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Supply Chain Insights, LLC © 2012
Supply Chain InsightsDelivering Insights to Line of Business Leaders
BRICKSMatterThe Role of Supply Chains in Building Market-Driven Differentiation
LORA M. CECERE CHARLES W. CHASE JR.
BookPublishes in August
2012
Supply Chain Insights, LLC © 2012
Who does it Best?
3
Dell
Toyota
Procter & Gamble
Supply Chain Insights, LLC © 2012
4
P&G Apple Dell Wal-Mart Toyota
38%
21%17%
4% 4%
SC Excellence
Who does it Best?
Supply Chain Insights, LLC © 2012
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52%36%
20% 16% 8%
Tipping PointsWhat were the Tipping Points?
Supply Chain Insights, LLC © 2012
What is Supply Chain Excellence?
Supply Chain Insights, LLC © 2012
Supply Chain
A supply chain is a complex system with complex processes with increasing complexity.
Supply Chain Insights, LLC © 2012
Supply chain strategy
Business strategyWhat are the right things to do to increase company value?
Value-network Supply Chain StrategyWhat are the right ways to support the business strategy?
What are the right trade-offs between value drivers for each value network?
Right ProductPlatforms
Design the Supply Response
Build Organizational Systems and Manage Talent
Align Supply Relationships
Alignment to Strategy
Align DemandRelationships
Effective Supply Networks
Execution of buy-side strategies
Continuous Improvement
Capabilities RequiredSupply Chain Network Design
Design Networks
Innovation Methodologies
Demand Networks
Joint Value Creation Strategies
Business Process
How do I do the right things right?
Supply Chain Insights, LLC © 2012
CostVolumeGrowth
Typical Organization9
CEO
Chief Customer
Officer
Chief Marketing
OfficerSales
Account Teams
COO
VP of Supply Chain
Customer Service Procurement Logistics
CFO
CIO
VP of Manufacturin
g
Quality
Supply Chain Insights, LLC © 2012
A Look Back
Supply Chain Insights, LLC © 2012
Inside-Out Inside-Out
Supply Chain Tipping Points1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
S&OP
Evolution of the PC
JIT
Theory ofConstraints
Supply Chain Organization
Re-Engineering the Organization
(Michael Hammer)
Internet/Email
eProcurement
Total QualityManagement
RFID
Vertical SiloExcellence
Efficient Order toCash Processes
+ Islands ofExcellence
ManufacturingExcellence
+
Supply Chain Excellence = Supply Chain Excellence =
Supply Chain Insights, LLC © 2012
Inside-Out Outside-In
Value-Based OutcomesDelivered by Horizontal Processes
+
Supply Chain Excellence = Supply Chain Excellence =
Supply Chain Tipping Points2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Y2K
Lean Six Sigma
.com
Demand Driven Concepts
Vertical SiloExcellence
Outsourcing Effectiveness
Social Responsibility
CSCO
Market-Driven Value Networks
Supply Chain Insights, LLC © 2012
The Long Tail: Growing Complexity
Volume
Level of PredictabilityPredictability based on forecast accuracy vs Actual Order Profiles
Supply Chain Insights, LLC © 2012
Commodity Price Pressure
14
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
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Jan-
08
Jan-
09
Jan-
10
Jan-
110.00
50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
Corn (metric Ton)
Wheat (metric Ton)
Coffee, Robusta (Pound)
Sugar (Pound)
Beef (Pound)
Crude Oil (Barrel)
Source: Index Mundi
$/LB
Supply Chain Insights, LLC © 2012
2002 2003 2004 2005 2006 2007 2008 2009 201030
35
40
45
50
55
60
65
Days of Inventory
Household Products ChemicalPharma Average
Data Source: CFO Magazine
Supply Chain Insights, LLC © 2012
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201035
45
55
65
75
85
95
Days of Working Capital
Household Products ChemicalPharma Average
Data Source: CFO Magazine
Supply Chain Insights, LLC © 2012
Evolution of Supply Chain Excellence
Align
ResilientReliable
Adapt
Efficient
Building Horizontal Connector
ContinuousTesting
LearningImproving
Orchestrate
Sense Demand
and Supply
Shape Demand andSupply based
on Market
DemandVolatility
Supply Volatility
Right Product
Right Place
Right Time
Right Cost
Cost
Procure to pay/order to
cash
Supply Chain Insights, LLC © 2012
An adaptive network focused on a value-based outcome that senses and translates market changes (buy and sell-side markets) bi-directionally with near-real time data latency to align sell, deliver, make and sourcing operations.
What is a Market-driven Value Network?
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Supply Chain Insights, LLC © 2012
Great Recession:Leaders sensed Market Changes 5x Faster
Supply Chain Insights, LLC © 2012
Industry Today Tomorrow
Airspace and Defense
Selling aircraft Performance-based logistics
Automotive Efficiency: sale and life of a car
Safe transportation
Consumer Products
Right product, right time, right place
Effectiveness at the moments of truth
Healthcare Efficient sickness Long life and wellness
What is a Value-based Outcome?
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Supply Chain Insights, LLC © 2012
Sales and Operations Planning
Supply Chain Insights, LLC © 2012
In 2011…Supply chains are grappling withskyrocketing costs and supply volatility.
Struggling with the integration of businessplanning and supply chain planningtechnologies.
Supply chains experienced a disruption.
Companies have multiple S&OP processes.
Industry progress on working capital has stalled.
90%
87%
85%
62%
!
Source: Supply Chain Resilience 2011 © 2011 The Business Continuity Institute. All Rights Reserved.
Supply Chain Insights, LLC © 2012
S&OP Evolution
Manufacturing-Driven
Deliver a Feasible Plan for Operations
Sales Driven
Match Demandwith Supply
Business-planning Driven
Coordination of Plans
Demand Driven
Sense andShape Demand
Market Driven
Orchestrate Demand
Market to Market
Greater Benefit• Growth• Resilience• Efficiency
Supply Chain Insights, LLC © 2012
Aligning for Balance24
S: Go-to-Market
Strategies
OP: Demand Orchestration
Commodity Strategies
Network Strategies: Make/Source & Deliver
Inventory: Form & Function
Competition
Market Drivers
&
Goal
Supply Chain Insights, LLC © 2012© 2011 Altimeter Group
Image by felixj used with Attribution as directed by Creative Commons http://www.flickr.com/photos/felixj/462022653
Where we are Headed
Supply Chain Insights, LLC © 2012
Historically, we have:
• Tried to get precise on inaccurate data
• Believed that the most efficient supply chain is the most effective supply chain
• Built efficient chains, but not effective or adaptive networks
• Wrongly defined the “R”s
• Focused inside-out, not outside-in.
• Rewarded the urgent, not the important
• Responded without sensing.
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Supply Chain Insights, LLC © 2012
Supply Chain Insights, LLC © 2012
Supply Chains Don’t Play by the Rules
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But, what if they
could?
Supply Chain Insights, LLC © 2012
Big Data Supply Chains are Evolving
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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
SensorData
NewDataTypes
Volume
Velocity
Variability
Supply Chain Insights, LLC © 2012
Connecting the Extended Supply Chain
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Trading Partner 1
Trading Partner 2
Trading Partner 3
Transactional Applications
Transactional Applications
Transactional Applications
Store
Supply Chain Insights, LLC © 2012
Evolving Supply Chain Architectures
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Collaborative Layer
Collaborative Layer
Collaborative Layer
Enterprise Data Warehouse
Enterprise Data Warehouse
Supplier Signal Repository
Demand Signal Repository
Predictive Analytics
Key:
Transactional Adapters and Intelligent Rule Sets
Trading Partner 1
Trading Partner 2
Trading Partner 3
Transactional Applications
Transactional Applications
Transactional Applications
Enterprise Data Warehouse
Store
Supply Chain Insights, LLC © 2012
Move the puck. Supply chain excellence is about more than supply and cost. Make it about value and growth.
Invest in new technologies to harness growth: make it count.
For manufacturers and retailers, supply chain is business.
Wrap-up
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Supply Chain Insights, LLC © 2012
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Lora Cecere
Blog: www.supplychainshaman.com
Twitter: lcecere
Linkedin:
linkedin.com/pub/loracecere/0/196/573
Thank you!