value chain planning overview enables leading edge and transformational business processes larry du...

Value Chain Planning OverviewEnables leading edge and transformational business processes

Larry DuSales, Value Chain Planning, China

August 2010

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The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

Safe Harbor Statement

Realities of the New Business Environment

New Business EnvironmentNew Business Environment

Continued focus on cost containment and productivity

Lean supply chains with lower inventories

Increasing levels of supply chain and enterprise risk

Heavy scrutiny on corporate performance and compliance

Controlled capital expenditures

Sustainability emerges as a key strategic priority

Continued focus on emerging markets and globalization

Change in Inventories2004-2009

Industrial Production Index2004-2009

ChallengesChallengesChallengesChallenges

Demand uncertainty and volatility

Lack of responsiveness and inflexibility in supply network

Misalignment of financial and operational plans in continuously changing business conditions

StrategiesStrategiesStrategiesStrategies

Lack of proactive insight into the impact of your decisions

• Sense demand in real-time and shape for revenue growth

• Improve agility and react quickly to supply chain events

• Profitably align demand and supply to corporate goals

• Continuously monitor enterprise and supply chain performance

Manage for Recovery Strategies that you should focus on today!

How

Delivers

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Oracle Value Chain Planning SolutionComplete ● Open ● Integrated ● Modular

Demand SignalRepository

DemandManagement and

AdvancedForecasting

CollaborativePlanning

ProductionScheduling

Global OrderPromising

Service Parts

Planning

Trade PromotionPlanning andOptimization

Advanced SupplyChain Planning

StrategicNetwork

Optimization

RT Sales and OperationsPlanning

Adv. PlanningCommand

Center

• Single source of truth• Integrated with ERP

Deductions andSettlement

ManagementRapid Planning

AIA

AIAAIA

LegacySystems

Integrated with other Key Solution Assets

AIA

AIA

AIA

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Oracle Value Chain Planning Solution

Sense demand in real-time and shape for revenue growth– Sense demand closer to the point of consumption with real-time visibility to demand events – Improve forecast accuracy through advanced analytics and improved consensus forecasting – Shape demand via integrated promotions planning– Manage new product introductions and marketing to shape demand and maximize revenue

Profitably align supply and demand to corporate goals– Maximize sales and improve execution by balancing supply and demand in a continuous S&OP process– Connect financial and operational planning via integrated business planning– Quickly simulate alternate business scenarios– Involve all key decision makers into an integrated iterative process

Improve agility and react quickly to supply chain events– Design your supply chain for agility – Plan your extended value chain with holistic supply planning and scheduling– Quickly respond to supply chain events with event-driven planning

Continuously monitor enterprise and supply chain performance

Complete ● Open ● Integrated ● Modular

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Achieve benefits incrementallyCrawl, walk, run approach – Focus on the most important problem first !

• Start with a base and plug-in new components incrementally• Reconfigure without reimplementation

PRODUCT BUSINESS AREA FULL SOLUTION

Value Chain Planning

Demand Management

Supply PlanningSales and Operations Planning

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Many customers across all industries

DiscreteManufacturing

ProcessManufacturing

Consumer Goods /

Distribution

High Tech

Look at the below logo, Subaru

S&OP – Gartner 2008

“Oracle offers a robust S&OP application with Advanced Supply Chain Management and

Demantra Demand Management” - AMR, 2008

“Oracle offers a robust S&OP application with Advanced Supply Chain Management and

Demantra Demand Management” - AMR, 2008

“Oracle’s breakthrough with Demand Signal Repository could change the way consumer goods manufacturers leverage a wide variety

of available data sources.” - AMR, 2008

“Oracle’s breakthrough with Demand Signal Repository could change the way consumer goods manufacturers leverage a wide variety

of available data sources.” - AMR, 2008

Supply Planning – Gartner 2009

IDC - Inventory Optimization 2009

Value Chain Planning – Analyst Feedback

Oracle Value Chain Planning

Reduce planning cycle time and make faster decisions continuously

Sense demand in real-time and shape for revenue growth

Profitably align supply and demand to corporate goals

Improve agility and quickly react to supply chain events


Sense demand in real-time

• Leverage demand insights to drive growth– Sense demand closer to the point of consumption with real-time

visibility to demand events – Analyze the effectiveness of promotions at retailers and distributors– Reduce time and effort to collect external market data

• Improve forecast accuracy through advanced analytics and consensus forecasting

– Move from a regimented periodic to a continuous demand planning process that involves all key constituents

– Leverage advanced analytics to more accurately predict demand– Use any combination of quantitative or qualitative data to establish

your base line forecast– Generate granular forecasts based on attributes and characteristics– Use multi-dimensional analysis to adjust, allocate, and rollup

Leverage demand insights to improve consensus demand

From an isolated process to a full Demantra solution within six weeks of going live our ‘A-items’ improved 45% in accuracy.

– Sagi Srinivas, Director, Supply Chain Systems, BiosenseWebster

Shape with integrated promotion planning

• Shape demand via promotions planning

– Understand the true impact of promotions and marketing instruments

– Simulate volume and profitability of future promotions and optimize promotional events

– Perform what-if analysis to understand the impact of varying promotional tactics

– Implement profitable sales and marketing strategies that are feasible to execute

• Manage new product introductions to maximize revenue

– Evaluate cannibalization of existing products on revenue and inventory goals

– Determine optimal timing of product launches and align them to financial goals

– Determine price breaks and promotions that can be leveraged for sell-off or ramp-up

Understand the financial and operational impacts of sales incentives





Improve agility and react quickly to supply chain events


• Move from a periodic reactive to a real time, iterative, and proactive process

• Reduce decision-making time by aligning financial and operational plans

• Engage management with executive dashboards that drill to root cause

• Drive tactical decisions into operational planning and execution, and monitor performance

• Start quickly with best practice templates and easily adapt to your business – evolve at your own pace

Profitably align supply and demand

* Planned for future

Maximize sales and improve operations via a continuous S&OP process

ContinuousS&OP

Demand sensingand shaping

Supplyplanning

TradeManagement

FinancialPlanning

Product Planning

RiskManagement

Engineering

FinanceSupplyProduct Demand

Interactive, extended S&OP process

Traditional S&OP process

Sales

Operations

Strategy

Finance

Marketing

Expected Business Benefits:•Improve S&OP planning cycle time•Reduction of inventory•Improve forecast accuracy and customer service levels•Adoption of a low cost producer strategy•Become a truly global business

The implementation of a global demand solution will:•Provide global visibility to demand - one demand source model for the business •Improve and provide measurements for global forecast accuracy •Enable management by exception •Provide a global collaborative forecast environment •Become an enabler for more accurate and rapid planning cycles •Develop and provide accurate component level demand forecasts to our internal and external suppliers •Be able to synchronize operational, tactical, and executional planning

CHALLENGES/OPPORTUNITIES• Lack of global demand visibility • Current S&OP was very manual with multi versions of

excel spreadsheets and access databases. • No closed loop process • Data never in sync

SOLUTIONS (a win in Q4, FY10)1.DP (Demand Planning)2.ASCP (Advance Supply Chain Planning)

COMPANY OVERVIEW Cummins Power Generation's strength comes from

being a division of Cummins Inc. - the world's largest manufacturer of diesel engines over 200 hp, with annual sales of $6.3 billion. Cummins Power Generation has unique expertise in that all aspects of generating set design, manufacture and service have been brought together in one company. All the major components - the engine, alternator and control systems -- are manufactured by divisions of Cummins.

Cummis Power Generation

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Emerson

CUSTOMER PERSPECTIVE

“Demantra is one of the most solid products I have seen. I give (Demantra) an A+ for the stability of the application for our business”

- Deb Bene – Business Solutions Manager

COMPANY OVERVIEWDiversified global manufacturing and technology company

serving industrial, commercial, and consumer markets around the world.

Industry: DiversifiedEmployees: 140,000Revenue: US$ 24.8 Billion

CHALLENGES/OPPORTUNITIESGlobal Planning and VisibilityMulti-tiered collaborative planning (inter-company

planning)S&OP Processes Visualization of Key Performance IndicatorsDemand Planning

Top-Down / Bottom-up Mix Analysis Automated Mix planning and ForecastingManage planning process by exception

Roll out to 10,000 user community

SOLUTIONSOracle Demantra Demand ManagementOracle Demantra Real Time Sales and Operation PlanningOracle Advanced Supply Chain PlanningGlobal Order PromisingOracle Collaborative PlanningHyperion Planning Oracle Configurator

RESULTS

Reduced global Inventory using ASCPConfigure to order forecasting of more

than 16 billion combinationsImproved return on assetsImproved customer loyalty Achieved global demand management Deployed effective sales and operations

planningIntegrated S&OP and Financial Planning

Emerson

Connect Finance and OperationsChallenge: misalignment between financial and operational plans

Financial Planning – Financial plans do not reflect

operational realities– Revenue forecast is unreliable as it

not adjusted to reflect operating forecast

– Strategic financial plans lack bottom up validation

– Financial planning uses discrete periods and looks backwards

Sales and Operations Planning – Operating plan not directly aligned to

financial targets– Impact of demand and supply changes

not visible to finance– Operating plan has little top-down

validation and decisions made without considering financial impact

– Operating plan is continuous and forward looking

Connect Finance and OperationsSolution: Integrated business planning via Hyperion integration

• Replace manual, intermittent, and disconnected process with a continuous, interactive, holistic Integrated Business Planning process

• Inject operational reality into Financial Plans and ensure financial viewpoint is embedded in the Operational planning process; top-down $’s to bottom-up units synchronization

• What-if simulation to examine alternative scenarios and evaluate financial impact of decisions

• Out-of-the-box AIA-based integration

SupplyChain Planning

Inventory Optimization

Demand Management

Performance Management

Strategic Network Optimization

Sales and Operations Planning Financials

TargetsSales

Forecast

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Simulate alternative business scenarios

Advanced Planning Command Center • Compare alternative business scenarios

– Planners execute scenarios

– Automatically translate detailed planning information to corporate metrics

– Track assumptions and attach supporting documents

• Approve and drive into execution

– Choose your baseline plan

– Drive tactical and execution decisions

• Monitor– Continuously monitor

performance and get real-time visibility to deviations

Demantra DM ASCP / SNO IO

Business scenarios

Assignedactivities

Planners execute assigned activities

Suggested alternatives

for evaluation

Improve agility and responsivenessEnable successive and continuous refinement

Tactical Supply

Plan

Network design and inventory strategy

Network design and inventory strategy

Tactical supply planningTactical supply planning

Event-driven simulationEvent-driven simulation

BusinessScenario Simulation(strategic, tactical,

operational)Supply networkSourcing and

Postponementstrategy

Supply networkSourcing and

Postponementstrategy

• Respond to changing markets and product mix changes

• Adjust supply network while preserving future growth

• Develop supply chain risk mitigation strategies

• Plan your extended value chain with holistic supply and distribution planning

• Improve demand fulfillment through constrained order promising

• Improve production throughput with plant level scheduling and monitoring

• Improve supply chain visibility through collaboration with trading partners

• React quickly to supply chain events• Empower planners with rapid what-if

scenario simulation• Leverage embedded analytics in UI

for insightful analysis while making rapid decisions

• Translate decisions in actions

• Project to rationalize distribution centers during merger of Pet Foods and Pillsbury Foods

• Reduced warehouses from 23 to 9• Held service levels constant despite reduction in

facilities• Significantly reduced transportation costs

• Determines allocation to produce most profitable product mix within existing constraints

• Performs all planning at the family level• S&OP composite picture in real time during review sessions• Reduced planning cycle time – Eliminated spreadsheets • Integrated sales and operations planning process resulting in

one consensus forecast number

Live on SNO, IO, ASCP

Customers

• Deployed for one product family (700 products, 5000 items) since May 2006

• Multi-echelon supply chain network (14 levels deep)• Improved forward visibility and understanding of

impact of inventory on service level • Part of S&OP process: quantitative understanding of

inventory investment to achieve sales upside• 20-30% improvement in service level for the same

inventory investment

• Daily holistic plan across projects and across businesses: 8 manufacturing plants, 6 distribution and 10 consignment warehouses

• Connected businesses processes and automated exceptions• Constrained order promising• Reduced inventory levels by $20M per year• Reduced delivery cycle by 10% for new equipment orders• Improved fulfillment rate for service parts• Reduced planning cycle time to daily

Live on Strategic Network Optimization

Large Automobile Manufacturer, Germany

Company• Leading automotive manufacturer with annual revenues over $52 Billion• Manufacturer of automobile and motorcycle products

Planning problem solved• Assess risk of currency fluctuations on manufacturing allocation

Unique aspects of implementation• Time varying currency forecasts for USD and Euro• Complex coordination between engine and auto platform manufacturing• Product launch sourcing decisions based on capacities, costs, currency, regional demand and

regional priority

Increased new product profitability due to optimal manufacturing sourcing

Improved risk management by considering multi-currency impacts

Monitor profitability and performance

Compare alternatescenarios

Analyze keyPlanning metrics

Analyze profitand loss

Analyze constrained forecast

Drill down torelevant details

Advanced Planning Command Center – 360 degree visibility

Suddendemand spike

Resourceoverloaded

Increase inlate shipments

Supply shortage

Enable closed-loop processesPlan->Execute->Measure->Improve

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Roadmap

Value Chain Planning – Roadmap

FY2009

VCP 12.1.1• Adv Planning Command Center 11i.10 integration• DSR enhancements

VCP 12.1.1• Adv Planning Command Center 11i.10 integration• DSR enhancements

FY2010

JDE-VCP integration PIPJDE-VCP integration PIP

VCP 12.1.2• PS and SNO enhancements• APCC standalone• Service Parts Planning enhancements• ASCP enhancements• IO intermittent demand support

VCP 12.1.2• PS and SNO enhancements• APCC standalone• Service Parts Planning enhancements• ASCP enhancements• IO intermittent demand support

VCP 12.1.3• Rapid Planning 1,1• Advanced Planning Command Center 2.0 (Risk, SPP, Web 2.0, S&OP, SCA, PTP)• Service Parts Planning replenishment enhancements• Demand Signal Repository 2.0• Production Scheduling support for CMRO

VCP 12.1.3• Rapid Planning 1,1• Advanced Planning Command Center 2.0 (Risk, SPP, Web 2.0, S&OP, SCA, PTP)• Service Parts Planning replenishment enhancements• Demand Signal Repository 2.0• Production Scheduling support for CMROPSFT-Demantra Integration PIP PSFT-Demantra Integration PIP

Rapid Planning 1.0Rapid Planning 1.0

Demantra 7.3• Integrated Business Planning through Demantra S&OP – Hyperion integration• Internationalization support for Demantra • Demand Management capabilities for CTO, NPI forecasting, and attribute forecasting • Performance and usability improvements

Demantra 7.3• Integrated Business Planning through Demantra S&OP – Hyperion integration• Internationalization support for Demantra • Demand Management capabilities for CTO, NPI forecasting, and attribute forecasting • Performance and usability improvements

Demantra 7.3.1• S&OP Rapid Planning integration• S&OP modeling enhancements• Comprehensive Trade Management enhancements • Exception management enhancements• Performance improvements

Demantra 7.3.1• S&OP Rapid Planning integration• S&OP modeling enhancements• Comprehensive Trade Management enhancements • Exception management enhancements• Performance improvements

Summary

• Complete - Best-in-class solution to solve all your key planning problems– Sense demand in real-time and shape for revenue growth

– Profitably align supply and demand to corporate goals

– Improve agility and quickly react to supply chain events

– Continuously monitor enterprise and supply chain performance

• Open - Architecture that blends in with your existing systems

• Integrated - Provides lower cost of ownership and quick deployment– Pre-built integration with Oracle EBS, JDE EnterpriseOne, Peoplesoft*

• Modular - Enables gradual deployment– Focus on most important problem first – Common platform foundation

– Expand gradually to full solution without redoing setup and configuration

Key Takeaways

* Future

Our View Of Best Practice Integrated Supply Chain Framework

Suppliers

Customers

Strategic Planning (Yearly / Quarterly)

Tactical Planning (Monthly / Weekly)

Operational (Daily / Transaction)

Demand Planning

Sales & Ops Planning

Market Strategy

Inventory Strategy

Product Strategy

Transport Planning & Execution

Collaborate

Procurement Strategy

Production Strategy

Financial Plans

Purchase Planning

Capacity Planning

Inventory Planning

Supply Planning

Collaborate

Order, Purchase, Production, Inventory, Financials

Customer Relationships Management

Warehouse Management

Production Execution

Collaborate Collaborate

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