Presentation given at Kinexions12

Bricks MatterOctober 2012

BRICKSMatterThe Role of Supply Chains in Building Market-Driven Differentiation

LORA M. CECERE CHARLES W. CHASE JR.

BookPublishes December

2012

BRICKSRight Use of Assets

Expansion into BRIC Countries (Brazil, Russia, India and China)

Supply Chain Process Knowledge

1 Truth 3 Lies

Supply Chain Insights LLC Copyright © 2012, p. 5

Agenda

Supply Chain Trends

In Search of Supply Chain Excellence

Race for Supply Chain 2020

Wrap-up

Evolving Practices


Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2011

Days of Inventory


Demand Signal

Accurate Weekly

Forecasting is ...

Delay from Purchase to

Signal

Data Latency and Distortion

Red Represents Emerging Economies with Distributor Trade

Retailer DC

Easy

3-10 Days

7-20 Days

Manufacturer DC

Difficult

10-20 Days

20-45 Days

Suppliers

Almost Impossible

20-50 Days

45-80 Days

Store

Trivial

Instant

Variable

Store


Building End-to-End Value Networks

Today

True collaboration only happens when there is a sustaining win/win value proposition.

Manufacturer


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 = FRUSTRATION

SHARED VISION

+ SKILLS + RESOURCES + PLAN + LEADERSHIP =GRADUAL CHANGE

Source: J.P. Kotter

Collaboration: The Right Stuff


Agenda

Trends Supply Chain



Wrap-up


Supply Chain Management: Top 3 Elements of Pain for Respondent


Evolution of Supply Chain Process Excellence

Align:Market Driven

ResilientReliable

Adapt: Demand Driven

Efficient

Building Horizontal Process Connectors

ContinuousTesting

LearningImprovingIn Market

OrchestrateDemand and Supply

Sense Demand

and Supply

Shape Demand andSupply based

on Market

Absorb DemandVolatility

Absorb Supply Volatility

Right Product

Right Place

Right Time

Right Cost

Cost

Procure to pay/order to

cash


Supply Chain “Excellence” Definition

A Supply Chain

is a Complex System

with Complex Processes

with Increasing Complexity


The Effective Frontier


Useful Ratios


• Performance better than peer group• Year-over-year improvements• Consistency in results• Leadership in managing trade-offs

What is Best in Class?


Cash-to-Cash Cycle vs. Gross Margin (2000-2011)SUMMARY SLIDE


Metric Equations


Corporate Summary


Cash-to-Cash Cycle vs. Gross Margin (2000-2009)SUMMARY SLIDE


Corporate Summary


Cash-to-Cash Cycle vs. Gross Margin (2000-2010) SUMMARY SLIDE


Inventory Turns vs. Revenue per Employee (2000-2010)SUMMARY SLIDE


Value Network Strategy

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

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 ProcessHow do I do the right things right?

Source: Supply Chain Insights, LLC


Agenda

Trends Supply Chain



Wrap-up


The Supply Chain of the Future

World Population

Source: “The World at Six Billion” United Nations, 2004; The World UN Population Assessment 2006; “Unsustainable World,” 04/15/08, BBC

North America

2007 2020339M 342M

Europe

2007 2020731M 722M

Asia

2007 20204.0B 4.6B

L America

2007 2020572M 660M

Africa

2007 2020965M 1.3B

Oceania

2007 202034M 40M

MARCO TRENDS


Inside-Out Inside-Out

Supply Chain Tipping Points

1987 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 =


Inside-Out Outside-In

Value-Based OutcomesDelivered by Horizontal Processes

+

Supply Chain Excellence = Supply Chain Excellence =

Supply Chain Tipping Points

2000 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


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?

31


Outside-In

Value-Based OutcomesDelivered by Value Networks

Supply Chain Excellence =

Supply Chain 2020 Tipping Points

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Talent Shortage

Compliance on Safe & Secure

Orchestration

Big Data Supply Chains

Internet of Things

Learning Supply Chains

Digital Manufacturing



Current State of Planning


Future State of Planning


Ease of Getting Total Supply Chain Costs: Manufacturers, Retailers & Distributors

___________________________________________________________Source: Supply Chain Insights LLC, Transportation (Aug-Oct 2012)Base: Transportation Users (Manufacturers, Retailers and Distributors) (n=34)Q18. How easy is it for your company to get total supply chain costs for your operations?

Users 12% 12% 24% 24% 29%

USERS: Ease of Getting Total Supply Chain Costs

Extremely/very easy 5 Neutral 3 Extremely/very difficult

24% EASY 53% DIFFICULT


Scenario Planning


IT Trends Excited About (Top 3)


Definition

39

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


Big Data: What is it all About?

Downstream DataCold Chain

GeolocationRFID

Social

Ratings & Reviews

T-Log Data Twitter

Facebook

Call Center Logs

VideoPhotographs

Warranty Information

ReturnsWeblogs

eCommerce

EDI

Data Mining

Forecasting

Sentiment Analysis

What-if Models Hadoop

Rules-Based Ontology

Constraint-based Planning

Data VisualizationLearning Systems

R

Text Analytics

Scorecards

Sensors

Map Reduce

Digital Path To Purchase

Mobile Applications


Evolution of Visibility

Where is My Stuff?Track and TraceQuery

Please Alert me of a ProblemAdvanced Analytics

Early WarningPredictive Analytics

Learn a Better Way

Vertical Functions

Supply Chain

Value Networks

Single Function Visibility

Supply Chain Visualization

Value Network Sense/Act/Response


Connecting the Extended Supply Chain

42


Connecting the Extended Supply Chain


Opportunity at the Intersection of the Social and Interest Graph(s)


More than Just “Like”


• Newell Rubbermaid

Newell Rubbermaid Gets IT!

#Future15SB @bwdumars


#Future15SB @bwdumars

Newell Rubbermaid Gets IT!


• Tried to get precise on inaccurate data.• Been sales-driven or marketing-driven not market-

driven• Believed that the most efficient supply chain is the

most effective supply chain.• Built efficient chains, but not effective networks.• Focused inside-out, not outside-in.• Rewarded the urgent, not the important.

In the end, Bricks Matter. Processes are Evolving, but it Matters More than Ever.

Historically, We Have…


Consulting Technology

ENRICH

NEW


SCI Research Supply Chain Index Ask a Supply Chain Wizard Supply Chain Wiki

Blogs Videos, Webinars, and Podcasts

Share Your Own

EDUCATE


Job Postings Events

Salary Information Help Board

EVOLVE

NEW


Supply Chain Super Heroes

S-Men

Digital Atlas

Titanium Titan Shaman

Community Facilitator

Good Karma

Increasing Knowledge

BadgesCommunity Facilitation

Ivy InsightsResearcher

Meet the Superheroes


Where is Your Opportunity?


Who is Lora?

• Founder of Supply Chain Insights

• 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.


Where Do You Find Lora?

Contact Information: [email protected]

Blog: www.supplychainshaman.com (4000 pageviews/month)

Twitter: lcecere 3350 followers. Rated as the top rated supply chain social network user.

LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (2300 in the network)