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© 2018 IBM Corporation
Mehtab Gilani
IBM Global Business Services (GBS)
Watson IoT & Industry 4.0 Practice Area Lead
Chemical & Petroleum (C&P)
Enhancing Visibility through Supply
Chain Control Tower
2
84% of CSCOs say
lack of visibility is their biggest challenge
Source: IBM IBV Global Chief Supply Chain Officer Study
3
That lack of visibility comes with a price:
1 in 3 companies report losses of $1M+ annually due to disruptions
Source: Supply Chain Resilience Report
4
The Data Challenge: Hindering Visibility
Cognitive Supply Chain
Unstructured/Dark Data Sources
No View
Social
Weather
NewsWMS ERP
Siloed Internal Systems
Siloed View
TMS
Limited View
Partner Network
Partner Supplier
Client
5
The Next Generation Supply Chain will be driven by insights, and orchestrate digital processes end-to-end
Cognitive Supply Chain
Linear today Digital future
Integrated Planning
Intelligent Assets
Analytics
Driven
Intelligence
+
Value Chain
Visibility
Customers
And
Consumers
Suppliers
and
Service
Providers
Order
Status
Fulfill
Order
Status
Fulfill
Sch
ed
ule
Sta
tus
Con
firm
Pla
n
Sta
tus
Dem
an
d
Advantaged
Back
Integration
Market
Awareness
& Customer
Intimacy
Source: IBM Institute of Business Value
6
Supply chain is a natural fit for AI
Cognitive Supply Chain
Source: IBM Institute of Business Value
7
Digital transformation helps address key Supply Chain challenges
7
Optimising inventory holding through usage and capability analysis
Optimizing supply chain and capital usage
through secure transactions
Leveraging insights to drive safe, efficient and
effective operations
Providing visibility to reduce disruption and mitigate supply chain
risks
Improving asset utilization through
location and condition tracking
Cloud & Data IoT Cognitive Blockchain
88
More of the most effective organizations view digital technologies as highly important to their supply chain strategy
Adopting digital technologies in the supply chain
Importance of technology trend to enterprise’s supply chain strategy
Cloud computing
62% 95%
Internet of Things
Predictive analytics
Machine-to-machine connectivity
Artificial intelligence / cognitive computing
Mobile technologies and applications
RFID / location technologies
63% 91%
48% 85%
19% 80%
22% 74%
27% 74%
22% 54%
Most effective chemicals
supply chain organizations
All others
Source: IBM Institute of Business Value
9
The leaders view digital technologies as critical to addressing the supply chain imperatives
Cognitive Supply Chain
Impact of technologies on supply chain imperatives – Most effective chemicals supply chain organizations
(Percentage of respondents selecting)
Imperative
Predictive
analytics
Cloud
computing
AI /
cognitive
computing
Internet of
Things
Machine-to-
machine
connectivity
Mobile
technologie
s
RFID /
location
technologie
s
Improve demand forecasting 74%
Enhance supply chain collaboration 94% 72% 97% 59% 44% 93%
Improve supply allocation and distribution decisions 73% 45% 72% 62% 52% 73% 65%
Integrate financial, sales, and operational planning 95% 52% 69% 61% 68%
Determine unplanned event scenarios 81% 34% 45%
Manage material quality and risks 83% 38% 90% 65% 44%
Increase analytics around supply chain data & costs 45% 63% 59% 55% 41%
Increase real-time visibility into operations 67% 89% 40% 91% 81% 89% 76%
Manage transportation disruptions 67% 48% 94% 60%
Improve service responsiveness 48% 83% 41% 52% 47% 89%
Source: IBM Institute of Business Value
10
An integrated and holistic perspective is necessary in order to maximize value capture from the overall supply chain transformation opportunity
Cognitive Supply Chain
Financial & Performance Management
Information
Technology
Business / Business Unit
Strategy
Logistics
Network
Supply Chain
Strategy & Policies
Strategic Sourcing &
Supply Capability
Planning & Inventory
ManagementSupply & Supplier
Management
Transportation & Distribution Management
Supply Chain Integration / Integrated Operations Planning
People, Organisation &
Culture
Business Rules,
Processes
STRATEGIC SUPPLY INFRASTRUCTURE
SUPPLY CHAIN INTEGRATION
OPERATIONAL PLANNING & EXECUTION
KEY ENABLERS
STRATEGIC DIRECTION
Aligned Strategy
• Customer segmentation
• Service requirements
• Capabilities supporting value
delivery
Aligned Structures
• Channel / supply chain
segment design
• Products and value
proposition that make a
difference
Aligned Functions
• Excellence in planning and
execution
• Effective supply chain
integration and collaboration
Aligned Operations
• Processes, organization,
people, business rules,
incentives and systems
• Roles, relationships and
accountabilities
What you want to achieve
How you will get there
• Differentiation in cost effectiveness and customer
service levels in delivering product to customers
• Integrated planning with key
suppliers and customers to maximise
responsiveness and manage costs
• Organisation, capabilities and the
culture that will bring it alive
• Effective processes and disciplined
performance management to ensure
value is delivered
• The technology to enable effective
management, control and execution
What it will look like• The operating model which will realise your
proposition
• The products and value proposition that will
differentiate your services
• The network that will enable you to deliver most
efficiently
11
Technology trends such as Industry 4.0 provide the building blocks for Next Generation Supply Chain Transformation
Cognitive Supply Chain
Enterprise Process Framework (EPF)
Industry 4.0 Digital Building Blocks
Next Generation Supply Chain
Integrated Planning
Category Management/Buy Optimization
Macro and Micro Forecasting
Adaptive Supply Chain Modeling
Dynamic Deployment
Integrated Business Planning
Intelligent Assets
Plant Performance Optimization
Asset Management
Predictive Maintenance
Predictive Quality/Warranty
Continuous Engineering
Energy Optimization
Worker Safety Management
Value Chain Visibility
Cognitive Resolution Rooms
Data Driven Compliance
Supply Risk Identification
Trading Partner Management
Storage/ Inventory/ Shipment Tracking
Procurement Intelligence
Intelligent Transactions
Weather
Forecasts
Tank TelemetryCustomer
BehaviorsLocal Events
Competitor
Disruptions
Micro and Macro
Economics
Past Issue
Resolutions
Market
Movements
Strategies and
Tradeoffs
Weather &
Labor Outages
Instrumented
Transportation
Instrumented
Manufacturing
Social Media/
Text Analytics
Blockchain
Ledger
Mobile
EngagementBlockchain
Contracts
Plan Manage Control
12
Next Generation Supply Chain capabilities offer the promise to dramatically improve Get it Right performance by improving end to end visibility and analytics enabled decision support
Cognitive Supply Chain
Source: IBM Institute of Business Value
Order
Production
Fulfillment
Delivery
Consumption
Forecast
Purchase
Cognitive forecasting tool
projects product trends
using internal and external
data and news
Exogenous data, analytics, IoT
and Sensors detect potential
issues with goods in transit
Cognitive Order Management
provides prescriptive order commits
based on delivery options and
predicted customer behavior
Dynamic Scheduling: Real-time
connection between incoming orders
and production schedule reduces lead
times and inventory
Smart Storage Devices at
customer sites notify ChemCo
when materials are consumed (or
not)
Blockchain-enabled supplier
visibility and purchasing
improves responsiveness
and surety of supply
Smart Storage Devices and
analytics improve picking decisions
and overall inventory quality
Future supply availability
Demand signals
Delivery confirmations Right product, right documentation
Near-term production completions
Demand trends to buy into Real-time order feed
Customer
13
Supply Chain – Virtual Command Centre
Cognitive Supply Chain
14
Supply Chain – Real-Time Responsiveness
Cognitive Supply Chain
15
Supply Chain Visibility
Cognitive Supply Chain
Piloting a platform that uses blockchain technology to track the shipment of goods
“provide information about the position and movement of goods within the supply chain”
Management and tracking of the transactions required whilst moving tens of millions of shipping containers around the world
Source: https://enterprisersproject.com/article/2016/8/how-monsanto-approaching-iot-ground
Monsanto leverages IoT data
in planning, in logistics, in the
supply chain, and at the
commercial level
16
The entire supply chain ecosystem will share a single trusted view of shipping events and can participate in paperless trade
Cognitive Supply Chain
17
Improve info
exchange with
partners
Transparent,
agile supply
chain
Supply Chain OptimizationB2B Collaboration
B2B
Integration
Software
Managed
File Transfer
Software
Supply
Chain
Business
Network
DMPCRM LogisticsSCMWMS SupplyDSP Data Mart POSERP Weather
Supply
Chain
Insights
Supply
Chain
Business
Network
Order
Management
Exception mgmt.
SLA performance
Synch systems
Scale connections
Availability
Optimize transactions
Connect suppliers
Manage disruptions
Collaborate / take action
Visibility & Insights
IBM Watson Supply Chain Portfolio…
18
Asset Performance Compared to Inventory Practices - Key Takeaways
MRO Inventory Optimization
12.9%
5.6%
7.7%
3.0%
3.3%
0.% 2.% 4.% 6.% 8.% 10.% 12.%
0
1
2
3
4
Avg. Downtime from Lack of Spares, Stock Outs
# o
f C
ust
om
er
Ro
les
Avg. Asset Downtime vs. Number of
Inputs from Reliability & Maintenance
6.5%
3.7%
0% 2% 4% 6% 8%
No
Yes
Avg. Downtime from Lack of Spares, Stock Outs
Sp
eci
aliz
ed
In
v. T
oo
l? (
Y/N
)
Avg. Asset Downtime vs. Utilization of
Specialized Inventory Optimization Tool
Source: Inventory Optimization: A Cross-Industry Comparison of Practices and Performance – August 2017 Survey (Scottmadden)
1919
MRO Inventory Optimization
Materials
Criticality
Analysis
Service Level
Analysis
Inventory
Performance
Visibility
Risk Based
Cost Analysis
Shared
Inventory
Optimization
Surplus &
Obsolete
Analysis
Acting on
the highest
value
spaces
30%Reduction in MRO
Inventory Costs
50%Reduction in
Unplanned Downtime
2020
MRO Inventory Optimization
Focus: Powerful Outcomes
Business Unit
Visibility
Configurable to provide
visibility into distinct
business units based on
specific business goals
and modes of operation
Best Practice
Retention
Ingestion of historic
data, addition of best
practice and results of
actions taken.
Knowledge transfer and
protection in system
cutovers
Supplier
Performance &
Bad Actors
Lead time and service
level analysis identifies
suppliers and
employees applying sub
optimal inventory
processes
Data Quality
Visibility
Highlight gaps and
errors in current
inventory data
provides guidance on
how to address gaps
21
Closed-Loop Optimization ProcessMRO Inventory Optimization
IBM MRO Inventory
Optimization
22
Success Story: Major Oil & gas Company
• Reduced MRO working capital by 10% in
six months at one site alone
• Lowered inventory levels by at least 10% three
years in a row
• Savings at Alaska site funded global implementation
• Achieved 10’s of $$millions in savings
InventoryLevels
Reduced by
10%
23
Select the right use cases
Digital Supply Chain
Supplier Available To Promise
Supplier Available To Ship
Supplier On Time Ship
Supplier On Time Delivery
Procure to Pay / Inbound
Supply
ShortageWeatherProduction
DelayLabor Dispute Supplier
Over CommitDelayed
delivery
Quality parts
issueDemand Spike
Carrier DelayCatastrophic Alert
Supplier FinancialsUnscheduled Order
24
A digital supply chain
collects, connects, and
consumes real-time signals
and information for
operational agility and
flexibility. New data sources
can provide insight and
automate action.
Create supply chain
processes that think
Ready your digital
skillset
Uncover new
intelligence
A digital supply chain
optimizes processes within
the enterprise and across
ecosystems. Infusing
advanced analytics across
processes enhances
decision making.
A digital supply chain
requires new ways to work.
Employees need to be
equipped with analytical
and problem-solving skills.
Data management, analysis
and visualization form the
basis for a digital
competency.
Getting to a digital supply chain
Recommendations
24 Source: IBM Institute of Business Value