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Supply Chain Value Networks: Taking Advantage of Big Data, Connectivity and Analytics• Driving Supply Chain Transformations• Lora Cecere, Founder of Supply Chain Insights 9/24/2015
Disclaimer: I am a Skeptic
A Curmudgeon…
A Fortune-teller of Sorts….
I Write for the Supply Chain Leader
Current State
9 out of 10 Supply Chains are Stuck
Progress: All IndustriesIndustry Snapshots (2006-2013)
IndustryYear –over-
Year Revenue Growth
Operating Margin
Inventory Turns
Cash-to-Cash Cycle
Revenue per Employee
(K$)SG&A Ratio
Retail Apparel Industry
18%39%
0.3927%
0505%
6826%
32518%
27%05%
Apparel Manufacturing Industry
14%82%
0.1232%
0568%
15008%
400355%
27%63%
Mass Retail Industry
09%50%
0.0620%
0606%
03148%
35048%
23%6%
Beverage Industry
09%61%
0.1916%
0204%
5346%
512 NC
24% 16%
Pharmaceutical Industry
08%47%
0.2329%
0316%
15547%
57232%
27%08%
Chemical Industry
08%45%
0.1010%
0604%
8723%
55723%
14%27%
Medical Device Industry
06%38%
0.1432%
0213%
20616%
35112%
34%04%
Grocery Retail Industry
06%31%
0.0337%
1701%
1050%
40554%
14%06%
Consumer Packaged Goods
05%25%
0.1473%
08482%
7217%
33314%
26% 09%
Food Industry
05%55%
0.1019%
07 17%
4004%
53455%
20% 18%
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2013Industry Average comprised of public companies (combined food & beverage industry: NAICS 3112% where % is any number from 0-9, 311320, 311520, 311821,
311941 & 312111), (chemical: NAICS 325188 & 325998), (consumer packaged goods: NAICS 3256% where % is any number from 0-9), (medical device industry: NAICS 339112), (pharmaceutical industry: NAICS 325412) reporting in One Source with 20123annual sales greater than $1billion
NC=no change
Descriptors Used by Leaders
Fallacy: Functional Excellence
Today’s Functional Organizational
Growing Demand Volatility
A Project-based Focus
What We Expected
A Supply Chain is a Complex System
with Complex Processes
with Increasing Complexity
What We Learned….
The Supply Chain Effective Frontier
Correlations to Market Capitalization
Orbit Chart: Wal-Mart(Inventory Turns and Operating Margin)
Orbit Chart: Apple (Inventory Turns and Operating Margin)
Orbit Charts: Dow Chemical Company
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014
-0.10 0.00 0.10 0.20 0.30 0.40 0.50 0.604.0
5.0
6.0
7.0
8.0
9.0
10.0
2006
Eli Lilly and CompanyOperating Margin
2014
NVO0.31, 6.48
2014
2006
Best Scenario
LLY0.24, 8.30
Average (Operating Margin, Inventory Turns)
Inve
ntor
y Tu
rns
Novo Nordisk Making Progress
Measuring Supply Chain Improvement
Overall Ranking per Company• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory (30%)
• Strength: Inventory Turns & Operating Margin Vector Trajectory (30% of score)
• Resiliency: Inventory Turns & Operating Margin Mean Distance (30%)
𝑺𝒖𝒑𝒑𝒍𝒚 𝑪𝒉𝒂𝒊𝒏 𝑰𝒏𝒅𝒆𝒙=𝟏𝟑𝑩𝒂𝒍𝒂𝒏𝒄𝒆 𝑭𝒂𝒄𝒕𝒐𝒓+
𝟏𝟑 𝑺𝒕𝒓𝒆𝒏𝒈𝒕𝒉 𝑭𝒂𝒄𝒕𝒐𝒓+
𝟏𝟑 𝑹𝒆𝒔𝒊𝒍𝒊𝒆𝒏𝒄𝒚 𝑭𝒂𝒄𝒕𝒐𝒓
Supply Chains to Admire Methodology
PerformanceBeats the industry
average for operating margin, inventory turns
and ROIC for 2006-2014 and 2009-2014
ImprovementRanks above peer group average on The Supply Chain
Index for 2006-2014 or 2009-2014
+
• Continuity of leadership
• Supply chain talent development
• Focus on a multi-year supply chain strategy
• Clear governance to guide cross-functional decision-making
• Strength in horizontal processes
• Excellence in supply chain planning, network design and inventory management
What Drives Top Performance?
Building the End-to-End Supply Chain
• Almost all End-to-end Transformation Projects Started with Failure
• Each is Culturally Unique: No one Right Answer
• Characteristics:- Continuity of Leadership- Alignment to the Business- Business Sponsorship- Slow and Deliberate
Characteristics
The End-to-End Journey
What is Visibility?
Risk Management: Top Disruptions
Counterfeit Goods
SHARED VISION + SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = CHANGE
SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION
SHARED VISION + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY
SHARED VISION + SKILLS + INCENTIVE + RESOURCES + LEADERSHIP = FALSE
STARTS
SHARED VISION + SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATIO
N
SHARED VISION + SKILLS + RESOURCES + PLAN + LEADERSHIP = GRADUAL
CHANGE
Source: J.P. Kotter
Collaboration: The Right Stuff
Bar codes were first used at Marsh Supermarket in 1968
VMI Performance
Retail Scorecards
SHARED VISION + SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = CHANGE
SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION
SHARED VISION + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY
SHARED VISION + SKILLS + INCENTIVE + RESOURCES + LEADERSHIP = FALSE
STARTS
SHARED VISION + SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATIO
N
SHARED VISION + SKILLS + RESOURCES + PLAN + LEADERSHIP = GRADUAL
CHANGE
Source: J.P. Kotter
Collaboration: The Right Stuff
Why Big Data and Digital Process Evolution Matters
Evolution of Digital Processes
Shift in First Order Processes
Could the Answer Lie in….
Clouds?
Streams?
Lakes?
Confluence of Technologies
Maturity on the Internet of Things
3D Printing
Ultimate Ear Case Study
Supply Chains Don’t Play by the Rules
46
But, what if they
could?
Analytics Maturity
48
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
NewData
Types
Volume
Velocity
Variability
Big Data Supply Chains
Big Data
Cognitive Learning Adoption
Data Types
• Today 9 out of 10 supply chains are stuck.
• We must learn from the past to adopt new approaches for the future.
• Making the digital pivot and embracing big data techniques offers the promise for innovation/improvement.
Summary
Questions?
Books to Educate Your Team
WileyDecember 2012
Wiley December 2014
Self-publishedSeptember 2014
Self-publishedSeptember 2015
Launches Oct. 1, 2015
Founder: Lora Cecere
• Founder of Supply Chain Insights• “LinkedIn Influencer”• Guest blogger for Forbes• Author of 4 books: Bricks Matter (2012), Shaman’s Journal (2014)
and Supply Chain Metrics That Matter (December 2014), Shaman’s Journal (2014)
• Partner at Altimeter Group (leader in open research)• 7 years of Management Experience leading Analyst Teams at Gartner
and AMR Research• 8 years Experience in Marketing and Selling Supply Chain Software at Descartes
Systems Group and Manugistics (now JDA)• 15 Years Leading teams in Manufacturing and Distribution operations for Clorox,
Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble.
Contact Information: • Email: [email protected]• Blog: www.supplychainshaman.com (10,000 pageviews/month)• Forbes: http://www.forbes.com/search/?q=lora+cecere• Twitter: lcecere (6500 followers)• LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (50,000 followers)