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USDA BMI Project Domestic ASE January 28, 2016 Attendee Summary Package

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USDA BMI Project –

Domestic ASE

January 28, 2016

Attendee Summary Package

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Business Management Improvement Framework

• Confirm Project Plan• Review policy, process

and strategy documents

• Gain high-level understanding of stakeholders, processes, systems, and performance

• Identify constraints, requirements, and critical success factors

• Hold ASE event and workshops to develop future state vision and capabilities

• Recommend process priorities

• Conduct stakeholder interviews, facilitated sessions and focus groups

• Collect performance data

• Evaluate User Satisfaction

• Support As-Is process modeling

• Analyze baseline data• Identify change

management factors• Identify improvement

opportunities

• Identify and interview SMEs

• Conduct workshops and facilitated sessions

• Conduct benchmarking and best practice reviews

• Develop To-Be process maps

• Define performance measures

• Document policies, regulations, reference material as required

• Develop high-level OCM Approach

• Confirm costs assumptions

• Evaluate alternatives from To-Be design

• Model alternatives’ cost and benefits

• Confirm alignment to USDA Transformation efforts

• Prepare the business case

• Facilitate USDA prioritization

• Present final recommended to-be operating model

• Develop full Implementation Plan

• Develop supporting OCM, communication and training products

• Develop content to support realization of to-be operating model (eg, policy papers, SOPs, requirements documentation, performance management tools, etc.)

ValidateVision

Conduct“As-Is”

Develop“To-Be”

DevelopBusiness Case

Implementation Plan

2

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

USDA Domestic Knowledge Wall

3

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In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Introduction

4

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In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Introduction (cont.)

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In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Introduction (cont.)

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In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Introduction (cont.)

7

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In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Level 1 Processes

L1 Process Name Commercial Definition USDA Context

1.0 Idea to Retire Managing the entire lifecycle of a product from

concept creation, product definition and

development, product launch, retirement

Managing product lifecycle, (includes market

research, specification development, updating

specifications, and phasing out of catalog items

2.0 Business to

S&OP

Translating overall business objectives/targets

into planning – including Business & Financial

Planning, Sales & Operations Planning, and

Reviewing Process Performance

Aggregating State and RA demand into defined

quantities

3.0 Demand to

Supply

Matching demand to supply including: demand

planning, supply planning, inventory &

warehouse management, quality inspection

Management of orders in WBSCM. Managing

brown box inventory at processors & physical

inventory at MFW’s

4.0 Procure to Pay Process of sourcing good and including,

managing suppliers, issuing solicitations,

awarding contracts, managing accounts

payable

AMS procurement activities subject to state and

federal laws

5.0 Order to Cash Process of creating, approving/issues orders,

distributing goods and receiving invoices

Delivery of product to states and RA’s &

management of entitlement spend

6.0 Enterprise Data

Management

Management of master data to support

transactional processing and reporting

Materials, vendors, & customers in WBSCM,

KPI’s and performance metrics

• Level 1 (L1) processes are high level process groups that are focused on a function or activity

• L1 processes are then decomposed (‘broken down’) into the component Level 2 processes

8

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Level 1 Processes: High Level Depiction

Commodity

Vendors

Processors

4.0 Procure to Pay 5.0 Order to Cash

GovernmentSourcePay Order

2.0 Business to S&OP

6.0 Enterprise Data Management

1.0 Idea to Retire

3.0 Demand to Supply

State Distribution

Agencies

Commercial

Distributors

Household

Programs

9

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

1.0: Idea to Retire

1.1 Manage Idea / Create Concept

1.2 Define Product

1.3 Develop Product

1.4 Qualify Product

1.5 Launch and Maintain

Product

1.6 Assortment

Planning

• Speaking with

vendors about

new products

• Surveying

schools to

determine

product

preferences

• Attendance at

trade shows &

conferences

• Finding product

offerings to

comply with

nutritional

guidelines

• Plan for

developing

product

(including

planning for

sourcing,

regulatory

requirements,

risk

management)

• Defining

product,

specs,

grading

standards,

potential

suppliers,

nutritional

standards

• Commercial

availability

• Development

of product

including

design,

prototyping,

development

collaboration

and

sourcing,

packaging

design,

planning for

logistics /

distribution,

cost

estimation

• Conducting

market

research,

RFIs, taste

testing

• Qualifying

suppliers:

incorporating

RFI results

and prototypes

into product

design

• Finalizing

product and

packaging

specifications

• Qualify

product

demand

• Product

samples prior

to FTL commit

(assumes

consistent

supplier)

• Product catalog

launch, product

maintenance,

specification

update/change

• Pilot programs

• New product

communication

• Timing of new

product launch,

procurement

cycle & ramp

up

• Product

retirement: plan

for ceasing

product

procurement,

phasing out

inventory in

supply chain

•Determination of

products to be

offered in the

USDA catalog

•SKU

rationalization

process

•Integration with

master data

management

10

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

2.0: Business to S&OP

2.1 Business & Financial Planning (Budget Program Allocation)

2.2 Sales and Operations

Planning

2.3 Review and Monitor Process Performance

• Allocating funds within each program

• Determining strategic initiatives and

historical data to drive fund

allocation

• State and RA decisions on catalog

offerings

• Cycle Menus- rotating standard

menu, use actual pricing, not Nov.

est. (menus drive food order, not

other way around)

• SKU rationalization

• Align entitlement/order timelines

• Reconciling demand forecasts

• Managing supply chain risks and

emergency demand shortfalls

• Move to pull inventory system

• Separate ordering from forecasting

• Automate

• No more state ordering without local

input

• Performing periodic assessments

of business to sales and

operational planning

• Analyzing results to continually

improve planning process and

reduce operational shortcomings

• Reporting back to USDA state

usage

11

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

3.0: Demand to Supply

3.1 Demand Planning3.2 Supply Planning

3.3 Inventory Management

3.4 Warehouse Management

3.5 Quality Inspection

• Collaborating with

RA's to gather

future demand

forecasts

• Using historical

data and decision

tools to aid in

demand planning

• Determining

forecast trends and

seasonality

• “Plan B” for supply

problems (weather,

AI, etc.)

• Using demand

forecasts to

determine freight

requirements and

consistent product

pipelines

• Determining

optimal

distribution

networks based

on those

requirements

• Align with

commercial

forecasting

• Optimize

distribution/orderi

ng sizes

• Inventory level

determination

• Inventory turn

management

• Pull/push trigger,

batch

management

• Standardized

accounting

methodology

(FIFO, LIFO,

replacement cost,

etc.)

• Data

management -->

real time

• Training

• Order quantities

driving aging

• Manage 3PL

warehousing

policy

• Pick/pack/ship

planning

• Stock

rotation(FIFO)

• Developing quality

parameters for

each commodity

• Determining when,

how, and where the

inspections will

take place in the

supply chain

• Quality checks not

consistent/accurate

12

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

4.0: Procure to Pay

4.1 Sourcing4.2 Solicitation Development

4.3 Solicitation Issuance,

Evaluation, Award

4.4 Receive and Manage

Commodities

4.5 Manage Accounts Payable

• Supplier strategy

and planning, e.g.

establishing long

term contracting

plans, strategic

sourcing, planning

supplier

scorecards, Small

Business

procurement

planning

• Supplier

management,

supplier

performance

evaluation,

providing feedback

• Gathering and

analyzing spend

analytics to drive

sourcing decisions

• Develop

solicitations

incorporating

requirements and

specifications with

a long term

strategic focus on

maximizing

agency value

• Communicated

Evaluation Criteria

to bidders.

• Determine

Contract Type, bid

timeline.

• Issuing

commodity/freight

bids, evaluating

responses,

evaluating past

performance,

awarding vendors

• Supplier

collaboration: e.g.

reverse auctions,

Q&A, industry

days, etc.

• Create,

approve/issue

purchase order

• Receipting&

confirmation,

product

identification

tracking &

traceability

• Account for and

resolve

overages,

shortages, and

damages.

• Track shipments

• Quality control –

grading &

inspection,

checkloading

• Document

supplier

performance

• Invoice receipt and

verification, manage

claims, payment

approval and

processing

• Automated Invoice

and Payment

processes

• Begin claims

management

process (if

necessary)

• Relay any rate

discrepancies to

involved

stakeholders as

soon as they are

identified

• PO Closeout/release

of funds

13

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

5.0: Order to Cash

• RA’s order against

estimated demand

from annual plan

• Analyze planned

vs. actuals for type

and amount of

food for

subsequent

annual

estimates/plans

• RA Orders come in

more frequently;

represent product

that has already

been purchased

• Analyze recipient

requests including

availability

checking (available

to promise) –

• Expand NW

type/Regional

warehouses as

option

• Pricing calculation

– based on actual

cost (product

already purchased)

• Real-time Data and

delivery scheduling

• Sales order

confirmation

• Have visibility to

Manage and

track distribution

of commodities

throughout supply

chain

• Track deliveries

from production

to distribution

• Goods issues,

pick/pack/ship

from warehouses

• Measure and

record how much

annual

entitlement has

been expended

• Monitor

throughout the

year

• USDA Schedule

contract (not sure

where this fits…)

• Measure and

resolve quality and

delivery issues

• Define “what is a

complaint”

• Defined warranty

periods

5.1 Receive Sales Order5.2 Sales Order

Approval and

Confirmation

5.3 Distribution of

Commodities to

Final Recipients

5.4 Managing

Entitlement

Spend

5.5 Complaints &

Recalls

14

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

6.0: Enterprise Data Management

6.1 EDM Strategy6.2 Data

Processes6.3 Data Design

6.4 Data Architecture

6.5 Implementation

• Vision, strategy,

objectives, scope,

data governance,

• Defining key

performance

indicators

• Data management,

processes and

controls, external

controls

• Communication of

data across all

programs that

includes feedback

mechanisms that

support data

reliability

• Data Security

• Increased visibility

and transparency

across the entire

supply chain

process

• Matrix for master

data objects, flow

of key data

elements,

reporting

• Data flow of

information from

distributors to

USDA

• Simplify access

to the data in the

system

• Improving overall

user experience

(user-

friendliness)

• Real-time and

accurate data

• Historical

Visibility

• Data mining and

reporting

• Transactional and

master data,

warehousing

• Integration of

internal and

external systems

to support holistic

view of

information

• Reduce system

processing time

• Product launch,

product

maintenance,

specification

update/change

• Data Archival

• Continuous

Improvement and

maintenance

15

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Share/Synthesize Ideas

16

USDA

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In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Share/Synthesize Ideas (cont.)

17

USDA

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Top 5 Improvement Opportunities

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In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

18

USDA __________________________ ____./ y

Prioritization ( <1.~e'!")' '"(Of .. \ Av":::> · -~;:.,. (~~ 3! at. &1 I I Fe~s . 9~ 16 f~. /2-5 2-)

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In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Prioritization Methodology: Factors

Five prioritization factors were identified in order to incorporate several aspects of process

improvement, including internal and external factors

Process Prioritization Factors Factor Description Factor Weight

Potential Financial Impact If improved, the potential financial impact (e.g. cost savings or

avoidance, increased capacity to distribute additional food (e.g.

Return on Investment)) that could potentially be achieved. The

higher the score, the more financial savings could be achieved. 0.21

Improved ProductivityIf improved, the process will have reduced time and/or reduced

effort (e.g. reduced administration burden, reduced waiting time,

reduced overall cycle time, reduced 'waste' (time, rework, etc.).

The higher the score, the more time could be saved 0.21

Direct Impact on Recipients (Process

Criticality) Process has a direct impact on RA's (high quality and speed of

service is important). The higher the score the more the process

impacts the final recipient receiving food aid. 0.31

Implementation Feasibility The implementation options available to improve the process

feasible and achievable to improve the process (factors would

include: cost, time, process complexity, resources, OCM) 0.16

Enterprise Environnmental Factors

support process improvement

There are few enterprise factors (e.g. organizational, regulatory,

political, cultural, infrastructure, suppliers ) that would prevent the

improvement of this project 0.11

1.0

19

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Prioritization Methodology: Factors

Process

Prioritization Factors Factor Description Very Low

Mediu

mVery High

Potential Financial

Impact

If improved, the potential financial impact (e.g. cost savings

or avoidance, increased capacity to distribute additional

food (e.g. Return on Investment)) that could potentially be

achieved. The higher the score, the more financial savings

could be achieved.

Increase financial

cost to chain

(Negative ROI)

Neutral

Highest decrease of

financial cost to supply

(High ROI)

Improved Productivity

If improved, the process will have reduced time and/or

reduced effort (e.g. reduced administration burden, reduced

waiting time, reduced overall cycle time, reduced 'waste'

(time, rework, etc.). The higher the score, the more time

could be saved

More time/effort

across processNeutral

Highest possible

time/effort savings

across process

Direct Impact on

Recipients

(process criticality)

Process has a direct impact on RA's (high quality and

speed of service is important). The higher the score the

more the process impacts the final recipient receiving food

aid.

Highest negative impact Neutral Highest positive impact

Implementation

Feasibility

The implementation options available to improve the

process feasible and achievable to improve the process

(factors would include: cost, time, process complexity,

resources, OCM)

Lowest likelihood

improvements can be

achieved (Fewest

implementation options)

Neutral

Highest likelihood

improvements can be

achieved (Large number

of levers/options to

impact implementation)

Enterprise

Environnmental

Factors

(support process

improvement)

There are few enterprise factors (e.g. organizational,

regulatory, political, cultural, infrastructure, suppliers ) that

would prevent the improvement of this project

Lowest alignment with

environmental factors or

greatest friction

Neutral

Highest alignment with

environmental factors or

lowest friction

20

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Factor Priority Worksheet

21

USDA

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1.2: Define Produci

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11.17% 16.33% 20.83% Rod I IP

J

2

20.83%

2 ; ______ .;;

2

J ;

J 2 ?

2

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Final L2 Process Rankings

22

USDA

y------------------------------'/ Order

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Score Level 2

• 2.2 Sales and Operaoons Planning

· 3.1 Demand Planning

· 3.3 Inventory Management

3.5 Qualy Inspection

4.4 Receive & Manage Comrrodtties

ASE Day Ranking Data

Order

16

17

18

19

20

2.1 Busiless & f inancial Planning (Budget Program Allocation) 21

22

5.3 Distri>ulion of Colllllodtties to Filal Re~ients 23

5.4 1.tanaging Entttlement Spend 24

3.SO 3.2 Supply Planning 25

3.3i 5.1 Receive Sales Order 26

3.26 1.5 Launch and Maintail Product

3.23 4.3 Soliciation Issuance, EvalJation, Award

3.22 5.2 Sales Order Approval and Confirmation

3.15 4.1 Sourcing

Capge111ini USDA

Score Level 2

3.0S 3.4 Mult~Food Warehouse Management

2.86 5.5 Complailts & Recalls

2.85 1.6 Assortment Planning

2.81 4.2 Solicttaoon Development

2.81 6.5 ~lementation

2.55 4.5 Manage Accounts Payable

2. 1.1: Lian age ldealCreate Concept

2.38 1.2: Define Product

2.29 6.1 EOJ,t Strategy

6. 4 Data ArcMecture

1.4: Qualify Product

1.3: Develop Product

6.2 Data Processes

6.3 Data Design

In collaboration withUSDA: Validate Vision Phase Deliverable| February 4, 2016

Thank you for your participation!

23

USDA

y------------------------------.,,,/

Capge111ini USDA