sanjiv bhatia “critical mass makes magic happen”
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Critical Mass Makes Magic Happen Sanjiv Bhatia Oct 10, 2013
How Magic Happens?
Relative Benefits
Relative Investment
Low Value
Non Differentiating
Key Differentiating
Spend too much on Low-Benefit Initiatives
Traditional Approach
Elemica Approach
Relative Benefits
Relative Investment
Low Value
Non Differentiating
Key Differentiating
Map $’s Invested to Benefits
Focus Time and Money on Value-Added Initiatives 2
Value Creation Framework
STEP DESCRIPTION KEY DELIVERABLES
Step 1 Value identification, Value Chain Blueprint, Partner Discovery
Value Realization Roadmap, Key Metrics, Business Case
Step 2 eReadiness Assessment, Partner Prioritization
Step 3 HL Program Plan Onboarding RoadMap
Prioritization Matrix
Following Roadmap Development, the Onboarding Program can be implemented in one or more Project Workstreams
Step 4 Onboarding Implementations.. Successful Project Golive
3
Step 1: Value Identification
Supply Chain Process Analysis
Supply Chain Blueprint
BUSINESS-SPECIFIC SUPPLY CHAIN
VALUE DRIVERS
MEASURES
PERFORMANCE TARGETS
OPERATIONAL PRACTICES / STRATEGIES
TOOLS/TECHNOLOGIES eBusiness Maturity
4
Value Drivers
Asset Intensity Reduction
Cost Reduction n Compress value
network n Automate interactions n Improve coordination n “Hire the customer”
10–20%
Target Value Improvement
n Customize offering n Enable value pricing n Create new offerings n Optimize (virtual
channels) n Improve customer
acquisition/intimacy
n Reduce working capital
n Reduce physical infrastructure
10–20%
30–60%
Revenue Enhancement
Value Focus
$X
$Y
$Z
5
Metrics Identification and Definition - Example
10
Employee satisfaction (Culture Index)
Responsibility IndexComplianceSupply chain costs / Sector revenue
Asset utilization
Pocket margin
Cost
Adherence to business rules
Commercial unit satisfaction
Collaboration
Growth
Perfect orderCustomer
MetricTheme
31 - 41 Days
71 - 91 Days
Future Performance Opportunity
133.3 DaysOTC Cycle Time -(Sales Cycle + DRO)
47.3 DaysSales Order Cycle Time
Current Performance
AverageMetric
31 - 41 Days
71 - 91 Days
Future Performance Opportunity
133.3 DaysOTC Cycle Time -(Sales Cycle + DRO)
47.3 DaysSales Order Cycle Time
Current Performance
AverageMetric
90%Not Tracked Today
On Time Delivery and Installation Rate
0.6 - 0.9%
40 - 50 Days
0.92% -1.57%Order Management Cost Percentage of Revenue (Preferred over Cost per Order)
86 DaysDays Revenue Outstanding
90%Not Tracked Today
On Time Delivery and Installation Rate
0.6 - 0.9%
40 - 50 Days
0.92% -1.57%Order Management Cost Percentage of Revenue (Preferred over Cost per Order)
86 DaysDays Revenue Outstanding
BUSINESS AND OPERATIONAL METRICS DEFINED TO DELIVER ON
SUPPLY CHAIN GOALS
Key Steps: 1) Define Business Value Generation Metrics for Greatest Opportunities 2) Calculate Current and Potential Impact on Revenue and Costs
WHAT WILL SUCCESS LOOK LIKE?
POTENTIAL VALUE STRATEGIES FINANCIALS
INC
OM
E S
TATE
MEN
TB
ALA
NC
E S
HEE
T
AnnualBenefits
One TimeBenefits
$65Million
$43Million
Sales
Gross Margin(Cost of Goods Sold)
InventoryCarrying Costs
Selling, General &Admin Expenses
Inventory
Accounts Receivable
Fixed Assets
Accounts Payable
Sales
Gross Margin(Cost of Goods Sold)
InventoryCarrying Costs
Selling, General &Admin Expenses
Inventory
Accounts Receivable
Fixed Assets
Accounts Payable
Improve Commodity Purchasing toProcure with Better Market Timing
Better visibility and management ofInventory to reduce carrying costs at
10% cost of capital
Utilize shared servicesAnd process optimization
Tools for demand chain, forecasting, and build-to-order.
Visibility improvement
Reconfigure Customer Contracts toMotivate Earlier Payment
No Recommendation
Automate and consolidate Process across business to achieve
better control
Increase Supply Chain Flexibilityto Meet Customer Requirements, especially
During Tight Market Periods
$42Million
$4 Million
$32 Million
$18 Million
$6 Million
N/A
$6 Million
$85 Million
6
Business Case - Example
7
Step 2: Identify Partner Universe
Business Entity (Company, Division etc.) – Product Line/Group
• Customers • Suppliers • Carriers • Warehouse Operators
• …
Discover partners on the Elemica network. Search by Region, Business Process, Transaction, Custom Tags...
8
Business Value Rank
Rank Partners on Business Value Enabled
9
Technical Assessment
New Message Types, Business Rules, Transformation Requirements Increases
Technical Complexity
Complexity Classification H
M
L
10
Partner Prioritization
Partner Name Business Rank Technical Rank
Cementhal 31 14
Evonik 21 8
Tyco 6 33
Cognis 14 42
Toyota 11 16
Hyosung 46 27
…. …. …..
Business Rank is based on analysis of business value created by a partner
Technical Rank is based on the technical complexity associated with onboarding a partner
Partners are ranked independently based on Business and Technical Criteria These are then mapped onto a Prioritization Matrix
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Prioritization Matrix
Technical Complexity
Busin
ess C
ritic
ality
II
Complex Onboarding
IV Complex Onboarding
III Easy Onboarding
I Low Hanging Fruit
Low
High
Low High
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Example Prioritization Matrix
13
eReadiness Assessment
Contact and
survey
Provide options
Provide program timelines Co
ntac
t
Provide info & docs
Select & commit to timelines
Com
mit
Click –thru agreement
Choose options
Roadmap is adjusted based on Partner Response to the eReadiness Assessment 14
Campaign Management
§ Create and Manage Campaigns for large scale on-boarding § Consolidated workspace for event status
15
Campaign Management
Monitor trading partner progress across various steps in the on-boarding process.
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Step 3: Rollout Roadmap - Example
Year 1 Year 2 Year 3
1 • Achieve consistency of priorities among the executive and functional leadership
2 • Improve communication, knowledge sharing, and collaboration
3 • Increase ownership of aligned roles & responsibilities
4 • Revenue Recognition and 2 Step Order solution
5 • Gain cross-functional agreement on SSC
6 • Review Sales compensation plan
7 • Reconsider Serialization
9 • Educate Sales & SSC staff re: each others tasks
16 • Create Order Project Managers
8a • Reengineer Sales and SSC processes
11 • Eliminate Evergreen Contracts
10 • System Driven Ibase Updates
7b • Serialization Changes
14 • Develop Change Management Process
18 • Revise ATP Process
15 • Perform Customer Segmentation
17 • Develop eBusiness Strategy
8 • Reconfigure SAP, Siebel, and their Interfaces
12 • Implement Sales BOM
13 • Reengineer Configurator capabilities
Governance
Process
Technology
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In Conclusion
23-80% Automation Savings Orders
$29.49 Cost of Manual Order
$5.99 Cost of Electronic Order
11-30% Automation Savings Shipments
$101.28 Cost of Manual Shipment
$71.37 Cost of Automated Shipment
15-80% Automation Savings Invoices
$22.45 Cost of Manual Invoice
$4.42 Cost of Electronic Invoice
Potential Business Value of using the Elemica Network………..
18
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