For london aligning for action
-
Upload
lora-cecere-supply-chain-insights -
Category
Business
-
view
2.277 -
download
0
description
Transcript of For london aligning for action
Supply Chain InsightsAligning for Action & Resolving Conflict
BRICKSMatterThe Role of Supply Chains in Building Market-Driven Differentiation
LORA M. CECERE CHARLES W. CHASE JR.
BookPublishes in August
2012
p. 3Supply Chain Insights, LLC © 2012
3
What’s in a name?
A rose by any other name would smell as
sweet.
William Shapespeare
4
p. 5Supply Chain Insights, LLC © 2012
Agenda
What is Supply Chain Excellence?
What is the Goal?
How do we make Decisions?
What do we Measure?
Wrap-up
p. 6Supply Chain Insights, LLC © 2012
Demand volatility
Need to improve profit margin
Supply prices
New product launch effectiveness
Need to increase market share
Change in global economy
Product consistency and reliability of manufacturing operations
Growth in global markets
Changes in competition
77%
76%
70%
66%
60%
59%
55%
50%
45%
21%
18%
12%
10%
9%
15%
16%
6%
12%
Impact of Supply Chain Challenges on Organization in 2011(7-Point Scale)
Extreme impact (7) Impact (5-7)
Impact of Supply Chain Challenges
Base: Total Sample (117)Q16. How much impact did the following supply chain challenges have on your organization in 2011?
Top 3 Supply Chain
Challenges
p. 7Supply Chain Insights, LLC © 2012
Inside-Out Inside-Out
Supply Chain Tipping Points
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
S&OP
Evolution of the PC
JIT
Theory ofConstraints
Supply Chain Organization
Re-Engineering the Organization
(Michael Hammer)
Internet/Email
eProcurement
Total QualityManagement
RFID
Vertical SiloExcellence
Efficient Order toCash Processes
+ Islands ofExcellence
ManufacturingExcellence
+
Supply Chain Excellence = Supply Chain Excellence =
p. 8Supply Chain Insights, LLC © 2012
Inside-Out Outside-In
Value-Based OutcomesDelivered by Horizontal Processes
+
Supply Chain Excellence = Supply Chain Excellence =
Supply Chain Tipping Points
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Y2K
Lean Six Sigma
.com
Demand Driven Concepts
Vertical SiloExcellence
Outsourcing Effectiveness
Social Responsibility
CSCO
Market-Driven Value Networks
p. 9Supply Chain Insights, LLC © 2012
A Supply Chain
is a Complex System
with Complex Processes
with Increasing Complexity
p. 10Supply Chain Insights, LLC © 2012
The Effective Frontier
p. 11Supply Chain Insights, LLC © 2012
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
p. 12Supply Chain Insights, LLC © 2012
Supply Chain Excellence Definition
Base: Total Sample (61)Q14. How does your company define supply chain “excellence?” Please select all that apply.
Right product, right place, right time at the right cost.
A responsive supply chain that can adapt as markets change.
A resilient supply chain that can withstand the shocks of demand and supply volatility.
The Efficient Supply Chain. Lowest cost per unit.
Right product, right place, right time.
70%
57%
52%
38%
20%
How Define Supply Chain “Excellence”
Most Mature
p. 13Supply Chain Insights, LLC © 2012
Agenda
What is Supply Chain Excellence?
What is the Goal?
How do we make Decisions?
What do we Measure?
Wrap-up
p. 14Supply Chain Insights, LLC © 2012
CostVolumeGrowth
Typical Organization14
CEO
Chief Customer
Officer
Chief Marketing
OfficerSales
Account Teams
COO
VP of Supply Chain
Customer Service Procurement Logistics
CFO
CIO
VP of Manufacturin
g
Quality
p. 15Supply Chain Insights, LLC © 2012
Yes 87%
No 10%
Not sure 3%
Have a Sales & Operations Planning Process
S&OP ProcessExistence, Goals & Processes
Match demand with supply
Maximize opportunity and mitigate risk
Develop a feasible plan
Determine the most profitable plan
Other
43%
32%
14%
8%
3%
S&OP Process Goal
1 2 3 4 5 More than 5
27%14% 20%
12% 9%19%
# Distinct S&OP Processes
5 S&OP processes on average
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
Shape Demand
Market Driven
Maximize Opportunity and Mitigate Risk. Orchestrate
DemandMarket to Market
Greater Benefit• Growth• Resilience• Efficiency
p. 17Supply Chain Insights, LLC © 2012
An Athlete Needs:
Strength
Flexibility Balance
p. 18Supply Chain Insights, LLC © 2012
What is Agility?
Base: Total Sample (117)Q11. How would you define what it means for your company’s supply chain to be “agile”? Please select the one that fits best.
49%
38%
10%3%
How Define Supply Chain “Agility”Shorter supply
cyclesFlexibility to make and deliver whatever is
ordered
Ability to adapt to
variations in demand and
supply
Ability to recalibrate plans in the face of mar-ket, demand and supply volatility and deliver the
same or comparable cost, quality and cus-
tomer service
p. 19Supply Chain Insights, LLC © 2012
Agility Importance vs. Performance
Base: Total Sample (117)Q12. How important is it for your company’s supply chain to be “agile” in 2012? Please base your answer on however your company defines agility.Q13. How would you currently rate your company’s supply chain in terms of being “agile”?
Importance Performance
89%
27%
5%
32%
6%
40%
Agility Importance vs. Performance (7-Point Scale)
Low (1-3)
Middle (4)
High (5-7)
62 % Points(Gap in Performance
vs. Importance)
Manufacturing View (
Units)
Sales View ($) Marketing View
($, U
nits)
Logistics View
(Units, Cases)
Ship-from Locations
Warehouses
Global
Production L
inesPlants
Global
Supply-side Views
Downstream Data
Account-LevelA
VMI C
DistributionNetwork
Supplier Supplier Supplier Supplier
DistributionNetwork
DistributionNetwork
Demand-side Views
Hole in Enterprise Architectures
Manufacturing View (
Units)
Channel View ($)
Accounts (Ship-to
locations
Countries
Global
Marketing View
($, U
nits)
Brands
Produ
ct
Catego
ries
Global
Logistics View
(Units, Cases)
Ship-from Locations
Warehouses
Global
Production L
inesPlants
Global
Supply-side Views
DemandTranslation
Downstream Data
Account-LevelA
VMI C
DistributionNetwork
Supplier Supplier Supplier Supplier
DistributionNetwork
DistributionNetwork
Demand-side Views
22
Business Planning
Forecasting
Constrained Forecast
Increasing levels of granularity
Increasing need for value network strategy alignment
A Forecast is not a Forecast is not a Forecast
Getting to Letter Perfect….
Common Practice Market-driven Focus
S Ask sales Focus on market drivers:How do we best shape demand?
& Direct integration to supply Design of the value chain to optimize trade-offs, minimize risk, balance cycles, and orchestrate demand
OP Manufacturing plan Trade-offs between make, source and deliver
23
The Need for Balance
24
S: Go-to-Market
Strategies
OP: Demand Orchestration
Commodity Strategies
Network Strategies: Make/Source & Deliver
Inventory: Form & Function
Competition
Market Drivers
&
Goal
p. 25Supply Chain Insights, LLC © 2012
Agenda
What is Supply Chain Excellence?
What is the Goal?
How do we make Decisions?
What do we Measure?
Wrap-up
p. 26Supply Chain Insights, LLC © 2012
Reporting Structure Where does S&OP Report?
Base: Total Sample (117)Q5. Please tell us how you define your company’s supply chain organization by selecting which function(s) report through the supply chain organization. Please select all that apply.Q7. To whom does your supply chain organization report? Q6. How would you characterize your company’s supply chain?
Chief Operating Officer
Gen Mgr of Business Unit
Leader of Manufacturing
Chief Financial Officer
Head of Procurement
Chief Information Officer
43%
26%
12%
9%
3%
2%
69% Profit Center
Managers
p. 27Supply Chain Insights, LLC © 2012
S&OP Plan Execution
Base: Have a S&OP process (102)Q25. After your S&OP plan is generated, how is it executed? Please pick the one that describes it best.
Execution is not connected to S&OP plan
We try to execute the S&OP plan, but hardly do in practice
We execute the S&OP plan most of the time
We execute the S&OP plan nearly all of the time
We monitor market events and adjust to S&OP plan within limits
9%
25%
35%
19%
13%
S&OP Plan Execution
Sense & Respond
p. 28Supply Chain Insights, LLC © 2012
Yes 77%
No 23%
Whether Operate Globally
Global Operations
Base: Total Sample (61)Q12. Does your company operate “globally?”Base: Operate Globally (47)Q13, Which of the following best describes how your company operates “globally?” Please select the one that fits best.
19%
32%11%
38%
How Operate GloballyGlobal
(regions roll up into global team; plan
globally to act locally)
Multi-national
(countries roll up into regional operation;
global planning)
Multi-national (countries roll
up into regional operations;
regional planning)
Regional (regional opera-tions supported
by regional supply chains)
43% Multi-national
p. 29Supply Chain Insights, LLC © 2012
Definition of best practices for process
Definition of supply chain metrics
Supply chain planning
Inventory strategies
Facilitation of horizontal processes, like S&OP
Evaluation of new technologies
Network design
Establishment of goals
Supplier development
Other
90%
82%
77%
74%
72%
69%
69%
51%
18%
3%
Primary Functions of Center of Excellence
Yes 64%
No 30%
Not sure 2%
Center of Excellence
Center of Excellence
Base: Total Sample (61)Q8. Does your company have a supply chain center of excellence – in other words, a dedicated team focused on improving supply chain process excellence?Base: Have Center of Excellence (39)Q9. What are the primary functions of your supply chain’s center of excellence? Please select all that apply.
6 functions of the center of excellence on average
p. 30Supply Chain Insights, LLC © 2012
Center of ExcellenceImportance vs. Performance
Base: Have Center of Excellence & Particular Function (varies by function) *CAUTION: SMALL BASE SIZE Q10. For each of the following functions of the supply chain center of excellence, how important is it to your overall company? SCALE: 7=Extremely important – 1=Not at all importantQ11. For these same functions, how would you rate your company’s performance? SCALE: 7=Excellent– 1=Poor
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
82%77% 74%
66%62%
57% 58%52%
21%
43% 44%
34%28%
20%
42%
30%
-61%
-33%-30% -31%
-34%-37%
-16%
-22%
Importance vs. PerformanceImportance (6-7) Performance (6-7) Gap (Perf - Impt)
NOTE: Supplier Development is not shown because not enough respondents report it is a function of their supply chain center of excellence
Base: Have
function 28* 30 27* 32 29* 35 19* 27*
p. 31Supply Chain Insights, LLC © 2012
IT Systems: Importance & Satisfaction
Base: Have 1+ Operational IT Systems (varies by system); *CAUTION: SMALL BASE SIZE Q16. How important are each of your current IT systems to your supply chain organization? SCALE: 7=Extremely important – 1=Not at all importantQ17. How satisfied are you with each of your current IT systems shown below? SCALE: 7=Extremely satisfied – 1=Extremely dissatisfied
Demand Planning
Enterprise Resource Planning
Order Manage-
ment
Tactical Supply
Planning
Price Manage-
ment
Production Planning
Transportation Planning
Product Lifecycle Manage-
ment
Manufacturing Execution Sys-
tems
Warehouse Management
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
86% 83% 80%76% 75% 73%
65% 63%59% 58%
30%24%
35%
20%28%
15%
42%
11%
25%
38%
-56%-59%
-45%
-55%
-47%
-58%
-23%
-52%
-34%
-21%
IT Importance vs. Satisfaction
Importance (6-7) Satisfaction (6-7) Gap (Sat - Impt)
Base: Have System
57 59 60 49 36 55 43 27* 44 48
p. 32Supply Chain Insights, LLC © 2012
Importance of S&OP Process for Agility
Base: Have a S&OP process (102)Q22. How important do you think your S&OP process is to improving the agility of your supply chain?
28%
42%
20%
7%3%
Importance of S&OP Process to Agility
Not important (1-3)
(4)
(5)
(6)
Extremely important (7)
90% Important
p. 33Supply Chain Insights, LLC © 2012
Agenda
What is Supply Chain Excellence?
What is the Goal?
How do we make Decisions?
What do we Measure?
Wrap-up
p. 34Supply Chain Insights, LLC © 2012
• Inventory Turns• Forecast Accuracy• Profit• Revenue• Customer Service
What do we Measure?
Looking at Supply Chain as a Complex System
Looking at Supply Chain as a Complex System
p. 37Supply Chain Insights, LLC © 2012
Benefits Received from S&OP Processes
Source: Supply Chain Insights, 2012What benefits have you received from your work with S&OP processes?
Increasing revenue
Improving forecast accuracy
Reduction of inventory
Improving asset utilization
Determining outsourced manufacturing
Determining procurement requirements
Improving new product launch
Transportation and warehouse management
Capital planning and asset management
Improvements in the perfect order
59%
57%
50%
42%
38%
36%
34%
32%
32%
30%
▲ 2%
▲ 5-7%
▲ 3-7%
▲ 3-6%
▲ 3-6%
▼ 10-15%
▼ 2-8%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
100
200
300
400
500
600
700
Comparison of Revenue/Employee for the Period of 2000-2011
P&G Colgate Unilever Kimberly-Clark Nestle Kraft
Re
ve
nu
e/T
ho
us
an
ds
of
Em
plo
ye
e
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Comparison of EBIT/Employee for the Period of 2000-2011
P&G Colgate UnileverKimberly-Clark Nestle Kraft
EB
IT/E
mp
loye
e
2002 2003 2004 2005 2006 2007 2008 2009 201050
55
60
65
70
75
80
Consumer Products: Comparison of Days of Inventory
P&G Colgate Unilever Nestle Kraft
2002 2003 2004 2005 2006 2007 2008 2009 2010 201140%
45%
50%
55%
60%
65%
70%
Consumer Products: Cost of Sales as a Percentage of Revenue
Unilever Kellogg Kraft General Mills Campbell HersheyP & G
Co
st
of
Sa
les
as
a %
of
Re
vn
ue
p. 42Supply Chain Insights, LLC © 2012
Agenda
What is Supply Chain Excellence?
What is the Goal?
How do we make Decisions?
What do we Measure?
Wrap-up
p. 43Supply Chain Insights, LLC © 2012
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.
43
Historically, we have:
p. 44Supply Chain Insights, LLC © 2012
Who is Lora?
•Founder of Supply Chain Insights
•Partner at Altimeter Group (leader in open
research)
•7 years of Management Experience leading
Analyst Teams at Gartner and AMR Research
•8 years Experience in Marketing and Selling
Supply Chain Software at Descartes Systems
Group and Manugistics (now JDA)
•15 Years Leading teams in Manufacturing and
Distribution operations for Clorox,
Kraft/General Foods, Nestle/Dreyers Grand
Ice Cream and Procter & Gamble.
p. 45Supply Chain Insights, LLC © 2012
Where do you find Lora?
Contact Information:
Blog: www.supplychainshaman.com
(3500 pageviews/month)
Twitter: lcecere 2900 followers. Rated
as the top rated supply chain social
network user.
Linkedin:
linkedin.com/pub/lora-cecere/0/196/573
(2300 in the network)