© 2004 The information contained herein is subject to change without notice

Überleben ist nicht genug…

The Anatomy of adaptive manufacturing

Neue Sourcing Modelle

„Predicting is hard, especially about the future„

Michael KlemenMärz, 2004

March 2004 2

20002000

The changing IT industry landscape

2003200320042004

Predicting is hard, especially about the future...

March 2004 3

A long way to go

March 2004 4

March 2004 5

An apartment building was built in a highly desirable area, and there

are people from all over the world that want to move in.

United States

Britain

France

Japan

March 2004 6

As they are moving in, the landlord realizes that each person has appliances with a different type of plug.

United States

Britain

France

Japan

March 2004 7

The landlord tried to solve the problem by installing standard outlets.

United States

Britain

France

Japan

March 2004 8

The tenants said “I don’t care what my landlord wants!”… and refused to use it because each had invested so much in

their appliances that they did not want to change.

United States

Britain

France

Japan

March 2004 9

Need For a Common Infrastructure

Apartment owners tried to solve the problem themselves by using an adapter for each of their appliances. This was

expensive and inflexible.

United States

Britain

France

Japan

March 2004 10

The Solution……. in 2002

Each apartment continues to use their appliances and someone else does the conversion for them.

United States

Britain

France

Japan

Any-to-any Conversion

Better -Better -

Long term adoption of standard industry wide interfaces.

Best -Best -

March 2004 11

Evolution Of Supply Chain Interoperability• True collaboration and interoperability are only possible after

communication and connectivity foundation has been established.

Fully integrated and collaborative business process

Value and Structure

Connect

ivit

y

XML enables computers and applications to be

connected

Simple Portals connect people to information

E-mail improves communications between

individuals

EDI moves simple data

Present

Future

March 2004 12

connectcollaboratecommunica

te

STATUS 2004 : DIE GESCHICHTE IST GUT...

ES HAT NICHT FUNKTIONIERT

March 2004 13

A long way to go

March 2004 14

EnterpriseIntegration

single

TradingCommunityIntegration

Value Collaboration

Network

# of Participantssingle multitude

Rela

tionsh

ipSta

tic

Dynam

icThe Vision: Value Collaboration Networks

•ERP, Planning, R&D

•Integration of the legacy applications

•Front-End/Back-End integration

•Customer Relationship Management

•Supply Chain Planning/Mgmnt.

•Collaborative Design

•Linkage with Supply Chain partners

•Trading Communities

•E-Procurement

•Dynamic Relationships with partners

•Recombinant Business Relationships

•Loose Internet Coupling

•E-Services driven

March 2004 15

SCM tendencies and trends in early 2004

March 2004 16

SRM - The Focus Shifts to the Ecosystem

1990My Enterprise• Integration• Inside• Hub• Dept. productivity 2003

My Trading Partners• Collaboration• Inside Out• Hub-and-spoke• SC integration 2010

My Ecosystem• Synchronization• Outside In• Peer-to-Peer• Ecosystem synergy

Source : Gartner Group 2003

March 2004 17

• Then− Business Logic was

managing manufacturing: build, store, sell

− Just in time− Just in sequence

• Now− Business Logic:

• supply side commodizitation• demand side customization

− Real time :• Wal-Mart captures precise information and lets P&G

figure out what to deliver to each store

Supply Chain - the biggest operational shift ever

RTE Supply Chain Processes

March 2004 18

A quick trip to the future: RFID

• Wal-Mart recently announced that it wants its top 100 suppliers, by 2005, to begin fitting their cases and pallets with radio-frequency-identification (RFID) tags—chips that can automatically transmit to a special scanner all of the information about a container’s contents or about individual products.

March 2004 19

Key components of the RFID process

Tag ReaderAntenna Middleware Supply chain execution

- Coiled antenna ofreader creates magnetic field with coiled antenna of tag- Waves turns into digital information

- Each item has a “tag” attached to it or embedded In it- Transmits identification data to a reader

-Transmit data tomiddleware- Associates tag info with product info

- Process information from reader- Filters data- Sends data tobackend servers

- Backend SCE or ERPsystems receives Information

Examples of SCE:- Updates inventory- Notifies shipment arrival- Triggers procurement

March 2004 20

Supply chain economics - the world today

March 2004 21

The Need for the Real Time Enterprise

March 2004 22

Change:from periodic to continous

Strategy :from monthly to rolling

Opportunity:from windows to keychains

Simultaneous Decision SupportAcross Multiple Enterprises

Point-to-Point Integration Today’s cycle timeToday’s cycle time

RTERTE

Extended Supply Chain Synchronization Latency

60 Days in 2002

Seconds

Increasingly Synchronized Supply Chain

RTE: Beyond Optimization to Synchronization Of the Extended Supply Chain

30 Days in 2004

14 Days in 2006

7 Days in 2008 3 Days in 2010

Sameday in 2012

March 2004 23

GG SCM HYPE CYCLE 2003

March 2004 24

GG MQ for Sourcing in Discrete Manufacturing

March 2004 25

GG MQ Solutions for SCM in Discrete Manufacturing

March 2004 26

GG SRM Growth suggestions 2003-2007

SRM Software Components Forecast (Millions of Dollars)

New License Revenue

2002

2003 2007

Growth (Percent)

2,238 2,028 2,44

-17 -9

2004

2,046

1

2005

2,114

3

CAGR (%) 2003 - 2007

2006

2,258

3 8

Source: Gartner Dataquest (September 2003)

March 2004 27

SRM Areas - User adoption 2004-2007

Source : Gartner Group Sept 2003

March 2004 28

Demand Chain Management: SCM/CRM Functional Convergence

• Key Intersection Points− Promotion Management− Integrated Demand Management− Configurator/CTP− Order Fulfillment− Pricing/revenue optimization− Service Process Management

SCM

Supplier Facing

Customer Facing

Convergence

DCMDemandProducts/

Capacities

Source : Gartner Group 2003

CRM

March 2004 29

Align PLM with Supply Chain Processes

Product Specs. part data lead time “As Built” BOM New product Specs.

Product Data Flow Product Information Repository

Design RetireProduceSell /

Grow /Service

SpecifyPLM Purpose

Product Related Processes

SCM Processes

Describe / negotiate part and service needs

Define logistics of fulfillment

Fulfill parts and service

CAD modelseBOMS mBOMs, formulas

pricing

Product Configs,Technical specs.

Dynamic Interchange

ServiceSource Plan Make Fulfill

Source : Gartner Group 2003

March 2004 30

Align engineering-centric and operations-centric processes

PlanPhase out

Ramp up Produce

Forecast ERP II Supported Processes

Product-Related Processes

lead time

“As Built” BOM

New product Specs.

Product Data Flow

Design RetireProduceSell /

Grow /Service

SpecifyPLM Purpose

CAD models

mBOMs

Routings

Product Configs,

Bills of Material

Drawings

Config. Rules Special Orders

FD&T

Materials, Resource, and Process Planning

Validate Quality, Process, and costs

Produce products, manage inventories

Dynamic Interchange

Product Information Repository

ECNs

Costs

Source : Gartner Group 2003

March 2004 31

Down to Earth in 2004

March 2004 32

2004 - down to Earth - the practical implementation

Production Planning Logistics Optimization

Supply Chain Planning

ProductionScheduling

ProductionScheduling

DistributionScheduling

DistributionScheduling

Forecasts

Orders & Call-offs

Supply Chain Strategy

March 2004 33

Networked Strategic Sourcing

Multi-Enterprise SCM Capabilities Store

Transactional

Executional

Strategic

Operational

Tactical

AnalyticalSell Make Buy Move

Knowledge Repository

Seller Workbench

Buyer Workbench

Supply Chain Visibility — Monitoring and Alerts – multi-modal, Multienterprise TMS

Multiorganization Supply Chain Measurement

Collaborative Demand Planning and

Replenishment

Collaborative Supplier Planning and

Replenishment

Trend Analysis

Network Design

Source : Gartner Group 2003

March 2004 34

McKinsey Survey Germany 2003

• Survey results reveal some of the chief differences between the best-performing companies and the laggards :

• Broadly, the logistics costs of the high performers were about 25 percent lower, and they moved goods out of inventory about four times faster.

• On the service side, they had better quality ratings, as well as delivery times that were almost half those of the laggards.

March 2004 35

SAP PRTM Survey Germany 2003

March 2004 36

Customer CentricityEven excellence in products & the related buying/order fulfillment will not be sufficient to attract & retain customers in the long run

CollaborationFaster time-to-market for new product development & order fulfillment is driving the need to collaborate with demand & supply partners

Product/ServicesHybridsComplementing excellent products with superior value-adding services will make the difference

MAXIMUMCUSTOMER

VALUE

How Companies Interact withTheir CustomersHow

Companies Fulfill Their Promises

How CompaniesDifferentiateTheir Offerings

Supply Chain Business Strategy Three Pillar's for Success

March 2004 37

Automotive SCM example

High Tech SCM example

March 2004 38

Customer DealerFleet Car Rental

Wholesalers

DEM

AN

D P

LAN

NIN

G

DEM

AN

D A

ND

SU

PPLY

MA

TC

HIN

G

MANUFACTURING

Product

Definition

Market

Offering

Wholesale Stock

Replenishment

Orders

Stock

Inventory

Dealer

Sales

Analysis

Delivery

Model

Center Allocation

Capacity

Planning Operating

Plan

Material

Forecast

Constraints

Management

Procurement

Material

Mgmt

Material

releasing

Build

Production

LLP

Late

Configuration

Added Value

Services

2nd Hand

Car Refur-

bishmen

OUTBOUND

LOGISTICS

Configure

Order

Processing

Sales

Scheduling

Order Bank

Mfg

Scheduling

Order Bank

Marketing

Analysis

Stock

Inventory

Dealer

Sales

Analysis

Delivery

Model

Center

Lead

Management

CRM / ATP

LLP

Consolidation

Warehouse

Added Value

Services

Line Side

Inventory

Magmt

INBOUND LOGISTICS

AD

APTIV

E IT

CovisintPrivate

MPTier 1 Tier 2 Tier 3

Hot Automotive areas today:• Customer Relationship Mangement and Available to promise

• Demand Planning

• Demand and Supply Matching

• Inbound Logistics

• Manufacturing

• Outbound Logistic

• Adaptive IT

Marketplaces

Portals

Moving to RTE - Automotive Industry example

March 2004 39

RTE Automotive Supply Chain

                                                                                                                                                                             

March 2004 40

RTE Automotive SCM/CRM

March 2004 41

Volkswagen Today

                                                                                                                          

                        

                                                         

                       

                                                    

              

March 2004 42

Volkswagen Today - SCM is big -

• Online negotiations 22,000 suppliers participated at various times

− > 3,190 online negotiations conducted − > 36 billion Euro turnover in volume (during

contractual period) negotiated (as at Jun 5, 2003) − Capacity Management (eCap)

> 200 suppliers integrated, among those 60 already migrated to the new eCAP/3 release

− 4,000 critical parts identified(as at Jun 18, 2003)

• AMES-T 385 VW suppliers with processual conformity are active

− 287 of them already implemented "controlled pick up" procedure together with Volkswagen AG plant Wolfsburg, and an additional group of 93 suppliers will start controlled pick up procedure on 18 August 2003

− Audi AG (plants Ingolstadt and Neckarsulm) will start controlled pick up procedure together with 271 suppliers on 15 September 2003

− 14 plants of VW Group implemented the process (Volkswagen, Volkswagen Nutzfahrzeuge, Audi, Skoda)

− 10 VW local hauliers are integrated(as at Aug 8, 2003)

 

 

 

March 2004 43

Volkswagen Today - SCM is big -

• Online catalog631 suppliers linked globally

− 1.076.737 articles in global catalog − 10.896  internal users − 2.695 cost centers integrated  − 269.730 transactions − 85.858.102 €  volume ordered

(as at May 31, 2003)

• Online Inquiries (ESL)> 5,500 suppliers linked

− > 730,000 inquiries processed

(as at Aug 28, 2003)

March 2004 44

DC x Today - SCM is big

March 2004 45

HP and our supply chains

• HP more than 100 million consumer customers today

• We touch 45 million consumers every month • In 2003 alone:

− HP sold 53 million products to consumers — not including supplies. (That means that a consumer buys an HP product more than once a second)

− HP has shelf space in 110,000 retail outlets in 176 countries around the world, in addition to the company's store.

− In the last 12 months alone, we've sold 43 million printers — more than one of every two printers sold in the world

− We've sold 8 million PCs − Every day more than 167 million pictures are taken using

an HP camera

March 2004 46

Commercial Enterprise

Home

TraditionalRetail

GlobalLargeMediumSmallSOHO

VARs CRs

Distributor/ Wholesaler

CHANNEL DISTRIBUTION MODEL

Commercial Business Support

PDE / PSDE

Consumer Business Support

HP

ESV

Consumer

HP IPG go to market

March 2004 47

HP IPG SC Operations:

Key chain supply chain collaboration

eHub

source

design logistics

forecast

procurement

inventory

BU

BU

BU

BU

logisticsproviders

tier 2suppliers

tier 1suppliers

CM

internal external

March 2004 48

Enterprise Integration Services

Auction

InventoryCollaboration

Buy/Sell

Sourcing

On line Inventory

Information &Analytics

Order & Forecast

Collaboration

Buy/Sell

e-Sourcing, Auctions & Disposition

outsourcedEDI hub

outsourcedxml hub

keychainwebservers

OutsourcedEDI hub

OutsourcedXML hub

KeyChainwebservers

hps (PeopleSoft)

SAP (r/3, apo)

other (Legacy)

Nexus (Baan)

HP Entities

web browser onlytrading partners

e-Service provider(s)

Leverages HP’sintegration backbone

Leverages HP’sintegration backbone

ERP-neutralERP-neutral

B2B + web browser

trading partners

B2B onlytrading partners

EDI + web browser

trading partners

Trading PartnersMultiple

“on ramps”

Multiple“on ramps”

Web browser onlytrading Partners

EDI + web browser

trading partners

B2B + web browser

trading partners

B2B onlytrading partners

XML

HPS (PeopleSoft)

SAP (R/3,APO)

Other (Legacy)

Nexus (Baan)

InventoryCollaboration/

DynamicRepl

HP IPG IT Architecture

March 2004 49

HP IPG SC Operations: Business Landscape

Region: EMEA

Segments: Commercial & Consumer Hardware, Supplies

Products: - 15 Product-Lines- 3500 SKUs, 7500 components

Manufacturing/ - 7 Manufacturing/Product Completion Sites

Product Completion: - 57 Production/Product Completion Lines- 3 Regional Warehouses

- Build to Stock, Build to Order, Dock Localiza

Shipment Volume : - 85 Million Inkjet-Cartridges/year- 20 Million Toner-Cartridges/year- 15 Million Consumer products/year- 4 Million Commercial products/year

Trucks : - 200 trucks per day

Revenue : - 8 Billion USD

March 2004 50

Supply Chain concept

aspects 2004

March 2004 51

Supplier relationships - conceptual components

• Supplier relationships a comprehensive process through:− Engineering function − Sourcing− Procurement− Payment

of product life cycle management.

Source : Gartner Group Sept 2003

March 2004 52

Supplier relationships - conceptual components• Product life cycle management (PLM)

− Collaborative design − White boarding − Bill of material development − Part directories

• Sourcing (strategic sourcing) − Strategy development − Spend analysis − Supply and market discovery − Requisition specification and negotiation − Bid analysis − Award and contract

• Procurement and purchasing − Master blanket release − Receipt and ASN − Order management

Source : Gartner Group Sept 2003

March 2004 53

Supplier relationships - conceptual components• Contract management

− Invoice variance − Document management − Compliance management − Collaborative contract development

• Financials − Project accounting − Accounts payable − General ledger − Encumbrance − Compliance − Reporting

• Maintenance and asset management − Work orders, bill of material and fleet management − Inventory management/tool cribs

• Marketplaces − Web services

Source : Gartner Group Sept 2003

March 2004 54

Firms Will Improve Processes At 3 Levels

Levelof

investment

Benefits

• Better visibilityinto shared processesMonitor

• Joint decision-making andprocess synchronizationManage

• Hands-free decision-making &automated resource allocationOptimize

March 2004 55

Keyfactor Trust

Competence

Confidence

Integrity Commitment Transparency

Congruency•Fit between •perception & reality•No hidden agendas

Dependability•Predictability•Certainty

Consistency•Fairness•Sense of equality•Objective

Mutuality•Win- win•Shared benefit•Reciprocity

Trusting Relationship

March 2004 56

A long way to go

but think about…

March 2004 57

Adaptive Enterprise

The ultimate state of fitness: Business and IT synchronized to

capitalize on change

Business

Information technology

March 2004 58

HP Adaptive Enterprise Design Principles

integration

simplification

standardization

modularity

• Reduce number of elements• Eliminate customization• Automate change

• Use standard technologies and interfaces

• Adopt common enterprise architecture• Implement standard processes

• Break down monolithic structures

• Create reusable components • Implement logical architectures

• Link business and IT • Connect applications and business

processes within and outside the enterprise

+

+

+

Applied consistently across:• Business processes• Applications• Infrastructure

March 2004 59

Measure and assess business agility

Profile Examine IT strengths, weaknesses and overall ability

to enable business agility

Prioritize Identify critical priorities for agility impact and investment optimization based on client priorities

Prescribe Recommend adaptive IT approaches and investments that address the critical priorities

range

time

ease

Assess IT’s ability to respond to business change

The level of effort, cost, and risk required to introduce and support change

The breadth of change the company is able to handle

The length of time it takes to make a change

March 2004 60

HP’s Darwin Reference ArchitectureElements of an adaptive architecture

InfrastructureInfrastructure services

Virtualized resourcesVirtualization

Sourcing Sharing Pooling

Resources

Clients PrintersServers Storage Network ContentEnvironment

Gridservices

Webservices

Securityservices

Registryservices …

MA

NA

GE &

CO

NTR

OL

asse

ss, advise

, act

MEA

SU

RE &

ASS

ESS

tim

e, ra

ng

e,

ease

ARCHITECT & INTEGRATE

ERP CRMCollaboration Publishing…

Applications

Suppliers Employees CustomersEXTEND & LINK

Business processesAutomated intelligent management

Dynamic resource optimization

Continuous secure operation

March 2004 61

The path to an adaptive enterprise

1. Measure, assess and maintain a dynamic link between business and IT

2. Architect and integrate heterogeneous IT environments

3. Manage and control business processes, applications and the IT environment

4. Extend and link business processes and applications horizontally – from suppliers through to customers

5. Delivers business and technology innovation for today and tomorrow

Business

Information technology

It’s the ultimate state of fitness in a world where every business decision triggers an IT event.

March 2004 62

Food for thought

March 2004 63

Food for thought – Supply Chain Management

NEUGIERIG SEIN !

March 2004 64

Food for thought

NEUGIERIG SEIN !

March 2004 65

Thank You

questions ?