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IBM Industry Solutions
A Framework For The Smarter Supply Chain IBM Smarter Business and Technology Series 2010
Jonathan Austin
Industry Frameworks Leader for Industrial Sector
ASEAN
2 © Copyright IBM Corporation 20092
Agenda
�Mid-market View from IBM CEO Study 2010
�Smarter Supply Chain
�Frameworks for the Smarter Supply Chain
�Supply Chain Performance Management
3 © Copyright IBM Corporation 20093
Today’s complexity foreshadows an even more complex future for Midmarket CEOs who are challenged to close the gap
78%Expect high/very high level of complexity over the next 5 years
60%Currently experiencing high/very high level of complexity
54%Feel prepared for expected complexity
24%Complexity gap*
* Complexity gap = difference between expected complexity and the extent to which CEOs feel prepared to manage complexity
Not at all/to limited change some change large/very large change
Required amount of change to respond to external factors 67%25%9%
IBM CEO Survey 2010
4 © Copyright IBM Corporation 2009© SAP 2008/Page 4
Within a Complex Supply Chain
The ability to act smarter will optimize performance
Supply Chain Demand Chain
ConsumerManufacturer
Equipment Supplier
Materials Supplier
Sub Contractor
Distribution Center
Retail Customer
Distributor or Wholesaler
Advertising Agency
Broker
5 © Copyright IBM Corporation 2009
6% –up to 20% during promotions 12% out-of-stock
Forecast accuracy 50-70% Customer order fulfillment 80%
Average of 50 days of supply in inventory
Only 16% manufacturer’s trade promotions turn a profit
70% to 90% of new product launches fail.
More than 100,000advertised brands exist in the industry
$1T in inventory across the entire value chain results in average customer fill rate of 70%.
Ten’s of thousands new items will be introduced –the vast majority will fail
Problems that may limit performance
6 © Copyright IBM Corporation 2009
Forecasting & Inventory Management
• In general, the forecasting accuracy shows similar trends, with midsize manufacturers marginally better
• However, the small manufacturers have more FG stock, probably due to more uncertainty from demand side.
7 © Copyright IBM Corporation 20097
Successful companies capitalize on complexity in three ways
• Creativity is #1 leadership quality• Drive change in the organization to
stay ahead of market and use a wide range of communication styles and tools
• Break with status quo of industry, enterprise and revenue models
• Use iterative strategies, make quick decisions and execute with speed
• Integrate globally, increase cost variability and exploit partnering to increase agility
• “Getting closer to customers” is the single most important theme
• Better understand customer needs through collaboration and info sharing
IBM CEO Survey 2010
8 © Copyright IBM Corporation 2009
Overall Business Drivers next 12-18 months
• Midsize manufacturers are driven by Productivity/ efficiency, geographic expansion and capacity addition
• Small manufacturers are more cost conscious, and want to retain existing customers
• Top 3 drivers overall are cost, new business, and productivity improvement
9 © Copyright IBM Corporation 2009
Global trend – digital convergence, globalization...…the world is changing and becoming more…
The explosion of new information, when integrated, analyzed, and acted upon using new types of intelligence, enables solutions that
… help build a Smarter Planet
Instrumented
Interconnected
Intelligent
9
10 © Copyright IBM Corporation 2009
What is “smarter supply chain”?
Inst
rum
ente
d
Interconnected
Intelligent
Risk Mitigation
Sense and Respond
Globalization
Cost ContainmentInsightful
VisibilityImprove Yield
Improve Quality
Your answer to renewed manufacturing agenda!
11 © Copyright IBM Corporation 2009
Key Operational Initiatives
• Quality improvement is the single most important operational initiative
• Other initiatives are fragmented, but reduction of delivery time, and manufacturing cost are the other 2 overall initiatives.
• In general, responsiveness and customer-centricity emerge as central themes
12 © Copyright IBM Corporation 2009
1Smarter Supply Chain: Powerfully Instrumented
MEASUREManufacturing Equipment is Instrumented and Automated
EVENTS
ACTIVITIES
EXCEPTIONS
STATUS
SCADA DCS MES Historian SPC Databases
We can measure everything.
MONITORProviding Live Broadcasts of Smarter
Manufacturing Information
Insightful
Visibility
We can see everything.
Instrumented
13 © Copyright IBM Corporation 2009
2 Smarter Supply Chain: Extensively Interconnected
Synchronize the Pulse
Create a Sense and Respond action from your manufacturing network to your
customersSynchronize All Manufacturing Functions
A holistic approach to pulse, constraints, and event triggers
A Single Point of View
The manufacturing network tightly integrated
Interconnected
14 © Copyright IBM Corporation 2009
3 Smarter Supply Chain: Faster and Intelligent
SMARTER Manufacturing:� The pulse is visible.� Decision making is fast and intelligent.� Status is known real-time.
Predictive and Adaptable
Learn As You Execute Production
Event-Triggered Manufacturing Network:
Match the Pulse
Intelligent
15 © Copyright IBM Corporation 2009
Extent of implemented Integration PracticesLeaders vs. Others
* Leaders determined based on respondents’ ranking in AMR Research Supply Chain Top 25 for 2008
Customer Inventory Planning & Deployment
Planning with Suppliers
Shared, real-time electronic
data
Continuous Replenishment with customers
30% 16% 24% 9%24% 19%
Sum:extensive
& some extent
Extensive
86%
79%
72%
53%
11%
63%
16%
62%
72%
61%
7%
11% 19%
1%
ExtensiveLeaders:
ExtensiveOthers:
Largest gap�Decision-support based
advanced analytics and optimization to automate and self-actuate supply chain transactions.
�Multi-partner collaborative platform
�Sense-and-respond demand & supply signal notification
�Smart devices & sensors (RFID) to capture real-time visibility:� forecasts/orders� schedules/commitments� pipeline inventory� shipment lifecycle status
Instrumented
Interconnected
Intelligent
Key Capabilities
Some Implementation
Some Implementation
Future Outlook: The Smart Supply Chain will require more connectivity, collaboration, and integrated processes to improve visibility among network partners as demonstrated by leaders
16 © Copyright IBM Corporation 2009
Quick Wins…Through Data Automation
Long TermWins…Through
Structural Process
Transformation
Example: Airbus Strategic Vision & Plan for Business Value Creation
EBIT,Cash, Cost Avoidance
���� Business Savings�������� Business SavingsBusiness Savings
Improvethe ‘Wayof Working’
���� Business Process�������� Business ProcessBusiness Process
Where isIt Working,Not Working?
���� Measurability�������� MeasurabilityMeasurability
InformationAbout Working,Not Working
���� Visibility�������� VisibilityVisibility
Accurate& Efficient Information
RFIDRFIDRFID
“Improving visibility is a pre-requisite
to improve the‘Way of Working’ & to deliver business
savings”
– Carlo Nizam,Head of Value Chain Visibility
& RFID, Airbus
17 © Copyright IBM Corporation 2009
Key Takeaways for ASEAN small manufacturers
• Overall business drivers are cost, productivity and expansion
• There is a strong focus on quality, responsiveness and customer centricity
• Medium-sized manufacturers need help in their supply chain processes, inventory management, delivery performance as well as in managing their cash
• Smaller manufacturers need help in managing their financial performance, and they are not investing enough in IT
18 © Copyright IBM Corporation 2009Infrastructure Platform
Source Make DeliverDesign – NPI Return - EOL
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Suppliers & Manufacturers
Customers & Channels
Manufacturing Value Chain
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19 © Copyright IBM Corporation 2009
Supply Chain Enterprise Applications
Supply Chain Strategy
Supply Chain Collaboration
Supply ChainPerformance Management
Supply Chain Visibility
Supply ChainPlanning
Asset Management
Product Lifecycle Management / R&D
IBM’s Smarter Supply Chain Management Framework are organized around key functional areas
20 © Copyright IBM Corporation 2009
Supply Chain CollaborationSupply Chain Performance Mgmt
Supply Chain Operations
Supply Chain Planning
Asset Management
Product Lifecycle Management / R&D
• Supply Chain Assessment• Business Transformation Strategy
• Package Selection• Version Upgrades
• Training and Learning Services• Systems Harmonization
• Business Process Improvement, Design and Implementation
• Business Modeling & Governance• Operations Improvement• Green / Carbon Assessment
• Technology Assessment• Mergers & Acquisitions Solutions
Supply Chain Enterprise Applications
Supply Chain Strategy
IBM Global Business Services Consulting Offerings
IBM Global Business Services Consulting Offerings
Maximo
Business Events
DW Solutions
Business Events, BPM Solutions, Manufacturing Integration Solutions, Remote Server
Traceability Server
MDM Server
Business Integration Solutions, Commerce Server
Collaboration
Product Development & ePLMSolutions
Telelogic
21 © Copyright IBM Corporation 2009
��������������
Business Need
60’s – 70’s 80’s – 90’s 00’s – 10’s
Singular Process Control & Visibility
Process Efficiency
Integrated Business
Activities Across the Firm
2020’s
Insight applied to business operations
• Prescriptive analytics
• Insight visualization
• Information Governance
• Content Analytics
• Prescriptive analytics
• Insight visualization
• Information Governance
• Content Analytics
Automate Processes Integrate Processes Optimize the Enterprise
Technology Evolution … the Age of Business Optimization
IndustryResponse
DriverInternal & External Process
Collaboration
���������������������������������
22 © Copyright IBM Corporation 2009
Business Analytics Answers 4 Key Questions …..
OPEN DATA STRATEGYERP Supply
ChainMES CRM 3PL WMS Inventory
Analytical ReportingDrill
Real-Time What is
Scenario ModelingWhat-if
Advanced AnalyticsWhat might be
23 © Copyright IBM Corporation 2009
Business Optimization - Electronics
Single Viewof Product
Asset LifecycleManagement
Supply ChainVisibility
BusinessPerformanceSingle View
of Product
Gains control over its Master Data Management System (MDMS) when it deploys IBM InfoSphere MDM Server for PIM and realizes cost savings and increased productivity.
Tracks and analyzes production processes and issues more effectively with IBM Cognos BI software and improves on-time delivery for customers.
Proactively manage growth of transactional data in Accounting, Sales and Logistics applications Improves service
levels and key business operations with IBM Optim Data Growth Solution
Panasonic required a more effective way to create consistent and complete information about its products for customers, dealers and Websites. Used MDM, WAS, GBS
24 © Copyright IBM Corporation 2009
Business Analytics Framework
Supply Chain MetricsSCOR Metrics Blueprint
Operations Data
• ERP• Inventory• Supply Chain• Logistics / 3PL• MES • Customer CRM• Syndicated Data• POS Data• Trade Promotion
ResultsDemand
FinanceSupply
Optimized S&OP Executive ReviewIntegrated Financial Plan
Go!Mobile
Scorecards
EventNotification
Reports& Analysis
Dashboards
IBM Cognos 10
Analytic ApplicationsSales, Procurement,
Finance, Workforce, etcOperational Planning
& Execution
Predictive Models
• Demand• Quantities• Inventory• Maintenance• Customer Behavior• After markets
Real TimeMonitoring
28 © Copyright IBM Corporation 2009
Customer Examples
� VICOR�Dashboards for all aspects of operations; 92% increase in Gross Margin
� Avaya�Supply Chain visibility solutions; 356% ROI with payback in 4 months
� Daimler Trucks of NA�Supplier performance & shortage focus; Shortages cut 50%; Rejects cut 30%
� Dole�S&OP to simulate demand and supply in an SAP/i2 environment
29 © Copyright IBM Corporation 2009
Customer Need:• Customer returns led to poor
financial performance and excessive financial reserves for warranty claims
� Cognos BI:� Reports� Analysis� Query
SolutionSolution
� $11 million savings attributed to Cognos through reducedwarranty claims reserve
ResultsResults
Approach:• Analyze customer return data• Root cause analysis• Take corrective action in the
production process to avoid future failure
Ryobi – Customer Warranty Analysis
30 © Copyright IBM Corporation 2009
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