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Presentation at Schulich School of Business MBA course on SCM and IT convergence
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Supply Chain + IT
Notes form a transformational journey
Arpad Hevizi – CelesticaVP IT Supply Chain Solutions
http://twitter.com/ahevizi
THE PROBLEM
Component
SupplierManufacturing Distribution
Center
Retail
Outlet
Air
Land
Sea
3PL 3PL
Repair
Service
Center
Returns
Consolidation
Center
OEM
3PL3PL
LATENCY
MISALIGNEDMETRICS
INFORMATIONLEADTIME
Service
Provider
Design
Center
3 CRITICAL SHIFTS
WHY?
Supply Chain is no longer about moving parts…
1DAY
7DAYS
7DAYS
7DAYS
7DAYS
REAL LEADTIME
Value Chain
View
An Often Overlooked Obstacle to
Supply Chain Integration and Excellence
TSMC TI CLS Cisco Ingram Walmart
Pressure Center – Wall Street
Pressure Center – Customers
Other
TSMC
Customers
Other
TI
Customers
Other
CLS
Customers
Other
Cisco
Customers
Other
Ingram
Customers
CSCOTSM IMCLS WMTTXN
The ‘forgotten’
End Customer
SCOR Benchmarking - Presentation5
ALIGNMENT?
• Solution Implemented
within budget and
resource constraints
• Business capabilities
are delivered and
tested as an
integrated solution
• User and support
resources are
identified and trained
• The solution is in
productive use
supporting core
business functions
• The organizational
and process changes
are implemented and
accepted
• The solution reached
maturity (stabilization
phase completed)
• The solution lead to
measurable business
benefits
• There is a clear
connection between
solution performance
and key business metrics
• Key performance
indicators are monitored
and the solution is
refined to maximize
value realization
Technical Success Operational Success Business Success
IT IS NOT TOOLS
THE ANSWER
WHAT?
Deliver Make Source
Plan
Extended Supply Chain
Company DomainCustomers Suppliers
Supply Management and Purchasing Execution
FOCUS: Supply Chain Control Today Controlling Supply Variability
Forecast Collaboration VMI & Supply Collaboration ReplenishmentPlanning (ROP)
The primary supply chain challenge is to balance a
variable demand profile with a variable supply at the
lowest cost to serve while achieving customer expectations
Demand Management and Fulfillment Activities
Controlling Demand Variability
FRAGILE BALANCE
Supply Side Partner Optimization
IT: Collaboration Solutions, Supply eHubs
Operations Excellence / Local Level
IT: Statistical Process Control Solutions, MRP II
Process Excellence / Local Level
IT: CAM, MRP Solutions
Supply Chain Networks / Integration
IT: Value Chain Planning solutions
Cross Operations Excellence / Enterprise Level
IT: ERP revolution
Demand Side Partner Optimization
IT: Collaborative Demand Planning, DDSN
1960s
1980s
1970s
1990s
2010s
2000s
THE EVOLUTION
Managing extended supply
chains as one synchronous
network.
TRUE INTEGRATION
Demand driven
Supply Network
Integration…
NOT THAT EASY
HOW?
LOAD CHASE
Company DomainCustomers Suppliers
Supply ManagementDemand Management
LOAD CHASEORDER
CHECK
PlannedSupplyChain
LOAD CHASESIMULATE
SCENARIOS
AdvancedSupplyChain
SupplyChain Vision
VALIDATE PLAN
ALIGNED
ORDERS
COLLABORATIVE REPLENISHMENT
SHARED
SCENARIOS
COLLABORATIVE PLAN
DEMAND / SUPPLY VISIBILITY
Extended Supply Chain
TypicalSupplyChain
REAL EVOLUTION
Real life is lagging behind the theory…
CONTROL PROBLEM
Component
SupplierManufacturing Distribution
Center
Retail
Outlet
Air
Land
Sea
3PL 3PL
Repair
Service
Center
Returns
Consolidation
Center
OEM
3PL3PL
LATENCY
MISALIGNEDMETRICS
INFORMATIONLEADTIME
Service
Provider
Design
Center
Deliver
Service
Sell
Make
Design
Source
Plan
Extended Supply Chain – out of scope for most companies today !!!
Company DomainCustomers Suppliers
Collaborative
Planning &
Forecasting
Collaborative
Planning
Hub Management
& Collaborative
Fulfillment
Collaborative
Replenishment
Service
Integration
Design for Supply
Chain
SUPPLY CHAIN SCOPE
CHANGE FOCUS
WHERE TO START?
VALUE FIRST
Attribute Metric (Strategic)
Reliability Perfect Order Fulfillment
Responsiveness Order Fulfillment Cycle Time
Agility Supply Chain Flexibility
Supply Chain Adaptability†
Cost Supply Chain Management Cost
Cost of Goods Sold
Assets Cash-to-Cash Cycle Time
Return on Supply Chain Fixed Assets
Return on Working Capital
Customer
Internal
VALUE DRIVERS
SCOR Benchmarking - Presentation18
"Go where the money is...
and go there often."
HISTORY LESSON
Understand & use 1 simple equation…
CCC = DSO + DSI - DPO
1DAY
7DAYS
7DAYS
7DAYS
7DAYS
FOCUS ON CASH
NEXT PROCESS
Strategize Develop Sell Plan Source Make Deliver Return Service
Collaborate & Communicate with Customers, Suppliers
Idea to Product Quote to Cash
Plan to Deliver
Issue to Resolution
Procure to
Pay
Requirement
to Resource
Market to
Sell
Collaborative Planning
Network Inventory Optimization
Supply Chain Performance & Risk Management
CORE ENTERPRISE
PROCESSES
EXTENDED
ENTERPRISE
Ready to support external service offerings
Empowers internal operations
Gap areaIT C
AP
AB
ILIT
Y
MA
TU
RIT
YLegend:
Integrated Business Planning and Analytics
EXTENDED PROCESS
Component
SupplierManufacturing Distribution
Center
Retail
Outlet
Air
Land
Sea
3PL 3PL
Repair
Service
Center
Returns
Consolidation
Center
OEM
3PL3PL
PerfectLaunch
Synchronized Supply Chain
PreventReturns
LIFECYCLE FOCUS
Service
Provider
Design
Center
Brand Owner CustomerComponent Supplier EMS Retailer
DependencyVariability
Mitigating these 2 attributes is a pre-requisite to a touchless supply chain
Current Model (Silo’ed) ‘Managed’ Collaborative Model
Supply Chain Spectrum
Qty / Mix
Baseline
Noise
Qty / Mix
Baseline
Noise
Supply Chain Spectrum
REDUCE NOISE
Critical Items Shortage Report
Qty
TimeWeek 1 Week 2 Week 3 Week 4 Week 5
A
B
C
A
B
C
A
B
C
ABC
A
BC
3PL PartnersCLS OperationsCLS Planning
Supply Chain Command Center - Conference Room
Sales
Planning
Sourcing
Production
Quality
Logistics
MANAGE EXCEPTIONS
ENABLE IT
Key Supply Chain Performance Metrics
Responsiveness{Order Fulfillment Lead Time}
Supply Chain Management Cost{Supply Chain Management Cost; Value-Added Productivity}
Assets Utilization Performance{Cash-to-Cash Cycle Time; Inventory Days of Supply; Asset Turns}
{Low}
{High}
{Low}
{High}
{Low}
{High}
Supply Chain Characteristics
Operational Execution {Local Autonomy} {Global Standardization}
Influence on Critical Suppliers {Limited} {Powerful}
Supply Chain Value-Add Services{Cost Containment} {Innovation Focus}
Ability to Influence Demand{Limited} {Powerful}
{Efficient} {Responsive}
Supply Chain Design
{Gut Feel} {Data Driven}
Analysis Approach
Agility / Flexibility{Supply Chain Response Time; Production Flexibility}
{Low} {High}
Reliability{Delivery Performance; Fill Rate; Perfect Order Fulfillment}
{Low} {High}
Desired Supply Chain CharacteristicsCurrent position
Legend:
Planning & Execution Tools{Off-line} {On-line}
SC
OR
–C
usto
mer
Fa
cin
gS
CO
R –
Inte
rnal F
acin
g
ALIGN ON VISION
Customers
Components Partners
Design Partners
Partners
Recycling Partners
Logistics Partners
DE
SIG
N
Product Data Management
Services
Design & Collaboration
Services
Perfect Launch
Supply / Demand Analysis, ATP/CTP
Network & Inventory
Optimization
Supply Network
Collaboration(planning)
SynchronizedSupply Chain
Supply Capability
Forecast
EM
S &
FU
LF
ILL
ME
NT
ReplenishDemand
Pull
Manufacturing &Fulfillment
Demand Pull &
Fulfillment
Order
Shipment
PreventReturns
Triage / Repair /
Redemption Recycle
LogisticsReturns
Shipment
AF
TE
R M
AR
KE
T
Supply Network
Collaboration(execution)
Supply Network
Collaboration(returns)
Supply Network
Collaboration(launch)
Visibility & Analytics
System Assy. Partners
MaterialsPlanning
& IPC
Order Management
& Commit
Material Quotation &
Pricing
Logistics, Transport. & Warehouse
Mgmt
Service
Parts
Planning
ALIGN ON TARGET
April May JuneJan Feb Mar July Aug Sep
Stra
tegi
cTa
ctic
alO
pe
rati
on
al
Supply Chain Command Center
Forecast Netting, Split & Collaborative allocation
Global ATP Check & Order Commit
Supply Demand Analytics & Supply Chain Simulation, Inventory Optimization
3
5
7
Team Engaged
Already Started
Automatic Inter-Factory Forecast & Commit Process
2
6
Status:
Oct Nov Dec
Scope definition
Production Scheduling and Execution optimization
4
Automatic Supplier Forecast & Commit Process
1
This initiative will be a customer facing
sub-process for ATP & Order Commit
(5) initiative
LAUNCH PROJECTS
Define improvement roadmap and initiatives…
3 PRACTICAL TIPS
WHAT NEXT?
FOCUS ON VALUE
IQ
Understand Supply Chain ClockSpeed…
UNDERSTAND CYCLES
IQ
Career Insight #1
It’s Not What You Know. It Never Was.
•Relationships
•Execution
•Transformation
I asked executives on my LinkedIn Network in a poll on
What is the most important executive skill to focus on in these times.
180 responded to the survey and 45 followed up with detailed comments
Execution is the most important focus. Business Expertise is the least.
Full Survey: http://is.gd/qz0G
EQ IQXQ
SOBERING DATA
Science of influence & Strong Relationships
IT’S NOT MAGIC
EQ
Execution Excellence & Leadership Skills
LEARN FORM THE BEST
XQ
Career Insight #2
Status Quo is Shifting. Break New Ground.
•Entire Industries Redefined
•New Businesses Born
•New Jobs Emerging
Organization Structure
Understand the Future & Create the Future
LEAD TRANSFORMATION
Career Insight #3
Your Career Will Take Longer. Unless…
•Change / Rotation
•Mentorship
•Transformational Projects
ANY QUESTIONS?
Arpad Hevizi – Vice President IT Supply Chain Solutions
GLOBAL TRANSFORMATION EXPERIENCE:
Global Beverage Manufacturer – As strategic advisor helped the company to develop an effective IT operating model
to reduce cost and increase responsiveness of the ‘global shared application service organization’. Lead the ‘IT Value
Assessment’ effort that helped to develop a cost baseline for all key IT applications and identified areas of support cost
reduction. Applied SCM principles to increase the effectiveness of their global development and support operations.
Sony-Ericsson – As strategic advisor helped Sony Ericsson to develop a global commercial strategy to increase
market share in high-growth markets and enable profitable growth. Helped Sony Ericsson to develop tailored fulfillment
models and differentiated service offerings to high-growth and mature markets to optimize cost-to-serve and improve
profitability. Reduced fulfillment time in Indonesia from 20+ days to consistent 7 days and reduced channel inventory by
14 days.
Motorola – Engagement Manager and Business Architect of the $35M Global Supply Chain Transformation initiative.
Lead the global implementation of Collaborative Planning and Forecasting, Advanced Global Planning and Flexible
Fulfillment Execution Solutions. Helped the process reengineering effort at Fort-worth Customer Fulfillment Center to
enable rapid ramp-up of operations and to become the highest performing DC for the company within 12 months. Lead
the ‘Supply Chain Value Assessment’ effort that helped to develop operational baseline for the companies newly
established Supply Chain Service operation.
Global Wireless Manufacturer –Business Architect and Program Manager of the Global Supply Chain Transformation
initiative. Lead the global implementation of Collaborative Planning and Forecasting, Advanced Global Planning and
Flexible Fulfilment Execution Solutions that enabled the company to support 100% increase in shipping volume while
reducing operational spend.
Arpad brings a unique blend of IT executive leadership and strategic business
transformation and operations experience. He has spent the last 15 years helping
clients to maximize value from their global transformation initiatives. He led the
implementation of global Supply Chain and enterprise solutions, developed
strategies related to emerging market growth, mergers and acquisitions and
value added service operations.