12th ECR Asia Pacific ConferenceValue Chain Stratagem – Going beyond traditional boundaries
Vijaykumar Kusurkar
Senior Director, SCM Applications, Asia Pacific
© 2006 Oracle Corporation – Proprietary and Confidential
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
� Set priorities based on VALUE
creation
• Focus: strategic cost management
AND value creation
� Leveraged TECHNOLOGY
• Invested in systems to gain &
manage insight on value drivers
� Collaborated with customers to
develop NEW products
• Developed new products, services
uniquely suited to downturn
� SHAPED demand through pricing for
profitability
• Shaped demand to gain market
share and profits
Note: Winners outperformed others in industry 6 years following 1990-91 recession. Losers are those that underperformed others in the industry. -- Source: Accenture
Lessons Learned From The Last DownturnWhat Winners in Last Recession Did Right
Business Environment & Supply Chain Management
A Time of Change and Innovation.
Changing Information Needs
• Retailers’ information advantage
• Consumer buying behaviors and interactions
• Global expansion and emerging markets
• Synchronization across value chain participants
• Need for agile IT response
Pressures Shaping
Consumer Products IT
Paradigm Shift in Information Flow
Future StateFuture State
Product
Management
Transaction
Processing
Marketing Planning/
Analytics
Human
Resources
Finance
Innovation
SuppliersDistributors
RetailersConsumers
Information
Platform
Current StateCurrent State
Product
Management
Planning
Marketing Information
Analytics
Human
Resources
Finance
Innovation
Transactional
Processing
Platform
SuppliersDistributors
Retailers
Consumers
- Customer Self Service
- Network Centric Product Innovation
- Collaborative Supply Execution
- Employee Self Service
- EDI / VMI
- Sales & Operations Planning
- Demand Sensing & Shaping
- Forecasting
- Order Entry
- Basic Accounting
- Distributed Order Management
- AP
- AR - E-Commerce
- Account Management (SFA) - Channel Management
- Employee Tracking
- Supplier Development
- New Product Development & Launch
- Personalized Customer Service
From Automation To Differentiation
Automation
Based,
Transactional
Knowledge
Based,
Collaborative
Internal External,
Universal
Process Complexity
Process Reach
- Customer Self Service
- Network Centric Product Innovation
- Collaborative Supply Execution
- Employee Self Service
- EDI / VMI
- Sales & Operations Planning
- Demand Sensing & Shaping
- Forecasting
- Order Entry
- Basic Accounting
- Distributed Order Management
- AP
- AR - E-Commerce
- Account Management (SFA) - Channel Management
- Employee Tracking
- Supplier Development
- New Product Development & Launch
- Personalized Customer Service
Commodity Business Processes
(80% of IT Budget)
From Automation To Differentiation
Automation
Based,
Transactional
Knowledge
Based,
Collaborative
Internal External,
Universal
Differentiated Business Processes
(20% of IT Budget)
Process Complexity
Process Reach
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
“We are experiencing significant swings in demand--complicating demand and supply planning and visibility across the value chain”
TODAY’S REALITYDemand Volatility and Uncertainty
TODAY’S REALITY
“We are always very
slow to react to
change, instead of
being able to
anticipate and
respond quickly.”
Supply Chain Complexity
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
“How can I innovate faster than my
competition with my products and supply
chains getting more and more complex?”
TODAY’S REALITYAccelerating Cost-effective Innovation
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
TODAY’S REALITYAlignment between Demand, Supply, Product
“We constantly struggle with multiple disparate,
departmental data sources and a lack of a holistic
planning process. This is negatively affecting our
competiveness and profitability.”
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
Today’s Value Chains need new Planning ApproachesPlanning strategies that you should focus on today
LACK OF RESPONSIVENESS
TO SUDDEN PROBLEMS
LACK OF RESPONSIVENESS
TO SUDDEN PROBLEMS
BUSINESS INSIGHT and
CONTINUOUS IMPROVEMENT
BUSINESS INSIGHT and
CONTINUOUS IMPROVEMENT
SUPPLY CHAIN
COMPLEXITY and RISK
SUPPLY CHAIN
COMPLEXITY and RISK
IMPROVE AGILITY and QUICKLY
RESPOND TO EVENTS
IMPROVE AGILITY and QUICKLY
RESPOND TO EVENTS
CONTINOUSLY MONITOR
VALUE CHAIN PERFORMANCE
CONTINOUSLY MONITOR
VALUE CHAIN PERFORMANCE
DEVELOP RISK MITIGATION
and POSTPONEMENT STRATEGIES
DEVELOP RISK MITIGATION
and POSTPONEMENT STRATEGIES
DEMAND VOLATILITY
and UNCERTAINTY
DEMAND VOLATILITY
and UNCERTAINTY
SENSE DEMAND MORE QUICKLY
and SHAPE FOR REV GROWTH
SENSE DEMAND MORE QUICKLY
and SHAPE FOR REV GROWTH
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
Value Chain PlanningModular – Craw, walk, run: start with your most important problem first
Demand
Signal
Management
TradeManagement
Demand
Management
Sales and
Operations
Planning
RiskManagement
and Network
Design
Inventory
Postponement
Supply and
Distribution
Planning
Collaboration
and VMI
Production
Scheduling
Global Order
Promising
Service
Parts
Planning
Planning
Analytics
FORECAST TO PLAN
RDBMS COLL SOA SECURITYMIDDLEWARE
MIOBIEEOBIEE WFL
Common
Planning
Server
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
Value Chain PlanningComplete – Best in class products support best in class processes
SALES AND OPERATIONS PLANNING
STRATEGIC PLANNING and RISK MGMT
COMPREHENSIVE TRADE MANAGEMENT
INTEGRATED PLANNING and EXECUTION
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
Value Chain PlanningIntegrated with Oracle – Open to non-Oracle systems
AIA
AIAAIA
Legacy
Systems
AIA
AIA
AIA
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
17
Oracle Value Chain Planning
Enables leading edge and transformational business processes …
� Predict
� Shape
� Align
Monitor and Manage
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
18
Predict market requirements and manage risk
• Sense demand closer to the point of consumption with real-time visibility to demand events
• Improve forecast accuracy
through advanced analytics and consensus forecasting
• Predict impact of supply chain risk to your network
• Account for variability in your
inventory positioning and postponement strategy
Demand SignalManagement
DemandManagement
RiskManagement
Translate real-time demand visibility to profitable market strategies
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
19
Sense demand closer to point of consumption
• More timely data to better sense, shape and respond to demand
• Reduced manual effort and cost
• Consistent data more easily leveraged across teams and applications
• POS sales
• Price
• Store inventory
• Promotional plans
• Store replen. rules
• Store forecasts
Retail Store Data DEMAND SIGNAL REPOSITORY
• Data sources centrally cleansed, harmonized and aggregated
• Pre-built dashboards and reports
• Powerful BI capabilities
• “Sense & Respond” event mgmtC
AP
TU
RE
MA
NA
GE
AN
AL
YZ
E
RE
SP
ON
D
INT
EG
RA
TE
Retail DC/ Distributor Data
• DC shipments
• DC inventory
• DC replen. rules
OtherExternal Data
• Retail loyalty
• IRI/AC Nielsen
• 3rd party demographic
• Causal (weather,etc.)
• RFID/EPC
• IMS, NDC, EDI (867, 852), Scripts, Pedigree
• Unstructured text
SO
A-B
as
ed
In
teg
rati
on
SALES & OPERATIONS PLANNING
SUPPLY & DISTRIBUTION PLANNING
PRODUCT LIFECYCLE MANAGEMENT
TRADE PROMOTION PLANNING & OPT
Non-Oracle Applications
DEMANTRA DEMAND MANAGEMENTDEMANTRA SALES & OPERATIONS PLN
ORACLE SUPPLY & DISTRIBUTION PLN
ORACLE PRODUCT LIFECYCLE MGT
DEMANTRA TRADE PLANNINGPre-Built Integration
ORACLE RETAIL
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
20
Drive to consensus demand more effectively
• Move from a regimented periodic to a continuous demand planning process
– Continuous collaboration across sales, marketing, finance, supply
chain and customers
– Each participant gets tailored view – configurable work sheets
– Comprehensive audit trail of changes
– Consensus based on inputs and weightings from groups
• Leverage advanced analytics to more accurately predict demand
– High precision statistical forecasting, no statistical background
required – Superior Bayesian-Markov analytics
– Use any combination of quantitative or qualitative data to establish your base line forecast
– Forecast based on attributes and characteristics
• Get quickly to an improved and realistic consensus number
– Collaborate with internal and external constituents
– Use multi-dimensional analysis to adjust, allocate, and rollup
– Workflow driven forecasting exceptions ensures responsiveness
Improve forecast accuracy through advanced analytics and collaboration
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
21
Oracle Value Chain Planning
Enables leading edge and transformational business processes …
� Predict
� Shape
� Align
Monitor and Manage
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
22
Balance demand and supply fluctuations
Shape demand for profitability
• Shape demand via promotions planning
• Manage new product introductions and marketing to maximize revenue
• Maximize sales and improve execution by balancing demand and supply in a continuous S&OP process
Trade Promotion
Management
Supply and Distribution
Planning
S&OP
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
23
Shape with integrated promotion planning
• Synchronizes sales, marketing, and supply
chain – Develop integrated strategies to adjust demand to
available supply
– Implement profitable sales and marketing strategies that
are feasible for supply chain to execute and check
availability of material and capacity to satisfy promotion
demand
– Leverage excess capacity to influence demand
• Predict the impact of marketing programs– Decompose lift to understand halo effects,
cannibalization, and consumer stock piling
• Simulate volume and profitability of future
promotions– Optimize promotional events based on goals and
constraints - profit, revenue, units, budget, timing, margin
– Perform what-if analysis to understand the impact of
varying promotional tactics
Understand the financial and operational impacts of sales incentives
Demantra Predictive Trade Planning and Optimization
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
24
Oracle Value Chain Planning
Enables leading edge and transformational business processes …
� Predict
� Shape
� Align
Monitor and Manage
Copyright © 2010, Oracle and/or its affiliates. All rights reserved.
25
Align operational plans with corporate goalsExecute to plan
MAKE BUYDISTRIBUTE SERVICE
Collaborate
Plan and Monitor – Tactical and Operational Plans
OperationPlan and Monitor – Sales and s Plan
• Plan your extended value chain with holistic supply and distribution planning
• Improve demand fulfillment through real-time order promising
• Improve production throughput through plant-level scheduling and monitoring
• Improve supply chain visibility and align trading partners via collaboration
• Transform your service operations to profit centers
METRIC PERFORMANCE
Best In ClassIndustry Average
Performance Summary:
• Best-in-class companies have greater focus on S&OP
• Key S&OP metrics tracked by companies on a regular basis are:
–Return on net assets
–Customer service levels
–Cash conversion cycle
–Gross margin
–Demand forecast accuracy
Note: Best-in-Class = top 20% of performers; Industry Average = middle 50%, and Laggards = bottom 30% of performers.Source: Aberdeen Research, Sales & Operations Planning: Aligning Business Goals with Supply Chain Tactics; June, 2008. Results based on survey responses from over 300 companies across four manufacturing industries: process, consumer, discrete, high tech /electronics.
81% 91% 97%50% 100%
Customer service levels (on-time and complete to the
customer’s request date)
120 60 15180 0
Average cash conversion
cycle (days)
The Best-In-Class Companies Outperform Other Players Through Higher Focus on S&OP
Laggards
60% 74% 86%50% 100%
Average forecast accuracy at the product family level
15%5%-5% 20%
Return on Net Assets
(RONA)-10%
KEY:
Gross Margin60%20% 55%40%30%
Today’s Integrated Planning Systems Email and Excel
Functional Operational PlanningFunctional Operational Planning
Demand
Management
Demand
Management
Customer
Management
Customer
Management
Human Resources Planning
Human Resources Planning
Supply
Planning
Supply
Planning
Product
Performance
Management
Product
Performance
Management
Logistics
Planning
Logistics
Planning
Financial PlanningFinancial Planning
Long-Term
Financial Planning
Long-Term
Financial Planning
Treasury
Management
Treasury
Management
Financial
Planning & Budgeting
Financial
Planning & Budgeting
WorkingCapital
Planning
WorkingCapital
Planning
Profitability
Management
Profitability
Management
Performance
Scorecards
Performance
Scorecards
Financials SCMHuman Resources CRM Manufacturing
FinanceSupplyProduct Demand
Better Approach
• Replace disconnected processes– Move off of standalone Excel
– Stop manual “integration” by email
• Minimally, start with traditional S&OP process implementation
– Demand and supply balancing
– Data integration
• Better: move to continuous, event-driven S&OP
– Manage by exception, proactive alerts
– Optimized what-if scenarios
– Forward looking analytics
– Unified platform: integrated data and process
Real time, continuous and collaborative Sales and Operations Planning process
Event-driven Sales and Operations Planning
FinanceSupplyProduct Demand
S&OP
Demand
SupplyTrade
Finance
Design
Risk
Start quickly – Progress at your own pace
Eliminatespreadsheets
Single consensus demand number
Pre-defined S&OP analysis worksheets
Demand and supply review
Financial review
Personal dashboards
Demand shaping
Demand and supply balancing
Workflow driven exceptions
Promotion planning
Financial planning
Network optimization and design
Promotion optimization
Risk Management
Inventory Optimization
Product life cycle management
Evolve to a best-practice Sales and Operations Planning process
Key takeaways
• It is time for change and just ERP based IT infrastructure that merely automates process is not enough
• Demand driven value chains that
– Sense and Predict Demand Closer to point of Consumption
– Shape Demand for Profitability
– Align Operational Plans and Corporate Goals
– Have built in forward-looking analytics so executives can quickly understand and make informed decisions
– Provide integrated system that enforces executive S&OP decisions at operational planning level