Supply Chain It Convergence MBA talk

Supply Chain + IT

Notes form a transformational journey

Arpad Hevizi – CelesticaVP IT Supply Chain Solutions

http://twitter.com/ahevizi

THE PROBLEM

Component

SupplierManufacturing Distribution

Center

Retail

Outlet

Air

Land

Sea

3PL 3PL

Repair

Service

Center

Returns

Consolidation

Center

OEM

3PL3PL

LATENCY

MISALIGNEDMETRICS

INFORMATIONLEADTIME

Service

Provider

Design

Center

3 CRITICAL SHIFTS

WHY?

Supply Chain is no longer about moving parts…

1DAY

7DAYS

7DAYS

7DAYS

7DAYS

REAL LEADTIME

Value Chain

View

An Often Overlooked Obstacle to

Supply Chain Integration and Excellence

TSMC TI CLS Cisco Ingram Walmart

Pressure Center – Wall Street

Pressure Center – Customers

Other

TSMC

Customers

Other

TI

Customers

Other

CLS

Customers

Other

Cisco

Customers

Other

Ingram

Customers

CSCOTSM IMCLS WMTTXN

The ‘forgotten’

End Customer

SCOR Benchmarking - Presentation5

ALIGNMENT?

• Solution Implemented

within budget and

resource constraints

• Business capabilities

are delivered and

tested as an

integrated solution

• User and support

resources are

identified and trained

• The solution is in

productive use

supporting core

business functions

• The organizational

and process changes

are implemented and

accepted

• The solution reached

maturity (stabilization

phase completed)

• The solution lead to

measurable business

benefits

• There is a clear

connection between

solution performance

and key business metrics

• Key performance

indicators are monitored

and the solution is

refined to maximize

value realization

Technical Success Operational Success Business Success

IT IS NOT TOOLS

THE ANSWER

WHAT?

Deliver Make Source

Plan

Extended Supply Chain

Company DomainCustomers Suppliers

Supply Management and Purchasing Execution

FOCUS: Supply Chain Control Today Controlling Supply Variability

Forecast Collaboration VMI & Supply Collaboration ReplenishmentPlanning (ROP)

The primary supply chain challenge is to balance a

variable demand profile with a variable supply at the

lowest cost to serve while achieving customer expectations

Demand Management and Fulfillment Activities

Controlling Demand Variability

FRAGILE BALANCE

Supply Side Partner Optimization

IT: Collaboration Solutions, Supply eHubs

Operations Excellence / Local Level

IT: Statistical Process Control Solutions, MRP II

Process Excellence / Local Level

IT: CAM, MRP Solutions

Supply Chain Networks / Integration

IT: Value Chain Planning solutions

Cross Operations Excellence / Enterprise Level

IT: ERP revolution

Demand Side Partner Optimization

IT: Collaborative Demand Planning, DDSN

1960s

1980s

1970s

1990s

2010s

2000s

THE EVOLUTION

Managing extended supply

chains as one synchronous

network.

TRUE INTEGRATION

Demand driven

Supply Network

Integration…

NOT THAT EASY

HOW?

LOAD CHASE


Supply ManagementDemand Management

LOAD CHASEORDER

CHECK

PlannedSupplyChain

LOAD CHASESIMULATE

SCENARIOS

AdvancedSupplyChain

SupplyChain Vision

VALIDATE PLAN

ALIGNED

ORDERS

COLLABORATIVE REPLENISHMENT

SHARED

SCENARIOS

COLLABORATIVE PLAN

DEMAND / SUPPLY VISIBILITY

Extended Supply Chain

TypicalSupplyChain

REAL EVOLUTION

Real life is lagging behind the theory…

CONTROL PROBLEM

Component


Center

Retail

Outlet

Air

Land

Sea

3PL 3PL

Repair

Service

Center

Returns

Consolidation

Center

OEM

3PL3PL

LATENCY

MISALIGNEDMETRICS

INFORMATIONLEADTIME

Service

Provider

Design

Center

Deliver

Service

Sell

Make

Design

Source

Plan

Extended Supply Chain – out of scope for most companies today !!!


Collaborative

Planning &

Forecasting

Collaborative

Planning

Hub Management

& Collaborative

Fulfillment

Collaborative

Replenishment

Service

Integration

Design for Supply

Chain

SUPPLY CHAIN SCOPE

CHANGE FOCUS

WHERE TO START?

VALUE FIRST

Attribute Metric (Strategic)

Reliability Perfect Order Fulfillment

Responsiveness Order Fulfillment Cycle Time

Agility Supply Chain Flexibility

Supply Chain Adaptability†

Cost Supply Chain Management Cost

Cost of Goods Sold

Assets Cash-to-Cash Cycle Time

Return on Supply Chain Fixed Assets

Return on Working Capital

Customer

Internal

VALUE DRIVERS

SCOR Benchmarking - Presentation18

"Go where the money is...

and go there often."

HISTORY LESSON

Understand & use 1 simple equation…

CCC = DSO + DSI - DPO

1DAY

7DAYS

7DAYS

7DAYS

7DAYS

FOCUS ON CASH

NEXT PROCESS

Strategize Develop Sell Plan Source Make Deliver Return Service

Collaborate & Communicate with Customers, Suppliers

Idea to Product Quote to Cash

Plan to Deliver

Issue to Resolution

Procure to

Pay

Requirement

to Resource

Market to

Sell

Collaborative Planning

Network Inventory Optimization

Supply Chain Performance & Risk Management

CORE ENTERPRISE

PROCESSES

EXTENDED

ENTERPRISE

Ready to support external service offerings

Empowers internal operations

Gap areaIT C

AP

AB

ILIT

Y

MA

TU

RIT

YLegend:

Integrated Business Planning and Analytics

EXTENDED PROCESS

Component


Center

Retail

Outlet

Air

Land

Sea

3PL 3PL

Repair

Service

Center

Returns

Consolidation

Center

OEM

3PL3PL

PerfectLaunch

Synchronized Supply Chain

PreventReturns

LIFECYCLE FOCUS

Service

Provider

Design

Center

Brand Owner CustomerComponent Supplier EMS Retailer

DependencyVariability

Mitigating these 2 attributes is a pre-requisite to a touchless supply chain

Current Model (Silo’ed) ‘Managed’ Collaborative Model

Supply Chain Spectrum

Qty / Mix

Baseline

Noise

Qty / Mix

Baseline

Noise

Supply Chain Spectrum

REDUCE NOISE

Critical Items Shortage Report

Qty

TimeWeek 1 Week 2 Week 3 Week 4 Week 5

A

B

C

A

B

C

A

B

C

ABC

A

BC

3PL PartnersCLS OperationsCLS Planning

Supply Chain Command Center - Conference Room

Sales

Planning

Sourcing

Production

Quality

Logistics

MANAGE EXCEPTIONS

ENABLE IT

Key Supply Chain Performance Metrics

Responsiveness{Order Fulfillment Lead Time}

Supply Chain Management Cost{Supply Chain Management Cost; Value-Added Productivity}

Assets Utilization Performance{Cash-to-Cash Cycle Time; Inventory Days of Supply; Asset Turns}

{Low}

{High}

{Low}

{High}

{Low}

{High}

Supply Chain Characteristics

Operational Execution {Local Autonomy} {Global Standardization}

Influence on Critical Suppliers {Limited} {Powerful}

Supply Chain Value-Add Services{Cost Containment} {Innovation Focus}

Ability to Influence Demand{Limited} {Powerful}

{Efficient} {Responsive}

Supply Chain Design

{Gut Feel} {Data Driven}

Analysis Approach

Agility / Flexibility{Supply Chain Response Time; Production Flexibility}

{Low} {High}

Reliability{Delivery Performance; Fill Rate; Perfect Order Fulfillment}

{Low} {High}

Desired Supply Chain CharacteristicsCurrent position

Legend:

Planning & Execution Tools{Off-line} {On-line}

SC

OR

–C

usto

mer

Fa

cin

gS

CO

R –

Inte

rnal F

acin

g

ALIGN ON VISION

Customers

Components Partners

Design Partners

Partners

Recycling Partners

Logistics Partners

DE

SIG

N

Product Data Management

Services

Design & Collaboration

Services

Perfect Launch

Supply / Demand Analysis, ATP/CTP

Network & Inventory

Optimization

Supply Network

Collaboration(planning)

SynchronizedSupply Chain

Supply Capability

Forecast

EM

S &

FU

LF

ILL

ME

NT

ReplenishDemand

Pull

Manufacturing &Fulfillment

Demand Pull &

Fulfillment

Order

Shipment

PreventReturns

Triage / Repair /

Redemption Recycle

LogisticsReturns

Shipment

AF

TE

R M

AR

KE

T

Supply Network

Collaboration(execution)

Supply Network

Collaboration(returns)

Supply Network

Collaboration(launch)

Visibility & Analytics

System Assy. Partners

MaterialsPlanning

& IPC

Order Management

& Commit

Material Quotation &

Pricing

Logistics, Transport. & Warehouse

Mgmt

Service

Parts

Planning

ALIGN ON TARGET

April May JuneJan Feb Mar July Aug Sep

Stra

tegi

cTa

ctic

alO

pe

rati

on

al

Supply Chain Command Center

Forecast Netting, Split & Collaborative allocation

Global ATP Check & Order Commit

Supply Demand Analytics & Supply Chain Simulation, Inventory Optimization

3

5

7

Team Engaged

Already Started

Automatic Inter-Factory Forecast & Commit Process

2

6

Status:

Oct Nov Dec

Scope definition

Production Scheduling and Execution optimization

4

Automatic Supplier Forecast & Commit Process

1

This initiative will be a customer facing

sub-process for ATP & Order Commit

(5) initiative

LAUNCH PROJECTS

Define improvement roadmap and initiatives…

3 PRACTICAL TIPS

WHAT NEXT?

FOCUS ON VALUE

IQ

Understand Supply Chain ClockSpeed…

UNDERSTAND CYCLES

IQ

Career Insight #1

It’s Not What You Know. It Never Was.

•Relationships

•Execution

•Transformation

I asked executives on my LinkedIn Network in a poll on

What is the most important executive skill to focus on in these times.

180 responded to the survey and 45 followed up with detailed comments

Execution is the most important focus. Business Expertise is the least.

Full Survey: http://is.gd/qz0G

EQ IQXQ

SOBERING DATA

Science of influence & Strong Relationships

IT’S NOT MAGIC

EQ

Execution Excellence & Leadership Skills

LEARN FORM THE BEST

XQ

Career Insight #2

Status Quo is Shifting. Break New Ground.

•Entire Industries Redefined

•New Businesses Born

•New Jobs Emerging

Organization Structure

Understand the Future & Create the Future

LEAD TRANSFORMATION

Career Insight #3

Your Career Will Take Longer. Unless…

•Change / Rotation

•Mentorship

•Transformational Projects

ANY QUESTIONS?

[email protected]

Arpad Hevizi – Vice President IT Supply Chain Solutions

GLOBAL TRANSFORMATION EXPERIENCE:

Global Beverage Manufacturer – As strategic advisor helped the company to develop an effective IT operating model

to reduce cost and increase responsiveness of the ‘global shared application service organization’. Lead the ‘IT Value

Assessment’ effort that helped to develop a cost baseline for all key IT applications and identified areas of support cost

reduction. Applied SCM principles to increase the effectiveness of their global development and support operations.

Sony-Ericsson – As strategic advisor helped Sony Ericsson to develop a global commercial strategy to increase

market share in high-growth markets and enable profitable growth. Helped Sony Ericsson to develop tailored fulfillment

models and differentiated service offerings to high-growth and mature markets to optimize cost-to-serve and improve

profitability. Reduced fulfillment time in Indonesia from 20+ days to consistent 7 days and reduced channel inventory by

14 days.

Motorola – Engagement Manager and Business Architect of the $35M Global Supply Chain Transformation initiative.

Lead the global implementation of Collaborative Planning and Forecasting, Advanced Global Planning and Flexible

Fulfillment Execution Solutions. Helped the process reengineering effort at Fort-worth Customer Fulfillment Center to

enable rapid ramp-up of operations and to become the highest performing DC for the company within 12 months. Lead

the ‘Supply Chain Value Assessment’ effort that helped to develop operational baseline for the companies newly

established Supply Chain Service operation.

Global Wireless Manufacturer –Business Architect and Program Manager of the Global Supply Chain Transformation

initiative. Lead the global implementation of Collaborative Planning and Forecasting, Advanced Global Planning and

Flexible Fulfilment Execution Solutions that enabled the company to support 100% increase in shipping volume while

reducing operational spend.

Arpad brings a unique blend of IT executive leadership and strategic business

transformation and operations experience. He has spent the last 15 years helping

clients to maximize value from their global transformation initiatives. He led the

implementation of global Supply Chain and enterprise solutions, developed

strategies related to emerging market growth, mergers and acquisitions and

value added service operations.

Supply Chain It Convergence MBA talk

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