Featuring Nari Viswanathan - APICS Fox River Chapter - …apics-foxriver.org/images/downloads/Meeting_Download… · · 2014-11-13... Keeping SCOR in the Supply Chain ... Fill Rate

© 2011 Steelwedge Software, Inc. Confidential & Proprietary. 1

Featuring Nari Viswanathan


Today’s Presenter

Nari comes to Steelwedge from Aberdeen Group

where he led the research firm’s supply chain

management practice. He has extensive experience

in industry analysis, market research, product

management, marketing and consulting. Prior to

Aberdeen Group, Mr. Viswanathan was a senior

product manager at i2 Technologies.

Nari Viswanathan Former Principal Supply Chain Analyst, Aberdeen Group

Vice President Product Management, Steelwedge


Agenda

• Rise of the Demand-Supply Network

• Market Research

• 7 Key Success Strategies for IBP

• IBP Process and Technology Platform Requirements

• Benefit Statement

• Key Takeaways


Traditional Supply Chain Thinking

Time

S

ales

Sal

es

Time

Sal

es

Time

Sal

es

Time

Manufacturer Distributor Wholesaler Retailer

Manufacturing Distribution Point of Sale

Consumer Supplier

Sourcing

• Bullwhipped Demand Signals

• Little Collaboration

• Excess Inventory

• High Execution Costs

• Stockouts

Source: Rich Sherman, Keeping SCOR in the Supply Chain


The Supply Chain is Evolving Into a

Demand-Supply Network

Manufacturers

Wholesale Distributors

Suppliers

Customer Demand

Info

Goods

Contract Manufacturers

Logistics Providers

Virtual Manufacturers

Retailers

Internet/

Portals Internet/

Portals Internet/

Portals

Source: Rich Sherman, Keeping SCOR in the Supply Chain


Companies Lack Control Over Processes

• Conversion of linear supply chain into multi-enterprise networks

• Results in loss of control and visibility

• Lead-times are increasing due to expansion of the network

• Planning collapsing into execution

• Risks are proliferating

• Highly dynamic business environment


Companies Lack Control Over Processes

• Conversion of linear supply chain into multi-enterprise networks

• Results in loss of control and visibility

• Lead-times are increasing due to expansion of the network

• Planning collapsing into execution

• Sustainability embedded into decision-making

• Risks are proliferating

S&OP-IBP is the key process for enabling cross-functional as well as multi-enterprise visibility

at the planning level


Agenda


• Market Research




• Key Takeaways


Pressures faced by Organizations

Source: Aberdeen Group, July 2011

34%

37%

43%

46%

54%

0% 10% 20% 30% 40% 50% 60%

Need for better tighter integrationbetween planning and execution

Customer mandates for faster, more accurateand more unique fulfillment

Management of increasing demand volatility

Improve top line revenue

Reduce supply chain operating costs

Percent of Respondents

34%

37%

43%

46%

54%

0% 10% 20% 30% 40% 50% 60%

Need for better tighter integrationbetween planning and execution

Customer mandates for faster, more accurateand more unique fulfillment

Management of increasing demand volatility

Improve top line revenue

Reduce supply chain operating costs

Percent of Respondents


Strategic Actions taken by

Organizations

36%

40%

44%

64%

30%

63%

24%

49%

32%

66%

24%

32%

0% 10% 20% 30% 40% 50% 60% 70%

Provide executive visibility to the S&OP

process

Manage demand forecasts within the S&OP plan

Create a profit optimized supply-demand balanced plan

Integrate the financial planning and

budgeting process with the S&OP process

Laggard

Average

Best-in-Class

Source: Aberdeen Group, July 2011



Gartner’s Maturity Model

S OP

Stage Stage 1:

Reacting

Stage 2:

Anticipating

Stage 3:

Collaborating

Stage 4:

Orchestrating

Balance:

S&OP

Goal Development of an

operational plan

Demand and supply matching

Profitability Demand sensing, and conscious tradeoffs

for demand shaping to drive an optimized

demand response

Ownership S = Sales

OP = Factory capabilities

S = Sales and Marketing Plans

OP = Planning and factory capabilities

S = Go-to-market plans

OP = Design of demand driven plan, make and

deliver processes

S = Go-to-market strategies and solutions

OP = Translation of demand into plan, make, deliver,

source and service strategies, with connection to execution

Metrics Order fill rate, asset utilization, inventory

levels

Order fill rate, forecast error, inventory turns,

functional costs

Demand error, customer service, working capital,

total costs

Demand risk, customer service, cash flow, market share and profit

S

OP

S

OP

S OP

S OP


Agenda


• Market Research




• Key Takeaways


7 Key Success Strategies for IBP

1. Engage sales and marketing

2. Link the financial plan to the operational plan

3. Ensure cross functional and multi-enterprise collaborative process

4. Continuously align strategy with operations

5. Process agility and flexibility through technology

6 Capture metrics for performance management as part of process

7. Optimized demand-supply-finance balancing


1. Engaging Sales and Marketing

• Sales is focused on opportunity conversion rather than build forecast

• BTS, CTO and ETO environments progressively more and more opportunity management focused

• Existing CRM systems do not focus on sales forecasting

• Engagement from sales is crucial – simple push driven process is required


IBP Needs to Start Upstream

Before Order Capture

• Challenges Faced: • Sales & Marketing not engaged in

S&OP

• Existing tools (CRM/ERP/DP) fall short

• Opportunity pipeline not integrated

• CRM and ERP product master mismatch

• Long planning cycle time (up to10 weeks)

• Benefits Gained: • Improved forecast accuracy by

30%

Opportunity Pipeline

Sales Forecast

Build Plan

Case study: $ 3 B semiconductor Manufacturer


2. Linking Financial Plan to

Operational Plan

• Financial parameters should be ubiquitous

• Time phased Average Selling Prices

• Cost modeling

• Statistical BOM attach rates driving model pricing for configure to order environments

• Multi-currency


Integrating With the FP&A process

• Case Study: Global pharmaceutical and medical equipment manufacturer

• Integration with Large ERP System

– Loads Annual Operating Plan at higher level and then allocate revenue plan to detail based on mix.

– Backward integration into financial system of record to convert to full P&L

– On a month to month basis, the IBP plan is refined to drive adherence to AOP


3. Cross-functional and Multi-Enterprise

Collaborative Process

• Cross-Functional

– Sales, Marketing, Procurement, Product Management

• Multi-Enterprise Trading Partners

– Customer, Supplier, 3PL, Supply Chain Finance provider

• Requires an IBP platform that can integrate with other transactional platforms


Procure to Pay Process

B2B Platform

Forecast

Commit

IBP Sourcing Template


4. Continuously Align Strategy with

Operations

• Strategic Issues: – Shifts in global markets

– Commodity shortages

– Changes due to compliance

– Natural disasters

– Mergers and acquisitions

• How to get executive buy-in and involvement? – Integrated platform that can serve as sandbox

– Scenario Management

– Assumption Management


Workflow Management

Intelligent Trade-offs

Assumptions Business Context

Scenario Management


5. Process Agility and Flexibility

• Traditional model decouples process and technology

• Results in un-integrated processes and functional silos

• Need to intelligently phase based on crawl-walk-run approach – Phase 1 - Basic Demand-Supply Balancing

– Phase 2 - Advanced Demand-Supply Balancing

– Phase 3 - Optimized Demand-Supply Balancing


Agility

Measured in time (e.g., Order to Delivery lead-time)

Agile Characteristics

Market Driven

Bias Toward Information Over Inventory

Low Inventory Levels

Collaborative relations with trading partners

“The Triple –A Supply Chain responds to short term changes in supply and demand more quickly”

Dr. Hau Lee Thoma Professor of Operations, Graduate School of Business,

Stanford University


Typical: Extended Lead Time = Reduced

Agility

Enterprise

Cu

stom

ers

Sup

pliers

Extended Lead Time

Info Raw &

WIP

Info Info FG

Excess Inventory

Excess Inventory

Lack of External

Collaboration

Not Demand Driven

Plan Driven Inventory

Vs. Demand


Sup

plie

rs

Enterprise

Improved Agility

Sup

plie

rs

Raw &

WIP

FG

Sup

plie

rs C

usto

me

rs

Improved Information Flow

Being Market Driven

With Improved Information Flow

Reduced Inventory and Lead Time

Reduced Lead Time = Increased Agility


Sup

plie

rs

Enterprise

Improved Agility

Raw &

WIP

FG

Being Market Driven

With Improved Information Flow

Reduced Inventory and Lead Time

Reduced Lead Time = Increased Agility

Reduced Carrying

Costs and Expedited Logistics

Increased Revenue and

Fill Rate

Reduced Inventory

Cu

stom

ers

Improved Information Flow


Flexibility

Rapidly change processes based on market events

• Short term flexibility

– Can be obtained through better execution

– Limited ability to respond in a strategic manner

– S&OP has smaller role

• Long term flexibility

– Can be obtained through better strategic and

operational planning

– Provides ability to execute new strategies and

programs

– S&OP has major role


Improve Agility and Flexibility

Focus on What Matters Understand Complexity and Its Impacts

Volatility

Imp

ac

t

Statistical Forecast with

Exception Monitoring

Collaboration with

Exception Monitoring

Stocking Strategy: Min/Max, Safety Stock, etc. with Exception Monitoring


Demand Planning Policy Steelwedge Policy Analysis Tools


6. Capture Metrics at the Point of

Process

• Sensor that measures process efficiency – metric

• Traditional approach decouples reporting with workflow

• Driven by technology limitations • Embedded metrics at the workflow level • Should support a standard library as well as

provide flexibility to create new metrics • End user should be able to create, modify and

manage metrics


• Integrated Dashboard • End User Configured • Enterprise Enabled

Excel


7. Optimized Demand-Supply-Finance

Balancing

• Demand-Supply Networks don’t lend themselves

to optimization • Crawl-Walk-Run • Ability to support

– Open box heuristic based planning – Optimization through solver

• Integrated platform – Ability to do tradeoffs across supply demand and

finance – Ability to respond quickly to changes in market

events and take action


3. Impact on profit margin – due to the revenue loss

2. Revenue loss due to lack of fulfillment of demand

1. Resource bottleneck results in constrained supply

4. Run solver as part of Rough Cut Capacity Planning with updated parameters


Agenda


• Market Research




• Key Takeaways


Key Evaluation Criterion for IBP

Solutions

• Holistic consideration of supply, demand and finance

• Master data management and integration architecture

• Ability to create flexible and sustainable business processes

• Quick time to deployment

• Support for multi-enterprise collaboration

• Embedded reporting and analytics


Agenda


• Market Research




• Key Takeaways


Companies with Best in Class S&OP Processes Have a

2.5X-6X Advantage in Key Performance Improvements

23%

33%40%

23% 26%

18%

48%

73%77%

84% 83% 81%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Customer

Retention (%)

Finished

goods days of

inventory

Complete

Order Fill

Rate (%)

Average

Forecast

Accuracy at

the Product

Family Level

Gross Margin

(% of

revenue)

Logistics

costs as a %

of sales

% a

ch

iev

ing

me

tric

im

pro

ve

me

nt

in p

as

t 2

ye

ars

All Others

BIC

© 2011 Steelwedge Software, Inc. Confidential & Proprietary. 39 39

S&OP-IBP is a $5M-$10M Typical Savings

Per $1 Billion in Revenue


Agenda

• Rise of the Demand-Supply

Network

• Market Research


• IBP Process and Technology

Platform Requirements


• Key Takeaways


Key Takeaways

• Monetized S&OP – Looking at finance at every step

• Formal integration with financial planning and analysis

• Ability to support capture of strategic plans, initiatives and activities as well as identify impact on operational plan

• Product and portfolio visibility and review including M&A

• Risk Management – visibility and management of risks

• Improved Trust and participation across the entire management team and not just supply chain

• Process education and change management is critical


Q&A

Learn more about Steelwedge’s S&OP solutions: www.steelwedge.com or call +1-925-460-1700

Nari Viswanathan [email protected]

Twitter @nariv

Documents

Featuring Nari Viswanathan - APICS Fox River Chapter - …apics-foxriver.org/images/downloads/Meeting_Download… · · 2014-11-13... Keeping SCOR in the Supply Chain ... Fill Rate