managing the iron triangle

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5/25/22 September 2014, p.1 Supply Chain Insights Global Summit #ImagineSC Managing the Iron Triangle Philippe Lambotte Mattel

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The presentation given by Philippe Lambotte, Senior Vice President of Global Supply Chain Operations at Mattel, at the Supply Chain Insights Global Summit in Scottsdale, AZ on September 10, 2014 Managing the Iron Triangle The supply chain leader manages the intersection of customer service, cost and inventory. Philippe Lambotte terms this the Iron Triangle. Listen to Philippe as he discusses the performance of Kraft, Merck, and now Mattel on the Supply Chain Index and shares his insights.

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Page 1: Managing the Iron Triangle

9/11/2014 September 2014, p.1Supply Chain Insights Global Summit #ImagineSC

Managing the Iron Triangle

Philippe LambotteMattel

Page 2: Managing the Iron Triangle

9/11/2014 September 2014, p.2Supply Chain Insights Global Summit #ImagineSC

AgendaOur message Triangle Definition Consumer Goods example – Kraft Pharmaceuticals example - MerckFashion/Toy example – Mattel Putting it all together

Page 3: Managing the Iron Triangle

9/11/2014 September 2014, p.3Supply Chain Insights Global Summit #ImagineSC

Supply Chain excellence – it is all about customers

Page 4: Managing the Iron Triangle

9/11/2014 September 2014, p.4Supply Chain Insights Global Summit #ImagineSC

Iron Triangle

Cost Cash

Service

Revenue Leverage supply chain capabilities to drive margin and top line revenue

Optimize required investments in working capital

Ensure products get to store at lowest landed cost

On Time In Full

Page 5: Managing the Iron Triangle

9/11/2014 September 2014, p.5Supply Chain Insights Global Summit #ImagineSC

Example Consumer Goods industry

Service

• Short cycle time • High promotional ratio• Regional/local supply chain • Focus on shelf execution

2

-

50,000

100,000

150,000

200,000

250,000

Prod_All

POS WM

Cs_Shipmts WM

Cs_Shipmts All

210000187100 7.25Z MAC & CHS 35

3 week+ reaction time

Page 6: Managing the Iron Triangle

9/11/2014 September 2014, p.6Supply Chain Insights Global Summit #ImagineSC

Example Pharmaceutical industry

Revenue

• Patent cycle/peak and cliff • High compliance management• High and complex technologies• 6 months - 3 year long supply

chains

73.0

30.0

Finished GoodsInventory coverage

Days

Drugs Food

-58%

97.5 98.0

Drugs Food

Service level %

Source: Industry Census of Manufacturers, 2001

Page 7: Managing the Iron Triangle

9/11/2014 September 2014, p.7Supply Chain Insights Global Summit #ImagineSC

Example Fashion/Toy industry

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0

500

1000

1500

2000

2500

Manufacturing production phasing

Inventory

• Huge Seasonality (Big 6)• Placing bets • Immediate write off after season • 1-3 month long supply chains

Page 8: Managing the Iron Triangle

9/11/2014 September 2014, p.8Supply Chain Insights Global Summit #ImagineSC

Putting it all together

Need to understand which corner of the iron triangle is most critical for your business

Educate your organization to understand trade offs and be deliberate about them

Keep two corners stable while driving the third one

Don’t wait for crisis to happen