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Presented by Trevor Miles, vice president of thought leadership
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Copyright © 2011 Kinaxis Inc. All Rights Reserved. 1
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 2Copyright © 2011 Kinaxis Inc. All Rights Reserved.
Trevor Miles
director, thought leadershipe: [email protected] | m: +1.647.248.6269 | t: @milesahead
Convergence of
Planning and Execution
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 3Copyright © 2011 Kinaxis Inc. All Rights Reserved.
Convergence Drivers
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 4
Today’s multi-tier global supply chain
Pervasive, global outsourcing
Product portfolio proliferation
Shrinking product lifecycles
Increasing demand & supply volatility
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 5
Companies can’t predict the
future,
…build organizations that will
survive and flourish under
…any possible future.
Source: McKinsey Quarterly, Dynamic management: Better decisions in uncertain times, December 2009
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 6
A volatile economy makes
traditional budgets
obsolete before they’re even
completed. New approaches:1. Scenario planning with trigger events
2. Zero-based budgeting
3. Rolling forecasts
4. Quarterly budgetingSource: McKinsey Quarterly, Just-in-time budgeting for a volatile economy, Spring 2009
Convergence of
Planning & Execution
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 7
Demand Dynamics
• Top CPG companies forecast performance
– MAPE for a monthly lag was 33%
– MAPE for a weekly lag was 48%
– NPI with weekly item/location MAPE was 65%Terra Technology, “2011 Forecasting Performance Benchmark Study”
• High-Tech/Electronics – anecdotal
– Struggle to get better than 50% MAPE
• Where will breakthrough performance come from?
– Learning to forecast and plan better?
– Learning to respond profitably to real demand?
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 8
Product Dynamics
• Each point is a specific SKU
• Coefficient of variation = Std.Dev./Mean
80% of Volume
80% of Variability
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 9
Product Dynamics
• Each point is a specific SKU
• Coefficient of variation = Std.Dev./Mean
Make-t
o-S
tock
Configure-to-Order
Pull
Make-to-Order Rationalize?
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 10
Product Dynamics
• Each point is a specific SKU
• Coefficient of variation = Std.Dev./Mean
Make-t
o-S
tock
Configure-to-Order
Pull
Make-to-Order Rationalize?
>50% Margin
Contribution!
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 11
Life Cycle Dynamics
Toolkit: Frameworks to Design and Enable Supply Chain Segmentation, Matthew Davis, Gartner, 19 May 2011
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 12
Life Cycle Dynamics
Toolkit: Frameworks to Design and Enable Supply Chain Segmentation, Matthew Davis, Gartner, 19 May 2011
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 13
Life Cycle Dynamics
Toolkit: Frameworks to Design and Enable Supply Chain Segmentation, Matthew Davis, Gartner, 19 May 2011
We focus too much
of our attention
on this phase
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 14
It is ironic that in many cases the
programs and innovations put in
place to generate growth cause
such a high level of demand
volatility and demand
unpredictability that the resulting
execution failures create a loss of
both top and bottom line growth.Next Generation Supply Chain Management - The Integration of Planning and Execution,
CSCO Insights Thought Leadership Series, Supply Chain Digest, 2009
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 15Copyright © 2011 Kinaxis Inc. All Rights Reserved.
So what’s the solution?
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The “Triple-A Supply Chain”Hau L. Lee, Harvard Business Review, October 2004
Agile
Adaptable
Aligned
respond and recover from
unexpected events quickly
evolve over time to follow
macro trends
align interests of all
participating firms
To achieve sustainable
competitive advantage, you
need all three capabilities
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 17
Problem starts with Taxonomy
• “Don’t Re Plan: Just Execute” – Wrong!
– Segments process into planning and execution
– Assumes forecast/plan is accurate/correct
• When we know it is not
• Therefore, executing against “wrong” plan
• Don’t Just Execute: Coordinate & Collaborate
– Start from knowledge that plan is not 100% correct
– Recognize need to re-plan, quickly
– Requires coordination across multiple tiers/functions
• Alignment is the goal
• Adaptability is the skill
• Agility is the method
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 18
It’s a phased approach
• Phase I – The Basics:
– Improved S&OP, a single view of demand, and enhanced
feedback loops to planning from execution
• Phase II – The Real-Time Supply Chain:
– Sensory networks, real-time visibility, intelligent alerts, and
decision-support dashboards
• Phase III – Sense & Respond Networks:
– Next generation supply chain technologies, changes to
hierarchical planning models, multi-level visibility, and new
organizational structuresNext Generation Supply Chain Management - The Integration of Planning and Execution,
CSCO Insights Thought Leadership Series, Supply Chain Digest, 2009
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 19
Kinaxis’ Point of View
Balancing supply and demand
of anything is everything
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 20
Kinaxis’ Point of View
Business is Complex,
but your Processes and IT systems
don’t need to be
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 21
Kinaxis’ Point of View
Planning, Monitoring and Responding
must be equal and integrated competencies
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 22
Kinaxis’ Point of View
All of Planning and Execution
must be integrated into a single system
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 23
Requires a breakthrough approach …
Visibility Analytics Collaboration
Consequence Evaluation
and AlertingSimulation/
What-If Analysis
Scenario
Comparison
… on a proven technology architecture
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 24
Collapse time to
make profitable
course
corrections
Plan, monitor, and
respond to all
aspects of supply
and demand
balancing in minutes
- not days or weeks
Reduce risk,
increase customer
satisfaction and
improving
profitability
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 25
SmartMarket LCD BufferInbound Hub
(VMI, SOI, CPO)
Carrier
DC
(VMR, DDR, VMI)PCCEMSSupplier
Change in Customer
Order Request
Customer Granted
Delivery Appt Does Not
Align To Commit Date
POD Date Missed
Request to Commit
Difference
Component Material
Shortage
Component Material
Order Late
Material Quality
Issue
Component Material
Excess
Material Readiness
Late Build Plan
ASY Shortage
ASY Excess
Shipping Capacity Constraint
ASY MPS Adherence
PRD MPS Adherence
MAD Date Missed
ECN (New, Changed)
NPI (New, Changed)
SKU Quality Issue (Stop
Ship)
Load Date Missed
In Transit / Shipping Late
SKU
Shortage
SKU Excess
Customer manages Alerts and KPIs
from Order Receipt to Order Delivery
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 26
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 27Copyright © 2011 Kinaxis Inc. All Rights Reserved.
Thank you! Questions?Trevor Miles | e: [email protected] | m: +1.647.248.6269 | t: @milesahead
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 28