tenthpin april 2020 webinar - how scm ensures business ... · science §our ambition is to be the...

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Tenthpin Management Consultants

Webinar: “How SCM ensures Business Continuity during and after Corona Crisis”


§ Global Lead Partner for SCM at Tenthpin Management Consultants

§ 20 years of management consulting experience

§ Industry expertise: Life Sciences, Consumer Goods, and Chemicals

§ Expert in Supply Chain Management (from strategy to implementation)

§ Seasoned speaker at various Supply Chain conferences

§ Professor for Logistics and SCM at H-BRS in Bonn, Germany

§ Research and consulting areas: Supply Chain Finance, Supply Chain Simulation

§ Background § Master in Business Administration§ Ph.D. in Supply Chain Finance§ Management consultant in SCM,

planning and simulation

Speakers

SCM webinar: “How SCM ensures Business Continuity during and after Corona Crisis”

Patrick Wolf Frank Vorrath Prof. Dr. Robert Grüter

§ Executive Supply Chain Partner and Vice President Service Delivery EMEA & APAC at Gartner

§ Former Vice President Global Supply Chain Johnson Controls

§ APICS Corporate Excellence Award for the Johnson Controls Supply Chain Excellence Operating System in 2017

§ In 2016, Frank was rated by the Supply Chain Movement Magazine under the top 38 Supply Chain Professionals in Germany


Tenthpin is a global management consulting firm, with deep expertise in the Life Sciences Industry sectors

Tenthpin - Global Footprint & Mission

Key facts & figures§ Founded in 2017§ HQ in Basel, Switzerland§ Management owned

Tenthpin Europe• Basel (CH)• Frankfurt (DE)• Lisbon (PT)• London (UK)

Tenthpin Asia• Hongkong• Shanghai• Singapore

Tenthpin US• Atlanta• Boston• Indianapolis• Houston• San Francisco

Making the Difference in Life Science§ Our ambition is to be the

leading business and technology consultancy that understands the unique challenges within the different industry segments in Life Sciences.

§ We provide independent advice and services to our clients.

§ We combine our industry and process knowledge with the latest technology drivers making the difference in any transformational change.


We provide independent advice and services to our Clients. We combine our industry and process knowledge with the latest technology drivers making the difference in any transformational change

Tenthpin - Services Portfolio

Technology Consulting

ERP Transformation

Transformation Management

Mergers, Acquisitions &

Divestitures

Innovation Management

Business Consulting

• Process & IT Due Diligence• Transaction Planning &

TSA Management• Post Merger Integration• Divestiture Management • Business Benefits Realization

• SAP ECC, S/4HANA• S/4HANA CLOUD• SAP Leonardo, SAP Fiori• SAP Analytics, BI• Testing and Data Services

• Program & Project Management• Change Management &

Communication• Quality Assurance• Team Effectiveness & Collaboration• Knowledge Management

• Operating model design• Process efficiency• Business Analytics • Data Management• Compliance and Regulatory

• Solution Development & Implementation

• Technology Architecture Services• Internet of Medical Things (IoMT)

Solutioning• Process Automation & Machine

Learning

• Digital Disruption• Digital Networking &

Co-Innovation• Digital Architecture• Digital Scale


1. Introduction of speakers and agenda

2. Overview on impact of COVID-19 on Life Sciences industry

3. The role of Supply Chain Resilience to domesticate the Black Swan

4. How SCM ensures Business Continuity – during and post-COVID-19

5. How to stress test your SC capabilities

6. Q&A

§ 5min

§ 15min§ 5min

§ 15min

§ 15min§ 5min

§ Patrick Wolf (Tenthpin)

§ Frank Vorrath (Gartner)§ Patrick Wolf (Tenthpin)


§ Prof. Dr. Robert Grüter§ Patrick Wolf (Tenthpin)

Agenda


Item Presenter / Facilitator Duration







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© 2020 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This presentation, including all supporting materials, is proprietary to Gartner, Inc. and/or its affiliates and is for the sole internal use of the intended recipients. Because this presentation may contain information that is confidential, proprietary or otherwise legally protected, it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.

COVID – 19Supply Chain ResponseLeading within the New Realities

Frank Vorrath, VP Service Delivery Team EMEA & APACGartner Supply Chain April 28, 2020

RESTRICTED DISTRIBUTION8 © 2020 Gartner, Inc. and/or its affiliates. All rights reserved.

By the members, for the membersEnterprise Supply Chain Leaders

COVID-19from Risk to

Recovery

Working within the New Realities

Leading within the New Realities

We Are In A COMPLETE Different World

Gartner COVID -19 Supply Chain Response from Risk to Recovery



Enterprise Supply Chain Leaders

Financial

Governance and Communication

Multi-Tier Sourcing Manufacturing Logistics

People

Demand Supply

CustomersMacro-economic

Supply Chains from Demand driven to constrained Supply driven

Leading within the new Realities


Will your revenue be positively or negatively impacted by COVID-19?Industry Negatively Unchanged Positively

Banking, Financial, and Insurance

96% 0% 4%

Retail and Wholesale 91% 0% 9%

Services 88% 6% 6%

Manufacturing 82% 8% 9%

Healthcare 76% 16% 8%

Technology and Telecom

75% 7% 8%

All Respondents 85% 8% 8%

Selected Industry Sample Sizes: Manufacturing n = 33, Healthcare n = 25, Banking, Financial, and Insurance n = 25, Services n = 16, Technology and Telecom n = 12, Retail and Wholesale n = 11All Respondents: n = 147








46 % of companies CFO‘s expecting a contraction in the range from 10-30 %

Outlook on Revenue predictions as a result of COVID-19


What is your TOP business concern related to COVID-19 in April?Textual Analysis of Open-Ended Response, Firms Negatively Impacted by COVID-19, All Industries

Business-Related Concern Frequency Cited (8 April – 12

April)

Frequency Cited (2 April – 6 April)

Cash (including cash conversion cycle, AR/AP, cash flow, and liquidity) 21% 24%

Macro-pandemic concerns (duration or severity of pandemic, overall economic health, macroeconomic uncertainties)

20% 13%

Revenue Losses, Reduction in (Customer Demand) 18% 26%

Employees (including working from home, morale, safety, security, labor issues, payroll, Paycheck Protection Program, and layoffs)

17% 22%

Other Issues (supply chain, logistics, governmental response, and firm-specific operations)

16% 12%

n = 94 senior finance leaders







Past Now Next

$655 $733

$806 $918

2016 2017 2018 2019

ü WIN NEW BUSINESSü GROW EXISTING ACCOUNTS

Consistent Revenue Growth

+16%2020 TARGET

Cash Working Capital

Inventory

CCC- AR & AP

CostCost Optimization

S&GA right sizing

COGS/OPEX/CAPEX

Strategy3-5 years Strategy

Annual Business Plan

(Re) Prioritization

“We will continue to execute our shared growth initiatives through geographical expansion, servicing national accounts, and continuing our acquisition strategy.”

Ron Widup,Vice Chairman, Board of Directors

Corporate Objectives

KEY INSIGHT: Prepare for risk to customers and channel partners by planning for softening of demand and longer sales cycles, and planning for constrained supply, credit risk and liquidity challenges.

Prepare for COVID-19 Sense and Response

(Pandemic Planning Resource Center)

Supporting the Business



https://www.gartner.com/en/insights/coronavirus


Focusing on high priority product groups

Understanding current Inventory and Supply Situation

Tracking daily run rate and compare to your “normal” run rate

Continuously reviewing risks and opportunities

S&OP Main Business Process Management Scenario Modelling



Key actions to manage demand risks and recovery



Key actions to manage supply risks and recovery

Align business rules:§ Product segmentation and prioritization§ Customers order allocation rules

Manage service risks:§ Alternative suppliers, materials,

product design, formulation§ Simplified product portfolios

Provide Inventory Visibility:§ Regular update on key product

inventory position§ Provide short term inventory projection

Review recovery plan:§ Understand demand best and worst

scenarios§ Build supply scenarios with projected

cost and inventory impact

Update key supply assumptions:§ Constantly review lead time, output

and available capacity § Update and add required buffer due to

uncertainty

Joint Planning with key suppliers:• Understand risks and opportunities• Risks and benefit sharing







Trends for Life-Science companies

Regulations

Informed Patient

GLOCALSupply Chains

Digital Insights and

IntelligentEcosystems

Personal Effective Medical

Treatment



New Business Models and Role of Supply Chain

E2E Visibility and Digital Transformation

Continuity/Risk Mitigation Strategy

Cost Optimization and Cash Improvement

E2E Supply Chain Risk Management

E2E Supply Chain Network Design

Sales and Operations Planning as main BMP

Demand Risk Assessment

Inventory (Service) Risk Assessment

Access to Labor

Access to Transport

Supply Risk Assessment

Communication

Financial Risk Assessment

Risk Opportunities+

Manage the COVID-19 Risk while focusing on the Recovery



Sense and Respond

Perform and Transform


© 2020 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This presentation, including all supporting materials, is proprietary to Gartner, Inc. and/or its affiliates and is for the sole internal use of the intended recipients. Because this presentation may contain information that is confidential, proprietary or otherwise legally protected, it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.

Thank YouStay Safe and

Healthy !


Frank Vorrath, VP Service Delivery Team EMEA & APACGartner Supply Chain April 28, 2020







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Agenda




• Ability to build robustness against negative events

• while still exploiting positive events

• counterfactual reasoning when considering risk

• COVID-19 can be categorized as a Black Swan event (like the dissolution of the Soviet Union or 9/11):• The event is of extreme rarity• It has a severe impact• It will be rationalized after first occurrence


How to identify a Black Swan How to cope with a Black Swan

The role of Supply Chain Resilience to domesticate the Black Swan


Do you think your Supply Chains are robust and resilient enough?


Source: Prof. Dr. David Francas, 2020

At least 51,000 (163 Fortune 1000) companies around the world have one or more direct or Tier 1 suppliers in the impacted region Hubei, and at least five million companies (938 Fortune 1000) around the world have one or more Tier 2 suppliers in the impacted region.

Source: Dun & Bradstreet, 2020


We need to move towards proactively building the capability of resilience into our supply chains, rather than react and fire-fight uncertainties and risk


RESIST

Ability of a Supply Chain to absorb the impact of a disruption without breaking and failing the system

RECOVER

Ability of a Supply Chain to recover operatonionally and financially after a disruption, and to come back stronger and smarter

The phases of a resilient supply chain







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Supply Chain resilience response in short term

Medium Term

Short Term

RESIST

Avoid Contain

Stock buffer management

Supplier monitoring

Supply Chain Weakness analysis3

2

1 Business Continuity Plan

Risk screening

Flexible Production Lines

5

4

6





AvoidRESIST

- Assess coverage of buffer stock both at company, and at customers- Create a priority list of allocation of the entirestock in the chain

- Assess inventory coverage of critical material at strategic suppliers (e.g. API)- Confirm material allocation on a weekly base - Analyze with supplier iflead times are being impacted (transportation and production)

Based on point 1 and 2:- Assess how long you can servecustomers without major service deterioration- Quantify probability of internal disruption due to e.g. factory closing- Evaluate with your logisticproviders any possible transportation disruption due to limited capacity on the market

Stock buffer management

Supplier monitoring

Supply Chain Weakness analysis

3

2

1

In this phase we put allefforts into ensuring

business continuity by focusing on secure

supply, agile inventorymanagement and

protecting cash flow.




ContainRESIST

- Plan for excess capacity utilization - Reallocate available resources to production and supply of life saving products- Enhance BCP by lessons learned

- Assess where are the most critical risks for priority customers and cash flow- Monitor permanentlycritical strategic suppliers

- Review and adjust regularly production lines setup (e.g. assignment of number of workers)- Flexibilization of manufacturing assets

Business Continuity Plan

Risk Screening

Flexible Production Lines 6

5

4

This phase alreadystarts with preparationof the Recover stage by

sustaining measures.



RECOVER

Stabilize Return

Digital Supply Chain Ecosystem E

Backup Sourcing

D

Financial ReservesC

Contingency PlanB

Task Force ‘Recover’A

Medium Term

Short Term

Supply Chain resilience response in medium term



After the recover organizations need to build in sustainable Supply Chain Resilience enabled by Digital Solutions


- Simulate Recover planalong the entire value chain- Collect and incorporate learnings from crisis into BCP

- Review current supplier network- Assess where multi-sourcing as backup is possible (mid to long term)

- Sustain partnerships with all relevant business partners including governmental authorities- Revisit Digital SC Transformation roadmap –prioritize initiatives supporting SC Resilience- Assess where crisis work-arounds can be digitized

Task Force ‘Recover’

Backup Sourcing

Digital Supply Chain Ecosystem E

D

A

Stabilize & ReturnRECOVER

Get prepared for the new normal – build in

sustainable Digital Supply Chain Resilience!


§ Monthly enterprise wide E2E process

§ Alignment of business objectives with strategic and tactical plans

§ Translation of tactical plan to operations

§ Alignment of assumptions§ Financial reconciliation based on

scenarios§ Setting of priorities§ Management of allocations

§ All enterprise functions have to be involved in daily S&OP meetings

§ Revisit assumptions based on latest developments and market insights

§ Prepare short-term scenarios (best/worse/worst case scenario) based on different assumptions

§ Set priorities to optimize cash flow position

§ Monitor and run daily allocation process for short products/markets

SHORT TERM: The role of Sales & Operations Planning as the master business platform to manage crises


Key characteristics of a “normal” S&OP

Key specifics of a „new normal“ S&OP – Resist mode

ResistS&OP


§ Monthly enterprise wide E2E process

§ Alignment of business objectives with strategic and tactical plans

§ Translation of tactical plan to operations

§ Alignment of assumptions§ Financial reconciliation based on

scenarios§ Setting of priorities§ Management of allocations

§ All enterprise functions have to be involved in daily/weekly S&OP meetings

§ Define ramp-up/down plansdependent on different assumptions(e.g. availability of API, PPE)

§ Develop continous scenarioassessments considering trade-off decisions

§ Setup pro-active ConstraintManagement process

§ Revisit allocation rules (e.g. sequenceand magnitude of ramping-up sites)

MID TERM: The role of Sales & Operations Planning as the master business platform to manage crises


Key characteristics of a “normal” S&OP

Key specifics of a „new normal“ S&OP – Recover mode

RecoverS&OP







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Agenda



How to stress test your SC capabilities –Supply Chain Risk Management with

Simulation

Prof. Dr. Robert Grüter

Prof. Dr. Robert Grüter – How to stress test your SC capabilities

Risk and return as the basic framework for determining your strategyIm

pact

of t

he ri

sk

Probability of occurrenceLow High

High

Low

Low Risk Medium Risk

Low Risk Low Risk

High Risk

Medium Risk

Medium Risk High Risk High Risk

Impact-Probability-Matrix Risk-return efficiency curve

33

Ris

k

Low

High

Low Return High

Current efficiency risk-return curve

Current position

A higher efficiency risk-return curve


(Supply Chain) Risk Management means trading off risk exposure and the cost of reducing it

34

Exposure Cost

Risk taking

Risk avoidance

Risk sharingRisk reduction


Complex, interdependent, stochastic systems? Wait a minute…

35

SCs are complex, interdependent, stochastic systems –requiring a fitting tool like simulation

Supply Chains in deterministic & simplistic frameworks – The Happy Path

BUT


Supply Chain map view

36


Supply Chain Simulation view with inventory and service-level

37


Time to recover for 100 replications of stochastic port closure time periods

38







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Agenda




Key take-aways


Key take-aways:§ Many industries report massive

disruptions – life sciences still less harmed

§ Stringent Cash Management is recognized as key to survive risk phase

§ Establish Supply Chain Resilience to master crisis and to recover

§ S&OP is the key process to orchestrate all required partners to navigate through current disruption

§ Stress test your supply chain by running SC Simulations to assess risk

§ Support SC Resilience by simulating your capabilities during the Recover phase


Wrap up & next steps


For further information feel free to contact our speakers:§ Frank Vorrath:

[email protected]§ Prof. Dr. Robert Grüter:

[email protected]§ Patrick Wolf:

[email protected]

Stay tuned for the next webinar in May:“The dependency of global pharma supply on Chinese and Indian API Supply”!

http://gartner.com

http://h-brs.de

http://Tenthpin.com

Legal Disclaimer

All data, information, statements, photographs, and graphic illustrations contained in this presentation are without any obligation to the publisher and raise no liabilities to Tenthpin Management Consultants or any affiliated companies, nor shall the contents in this presentation form part of any contracts, which may be concluded between Tenthpin Management Consultants companies and others referred to herein.

© Tenthpin Management Consultants 2019. All rights reserved. No part of this copyrighted work may be reproduced, modified or distributed in any form or by any means, or stored in any database or retrieval system, without the prior written permission of Tenthpin Management Consultants or its affiliates. Any such unauthorized use for any purpose is a violation of the relevant copyright laws

tenthpin april 2020 webinar - how scm ensures business ... · science §our ambition is to be the...

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