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Value Chain Planning OverviewEnables leading edge and transformational business processes
Larry DuSales, Value Chain Planning, China
August 2010
2
The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.
Safe Harbor Statement
Realities of the New Business Environment
New Business EnvironmentNew Business Environment
Continued focus on cost containment and productivity
Lean supply chains with lower inventories
Increasing levels of supply chain and enterprise risk
Heavy scrutiny on corporate performance and compliance
Controlled capital expenditures
Sustainability emerges as a key strategic priority
Continued focus on emerging markets and globalization
Change in Inventories2004-2009
Industrial Production Index2004-2009
ChallengesChallengesChallengesChallenges
Demand uncertainty and volatility
Lack of responsiveness and inflexibility in supply network
Misalignment of financial and operational plans in continuously changing business conditions
StrategiesStrategiesStrategiesStrategies
Lack of proactive insight into the impact of your decisions
• Sense demand in real-time and shape for revenue growth
• Improve agility and react quickly to supply chain events
• Profitably align demand and supply to corporate goals
• Continuously monitor enterprise and supply chain performance
Manage for Recovery Strategies that you should focus on today!
How
Delivers
6
Oracle Value Chain Planning SolutionComplete ● Open ● Integrated ● Modular
Demand SignalRepository
DemandManagement and
AdvancedForecasting
CollaborativePlanning
ProductionScheduling
Global OrderPromising
Service Parts
Planning
Trade PromotionPlanning andOptimization
Advanced SupplyChain Planning
StrategicNetwork
Optimization
RT Sales and OperationsPlanning
Adv. PlanningCommand
Center
• Single source of truth• Integrated with ERP
Deductions andSettlement
ManagementRapid Planning
AIA
AIAAIA
LegacySystems
Integrated with other Key Solution Assets
AIA
AIA
AIA
8
Oracle Value Chain Planning Solution
Sense demand in real-time and shape for revenue growth– Sense demand closer to the point of consumption with real-time visibility to demand events – Improve forecast accuracy through advanced analytics and improved consensus forecasting – Shape demand via integrated promotions planning– Manage new product introductions and marketing to shape demand and maximize revenue
Profitably align supply and demand to corporate goals– Maximize sales and improve execution by balancing supply and demand in a continuous S&OP process– Connect financial and operational planning via integrated business planning– Quickly simulate alternate business scenarios– Involve all key decision makers into an integrated iterative process
Improve agility and react quickly to supply chain events– Design your supply chain for agility – Plan your extended value chain with holistic supply planning and scheduling– Quickly respond to supply chain events with event-driven planning
Continuously monitor enterprise and supply chain performance
Complete ● Open ● Integrated ● Modular
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Achieve benefits incrementallyCrawl, walk, run approach – Focus on the most important problem first !
• Start with a base and plug-in new components incrementally• Reconfigure without reimplementation
PRODUCT BUSINESS AREA FULL SOLUTION
Value Chain Planning
Demand Management
Supply PlanningSales and Operations Planning
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Many customers across all industries
DiscreteManufacturing
ProcessManufacturing
Consumer Goods /
Distribution
High Tech
Look at the below logo, Subaru
S&OP – Gartner 2008
“Oracle offers a robust S&OP application with Advanced Supply Chain Management and
Demantra Demand Management” - AMR, 2008
“Oracle offers a robust S&OP application with Advanced Supply Chain Management and
Demantra Demand Management” - AMR, 2008
“Oracle’s breakthrough with Demand Signal Repository could change the way consumer goods manufacturers leverage a wide variety
of available data sources.” - AMR, 2008
“Oracle’s breakthrough with Demand Signal Repository could change the way consumer goods manufacturers leverage a wide variety
of available data sources.” - AMR, 2008
Supply Planning – Gartner 2009
IDC - Inventory Optimization 2009
Value Chain Planning – Analyst Feedback
Oracle Value Chain Planning
Reduce planning cycle time and make faster decisions continuously
Sense demand in real-time and shape for revenue growth
Profitably align supply and demand to corporate goals
Improve agility and quickly react to supply chain events
Continuously monitor enterprise and supply chain performance
Sense demand in real-time
• Leverage demand insights to drive growth– Sense demand closer to the point of consumption with real-time
visibility to demand events – Analyze the effectiveness of promotions at retailers and distributors– Reduce time and effort to collect external market data
• Improve forecast accuracy through advanced analytics and consensus forecasting
– Move from a regimented periodic to a continuous demand planning process that involves all key constituents
– Leverage advanced analytics to more accurately predict demand– Use any combination of quantitative or qualitative data to establish
your base line forecast– Generate granular forecasts based on attributes and characteristics– Use multi-dimensional analysis to adjust, allocate, and rollup
Leverage demand insights to improve consensus demand
From an isolated process to a full Demantra solution within six weeks of going live our ‘A-items’ improved 45% in accuracy.
– Sagi Srinivas, Director, Supply Chain Systems, BiosenseWebster
Shape with integrated promotion planning
• Shape demand via promotions planning
– Understand the true impact of promotions and marketing instruments
– Simulate volume and profitability of future promotions and optimize promotional events
– Perform what-if analysis to understand the impact of varying promotional tactics
– Implement profitable sales and marketing strategies that are feasible to execute
• Manage new product introductions to maximize revenue
– Evaluate cannibalization of existing products on revenue and inventory goals
– Determine optimal timing of product launches and align them to financial goals
– Determine price breaks and promotions that can be leveraged for sell-off or ramp-up
Understand the financial and operational impacts of sales incentives
Oracle Value Chain Planning
Reduce planning cycle time and make faster decisions continuously
Sense demand in real-time and shape for revenue growth
Profitably align supply and demand to corporate goals
Improve agility and react quickly to supply chain events
Continuously monitor enterprise and supply chain performance
• Move from a periodic reactive to a real time, iterative, and proactive process
• Reduce decision-making time by aligning financial and operational plans
• Engage management with executive dashboards that drill to root cause
• Drive tactical decisions into operational planning and execution, and monitor performance
• Start quickly with best practice templates and easily adapt to your business – evolve at your own pace
Profitably align supply and demand
* Planned for future
Maximize sales and improve operations via a continuous S&OP process
ContinuousS&OP
Demand sensingand shaping
Supplyplanning
TradeManagement
FinancialPlanning
Product Planning
RiskManagement
Engineering
FinanceSupplyProduct Demand
Interactive, extended S&OP process
Traditional S&OP process
Sales
Operations
Strategy
Finance
Marketing
Expected Business Benefits:•Improve S&OP planning cycle time•Reduction of inventory•Improve forecast accuracy and customer service levels•Adoption of a low cost producer strategy•Become a truly global business
The implementation of a global demand solution will:•Provide global visibility to demand - one demand source model for the business •Improve and provide measurements for global forecast accuracy •Enable management by exception •Provide a global collaborative forecast environment •Become an enabler for more accurate and rapid planning cycles •Develop and provide accurate component level demand forecasts to our internal and external suppliers •Be able to synchronize operational, tactical, and executional planning
CHALLENGES/OPPORTUNITIES• Lack of global demand visibility • Current S&OP was very manual with multi versions of
excel spreadsheets and access databases. • No closed loop process • Data never in sync
SOLUTIONS (a win in Q4, FY10)1.DP (Demand Planning)2.ASCP (Advance Supply Chain Planning)
COMPANY OVERVIEW Cummins Power Generation's strength comes from
being a division of Cummins Inc. - the world's largest manufacturer of diesel engines over 200 hp, with annual sales of $6.3 billion. Cummins Power Generation has unique expertise in that all aspects of generating set design, manufacture and service have been brought together in one company. All the major components - the engine, alternator and control systems -- are manufactured by divisions of Cummins.
Cummis Power Generation
18
Emerson
CUSTOMER PERSPECTIVE
“Demantra is one of the most solid products I have seen. I give (Demantra) an A+ for the stability of the application for our business”
- Deb Bene – Business Solutions Manager
COMPANY OVERVIEWDiversified global manufacturing and technology company
serving industrial, commercial, and consumer markets around the world.
Industry: DiversifiedEmployees: 140,000Revenue: US$ 24.8 Billion
CHALLENGES/OPPORTUNITIESGlobal Planning and VisibilityMulti-tiered collaborative planning (inter-company
planning)S&OP Processes Visualization of Key Performance IndicatorsDemand Planning
Top-Down / Bottom-up Mix Analysis Automated Mix planning and ForecastingManage planning process by exception
Roll out to 10,000 user community
SOLUTIONSOracle Demantra Demand ManagementOracle Demantra Real Time Sales and Operation PlanningOracle Advanced Supply Chain PlanningGlobal Order PromisingOracle Collaborative PlanningHyperion Planning Oracle Configurator
RESULTS
Reduced global Inventory using ASCPConfigure to order forecasting of more
than 16 billion combinationsImproved return on assetsImproved customer loyalty Achieved global demand management Deployed effective sales and operations
planningIntegrated S&OP and Financial Planning
Emerson
Connect Finance and OperationsChallenge: misalignment between financial and operational plans
Financial Planning – Financial plans do not reflect
operational realities– Revenue forecast is unreliable as it
not adjusted to reflect operating forecast
– Strategic financial plans lack bottom up validation
– Financial planning uses discrete periods and looks backwards
Sales and Operations Planning – Operating plan not directly aligned to
financial targets– Impact of demand and supply changes
not visible to finance– Operating plan has little top-down
validation and decisions made without considering financial impact
– Operating plan is continuous and forward looking
Connect Finance and OperationsSolution: Integrated business planning via Hyperion integration
• Replace manual, intermittent, and disconnected process with a continuous, interactive, holistic Integrated Business Planning process
• Inject operational reality into Financial Plans and ensure financial viewpoint is embedded in the Operational planning process; top-down $’s to bottom-up units synchronization
• What-if simulation to examine alternative scenarios and evaluate financial impact of decisions
• Out-of-the-box AIA-based integration
SupplyChain Planning
Inventory Optimization
Demand Management
Performance Management
Strategic Network Optimization
Sales and Operations Planning Financials
TargetsSales
Forecast
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Simulate alternative business scenarios
Advanced Planning Command Center • Compare alternative business scenarios
– Planners execute scenarios
– Automatically translate detailed planning information to corporate metrics
– Track assumptions and attach supporting documents
• Approve and drive into execution
– Choose your baseline plan
– Drive tactical and execution decisions
• Monitor– Continuously monitor
performance and get real-time visibility to deviations
Demantra DM ASCP / SNO IO
Business scenarios
Assignedactivities
Planners execute assigned activities
Suggested alternatives
for evaluation
Oracle Value Chain Planning
Reduce planning cycle time and make faster decisions continuously
Sense demand in real-time and shape for revenue growth
Profitably align supply and demand to corporate goals
Improve agility and react quickly to supply chain events
Continuously monitor enterprise and supply chain performance
Improve agility and responsivenessEnable successive and continuous refinement
Tactical Supply
Plan
Network design and inventory strategy
Network design and inventory strategy
Tactical supply planningTactical supply planning
Event-driven simulationEvent-driven simulation
BusinessScenario Simulation(strategic, tactical,
operational)Supply networkSourcing and
Postponementstrategy
Supply networkSourcing and
Postponementstrategy
• Respond to changing markets and product mix changes
• Adjust supply network while preserving future growth
• Develop supply chain risk mitigation strategies
• Plan your extended value chain with holistic supply and distribution planning
• Improve demand fulfillment through constrained order promising
• Improve production throughput with plant level scheduling and monitoring
• Improve supply chain visibility through collaboration with trading partners
• React quickly to supply chain events• Empower planners with rapid what-if
scenario simulation• Leverage embedded analytics in UI
for insightful analysis while making rapid decisions
• Translate decisions in actions
• Project to rationalize distribution centers during merger of Pet Foods and Pillsbury Foods
• Reduced warehouses from 23 to 9• Held service levels constant despite reduction in
facilities• Significantly reduced transportation costs
• Determines allocation to produce most profitable product mix within existing constraints
• Performs all planning at the family level• S&OP composite picture in real time during review sessions• Reduced planning cycle time – Eliminated spreadsheets • Integrated sales and operations planning process resulting in
one consensus forecast number
Live on SNO, IO, ASCP
Customers
• Deployed for one product family (700 products, 5000 items) since May 2006
• Multi-echelon supply chain network (14 levels deep)• Improved forward visibility and understanding of
impact of inventory on service level • Part of S&OP process: quantitative understanding of
inventory investment to achieve sales upside• 20-30% improvement in service level for the same
inventory investment
• Daily holistic plan across projects and across businesses: 8 manufacturing plants, 6 distribution and 10 consignment warehouses
• Connected businesses processes and automated exceptions• Constrained order promising• Reduced inventory levels by $20M per year• Reduced delivery cycle by 10% for new equipment orders• Improved fulfillment rate for service parts• Reduced planning cycle time to daily
Live on Strategic Network Optimization
Large Automobile Manufacturer, Germany
Company• Leading automotive manufacturer with annual revenues over $52 Billion• Manufacturer of automobile and motorcycle products
Planning problem solved• Assess risk of currency fluctuations on manufacturing allocation
Unique aspects of implementation• Time varying currency forecasts for USD and Euro• Complex coordination between engine and auto platform manufacturing• Product launch sourcing decisions based on capacities, costs, currency, regional demand and
regional priority
Increased new product profitability due to optimal manufacturing sourcing
Improved risk management by considering multi-currency impacts
Oracle Value Chain Planning
Reduce planning cycle time and make faster decisions continuously
Sense demand in real-time and shape for revenue growth
Profitably align supply and demand to corporate goals
Improve agility and react quickly to supply chain events
Continuously monitor enterprise and supply chain performance
Monitor profitability and performance
Compare alternatescenarios
Analyze keyPlanning metrics
Analyze profitand loss
Analyze constrained forecast
Drill down torelevant details
Advanced Planning Command Center – 360 degree visibility
Suddendemand spike
Resourceoverloaded
Increase inlate shipments
Supply shortage
Enable closed-loop processesPlan->Execute->Measure->Improve
30
Roadmap
Value Chain Planning – Roadmap
FY2009
VCP 12.1.1• Adv Planning Command Center 11i.10 integration• DSR enhancements
VCP 12.1.1• Adv Planning Command Center 11i.10 integration• DSR enhancements
FY2010
JDE-VCP integration PIPJDE-VCP integration PIP
VCP 12.1.2• PS and SNO enhancements• APCC standalone• Service Parts Planning enhancements• ASCP enhancements• IO intermittent demand support
VCP 12.1.2• PS and SNO enhancements• APCC standalone• Service Parts Planning enhancements• ASCP enhancements• IO intermittent demand support
VCP 12.1.3• Rapid Planning 1,1• Advanced Planning Command Center 2.0 (Risk, SPP, Web 2.0, S&OP, SCA, PTP)• Service Parts Planning replenishment enhancements• Demand Signal Repository 2.0• Production Scheduling support for CMRO
VCP 12.1.3• Rapid Planning 1,1• Advanced Planning Command Center 2.0 (Risk, SPP, Web 2.0, S&OP, SCA, PTP)• Service Parts Planning replenishment enhancements• Demand Signal Repository 2.0• Production Scheduling support for CMROPSFT-Demantra Integration PIP PSFT-Demantra Integration PIP
Rapid Planning 1.0Rapid Planning 1.0
Demantra 7.3• Integrated Business Planning through Demantra S&OP – Hyperion integration• Internationalization support for Demantra • Demand Management capabilities for CTO, NPI forecasting, and attribute forecasting • Performance and usability improvements
Demantra 7.3• Integrated Business Planning through Demantra S&OP – Hyperion integration• Internationalization support for Demantra • Demand Management capabilities for CTO, NPI forecasting, and attribute forecasting • Performance and usability improvements
Demantra 7.3.1• S&OP Rapid Planning integration• S&OP modeling enhancements• Comprehensive Trade Management enhancements • Exception management enhancements• Performance improvements
Demantra 7.3.1• S&OP Rapid Planning integration• S&OP modeling enhancements• Comprehensive Trade Management enhancements • Exception management enhancements• Performance improvements
Summary
• Complete - Best-in-class solution to solve all your key planning problems– Sense demand in real-time and shape for revenue growth
– Profitably align supply and demand to corporate goals
– Improve agility and quickly react to supply chain events
– Continuously monitor enterprise and supply chain performance
• Open - Architecture that blends in with your existing systems
• Integrated - Provides lower cost of ownership and quick deployment– Pre-built integration with Oracle EBS, JDE EnterpriseOne, Peoplesoft*
• Modular - Enables gradual deployment– Focus on most important problem first – Common platform foundation
– Expand gradually to full solution without redoing setup and configuration
Key Takeaways
* Future
Our View Of Best Practice Integrated Supply Chain Framework
Suppliers
Customers
Strategic Planning (Yearly / Quarterly)
Tactical Planning (Monthly / Weekly)
Operational (Daily / Transaction)
Demand Planning
Sales & Ops Planning
Market Strategy
Inventory Strategy
Product Strategy
Transport Planning & Execution
Collaborate
Procurement Strategy
Production Strategy
Financial Plans
Purchase Planning
Capacity Planning
Inventory Planning
Supply Planning
Collaborate
Order, Purchase, Production, Inventory, Financials
Customer Relationships Management
Warehouse Management
Production Execution
Collaborate Collaborate