “the edges” (NPI & Fulfillment)• The role of forecasting; is it changing S & OP?• The sweet spot: Reverse Logistics• Omni-channel & SCM• Displaying meaningful results / communication• Encryption / Safety• Moving forward• Q & A

Traditional ERP vs. Big Data• ERP is not going away……however• Emerging are: The Edges:

– Channels– Social media– RFID– PoS– GPS– Blueprint data

© Deloitte & Touche LLP and affiliated entities.Digital Convergence

of small businesses now get at least one quarter of new customers via social media.

of young people refer to social media to decide where to go when they go out.

of Americans check their social networks several times a day.

of Americans check brand pages regularly as part of their social media activity.

of time spent online is for social media.

• If Facebook were a country, it would

be the world’s 2nd largest - 1.3B

• Percent of 18-34 year olds who check Facebook when they wake up - 48 %

• Social Media has overtaken adult

content as the #1 activity on the web

• 1 out of 8 couples married in the US

last year met via social media

78%

61%

27%

35%

27%

Digital engagement is the future

Digital Convergence

Big Data: How Much

• Google processes 20K TB a day• Facebook has 2.5 PB of user data + 15 TB/day• eBay has 6.5 PB of user data + 50 TB/day• NSA touches 29K TB a day

* 1000 gigabytes = 1 Terabyte* 1000 Terabytes = 1 Petabyte

A critical mass of new technologies and consumer and client demand is ushering in a new era of computing, and with it the

“Post Digital Age”

6 Billion People worldwide have access to a

mobile phone

The number of mobile-connected devices exceeded

the word’s population in 2012

1

2

3

4

• Projects measured in years• Vast divide between IT and

business• Long adoption curves

• Projects measured in years• Vast divide between IT and

business• Long adoption curves

• Projects measured in months• Bridging gaps between IT and

business• Accelerated adoption

• Projects measured in weeks

• IT and business collaboration

• Accelerated adoption

Mainframe

Client/Server

Web

Digital

7

Complexity of data

Internet of Things

Internet of Things : Marketing & SCM

• Internet of things brings real-time data via scanners and sensors to the channels and suppliers.

• Creates real time Point of sales data.

Making analytics relevant to the heart of clients’ business with Analytics domains

FinanceAnalytics

RiskAnalytics

WorkforceAnalytics

Supply ChainAnalytics

CustomerAnalytics

Companies should have a more complete intimate understanding of their customers to get them, grow them, and keep them.

Many leaders want to take advantage of the benefits of risk analytics to limit risk exposure or to take certain risks to generate returns.

Finance managers have applied analytics to better understand the present and more accurately predict the future.

Workforce reporting and analytics achieves greater visibility and deeper insights into the most complex workforce-related challenges.

Apply analytics to achieve forward-looking insights combined with the disciplined execution of the supply-chain function.

Big Data – Why Supply Chain? • INCREASE CUSTOMER ENGAGEMENT—lost market share • IMPROVE PRODUCT/SERVICE QUALITY—Toyota • OPTIMIZE OPERATIONAL EFFICIENCIES—SW Airlines• PROVIDE FASTER TIME –TO-MARKET POTENTIAL FOR GREATER

REVENUE RECOGNITION—Apple & Samsung lead in APP market• SENSE SMALL EVENTS TRIGGERS POINTS (BEFORE THEY

BECOME BIG IMPACTS PROBLEMS/PROXIES)—Nokia/Blackberry since 2008

• IMPROVE RISK MANAGEMENT—Cost of BP oil spill

APICS Big Data Survey,2012Supply Chain Inventory Levels

Competitive Trends

Actual Product Usage

Forecasting/planning/scheduling

Actual/Real Time Demand 68%

34%

37%

79%

60%

Prescriptive Analytics

• The emerging technology of prescriptive analytics goes beyond descriptive and predictive models by recommending one or more courses of action -- and showing the likely outcome of each decision.

Big Data – The Mystery• Questions for executives:

• What happens in a world of data transparency?• If you could test all decisions, would you be more

competitive?• How would your business change with real-time data?• Can data replace some management?

• Are Amazon, Alibaba, & Zulily Marketing or Supply Chain Companies?

• Is Data security is an growing concern when increasing trends for complex gathering and harnessing of data are exploding?

Big Data – Game changers

Big Data - Amazon

• Amazon has filed a patent for a shipping system designed to cut delivery times by predicting what buyers are going to buy before they buy it — and shipping products in their general direction, or even right to their door, before the sales click.

Big Data: Supply ChainGame Changing TechnologiesRFID & PoS Data:• Real time consumption• Shelves become the inventory manger• Too much inventory can push “deals” out to

users while shopping via GPS• Merchandising and product location• Users include Office Max & Best Buy

Big Data: Supply ChainCustomer Analytics Blueprints• Customer Profile: 360-degree view of the

customer• Micro-segmentation: Create segments of one• Next Action: Predict and Influence customer

decisions• Loyalty Programs: Keep customers by using

data applied to particular segmentation

Big Data: Supply ChainEyesee: The eye recognition cameras• Eyesee: $5,100 Mannequin uses IBM Cognos

software– collects data from patrons — logging things like

age, gender and ethnicity– recognizes words to allow retailers to eavesdrop

on what shoppers say about the mannequin’s attire

Eyesee: The eye recognition cameras

• Calo (2009): People can be so fake: Truth in privacy overcomes truth in observed situations

Big Data: Supply ChainCustomer Analytics Blueprints• In store cameras with consumer behavior• Walmart: Shopperception

– Avg Visit duration– % of vistors thru Transit Zones– Touches per product / Pick-ups– Return to shelf– Conversion: Touches and not returned– Heat maps: color coded

7x24 shelf analysis with multiple and simultaneous people tracking:

• Traffic Flow analysis based on zones/time

• Heat Maps of conversion rates for each SKU.

• Hot activity zones in shelf

More Shopper insights:

• Multiple events on the shelf.

• Entrance / bounce paths

• Average times in zones

• Product traction analysis

• Real comparative shelf layout performance

Omni-Channel changing everything

Omni channel is here to stay…

- Make Up For Ever – The cosmetics company put iPads in some of its stores to let shoppers browse products and virtually try various make-up combinations by uploading their own photos- Loyalty cards are on their way out and will be replaced by customized rewards that incorporate social information, shopping behavior, and more.

Near Real-time Data & Dashboards

Identifies Actual & Predictive OOS & Overstock Issues At SKU/ Store Level

Enables Root Cause Analysis

Actionable Tasks Prioritized By Profitability

Drive Sales & Execution‒ New Product Introductions‒ Closing Distribution Voids‒ Promotion Execution & Effectiveness‒ Store Merchandising & Replenishment‒ Order & Shipment Forecasts‒ Retail Pricing Compliance

PepsiCo Believes In The Power Of Data & Analytics To Drive Supply Chain

P

Big Data - Visualization

Big Data - Visualization

-Visual Analytics methods allow decision makers to combine their human flexibility, creativity, and background knowledge to gain insight into complex problems.-Example:- To predict demand, Amway China applied SAS time series forecasting to data from 70 million orders placed over the past three years improving delivery and inventory by +20%

Utilizing Big data to discover and explain

Is not as easy as you might think…– Poor and sparse samples, surrogates, bias…– As number of dimensions increases it becomes

increasingly difficult to add in any data point without giving rise to some kind of statistically significant ‘pattern’ or ‘cluster’

– And parametric distributions become unreliable– It is very difficult to discover useful things that are

unknown by experts

Utilizing Big data to discover and explain

Data Visualization

Once Visualized The sweet spots for Big

Data & SCMS & OP

Reverse Logistics and Sustainability

The Role of Forecasting• Forecasting is a vital function and impacts every significant

management decision…. And is always inaccurate• Finance and accounting use forecasts as the basis for

budgeting and cost control• Marketing relies on forecasts to make key decisions such as

new product planning and personnel compensation• Production uses forecasts to select suppliers, determine

capacity requirements, and to drive decisions about purchasing, staffing, and inventory

Sales & Operations Planning• Is an executive decision-making process• Balances demand and supply• Deals with volume in both units and $$$ at

aggregate level• Ties operational plans to financial plans:

one set of numbers• Is the forum for setting relevant strategy

and policy

From APICs : – Deep Analytics

Analytics-based reporting tells the S&OP planning teams:

The data and the application of analytics is at the heart of S&OP

Where they are (Current state of the business)

What actions need to be taken and driven down into tactical and operations S&OP processes

What results and trends are emerging from their decisions

What corrective steps do the S&OP planning teams which to take

Sales & OperationsPlanning (Can be real-time

With Analytics)

Master Scheduling

Detailed Planning& Scheduling

CAPACITY

PLANNING

FORECASTING

&

DEMAND

BusinessPlanning

High Level Enterprise Resource Planning Model

Annually

Bi-Monthly

Weekly

Daily

StrategicPlanning

2-10 Years

Forecast Only

Forecast Only

Forecast PoS real

time

Forecast & Orders

Orders Only

Rough-cut Capacity Planning

Capacity Requirements Planning

Resource Planning

The monthly sales and operations planning process & Collaborative Planning, forecasting, & replenishment with Big Data

End of month

STEP 1Data

Gathering

STEP 5Exec S&OP

Meeting

STEP 4Pre-S&OPMeeting

STEP 3Supply

Planning

STEP 2DemandPlanning

Statistical forecastsField sales worksheet

Management forecast1-st pass spreadsheets

Capacity constraints2-nd pass spreadsheet

RecommendationsFor executive S&OP

Decisions

Wallace: 2nd edition Sales & Operations Planning

First real time data check

Second real time Data Check

With Analytics & CPFR this is real time cutting 1 week or more in POS data

Data and S &OP

Big Data – CLSC & Reverse Logistics

Utilizing Big data Improve CLSC Supply Chains• Supply Chains and Marketing converge with improved POS,

velocity with RFID, reduction of lead-times with “make->sell” compression of data & inclusion of “sell-> return.”

Reverse Logistics: Hi Tech Trash• Two Million tons of e-waste goes to landfills each year• 163K PCs & TVs become obsolete every year

• Eight categories of reverse flows1. Products that have failed; are unwanted, damaged, or defective; but can be

repaired or remanufactured and resold.2. Products that are unsold from retailers, usually referred to as overstocks that have

resale value.3. Products being recalled due to a safety or quality defect that may be repaired or

salvaged.4. Products needing “pull and replace” repair before being put back5. in service.6. Products that can be recycled such as pallets, containers, computer inkjet

cartridges, etc. 7. Products that are old, obsolete, or near the end of their shelf life but still have

some value for salvage or resale.8. Products or parts that can be remanufactured and resold.9. Scrap metal that can be recovered and used as a raw material for further

manufacturing.

No

VALUE

ADD

VALUEADD

Reuse can cycle quickly but what about the others? With Analytics prescrpitive

works for all 3

A business process approach• Product acquisition is a major driver of success• Creating effective remarketing channels is another major

driver• Research emphasis has largely been on reverse logistics,

disassembly and remanufacturing operations; not acquisition timing; This is where Prescriptive analytics takes place

• Product returns represent a value stream, not just a waste stream

Time-sensitive product return streams

• Short life-cycles; high obsolescence risk• Returned products losing value rapidly• “Value of time” a key prescripter

– Examples:• PCs• Printers and Computer Peripherals• Mobile Phones• Telecommunications Equipment

Product Acquisition

• The collection of used products potentially accounts for a significant part of the total cost, which can be compared with the last mile issue in distribution of products in the forward supply chain.

• The collection may occur by door to door, through service center, through sales center and sometimes by customers.

• Answer: Proximity and ease of access for customers & timely returns based on prescriptive analytics

• Sorting Purification Compounding

Analytics in non-traditional supply chain markets

Advanced Technology & Hospitals– Doctor data tracking has

helped reduce the average stay for adult inpatients from 4.2 days in 2011 to four days in 2012.

– Such efforts also have reduced the average cost per admitted patient by $280, which saved the health system a total of $13.8 million from 2011 to 2012.

• Lean beyond shop floor• Current State data

Advanced Technology

• Process:– Surgical Supplies Pick &

Return

Advanced Technology

• Success:– Eliminated 12,000

supply errors – Saved 600 hours of

O.R. time– Reduced inventory by

15%– Real-time

Performance Reporting

Usage, Benefits, and Success of BAThe data Scientist and business exec cannot communicate.

Why BI/BA projects fail 1. Failure to recognize BI projects as cross-

organizational business initiatives and to understand that, as such, they differ from typical standalone solutions

2. Unengaged or weak business sponsors3. Unavailable or unwilling business representatives

from the functional areas

Usage, Benefits, and Success of BA Why BI/BA projects fail

4. Lack of skilled (or available) staff, or suboptimal staff utilization

5. No software release concept (i.e., no iterative development method)

6. No work breakdown structure (i.e., no methodology)

Usage, Benefits, and Success of BA

Why BI/BA projects fail 7. No business analysis or standardization

activities8. No appreciation of the negative impact of

“dirty data” on business profitability9. No understanding of the necessity for and

the use of metadata10.Too much reliance on disparate methods

and tools

Big Data: Is Our Security Keeping Pace?

Big Data: Is Our Security Keeping Pace?

Are We Headed Towards “Impossible Privacy”?Another Case: Google

•Google has every single email you ever sent using Gmail. They have it stored, indexed, and they have

built models of your behavior.•Yahoo and Facebook have been doing similar

things.How secure do you feel?

Big Data: Is Our Security Keeping Pace?

The “Cloud”: The Risks“The internet of things”

•Internet security breaches happen often.•If the server goes down, your devices can’t access data. (Both Amazon and Gmail have gone dark).•Lack of access if you have no Internet access•If a hacker gets your password, you may be locked out of all your devices.

Your security is only as good as the weakest link in the chain

Big Data: Is Our Security Keeping Pace?

In December & January Target reports another hack for 110 million records

Was this done by a global cybercrime group or an individual?

Big Data: SCM Jobs

Careers in Analytics

PORTLAND STATE UNIVERSITY

MS IN GLOBAL SUPPLY CHAIN MANAGEMENT

PREPARE FOR

AN INTEGRATED FUTURE

Supply Chain & Your Career

• Vice President/General Manager $175,260• Corporate Division Manager $142,000• Supply Chain Director/Manager $114,275• Logistics Director/Manager $109,760• Business Analyst / Data Analyst $101,000• Operations Manager $98,235• Purchasing/Procurement Director/Manager $85,070• Traffic Manager $69,480• Warehouse Director/Manager $84,730• Coordinator/Analyst $67,000

*Data from Logistics Management 30th Annual Salary Survey, released April 2014. Salary potential may vary depending on location, experience and education.

What type of salary can you expect from supply chain positions?*

Big Data is easy!Questions?