KS Supply Chain Management Overview V2olathe.k-state.edu/professional-dev/workshops/engineering...Linear End-To-End Supply Chain 9 From Forecasting & Planning to Customer Service,

SupplyChainManagementOverviewFebruary2018

RichardMotilal

§ Introduction

§ Supply Chain is Transformative

§ End-to-end Supply Chain

§ Supply Chain Elements

§ Keys to Success

§ Optimization Initiatives

§ Steps to Transform your Supply Chain

§ Competitive Advantage of High-performing Supply Chains

Agenda

2

Supply Chain Management – Now

3

q Supply Chain Management is a dynamic field, rapidly changing and incorporating cutting edge technology to deliver outstanding Customer Service and Cost benefits to its principals. Ø Varying levels of automation is employed from physical manual processes to Robotics and Drones

q Historically, changes and advances are based on business requirements and Supply Chain functions are performed by departments:§ within companies, § or outsourced to Companies specializing in providing Supply Chain services

§ Introduction





§ Keys to Success



Agenda

4

Supply Chain is Transformative

Touches all aspects of business: Because of this, its impact and contribution to overall enterprise performance is well documented

StrategyCorporate strategy dictates the structure and features of the Supply Chain operation

Manufacturing

Operations

Product Development

Sales / Marketing

Enterprise

Coordination of raw materials, suppliers, factory and production scheduling, quality management, transportation and positioning of equipment and inventory

Inbound logistics, Warehousing & DC operations, inventory management, forward logistics, reverse logistics

Involved in every step of product development and delivery, whether it is a service or physical item

S&OP, Demand-Supply balancing, forecasting, demand planning

In large corporations, there is a large internal customer base that depends on the Supply Chain for institutional supplies and services

5

SupplyChainEstablishesNewRevenueStreams

6Source: Comcast

Companion product ecosystems drive sales

Reverse Logistics & Sustainability elements supports progressive advances

In today’s consumer environment, companion products

enhance the value of the Supply Chain with increased

revenue opportunities. Companies like Apple (Beats) and

Samsung (Harman-JBL), are examples.

In the last decade or so, Reverse Logistics, Sustainability,

after-market and secondary market operations have

become increasingly important for the obvious reasons:

cost, environment, etc.

7

SupplyChainprovidesbothquantitativeandqualitativevaluedrivers

Quantitative ($) Qualitative

q Fixedcosts- Severalfixedcostitemsarestandardinthetypicalsupplychain.• Workingcapital(e.g.WIP,finishedgoods)- Inventoryonhand.• Inventoryturns(velocity/efficiency)– Lean6sig/JIT- SupplyChain

velocity,centralizedvsdistributed.

q Transactionalcosts– includescostsincurredthroughoutthelifecycleoftheproduct.

• Transportationcosts- TransportationCostscanbesignificantbasedonproducttypeanddistributionnetwork,alongwithdesiredservicelevels.Inbound,outboundandreverseareallrelevant.

• Processingcosts(pick/pack/ship)- DCrelatedcostsvarywidelybasedonsuiteofservicesaswellasDCcapabilities(automation,scale,technology,etc.)

ThetangiblebenefitsofanefficientSupplyChainislargelybasedonitsabilitytoprovideproduct/servicewhenandwhereitisneededandatthelowestoverallcost(TCOmodel).

q Customerservice– ThemajorityofSupplyChainstodayaredemanddriven,makingresponsiveness,visibility,andefficiencykeymetrics.

q Businessflexibility– CustomerrequirementsdriveSupplyChainstructureandprocesses.Intoday’sdynamicandrapidlychangingmarketconditions,supplychainflexibilityiskey.

§ Introduction





§ Keys to Success



Agenda

8

LinearEnd-To-EndSupplyChain

9

FromForecasting&PlanningtoCustomerService,SupplyChainimpactsdifferentareasofthebusiness

Forecasting &

PlanningProcurement Manufacturing Inbound

Logistics Warehousing Inventory Management

Postponement Services

Outbound Fulfillment /

Transportation

Reverse Logistic

Customer Service

1 2 3 4 5 6 7 8 9

10

§ Introduction





§ Keys to Success



Agenda

10

SupplyChainElements

KeyelementsforasuccessfulSupplyChain

SystemsCollaboration Innovation

Leveragesresourcesevenoutsidethecompanyandprovidesbenefitstopartners

• SupplierCollaboration• SupplyChainOptimization• CustomerRelationshipManagement• S&OP• Omni-ChannelMarketing• Store-inStore

Providespeed,efficiencyandfacilitateprocessoptimization

• ERPSystems• Planning• Procurement• Scheduling• WarehouseManagementSystems

(WMS)• TransportationManagementSystems

(TMS)• RetailManagementSystems

Lookingaheadandleveragingtechnologytomaximize,savings,andperformance

• Serialization• Robotics• GPS• Drones• Tracking.

11

§ Introduction





§ Keys to Success



Agenda

12

KeystoSuccess

•Collaborativemodel

•ClearlydefinedRACI

•Clearlydefinedmetrics

•Consensusforecasts&plans

PartnershipVisibilityAnalysis

•Presentinformationandinsights,notjustdata

•Buildagility

•Thinkend-to-end

•Employtherighttalent&recruitcarefully

Innovation&Flexibility

•Alignmentwithstrategy

•Buildsustainableresults

•Changemanagement

•Useappropriatetechnology

•Buildpartnerships

CompetitiveAdvantageSolutions

13

§ Introduction





§ Keys to Success



Agenda

14

OptimizationInitiatives

15

BaselineandimproveforecastingDemandOptimization

Establishandinstitutionalizeinventorypolicies&processes

InventoryOptimization

Measure,manageandimprovesupplierperformanceSupplyOptimization

TherightamountofinventoryintherightplaceattherighttimeRetailOptimization

§ Introduction





§ Keys to Success



Agenda

16

StepstoTransformyourSupplyChain

17

IntegrateDatafromSystems

• Evaluate,AnalyzeandTakeActiontoDelivervalue

BuildIntegratedDashboards

• MonitorKeyMetrics&KPIs

PromoteCollaboration

• EncourageParticipation&Feedback

• Breakdownsilos

ImplementaStructuredGovernance

Model

• DirectActivitiestoaUnifiedOutcome

IncreaseForecastAccuracy

• Target>80%• LeverageCPFR,S&OP,andintenseCollaboration

18

InventoryManagement

TransactionVisibilityandAccurateReportingarenecessary- DataandSystemReconciliationarerequired.

Illustrative

Inventory&Financial

ManagementSystem

3PL

MIS POSSystem

Source Of TruthInventory Valuation (per-SKU)Financial Reporting

Data Sync’dSKU master definition# units per SKU per location

Source Of TruthSKU master definitionInventory lifecycle by IMEI

Data Sync’dInventory by IMEI per locationInventory condition by IMEI

Source Of Truth# units in inventory per SKU per location# units shipped per SKU per locationInventory condition by IMEI

Data Sync’dSKU master definition# units sold per SKU per location

Source Of Truth# units sold per SKU per locationInventory by IMEI per location

Data Sync’dSKU master definition# units shipped per SKU per location

# un

its s

hipp

ed#

units

sol

dIM

EI fo

r all

units

rece

ived

§ Introduction




§ Keys to Success




Agenda

19

CompetitiveAdvantageofHigh-performingSupplyChains

Best-in-classsupplychainsenableenterprisestooutperformtheirpeers

20

HighperformingSupplychainprovideacompetitiveadvantagetothebusinessbyconsistentlydeliveringhigh-quality,low-cost,timelyservice

tocustomers.

Appendix

AHigh-levelviewofSupplyChainstructure

23

ConsensusForecast

TypicalWirelessSupplyChainPlanningProcess

Top Down Base Forecast

(units)

Bottom Up Base Forecast

(units)

Top Down Base Attach Rates

(%)

Bottom Up Base Attach Rates

(%)

Consensus Base Forecast

(units)

Devices

Accessories

Consensus Base Attach Rates

(%)

Top Down Promo Impact

(%)

Bottom Up Promo Impact

(%)

Devices Consensus

Forecast w/ promos

(units)

Top Down Promo Impact

(%)

Bottom Up Promo Impact

(%)

Consensus Promo Impact

(%)

Base Forecast (units)x

Promo Impact (%)

AccessoriesConsensus

Forecast w/ promos

(units)

Consensus Promo Impact

(%)

Consensus Attach Rates w/ promos

(%)

Ad-H

ocPr

omotions

Consensus Attach Rates (%)x

Consensus Device Forecast (units)

Illustrative

24

Centralizationcanimproveservicelevelstomaximizevalue.SupplyChainPlanning Illustrative

60%

62%

64%

66%

68%

70%

72%

74%

76%

78%

80%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

Centralizing the planning function with inputs from S&OP:

• Product Marketing• Retail• Finance• Supply Chain

Service level decisions are made based on the Total Cost of Ownership and Value to Company, considering:

• Cost of Missed Saleso Modesto Service Margino Modesto Device Margino Modesto Accessories Margino Reduced Comcast Churn

• Cost to Serveo Cost of Capitalo Excess & Obsolescence o Handling o Shrink (Leak, Loss)o Transportation costs

Inventory Levels are determined by:• ISP• Forecast Error• Distribution Network Lead Times

Optimal Service Level

In Stock Percentage (ISP)

Cost of Missed Sales

Cost of Carrying

Inventory

Total Cost

25

AlookatReplenishmentLogicSupplyChainPlanningIllustrative

Cycle Max (Order Up To)

Cycle Min

Stock Out

SafetyStock

ROP

ROQ

Lead TimeDemand

Store Capacity

CYCLE MAX

• Variable based on• ROQ (Derived by an Independent series of variables – see below)• Safety Stock / Min

• Represents the maximum allowable on hand inventory level (for prescribed period)• This quantity will never be less than the Min + ROQ• This quantity will never be greater than total store capacity

CYCLE MIN

• Variable based on • Calculated Safety Stock (Based on service level, lead time, forecast confidence

• Considerations will also be made for secondary non-calculable variables• Minimum desired stock, NPI, Model Change (supersession)• Perceived risk based on store performance, labor issues, etc…

ROQ

• Variable based on• Forecasted Demand• Lead Time Demand• EOQ (Economic Order Quantity)• SMOQ (Store Minimum Order Quantity)

• Store Operational Capacity Constraints• Store Inventory Capacity• Configuration / Pack Quantities • Ship Days per week (frequency of store order wave)

ROP • Point at which order is triggered• This value will never be less than the Min quantity

Documents

KS Supply Chain Management Overview V2olathe.k-state.edu/professional-dev/workshops/engineering...Linear End-To-End Supply Chain 9 From Forecasting & Planning to Customer Service,