Presentation on the Future of Supply Chains at Transplace Conference in San Antonio

Supply Chain 2020

Supply Chain Insights LLC Copyright © 2016, p. 2

Disclaimer: I am a Skeptic


A Social Scientist


A Fortune-teller of Sorts….

I Write for the Supply Chain Leader


Delivering Open Content To The Market

15 Years Ago


Looking Back

Pressure Is On!


Current State of Supply Chain


Descriptors Used by Leaders


Who Has a Supply Chain That Is Working Well?


Since 2000, 52 percent of the companies in the

Fortune 500 have either gone bankrupt, been

acquired, ceased to exist, or dropped out of the

Fortune 500.

Activist campaigns against companies with a market

cap greater than $10 billion has more than doubled

since 2010. Activists won, partially won or settled

73% of proxy fights in 2014, up from 55% in 2010.

Increasing Pressure on Operations


Productivity


Technology Evolution

ERP

SRM

APS

PLM

CRM

Operational Investments Workforce ProductivityAnalytics

Understanding the Organization


Right Stuff?


Supply Chain as a Function


Middle Management Has Greatest

Shortage of Supply Chain Talent


Growing Talent Gap

Evolution of Visibility


Increase in Outsourcing


Supply Chain Visibility


Evolution of Visibility


Vision: Network of Networks


• Bi-directional flows

• Collaborative workflows

• System of record

• Optimization and analytics

• Learning over time

• Automation of planning master data

• On-line benchmarking

What is Important?


The Evolution of the Long Tail


Bullwhip Effect


Need for Network Ownership

Metrics That Matter


What We Expected


A Supply Chain

is a Complex System

with Complex

Processes

with Increasing

Complexity

What We Learned….


The Supply Chain Effective Frontier


Chemical Industry a Look at Orbit Charts: Dow & DuPont(Inventory Turns and Operating Margin)


A Closer Look at Orbit Charts: Automotive


Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014

2006

4.0

5.0

6.0

7.0

8.0

9.0

10.0

-0.10 0.00 0.10 0.20 0.30 0.40 0.50 0.60

Operating Margin

Eli Lilly and Company Novo Nordisk

2014NVO

0.31, 6.48

2014

2006

Best Scenario

LLY

0.24, 8.30

Average (Operating Margin, Inventory Turns)

Inven

tory

Tu

rns

A Closer Look at Pharmaceuticals: Novo Nordisk Making Progress


2006

2014

2006

2014

6

7

8

9

10

11

12

13

0.09 0.10 0.11 0.12 0.13 0.14 0.15 0.16 0.17 0.18 0.19

Inve

nto

ry T

urn

s

Operating Margin

The Emerson Electric Company Schneider Electric SE

Best Scenario

SBGSY

0.13, 7.37

EMR

0.16, 10.95

Average (Operating Margin, Inventory Turns)

Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014 from YCharts

Electrical Equipment: Operating Margin vs. Inventory Turns

(2006 – 2014)

Planning Maturity: Large Conglomerate

Application Channel Sell Deliver Make Source Suppliers

Strategic

Planning

6-18 months

Partner

Planning

Network Design Strategic

Sourcing

Tactical Planning

12-52 weeks

Sales and Operations Planning Commodity

Council Buying

Strategies

Requirements

Planning

Joint

Value

Creation

Forecasting Inventory

Configuration

Tactical

Supply

Supplier

Development

Transportation

Planning

Material

Orchestration

Operational

Planning

3-12 weeks

Demand Sensing (MDS

and DS)

Inventory Planning

DRP/Load

Planning

Deployment

Production

Planning

MRP Supplier

Sensing

Internal Visibility Supplier Visibility

Executional

Planning

0-3 Weeks

Customer VMI

Trade Promotion Execution

ATP

Supplier VMI

Transactional

Data

Transactions

Planning Master

Data

Planning Master Data


• Which metrics matter?

– Growth, operating margin, inventory turns, ROIC, customer

service (in the eyes of the customer)

• How do we get unstuck?

– Focus cross-functionally on a balanced portfolio. Bonus

employees against the portfolio.

– Augment with functional metrics focused on improving

RELIABILITY.

• What are the functional reliability metrics?

– Examples include: forecasting, first pass yield, OEE, on-time

delivery, orders shipped complete, hands-free orders, schedule

attainment, safety metrics, employee turnover

Insights

Making the Digital Pivot


• Supply chains that learn as we sleep

• Multi-tier planning and automation of replenishment

• Network of networks: network inter-operability

• Embedding of sentiment analysis

• Interactive UI

• New business models: confluence of new technologies

Looking Forward


Confluence of Technologies


Data Strategy for….

Clouds?

Streams?

Lakes?


Big Data Supply Chains are Evolving

47

Challenges:

• Transactional

• Time phased data

Structured

Data

• Social

• Channel

• Customer Service

• Warranty

• Temperature

• RFID

• QR codes

• GPS

• Mapping and GPS

• Video

• Voice

• Digital Images

Unstructured

Data

Sensor

Data

New

Data

Types

Volume

Velocity

Variability


Analytics Maturity


Learning a New Language


Data Types

Supply Chains Don’t Play by the Rules

51

But,

what if

they

could?


Case Study: Internet of Things

Rethinking Supply

Chain Execution

Closed Loop

Replenishment

2:00am Emergency

Drug Call

11:1811:22

SHM PowerPoint Template Guidelines 03.15.10

Intelleflex Confidential

Opportunity

• 1/3 of shipped produce wasted: $34B in annual global waste from perishable foods

• 50% is due to temperature variations from the farm to retail shelf

• Reducing temperature related shrink by half is approx. $9B opportunity.

Perishable Produce – A Closer Look

1% reduction in Shrink Increase in profit of

$1,173,555

6% reduction in Shrink Increase in profit of

$7,378,830

One Commodity: Strawberries

Case Study on Shelf life

Perishable Products: RFID Cold Chain Opportunity

Group by First In or Shelf Life?

Having different remaining shelf life mixed on pallets, causes problems later. Sending short shelf life berries on

longer delivery cycles turns Good Berries into BAD Berries for the retailer and others. More yellow & red pallets in

Philadelphia & Southern California ~ More shrink at the retailer ~ Lower customer satisfaction

15+ 14+

13+

11+

15+ 15+ 15+

10+

<10

12+

12+

<1012+

15+

14+12+

11+14+

13+

12+

12+

10+

<10

<10

15+

15+

15+

15+

15+

15+

15+

15+

15+

15+15+

Currently berries come in from growers, pass QC, and are put on export pallets on a First In Basis (traceability control)

WHICH RESULTS IN MIXED SHELF LIFE ON MULTIPLE PALLETS….

ALL GOOD BERRIES, BUT - they have different remaining shelf life when received from growers

If we can group berries by shelf life, we avoid problems on multiple pallets – and send pallets to the right destination…

Evolution of 3-D Printing of Human Organs

Ultimate Ear

Opportunity

at the Intersection

of the Social and Interest Graph(s)


Listening: Lenovo


0

0

0

0

0

0

0

Canada

-Customer A calls about a blue screen on a Yoga

-Customer B posts on Facebook about his X220’s AC/DC adapter issues

Large Enterprise Client experiences 5 keyboard malfunctions in their latest

shipment. Complaints received through account executive

[Critical Situation]

Brazil

-Customer F submits a service from on

esupport.lenovo.com regarding

their W530 hard drive

Morocco

-Customers G & H comment on their

X220’s electrical issues on Twitter.com

-Customer I called about Yoga screen

issues

Australia

-Customer J write a review on

NewEgg.com about AC/DC adapter

issues on X220

-Customer K had an eChat with Lenovo

about Yoga screen issues

China

-Customer L wrote on Weibo about

Yoga screen issues

-Customer M calls about a Tablet 8battery issues

Voice of Customer Comes in Many Forms

USA

-Customers C & D write X220 product

reviews on amazon.com and mention

issues with AC/DC adapters

-Customer E posts on

forums.lenovo.com that they are

experiencing blue screens on their Yoga


0

0

0

0

0

0

0

Lenovo

- 6 recorded issues about X220’s

AC/DC adapter

- 5 recorded issues about

keyboard issues on X1 Carbon

- 5 recoded issues about Yoga

screen

- 1 recorded issue about W530

hard-drive

- 1 recorded issue about Tablet 8

battery

One Voice – A Single View of Perceptual Quality


Traditional Digital

Project definition Large projects with

known outcomes

Small projects that evolve

Funding Licensed deployments Cloud deployments

Type of data Structured transactional

data

Unstructured and

structured data

Data characteristics Data with low velocity Data with high velocity

Leadership Led by IT Led by the business

Process focus Inside-out Outside-in

Capabilities Better response Test and learn

Technologies Large, established

vendors

Small and evolving

technology sources

Shifts


Wrap-up

• Supply chains are five years

away from learning as we

sleep. Stabilize legacy

spending.

• We must learn from the past

to unlearn, and then rethink

supply chain processes. The

starting point is rewiring our

brains.

• Value network automation

has great promise: welcome

the Network of Networks.


About Lora Cecere

• Founder of Supply Chain Insights

• “LinkedIn Influencer”

• Guest blog for Forbes

• Author of 4 books: Bricks Matter (2012), Shaman’s Journal (2014),

Supply Chain Metrics That Matter (2014), Shaman’s Journal (2015)

• 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.

Contact Information: • Email: [email protected]

• Blog: www.supplychainshaman.com (15,000 pageviews/month)

• Forbes: www.forbes.com/sites/loracecere

• Twitter: twitter.com/lcecere (7,200 followers)

• LinkedIn: www.linkedin.com/in/loracecere (86,724 followers)

• LinkedIn Influencer: www.linkedin.com/today/author/446631

Presentation on the Future of Supply Chains at Transplace Conference in San Antonio

Business

Transcript of Presentation on the Future of Supply Chains at Transplace Conference in San Antonio