a general model of supply chain visibility
DESCRIPTION
A General Model of Supply Chain Visibility. By: Jonah McIntire. www.supply-chain-visibility.com. Business Leaders Expect Visibility to be Impactful. The 2009 Supply Chain Officer’s study by IBM shows that Supply Chain Visibility is the top concern, but not the top priority, for SCOs… - PowerPoint PPT PresentationTRANSCRIPT
A General Model of Supply Chain Visibility
www.supply-chain-visibility.comBy: Jonah McIntire
Business Leaders Expect Visibility to be Impactful
• The 2009 Supply Chain Officer’s study by IBM shows that Supply Chain Visibility is the top concern, but not the top priority, for SCOs…
• Gartner identified six major competencies to focus on within supply chain execution, of which four (Global Trade Management, Inbound Logistics, Flow Management, and Labor Management) require decision making supported by SC visibility…
• An AMR study in 2008 showed visibility as the most strategically important technology investment for supply chains with revenue over $1 Billion USD
• A 2008 academic study in Sweden showed an empirical improvement of ~3% in ROA for 14 companies completing a visibility initiative
www.supply-chain-visibility.comBy: Jonah McIntire
Let’s spend 30 minutes on the following…
1. Defining visibility as a process2. A general supply chain visibility model3. A visibility effectiveness Model
www.supply-chain-visibility.comBy: Jonah McIntire
Technology…
• Is purchasable…• Is subject to technology cycles•Concerned with upgrade paths and interoperability, etc…
Business Goal…
• Defines a final, desirable state• Has inherent value• Can be achieved and lost
Strategy…
• Provides guiding principles for how to use resources• Is difficult to evaluate independent of its implementation
Process…
• Renders inputs into outputs by doing work• Can be measured both as a black-box, and by sub-processes
What is supply chain visibility??
www.supply-chain-visibility.comBy: Jonah McIntire
The Need for a Visibility Effectiveness Framework
Total Supply Chain Effectiveness
Cost Service
Agility Resilience Reliability Responsiveness
The Black Box of Visibility Processes
www.supply-chain-visibility.comBy: Jonah McIntire
Supply Chain Visibility Processes
The Black Box of Visibility Processes
Total Supply Chain Effectiveness
Information
Materials
Capital
www.supply-chain-visibility.comBy: Jonah McIntire
Supply Chain Visibility Processes
The Black Box of Visibility Processes
Total Supply Chain Effectiveness
Information
Materials
Capital
Information…
• Summary data• Sales levels• Sustained markup
• Conceptual objects• Forecasts• Purchasing Agreements• Maximum Capacity
Materials…
• Cases, Items, Pallets, etc• Aggregates of weight, counts
Capital…
• Accounts payable / receivable• Past payments• Cost of capital
www.supply-chain-visibility.comBy: Jonah McIntire
Why Use a General Visibility Model?
Scoping…
• Who is the stakeholder list? Departments, locations, staff?
• Where does visibility end and begin, what systems or tasks are involved?
Performance…
• Enables decoupling successful from unsuccessful processes
• Enables measuring the visibility initiative below total impact
• Enable cross-organization benchmarking and best-practices
www.supply-chain-visibility.comBy: Jonah McIntire
Tier 1 Supply Chain Visibility Processes
Tier 1 Supply Chain Visibility Effectiveness
Sensitivity
The capacity to capture data as it appears in the supply chain
Accessibility
The capacity to relevantly interconnect data and prepare for its later usage
Intelligence
The capacity to extract data in ways which identify high-value data and relationships
Decision Interruption
The capacity to interrupt decisions so that different, and better, outcomes emerge
www.supply-chain-visibility.comBy: Jonah McIntire
Supply Chain Visibility Effectiveness
Sensitivity Accessibility Intelligence Decision
InterruptionROA
Assets
Revenue
Expense
The Cost-Benefit Space for Visibility Metrics
Tier 1 Visibility Effectiveness Metrics
Tier 2 ROA Metrics
A General Model of Visibility Effectiveness
www.supply-chain-visibility.comBy: Jonah McIntire
Visibility Effectiveness: Draft Tier 2 Metrics
Supply Chain Visibility Effectiveness
ROA Sensitivity Accessibility Intelligence Decision
Interruption
Draft Tier 2 Metrics:• Sensory Completeness• Sensory Redundancy• Sensory Accuracy / Bias• Sensory Depth of Detail• Sensory Timeliness
Qualitative Examples:• DC Manager “-We don’t see inbound deliveries except from specific suppliers…”• Buyer “My POs don’t show as “in-transit” until a week after they ship…”• Accountant “Every quarter get’s closed improperly because we don’t know about goods delivered FOB on the last few days”• Stores Staff “The shipment has an ETA, but it is always 2-3 days earlier than actual delivery”
www.supply-chain-visibility.comBy: Jonah McIntire
Visibility Effectiveness: Draft Tier 2 Metrics
Supply Chain Visibility Effectiveness
Draft Tier 2 Metrics:• Ease of Access / Use• Universality of Object Definitions• Longevity
Qualitative Examples:• DC Manager “We only have one super-user who can track & trace well”• Buyer “I can track WIP by PO#, but after the factory I have to use container #s, BOL #s, case #s, etc” • Accountant “Shipments from 2008 have actual freight cost, but 2009 records only show the assumed PO freight factor… cross-year comparisons are impossible”• Stores Staff “I can’t lookup all shipments to my store at once, I have to look for Warehouse shipments first and then store-to-store transfers next”
ROA Sensitivity Accessibility Intelligence Decision
Interruption
www.supply-chain-visibility.comBy: Jonah McIntire
Visibility Effectiveness: Draft Tier 2 Metrics
Supply Chain Visibility Effectiveness
Draft Tier 2 Metrics:• Ease of Use• Analytical Accuracy• Analytical Re-Usability• Automation of Analysis• Analytical Relevance
Qualitative Examples:• DC Manager “Inbound volume forecasts are sent, but only once per month. The system should create a new forecast whenever something changes”• Buyer “I think landed cost is rising, but I have to push large data sets to Excel to calculate rolling-window metrics” • Accountant “Landed-Cost is on a weekly Executive Dashboard, but the calculation ignores DC bypass shipments”• Stores Staff “I have to run four separate reports to calculate when out-of-stock items will be available again”
ROA Sensitivity Accessibility Intelligence Decision
Interruption
www.supply-chain-visibility.comBy: Jonah McIntire
Visibility Effectiveness: Draft Tier 2 Metrics
Supply Chain Visibility Effectiveness
Draft Tier 2 Metrics:• Depth of procedural integration• User satisfaction with the decision-procedure, including the point of interruption…• Transparency to how the visibility
intelligence is affecting or should effect the
decision making process
Qualitative Examples:• DC Manager “I am sent an automated report when a store receives a carton as damaged in the inventory system; what am I supposed to do with this alert?”• Buyer “It would take a lot of time and effort to always consider chargeback trends when issuing new POs, so I only review them before seasonal POs” • Accountant “I run a report on all charge-backs that are pending, and then have to email each supplier-buyer pair individually. It would be better if the alerts were system-generated directly to the relevant parties”
ROA Sensitivity Accessibility Intelligence Decision
Interruption
www.supply-chain-visibility.comBy: Jonah McIntire
Visibility Effectiveness: Draft Tier 2 Metrics
Supply Chain Visibility Effectiveness
ROA Sensitivity Accessibility Intelligence Decision
Interruption
Net Sales
Total Cost
Net Profit
Net Sales
Net Margin
Ave Current Assets
Ave Fixed Assets
Net Sales
Total Assets
Total Asset Turnover
Return on Assets
÷-
X
÷+
www.supply-chain-visibility.comBy: Jonah McIntire
General Model of Visibility
The Black Box of Visibility Processes
Total Supply Chain Effectiveness
Information
Materials
Capital
General Model of Visibility Effectiveness
Sensitivity
The capacity to capture data as it appears in the supply chain
Accessibility
The capacity to relevantly interconnect data and prepare for its later usage
Intelligence
The capacity to extract data in ways which identify high-value data and relationships
Decision Interruption
The capacity to interrupt decisions so that different, and better, outcomes emerge
www.supply-chain-visibility.comBy: Jonah McIntire
ROA
Sensitivity
Accessibility
Intelligence
Decision Interruption
RevenueAssetsCosts
CompletenessConsistency
Timeliness
Ease of UseEase of Access
AccuracyRelevancy
Re-Usability
Depth of Process IntegrationUser Trust
User Satisfaction
As-Is Option A Option B
Example Visibility Effectiveness Scorecard
www.supply-chain-visibility.comBy: Jonah McIntire
