Transformational Steps on the Journey to Demand Driven Supply Network

John Hanna, The Clorox CompanyPadman Ramankutty, Intrigo Systems Inc.

July 20th, 2010

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The Clorox Company

1913 - America's first commercial-scale liquid bleach factory – Oakland, CA

1914 - Product named Clorox® bleach.

Owned by Procter & Gamble 1957–1968

Growth through diversification

Worldwide manufacturer and marketer of consumer products- trusted & recognized brands

8300 Employees worldwide

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The Clorox Company - TodayPrimary Products:

Laundry Cleaning ProductsHome Cleaning ProductsSpecialty ProductsOther Businesses

House Hold & Professional Brands:

FY’10 Revenues of $5.2 Billion Global

North America

South America

Central America

Africa

Europe

Middle East

Asia

Pacific

About IntrigoPremier Enterprise Consultancy, focused on orchestrating Customer Value Networks at

the confluence of Demand, Supply and Innovation using SAP Technologies.

Provide solutions for our clients :• Insights about Customers and Channels ( Sense: TPM/Channel…)• Risk/Response modeling on Supply Side ( Risk Reduction: CTM/CTP/SC Risk..)• Accelerate the innovation cycle that impacts the Demand and Supply equations

Supply Respond Sense

Innovate

Source: AMR

Create

Demand

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5

Intrigo Approach & Offerings

Offerings: Authorized SAP reseller/VAR for High-techiSemi®: A solution for growing semiconductor companiesImplementation & Support

SCM, S&OP, Collaboration, SCRM, SCPMERP, Channel, PLMSRM BI & AnalyticsTPM

IT Strategy/Architecture Roadmaps

CPG, Semiconductor, Hi-Tech, AFS

Approach: Implement an integrated base line capability, reduce riskHelp clients with the ability to ramp up new users and increase its business

operational capabilities, eliminate prolonged change management and technological challenges including redundant interfaces

Leverage common practice templates to reduce the design cycle timeIterative realization methodology to reduce time/cost and risk

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Advanced:Demand Shaping

Incremental:Demand Sensing

Clorox DDSN Vision & iPlan Foundation SU

PPLI

ER

Planning & Execution Processes

Physical Network Strategy

Planning & Execution Systems

Foundational:Order SourcingInventory OptimizationDemand PlanningSupply PlanningDeploymentVMILoad-buildingRetire Legacy Applications

CU

STO

MER

Challenges:Planning capabilities were limited

by system complexity and outdated functionality

Planning process/system landscape created long information flow cycle times resulting in supply chain losses

Objectives & Scope

Deliver foundational capabilities required to enhance product supply planning and execution processes

Tools to deliver supplier-to-consumer integration

Supported by one SAP suite of tools and one set of master data

Real time and visible

Demand driven

Synchronized end to end

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iPlan

StrategyDesigned to improve efficiency and reduce cost by:

Implementation of new supply chain planning system and process transformationSimplification of global supply chain network

Improve quality and reduce variability in supplier, carrier, and production signals

Increase agility/ability to react to changes in demand and/or supply faster and more efficiently

Reduce 3 systems down to 1 (SAP SCM – APO module replaces Logman, i2, and Logility)

Provide best-in-class total response time*: < 10 days* Response is the time it takes for a change in demand to be

translated into an actual response at a first tier supplier

Planning supported by a single suite of tools (SAP APO) using one set of master data, reducing maintenance costs of 3 highly customized systems

Eliminates existing non-SAP systems (Logman, Logility, i2) and implements leading-class inventory management tools including:

SAP APO

SmartOps Inventory Optimization

LEO (Ortec) Load Building

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Business Units – Complexity & Requirements

Business Unit

Attributes

Laundry Multi Plant Sourcing, Multi Work Center Sourcing , Complex Network, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories

Homecare Multi Plant Sourcing, Multi Work Center Sourcing , Complex Network, Intermodal Shipments, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories

Kingsford Multi Plant Sourcing, Multi Work Center Sourcing, Complex Network, Upstream Process Constraints, Storage Constraints, Seasonal Pre-Builds, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories

Glad Multi Plant Sourcing, Multi Work Center Sourcing , Complex Network, Upstream Process Constraints, Global Sourcing, Intermodal Shipments, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories

Foods Multi Plant Sourcing, Inter Plant sourcing, Complex Network, Shelf Life, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories

Brita Multi Plant Sourcing, Inter Plant sourcing, Complex Supply Network, Long Lead Times, Global Sourcing, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories

Litter Single Plant, Global Sourcing, Multi Work Center Sourcing , Intermodal, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories

Auto Multi Plant Sourcing, Multi Work Center Sourcing , Complex Network, Intermodal Shipments, Production & Storage Capacity, Mutli-Echelon Inventory

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iPlan Guiding PrinciplesFocus on servicing the business at 99.5% fill rate, while minimizing inventory levels, spoilage, logistics and manufacturing costs

Function as an integrated planning organization where there is a strong linkage between Sales & Operation planning, Demand Planning, Supply Planning, CRP, Deployment, and Load building

Collaborate and communicate effectively with the commercial side of the business as well as with Manufacturing

Fully leverage available tools and technology and adopt an exception based planning approach

Reduce need for near term fire-fighting by focusing on the medium to long term

Provide visibility to long-term (24 months) Production, Sales and Inventory plans to drive strategic decision making

Drive to standardized processes across both supply and demand planning

Ensure that the team is trained on supply chain planning tools and technologies

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Manufacturing Locations:

Multi-Echelon Supply Chain Model

MFG Plant

Co-located

DC

Co-Pack Plant

Co-Pack DC

Suppliers RDCPost-pone DC

VMIOrdersWIP

Finished Goods Finished Goods

Postponement DCs:

CustomerOrders

RDC Network:

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Integrated Process Overview

= iPlan Process Area (APO)

= Execution Steps

Supply Planning

(SCM-APO)

VMI(SCM-APO)

STRATEGICPLANNING

TACTICALPLANNING

EXECUTIONPLANNING

EXECUTION

SOURCEDISTRIBUTE

CU

STO

MER

Deployment (SCM-APO)

Demand Planning

(SCM-APO)

DELIVER

SUPP

LIER

MAKE

REPORTING MEASURE ANALYZE

Load Building (ORTEC)

ORDER

Inventory Planning

(SmartOps-MIPO)

= iPlan Process Area (SmartOps)

= iPlan Process Area (ORTEC)

S&OP, Budget Planning

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High Level Process Areas

Demand PlanningInventory

Optimization /Supply Planning /

Load Building

Produce a forecast of customer shipments to be used for supply planning, sales planning, financial analysis, and external financial reporting

Objectives:

Key Outputs:

MetricsForecast AccuracyForecast bias (over time)Forecast Volatility

Base statistical forecastUnconstrained consensus forecastMetrics and Exceptions

Specify Inventory Levels at different nodesProduce a constrained supply plan to be used for production planning, plant budgeting tactical planning, long range planning and distribution planning that complies with approved strategies and policies``

Inventory TurnsInventory Days on HandCapacity Utilization

Constrained supply planInventory projectionLane velocity and projected storage

Deployment Planning

Generate a deployment plan that complies with approved strategies and policies, incorporating the supply plan

TL UtilizationIM UtilizationRedeployment

Replenishment plan

CRP / VMI

Produce a forecast of VMI / CRP customer shipments, generate and execute replenishment plan that complies with approved strategies and policies

Service LevelsInventory TurnsCustomer Days of SupplyTL Utilization

VMI forecastReplenishment Plan

Generate an executable load plan that complies with approved strategies and policies, incorporating customer specific requirements

TL Utilization

Executable load

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APO DP ForecastTranslation

UPC/Ship To

APO SNPFERT/Ship From Deployment

Optimizer

ECC

ORTEC LEO

A Nuanced Approach – Forecast Translation

Keeps the demand signal clean and provides for a more accurate picture of the demand signal from the customer, aligns with Demand Driven Supply Network (DDSN) vision1 UPC : n Products (SKU). The mapping is a function of demand source Prevents opportunistic shipments from becoming repeated as an ongoing forecastRole clarity & accountability

Demand Planners – Customer DemandSupply Planners - Sourcing decision and Supply Efficiencies

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A Nuanced Approach – Segmentation

Sup

ply

Pre

dict

abili

ty

Demand PredictabilityLowHigh

Low

High

Promotion-driven

Bread & Butter

Distribution-driven

Outlier

Cluster Analysis to Identify SegmentsDemand predictabilitySupply predictability

Assuming that the higher the volume, the more secure and predictable the capacity is

Promotion-driven

Bread & Butter

Distribution-driven

Promotion-driven

Bread & Butter

Outlier

Distribution-driven

Promotion-driven

Bread & Butter

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A Nuanced Approach – Planning Parameter Definitions

Segmentation:Identifies SKUs that behave similarly

Structured approach to support differentiated supply chain

Development of business rules to drive results

Mass updates of parameter maintenance

Outlier

Bread & Butter

Promotion Driven

Distribution

Demand Predictability(Coefficient of Variation)

% of Total Volum

e

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iPlan Enabled Process Changes

DemandPlanning

SupplyPlanning

Deployment

CRP/VMI

LoadBuilding

Time

Granularity

Where we plan today

Course

Fine

Near Far

Most time and energy is

here

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Value Drivers

Cross Functional Value Drivers:Single integrated system across planningException based planning that is supported by customized alerts and reporting

Demand Planning CRP / VMISupply Planning /

Inventory Optimization

Load BuildingDeployment Planning

Enhanced statistical forecastingcapabilitiesAutomated updates of sales and marketing intelligence into demand forecasting solutionAbility to plan VMI and non-VMI demandImproved planning capabilities across planning life-cycle

Value Drivers:

Providing a capacity constrained plan to finite scheduling and deploymentImproved master plan stability and reduced “fire fighting” Incorporation of supply planning intelligence into forecast disaggregationImproved management of product transitions

Value Drivers:

Deployment plans generated based on constrained supplyplansImproved management of product transitionsImproved intermodal and truckload utilization

Value Drivers:

Synchronization ofdemand planning and CRP/ VMI forecastsImproved management of product transitionsImproved truckload utilization

Value Drivers:

Build executable loads based on deployment plan (includes CRP)

Value Drivers:

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Benefits

Area Benefit Supporting Modules

Transportation

Increase Inter-Modal Utilization Deployment, Load Building (ORTEC)

Increase Truckload Utilization Load Building (ORTEC)

Reduce Redeployments Supply Planning, Deployment

WarehousingReduce Outside Warehousing Supply Planning

Reduce RDC Variable Operating Expenses Supply Planning

Manufacturing Reduce Unplanned Overtime Spend Supply Planning

Obsolescence Reduce Liquidations Demand Planning, Supply Planning

Inventory Optimize inventory levels across the network MIPO (SmartOps), Supply Planning

IS Operations Retire Obsolete Application Platforms MIPO (SmartOps), APO-SCM, ORTEC (Load Building)

Thank You

For additional information, please contact us at info@intrigosys.com or visit www.intrigosys.com.