greg aimi from amr research on ‘achieving a demand-driven supply chain: redesigning your supply...
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6/29/2010
Greg Aimi Supply Chain Research Director
Demand Driven Value Networks
Redesigning the Supply Chain for the 21st Century
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Gartner delivers the supply chain and
technology-related insight necessary to
help clients make the right decisions,
every day.
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Quick Overview of a Complex Topic
• Legacy of evolution – critical change agents
• The new approach – how DDVN is different
• Why change?
• A Framework for the model
• Top things to consider
• Challenges from the field
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Industrial Revolution
• Asset heavy
• Efficiency focus
• Make it, Sell it
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Major changes in the last 10-15 years
• Asset heavy
• Efficiency focus
• Make it, Sell it
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Customer Profile Changes
• Consumer buying patterns have changed, increasing
demand volatility
• More options and variants to choose from
• Web based research has become the norm
• Online buying will increase
• Green starting to have an impact
• Services become more important
• Emerging market trends create a shift in volume
• The channel model must change accordingly, improving
the overall experience
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Traditional SC operates in silos
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Demand Attract, Sell, Service
Supply Plan, Source,
Make, Deliver
Product Define, Design,
Promote, Supply,
Support
“I Think I Can Sell…”
“Here It Is, Sell It”
“Here’s a New
Product – Figure Out
How to Make It”
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Product
Demand Supply
Insights Capability
& Risk
Opportunities
Demand-driven Value Network (DDVN)
Sense Shape Profitable
Response
Innovation
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Why Does It Matter? Cause the Leaders:
Deliver 20% More
Perfect Orders…
68%
90%
Laggards
Leaders
…while holding a third less inventory…
Laggards
Leaders
72 Days
54 Days
…with lower SCM costs equal to 5% of revenue
26%
21%
Laggards
Leaders
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Demand Translation for balanced
Push/Pull Matching
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Product & Service Innovation
Seg
men
ted
Cu
sto
mers
, B
uyers
,
Users
, &
Co
nsu
mers
Pull
Channel
Demand
&
Demand
Management
User/
Consumer/
Demand
Insights
Su
pp
liers
& P
artn
ers
Push
Reliable,
Profitable
Response from
Supply Based on
Demand
Demand Visibility Supply Visibility
decoupling
Demand
Translation
Integrated Strategy,
Business & Planning
w/ Trade-offs
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Product
Demand Supply
Shape Profitable
Response Sense
The transformation to DDVN
New revenue streams
Segmentation
Multi-Channel Management
Demand Management
The Digital Customer
Mobility and connectivity
Premium service and aftermarket
Warranty/Recalls
Product Lifecycle – Design for Supply
Platform Management and Reuse
Voice of the Customer
Supplier Innovation
Remote diagnostics
Network design
Agile Manufacturing
Manufacturing Intelligence
Supplier Integration
Quality / Risk
Visibility
Materials Management
Compliance
Logistics Effectiveness
Cost Management / Efficiency
Demand Mgmt & Translation
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2009
1. Apple
2. Dell
3. Procter & Gamble
4. IBM
5. Cisco Systems
6. Nokia
7. Wal-Mart Stores
8. Samsung Electronics
9. PepsiCo
10. Toyota Motor
11. Schlumberger
12. Johnson & Johnson
13. The Coca-Cola Company
14. Nike
15. Tesco
16. Walt Disney
17. Hewlett-Packard
18. Texas Instruments
19. Lockheed Martin
20. Colgate Palmolive
21. Best Buy
22. Unilever
23. Publix Super Markets
24. SonyEricsson
25. Intel
• Outside-in focus
• Embedded innovation
• Extended supply chains
• Balanced excellence
• Attitude
• Metrics
• Supply chain talent
Supply chains that are…
• Predictable and reliable
• Flexible
…and have:
• Profitable demand response
• Sustainable growth
• Satisfied customers
Outcome
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The Future of Value Network Management
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Personalized interaction with customers across multiple channels
The power of the “digital customer”
Growth in expectations for green, mobile, connected solutions
Innovation to achieve a new price point for new markets
Service as a differentiator
Better alignment and visibility from customer through to supplier
Demand-driven planning and translation of demand (pull vs push)
Standardized business processes to improve costs, quality and agility
Supply chain velocity improve in core products and parts
Redesigned sourcing and logistics networks – integrating LSPs
Value talent and supply chain as enabler and differentiator
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Getting out of Neutral – Why is it so hard?
Barriers to Value Chain Excellence
Lack of goal clarity
Little alignment to business strategy
Poor connection of planning to execution
Misaligned metrics and reward systems
Confusion over what is a good decision
Not all constituents participate / buy-in
Reactive, do not value demand management
60% Change Management
30% Process
10% Technology
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Demand Driven Value Networks Redesigning the Supply Chain for the 21st Century
© 2009 Gartner, Inc. and/or its affiliates. All rights reserved.
Gartner is a registered trademark of Gartner, Inc. or its affiliates.
Greg Aimi
Director of Supply Chain Research
125 Summer Street
Boston, MA 02110
USA
617 542 6600