agility – beyond operational excellence€¦ · jit just-in-time | ecr efficient ... time, based...

Agility – Beyond Operational Excellence

DOAG ConferenceDortmund, May 7, 2014

Transforming the organization to beLean, Responsive and Agile.

Agenda

1. Introduction – EY’s competence in supply chain management

2. Agility – what does this mean for your business?

3. Agility in your business – Ensuring adaptiveness to changed market conditions

4. What is the speed you need – time horizons of agility

5. Sources of agility – levers in organization, processes, systems, staff

Agility - Beyond Operational Excellence


IntroductionEY

Global compentence in Value Chain optimization


140countries

27kprofessionals

$4.3brevenue

► Americas9,700 professionals

► EMEIA12,400 professionals

► APAC3,900 professionals

Germany Switzerland Austria (GSA)900 EY professionals(in that 250 ex-J&M professionals)

Our service offering


Supp

lyC

hain

Stru

ctur

esSupply

Chain

Day-to-D

ayO

perations

ServiceOffering

Supply ChainTechnologies

Supply ChainPerformanceand controls

Supply ChainSegmentation

End-to-EndSupply Chain

Design

Supply ChainOrganization

IntegratedValue ChainManagement

► Monitoring of current supply chainperformance

► Matching with customer requirements► Targeted controls and KPI to monitor

and improve SC

► Integrative information flow across systems► From demand signals to demand fulfilment► Focus on ERP and APS functionalities► SAP ERP, SAP SCM, SAP EIS, SAP S&OP

on HANA, SPP DS, Icon SCM, Asprova, I2,Infor, OMP, OrSoft ,Steelwedge, et al.

► Integrated processes, procedures,rules/policies, responsibilities

► SC processes designed based onlean principles

► Operations structured according toSC principles

► Global, regional, and local leadershipstructures and roles

► Required formal empowerment todrive operational performance andrequired improvements

► Escalation procedures andaccountabilities

► SC Strategy alignment to businessstrategy and market requirements

► International supply chain structures► Based on relevant SC maturity► Creation of demand and/or

supply driven segments► Differentiation of

manufacturing and supplystrategies

► SC complexity reduction orcontrol improvements

► Total view on the supply chain► Integration of suppliers and

customers into planning anddelivery processes

► Consideration of individualconstraints and performancerequirements

► Sales and Operations planningused as core businessmanagement process

► Collaboration across functionsand across corporate boundaries

Current highlights for You


www.de.ey.com/supplychaindays

Supply Chain Trend Study 2014

Starting June 2014

[email protected]

Presentation title

Agility – what doesit mean?

Some definitions …Agility in value chains describes the ability of companies to adapt to changed marketconditions, providing appropriate responses in a meaningful frame of time

3 Factors are decisive for business agility:

► Ability for early recognition of changes in Markets, and the need to initiate the adaptation inthe company. This includes access to the nature of changes, but also to learn to accelerate andimprove this capability over time.

► Flexibility to rapidly initiate, implement, and accomplish changes in regards to product,processes, and organizational, being in internal structures and setups, as well as in the externalinterfaces to customers and suppliers, and other stakeholders

► Transformation velocity, being defined by the time required, to initiate, implement, andaccomplish the required changes in the company and ist environment competently and in a securedfashion


Agility requires some level of collaboration

Finance & Controlling

Innovation & Product LifecycleManagement

Supply Chain Operations

Finance and controlling

Sales andmarketing

Service andspare partsMgmt

Pro-duction

Ware-housing

Logis-tics

Distri-bution

OrderMgmt

Plan-ning

QualityMgmt

Mainte-nance

1. Functional Silos

Finance & Controlling

Innovation & Product LifecycleManagement

Supply ChainManagement



Sales andmarketing

Service andspare partsMgmt

Pro-duction

Ware-housing

Logis-tics

Distri-bution

OrderMgmt

Plan-ning

QualityMgmt

Mainte-nanceSourcing &

Purchasing

2. Internally integrated SCM

3. Integration with customers and suppliers

CustomerSupplier

Innovation & Product Lifecycle ManagementSupply ChainManagement



Sales andmarketing

Service andspare parts Mgt

Pro-duction

Ware-housing

Logis-tics

Distri-bution

OrderMgmt

Plan-ning

QualityMgmt

Mainte-nanceSourcing and

purchasing

Supply ChainChampions 2012

Sourcing andpurchasing

EY SCM Service Offering / Advent International 18.2.2014

Agility – ensuringadaptiveness


Fast-changing & complexproduct & service portfolio

CostPressure

FinancialRisk

Shortage ofResources

UbiquitousInternet

DemographicChange

Globalisation

Urbanisation

Mobility

Transformation is essential due to megatrends in afast-changing world companies are facing today

Highly individualised & volatilecustomer demands


Fast-changing & complexproduct & service portfolio

CostPressure

FinancialRisk

Shortage ofResources

UbiquitousInternet

DemographicChange

Globalisation

Urbanisation

Mobility

Main challenge are the dynamics from intensiveinteraction between the individual challenges

Highly individualised & volatilecustomer demands


Game changing business trends:Acceleration

Hours Days Weeks Months

Structural Reduction

Internet

Customizedto Order

24 hr Delivery

Moment ofNeed

Select

Produce

Deliver

Time

New EnablersTraditional process


Moment ofFulfilment

Moment ofFulfilment

Game changing business trends:IT-Integration


Shipment Signals

Production Signals

Sourcing Signals

Demand & Supply Data

Supply Chain Cockpit

Game changing business trends:Integration in the value chain


Lean

The 1980’s:Automotive optimizesinbound supply(“JIT”)

Supply Production Distribution Consumer

ResponsiveThe 1990’s:Retailers optimizeinbound distribution(“ECR”)


DynamicThe 2000’s:Electronics optimizesthe chain flow(“CPF”)


Customer centricand integrated

The 2010’s:E-Tailers integrate withthe consumer, andleverage on superior SCcapabilities along theentire chain

JIT Just-in-Time | ECR Efficient Consumer Response | CPF Continuous Product Flow


Game changing business trends:Volatility from working capital optimization *)


Increased volatility in supply chains Increased complexity in the value network

► Increasing upstream demand volatility► Increasing requirements on flexibility► Increased product portfolio

► Extensive global sourcing networks► Less time to respond to quality problems► More exposure to transport risks

Impulse

Old paradigm: Large inventories as security buffers

New paradigm: Inventories as unwanted capital

*) Similar effects account from “operational excellence” initiatives,streamlining operations, but making them often more vulnerable


The speed youneed

For a business, agility has two main sides:internal value chain, and value network


Internal value chain Value network

► Internal alignment of functions► Collaboration on adjustment scenarios► Embedded agility from built-in flexibility

► Being close to customers► Taking advantage of global capabilities► Swift adjustments when required

Agility is the ability to respond in the appropriatetime, based on having key enablers in place


Response TriggerEnabler

► Internal Impulses§ Management Decisions§ Product portfolio changes§ Investments (M&A)§ Divestments (M&A)§ …

► External impulses§ Raw materials§ Customers§ Competition§ Pricing§ New technologies§ New practices§ …

Yourbusiness

► Organizational response§ …§ …§ …§ …

► Process responses§ …§ …§ …§ …

► Segmentation► Modularization► Standardization► Globalization► Partnering► Networks► Strategic stocks► Financial reserves

Main objective is to create the readiness to beagile when needed


► For each business, an individual agilityconcept should be implemented

► Modularity of the business is a keyenabler for having a higher potentialagility, and to respond to impulses fromthe market

► In case of a “disturbance”, the requiredmodules can be activated with targetedactions, and thus enable the adaptationof the business to the new situation

► Preparing in this way, makes theorganization much more nimble, andreduces the time span to respondsignificantly

► Additional advantage is that all requiredpreparations can be done without directstrain on the business, thus allowingactions to be planned and preparedthoroughly, and well thought through

Low agility High agility

Where does your business stand today?

Currentstructure

Future statestructure

Enablingstructure

Pre-pare

Exe-cute

t0 t1 t2

Prepare without stress Execute fast

Agility needs to address individual prohibitors


Highly Flexible Structure

Adjustable structure

Flexible but needs renewal

Inflexible structure

High

Low

Longterm

Shortterm

ExistingStructural

Agility

Time toadapt

Fundamentalchange

Continuouschange

Incrementalchange

Responsivechange

► For each business, an individual agilityplan should be developed, depending onits individual agility profile

► Key questions to be answered areaddressing- the required speed for change- for what type of impulse- to initiate which type of change- to reach which future state- based on which agility levers- who leads the transformation

► There are specific business conditionswhich provide limitations to agility, suchas large-scale equipment; thereforerequired to identify ways to reduce thetime scale for adjustments by changesof the current investment strategies

► Main emphasis for the roadmap tohigher levels of agility is to identifysources of agility which serve manydifferent types of adjustments


Sources of agility

Types of agility – levers in organization, processes,systems, staff


► Nimble organizations that can shift accordingto changing needs

► Adaptive processes that allow to re-routeorders and tasks according to changingrequirements

► Integrated systems with standardizedinterfaces to adapt to new situations

► Staff that is educated, willing to learn, andready to adapt to new working styles

Innovation

Business setup

Order management and fulfilment

Manufacturing

Distribution

IT Platforms

E-o-S

E-o-F

E-o-S Economies of Scale; E-o-F Economies of Flexibility

Some examples how to make your company moreoperationally agile

Transparency forflexible supplyplanning

More educated „Make-or-Buy“ Decisions

Selective, differentiateduse of different sourcingtypes

Detailed evaluation andselection as well asmonitoring of suppliers,

Develop products andprocesses jointly withsuppliers

Use of autonomousdevelopementorganizations

Use of flexibleworking timemodels

Build competencenetworks based on„Pooling“

Build explicit knowledgepools

Give way for„Partnering“ insteadof enforcing marketpower

Establish and ensuredynamic qualityassurance

Drive required changesusing extensive, pro-active communication

Establish self regulatingproject teams

Integrate with keySupply-Chain-Partnerswith suitable IT-Systems

Quelle: BME / BVL-Studie: Supply Chain Agility - Strategische Anpassungsfähigkeit im Supply Chain Management, 2013


Presentation title

Thank you!

Place imagehere withreference toguidelines

We create Value Chain Champions

Dr. Dieter BölzingPartner SC Strategy & PlanningTel.: + 49 6196 996 17681Mobile: + 49 173 65 54 554E-Mail: [email protected]

Volker StockrahmPartner SC Strategy & PlanningTel.: + 49 6196 996 17908Mobile: + 49 160 939 17908E-Mail: [email protected]

Ernst & YoungMergenthaler Allee 3-565679 Eschbornwww.ey.com

EY SCM Service Offering / Advent International 18.2.2014

agility – beyond operational excellence€¦ · jit just-in-time | ecr efficient ... time, based...

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