Avnet & Enterprise Effectiveness

Pascal Fernandez

1

2 May 10th, 2016

Content

• Avnet and the HiTech Industry Supply Chain

• Higher level of Collaboration

• Resolving Visibility

• Enterprise effectiveness – Avnet SCOR journey

3 May 10th, 2016

Avnet, Inc. Corporate Overview

Avnet was the only distributor to be

recognized in this prestigious report

Avnet: Gartner

Supply Chain

Top 10High-Tech

Company 2015

4 May 10th, 2016

Company Snapshot

Americas

$11.14B

(40%)

Asia

$8.91B

(32%)

EMEA

$7.87B

(28%)

• Named to the FORTUNE Most

Admired list for technology

distribution, 2007-2015

• No. 985 on the 2014

Forbes list of world’s

biggest public companies

• No. 108 on the 2015

FORTUNE 500 (U.S.)

• No. 430 on the 2015

FORTUNE Global 500

• Named a 2014 World's Most

Ethical Company by

Ethisphere Institute

An Industry Leader

FY15 Annual Revenue

$27.9B

Avnet, Inc.

$10.6B

Avnet

Technology

Solutions

$17.3B

Avnet

Electronics

Marketing

• Headquartered in

Phoenix, AZ

• Founded in 1921

• AVT listed on

the NYSE in 1960

• 800+ suppliers

• 100,000 customers

• 96 acquisitions

announced or closed

since FY91

• 18,000+ employees

worldwide

Fast Facts

38%

62%

5 May 10th, 2016

Poing, Germany

Stutensee, Germany

Tiel, Netherlands

Tongeren, Belgium

Avnet Global Facilities Infrastructure

Global Footprint

3.6 MILLION

SQ. FT.

Total Operations Employees

3,500+

Distribution

CentersBeijing, China

Chandler, Arizona

Guadalajara, Mexico

Miami, Florida

San Jose, California

Toronto, Canada

Newcastle, UK

Poing, Germany

Tongeren, Belgium

Value Add

Centers

Acton, Massachusetts

Atlanta, Georgia

Chandler, Arizona

Guadalajara, Mexico

Groveport, Ohio

Hollis, New Hampshire

Nogales, Mexico

San Jose, California

Third-Party

LogisticsBratislava, Slovakia

Herrenberg-Gültstein, Germany

Jazlovice, Czech Republic

Jundiai, Brazil

Otopeni-Ilfov, Romania

Piaseczno/Warszawa, Poland

Vecses, Hungary

Zug, Switzerland

China (4 Locations)

Ho Chi Minh City, Vietnam

India (10 Locations)

Jebel Ali Free Zone, Dubai

Japan (2 Locations)

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Programming

Integration

Lifecycle Solutions

Cables/ConnectorsP

Beijing, China

Hong Kong, China

Sydney, Australia

Singapore

Tianjin, China

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Hachioji, Japan

Hong Kong, China

Jakarta, Indonesia

Singapore

Sydney, Australia

Taipei, Taiwan

6 May 10th, 2016

What we do…

Leverage our global supply chain visibility

and management capability to develop

leading solutions that enable Avnet, our

customers and suppliers to manage

their supply chain complexity with greater

effectiveness and efficiency

•Create new value streams

•Incubate new models & tools

•Develop thought leadership,

innovate ahead of market

evolution

Hi-Tech Industry Ecosystem

The ‘New Norm

Avnet Velocity

7 May 10th, 2016

Where we play….

Logistics

Planning

Access to Products

and Technology

Process design

Geographical

reach

Financial

efficiency

Visibility &

Control

8 May 10th, 2016

The Hi-Tech industry Supply Chain

9 May 10th, 2016

Contract Manufacturers

OEM Sub

Assembly

Distributors / retailers

Control. Visibility. Cost. Risk.

The ‘New Norm’

Ecosystem

complexityFrom Components

to OEM products…

10 May 10th, 2016

Electronic Industry Supply Chain Summary

Telecom Infrastructure, Networking

IP in Western Europe, North America… and Asia

Manufacturing in B(R)ICs for volume and Regional Markets

Re localizing lower volumes and final integration

Automotive

Revolution is progress ! Electronic is the highest material spend

Transportation cost, proximity to end customer and Quality constraints keeps PCB assembly close to car makers and end customers

Industrial, Medical, Energy

Low to high volume remains in indigenous region

High volume low mix goes to Asia on occasion

Transportation, Avionic, Defense

Remains in Europe for European market

IP and Quality key factors

Governmental influence

Toy industry, consumer goods, mobile phones, personal computers….

All moved to BRIC’s

Cost is predominant

And IOT !!

11 May 10th, 2016

IOT Hurdles

Authentification

Encryption

Licensee network

management

Access to

technology

NPI

Royalty

collection

Global

fulfillment

Inventory

management

Network

design

Logistics

Manufacturing

Integration

12 May 10th, 2016

Hi-Tech Industry Ecosystem

The ‘New Norm’

Volatility

Complexity Increased

VelocityRisk

The

New

Norm

13 May 10th, 2016

Higher level of collaboration

Extended S&OP

Resolving Visibility

Promoting enterprise

effectiveness

The ‘New Norm’How do we deal with it?

14 May 10th, 2016

Higher level of collaboration

15 May 10th, 2016

Operationally focused

Planning focused

Profit focused

Value focused

Collaboration maturity

Orchestrating

Anticipating

Reacting

Collaborating

Gartner

16 May 10th, 2016

Extended S&OPExtending the traditional S&OP process:

•Demand Forecasts

•Business trends

•Events, Promotions,

NPI information

Customer Input

•Capacity Updates

•Lead Time

•PCN / EOL

•Business Trends

•Scheduled Maintenance

Supplier Input

17 May 10th, 2016

Collaborate and Compromise

Flexibility vs Inventory

Security vs Liability

Cost vs Lead Time

Lead Time vs Demand

Proximity vs Critical Mass

MTS vs MTO

Labor Cost vs Transportation Time

Margin vs Cash flow

18 May 10th, 2016

Dependencies

Inventory

Management

Model

Extended

S&OP

Forecast

Management

Tools & Processes

19 May 10th, 2016

Visibility

20 May 10th, 2016

Visibility is critical

In a virtual enterprise

environment, information

management makes the

difference

Visibility

Risk Mitigation

Inventory Optimization

Business Opportunities

Customer Service

21 May 10th, 2016

Resolving Visibility IssuesWhy is it important?

Supply Chain

Visibility

Supply Chain

Risk

Management

Supply Chain

Response

Management

Competitive Advantage

Su

pp

ly C

hain

Matu

rity

Sustainable

Supply Chain

ManagementVisibility

Sustainability

Predictability

22 May 10th, 2016

Resolving Visibility IssuesUsing a Supply Chain Control Tower

Original Equipment Manufacturer (OEM)

Collaborative Execution Management

Enterprise Collaboration Hub

Business Process Rules Enforcement

Global End-to-End Data Collection

Manage Inter and Intra-Company Processes by Exception

Supply: EMS, ODM, Component & Raw Material Suppliers

Demand: Channel/Retailer

OEM Data (examples)

Demand Forecast

S&OP Plan

Sales Orders

SKU Level Sell-Out

Inventory info/ On-hand

Channel Inventory

Purchase Orders

Goods Receipt

Supply Side Data (examples)

Forecast

Purchase Orders

Confirmations

Shipping Data

FG Inventory,

WIP Inventory

VMIVMI Hubs

Tier 2 Suppliers

Tier 1 Suppliers

EMS

ODM

Regional Merge Centers

Tier 1 Suppliers

3PL

Tier 2 Suppliers

Regional Merge Centers

3PL

EMS

FG Inventory

Optimization

Channel Inv

Visibility

Collaborative

Demand

Demand Side Multi-Echelon

Ecosystem

Channel

Retailer

Consumer

Supply Side Multi-

EchelonEcosystem

Inventory

Visibility

Shortage

Elimination

Supply

Assurance

Suppllier

VMI

Logistics

Visibility

Collaborative

Supply

23 May 10th, 2016

Resolving Visibility Issues What Are Other Organizations Doing?

“Best-in-class companies are

3 times as likely to increase B2B

connectivity/visibility into

customer side processes”

(Aberdeen Group)

Gartner predict that

“by 2016, 50% of the

Gartner top 25 will rely

upon predictive analysis to

further exploit low latency

network-based data”

(SC Digest)

“Best-in-class companies are 1.6

times as likely to increase B2B

connectivity/visibility into supplier

side processes”

(Aberdeen Group)

24 May 10th, 2016

Enterprise effectiveness

25 May 10th, 2016

Avnet Experience: Why More Metrics Matter?

Revenue• All revenue was

good revenue• We needed another measure…

Profitable Revenue• ROWC, GM, COGS• Is it time for yet another

component?

Profitable Growth• Value Chain Reliability• Value Chain

Responsiveness• Cost to Serve• Asset Management

Pre-VBM VBM And Now?

26 May 10th, 2016

The mission of Avnet Enterprise

Effectiveness is to engage all Avnet

employees in process improvements

that continuously enhance the

customer experience and enable

profitable growth.

27 May 10th, 2016

Enterprise

Effectiveness

Imperatives

28 May 10th, 2016

Perfect Order Fulfillment (POF) - Reliability

• Perfect Order Fulfillment (POF) is a customer

facing performance metric for organization's

supply chain reliability

• POF measures how well we are meeting

commitments to customers in four areas:

• Delivery item and quantity accuracy

• Delivery performance according to customer commit

date (OTD)

• Accurate, complete and on-time documentation

• Perfect condition

29 May 10th, 2016

Guiding Principles for Metrics Interpretation

• Customer facing metrics should be measured as close to the

customer experience as possible

• The moment of order submission instead of order entry

• Delivered performance instead of shipping performance

• Received quality instead of produced or shipped quality

• Measure what makes sense

• Don’t have data? Make a reasonable assumption of the

missing component until you will be able to obtain the data

• Trend data is more important then a single measurement

• It is not about how you think it should be measured, ask your

customer what is important to him/her

30 May 10th, 2016

Our Scope for Perfect Order Fulfillment

Perfect Order Fulfillment

1.1

Orders Delivered in Full

2.1

Delivery Item Accuracy

2.1 A

Delivery Quantity Accuracy

2.1 B

Orders Delivered on Time

2.2

Delivery Date Accuracy

2.2 A

Delivery Location Accuracy

2.2 B

Documentation Accuracy

2.3

Shipping Document Accuracy

2.3 B

Payment Document Accuracy

2.3 A

Compliance Document Accuracy

2.3 C

Other Document Accuracy

2.3 D

Orders Delivered in Perfect Condition

2.4

Orders Delivered Damage Free

2.4 A

Orders Delivered with Warranty and

Returns

2.4 C

Orders Delivered Defect Free

2.4 B

Orders Delivered Faultless Installation

2.4 D

Level 1Strategic Metric

SCOR Attribute

Level 2Process Metric

Level 3Diagnostic

Metric

31 May 10th, 2016

Cross Enterprise Scorecard & Metrics,

….choose you battle, create your optimal mix

ECONOMIC

SERVICES

ECOLOGIC

COST

ASSET

RELIABILITY

RESPONSIVNESS

RISK MITIGATION

ENVIRONMENTAL

SOCIAL

32 May 10th, 2016

3 Key Factors will drive success:1. Higher level of collaboration– across the enterprise and beyond

2. Resolve Visibility Issues – enabling your supply chain to sense and

respond to demand and supply issues

3. Plan for Enterprise effectiveness. Create a culture, adopt a reference model,

Measure, Stimulate Innovation, implement effective governance

Key Takeaways

The ‘New Norm’ for the HiTech Industry

• Increased complexity, volatility, underlined by increased risk

management, increasing supply chain management costs, and

increased pressure on supply chain velocity.

33 May 10th, 2016

Q & A

Pascal.Fernandez@avnet.com

34 May 10th, 2016

Digital Publication

150,000 customers,

suppliers, industry experts

http://scnavigator.avnet.com/