presentation at the terra technology conference march 27
DESCRIPTION
Presentation given by Lora Cecere at the Terra TechnologyConference on March 28, 2012TRANSCRIPT
Supply Chain Insights, LLC © 2012
Supply Chain InsightsDelivering Insights to Line of Business Leaders
BRICKSMatterThe Role of Supply Chains in Building Market-Driven Differentiation
LORA M. CECERE CHARLES W. CHASE JR.
BookPublishes in August
2012
Supply Chain Insights, LLC © 2012
Supply Chain
A supply chain is a complex system with complex processes with increasing complexity.
Supply Chain Insights, LLC © 2012
4
P&G Apple Dell Wal-Mart Toyota
38%
21%17%
4% 4%
SC Excellence
Who does it Best?
Supply Chain Insights, LLC © 2012
5
52%36%
20% 16% 8%
Tipping PointsWhat were the Tipping Points?
Supply Chain Insights, LLC © 2012
Inside-Out Inside-Out
Supply Chain Tipping Points
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
S&OP
Evolution of the PC
JIT
Theory ofConstraints
Supply Chain Organization
Re-Engineering the Organization
(Michael Hammer)
Internet/Email
eProcurement
Total QualityManagement
RFID
Vertical SiloExcellence
Efficient Order toCash Processes
+ Islands ofExcellence
ManufacturingExcellence
+
Supply Chain Excellence = Supply Chain Excellence =
Supply Chain Insights, LLC © 2012
Inside-Out Outside-In
Value-Based OutcomesDelivered by Horizontal Processes
+
Supply Chain Excellence = Supply Chain Excellence =
Supply Chain Tipping Points
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Y2K
Lean Six Sigma
.com
Demand Driven Concepts
Vertical SiloExcellence
Outsourcing Effectiveness
Social Responsibility
CSCO
Market-Driven Value Networks
Supply Chain Insights, LLC © 2012
An adaptive network focused on a value-based outcome that senses and translates market changes (buy and sell-side markets) bi-directionally with near-real time data latency to align sell, deliver, make and sourcing operations.
What is a Market-driven Value Network?
8
Supply Chain Insights, LLC © 2012
What is Supply Chain Excellence?
Supply Chain Insights, LLC © 2012
Revenue/Employee in Consumer Products
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100
100
200
300
400
500
600
700
P&G ColgateUnilever Kimberly Clark
Supply Chain Insights, LLC © 2012
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
EBIT/Employee
P&G Colgate Unilever
Ea
rnin
gs
Be
fore
In
tere
st
an
d T
ax
es
Supply Chain Insights, LLC © 2012
2002 2003 2004 2005 2006 2007 2008 2009 20100
20
40
60
80
100
120
140
Comparison of EBIT/Employee Plotted Against Days of Inventory for P&G/Unilever for the Pe-
riod of 2002-2010
P&G DOI P&G EBIT/EmployeeUnilever DOI Unilever EBIT/Employee
Supply Chain Insights, LLC © 2012
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201140%
45%
50%
55%
60%
65%
70%
Cost of Sales as a Percent of Revenue
Kellogg Kraft General MillsCampbell Hershey P & G
Co
st o
f S
ales
a P
erce
nta
ge
of
Rev
enu
e
Supply Chain Insights, LLC © 2012
Where are we Headed?
Supply Chain Insights, LLC © 2012
Supply Chain Insights, LLC © 2012
Supply Chains Don’t Play by the Rules
16
But, what if they
could?
Supply Chain Insights, LLC © 2012
Big Data Supply Chains are Evolving
17
Challenges:
• Transactional• Time phased data
Structured Data
• Social• Channel• Customer Service• Warranty
• Temperature• RFID• QR codes• GPS
• Mapping and GPS• Video• Voice• Digital Images
Unstructured Data
SensorData
NewDataTypes
Volume
Velocity
Variability
Supply Chain Insights, LLC © 2012
Evolution of Supply Chain Excellence
Align
ResilientReliable
Adapt
Efficient
Building Horizontal Connector
ContinuousTesting
LearningImproving
Orchestrate
Sense Demand
and Supply
Shape Demand andSupply based
on Market
DemandVolatility
Supply Volatility
Right Product
Right Place
Right Time
Right Cost
Cost
Procure to pay/order to
cash
Supply Chain Insights, LLC © 2012
S&OP Evolution
Manufacturing-Driven
Deliver a Feasible Plan for Operations
Sales Driven
Match Demandwith Supply
Business-planning Driven
Coordination of Plans
Demand Driven
Sense andShape Demand
Market Driven
Orchestrate Demand
Market to Market
Greater Benefit• Growth• Resilience• Efficiency
Supply Chain Insights, LLC © 2012
Connecting the Extended Supply Chain
20
Trading Partner 1 Trading Partner 2 Trading Partner 3
Transactional Applications
Transactional Applications
Transactional Applications
Store
Supply Chain Insights, LLC © 2012
Evolving Supply Chain Architectures
21
Collaborative Layer
Collaborative Layer
Collaborative Layer
Enterprise Data Warehouse
Enterprise Data Warehouse
Supplier Signal Repository
Demand Signal Repository
Predictive AnalyticsKey:
Transactional Adapters and Intelligent Rule Sets
Trading Partner 1 Trading Partner 2 Trading Partner 3
Transactional Applications
Transactional Applications
Transactional Applications
Enterprise Data Warehouse
Store
Supply Chain Insights, LLC © 2012
Historically, we have:
• Tried to get precise on inaccurate data
• Believed that the most efficient supply chain is the most effective supply chain
• Built efficient chains, but not effective networks
• Wrongly defined the “R”s
• Focused inside-out, not outside-in.
• Rewarded the urgent, not the important
• Responded without sensing.
22
Supply Chain Insights, LLC © 2012
23
Lora Cecere
Blog: www.supplychainshaman.com
Twitter: lcecere
Linkedin:
linkedin.com/pub/loracecere/0/196/573
Thank you!