1. Supply Chain Insights
Delivering Insights to Line of Business Leaders
Supply Chain Insights, LLC © 2012

2. BRICKS Book
Publishes
Matter
in August
2012
The Role of Supply Chains
in Building Market-Driven
Differentiation
LORA M. CECERE
CHARLES W. CHASE JR.

3. Who does it Best?
Dell
Toyota
Procter &
Gamble
3
Supply Chain Insights, LLC © 2012

4. 4
Who does it Best?
SC Excellence
38%
21%
17%
4% 4%
P&G Apple Dell Wal-Mart Toyota
Supply Chain Insights, LLC © 2012

5. 5
What were the Tipping Points?
Tipping Points
52%
36%
20% 16% 8%
Supply Chain Insights, LLC © 2012

6. What is Supply Chain Excellence?
Supply Chain Insights, LLC © 2012

7. Supply Chain
A supply chain is a complex system with
complex processes with increasing
complexity.
Supply Chain Insights, LLC © 2012

8. Alignment to Strategy
Business strategy
What are the right things to do to increase company value?
Value-network Supply Chain Strategy
What are the right ways to support the business strategy?
What are the right trade-offs between value drivers for each value network?
Align Demand Right Product Design the Build Align Supply
Relationships Platforms Supply Organizational Relationships
Supply chain strategy Response Systems and
Manage Talent
Effective Supply
Demand Networks Design Networks Continuous Networks
Improvement
Joint Value Innovation Supply Chain Execution of buy-
Creation Strategies Methodologies Network Design Capabilities Required side strategies
Business Process
How do I do the right things right?
Supply Chain Insights, LLC © 2012

9. 9
Typical Organization
CEO
Chief
Customer COO
Officer
Chief
VP of Supply VP of
Marketing Sales CFO
Chain Manufacturing
Officer
Account Customer
Procurement Logistics CIO Quality
Teams Service
Growth Volume Cost
Supply Chain Insights, LLC © 2012

10. A Look Back
Supply Chain Insights, LLC © 2012

11. Supply Chain Tipping Points
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
JIT Supply Chain Internet/Email
RFID
Organization
Evolution of eProcurement
the PC
Re-Engineering the Total Quality
S&OP Organization Management
Theory of
Constraints (Michael Hammer)
Supply Chain Excellence = Supply Chain Excellence =
Islands of Manufacturing Vertical Silo Efficient Order to
+ +
Excellence Excellence Excellence Cash Processes
Inside-Out Inside-Out
Supply Chain Insights, LLC © 2012

12. Supply Chain Tipping Points
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
.com Social
Responsibility
Y2K
Demand Driven
Concepts CSCO
Lean Six Sigma
Market-Driven
Value Networks
Supply Chain Excellence = Supply Chain Excellence =
Vertical Silo Outsourcing Value-Based Outcomes
+
Excellence Effectiveness Delivered by Horizontal Processes
Inside-Out Outside-In
Supply Chain Insights, LLC © 2012

13. The Long Tail: Growing Complexity
Volume
Level of Predictability
Predictability based on forecast accuracy vs Actual Order Profiles
Supply Chain Insights, LLC © 2012

14. Commodity Price Pressure
400.00
350.00
300.00
250.00 Corn (metric Ton)
Wheat (metric Ton)
200.00
$/LB Coffee, Robusta (Pound)
150.00 Sugar (Pound)
100.00 Beef (Pound)
Crude Oil (Barrel)
50.00
0.00
Source: Index Mundi
14
Supply Chain Insights, LLC © 2012

15. Days of Inventory
65
60
55
50
45
40
35
30
2002 2003 2004 2005 2006 2007 2008 2009 2010
Household Products Chemical Pharma Average
Data Source: CFO Magazine
Supply Chain Insights, LLC © 2012

16. Days of Working Capital
95
85
75
65
55
45
35
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Household Products Chemical Pharma Average
Data Source: CFO Magazine
Supply Chain Insights, LLC © 2012

17. Evolution of Supply Chain Excellence
Continuous
Align Building Horizontal
Connector
Testing
Learning Orchestrate
Improving
Adapt
Resilient
Reliable
Right Product Efficient
Sense Demand
Demand Volatility
and Supply Right Place Cost
Shape Right Time
Procure to
Demand and Supply pay/order to
Supply based Volatility cash
on Market Right Cost
Supply Chain Insights, LLC © 2012

18. What is a Market-driven Value Network?
An adaptive network focused on a value-
based outcome that senses and translates
market changes (buy and sell-side markets)
bi-directionally with near-real time data
latency to align sell, deliver, make and
sourcing operations.
18
Supply Chain Insights, LLC © 2012

19. Great Recession:
Leaders sensed Market Changes 5x Faster
Supply Chain Insights, LLC © 2012

20. What is a Value-based Outcome?
Industry Today Tomorrow
Airspace and Selling aircraft Performance-
Defense based logistics
Automotive Efficiency: sale and Safe transportation
life of a car
Consumer Right product, right Effectiveness at
Products time, right place the moments of
truth
Healthcare Efficient sickness Long life and
wellness
20
Supply Chain Insights, LLC © 2012

21. Sales and Operations Planning
Supply Chain Insights, LLC © 2012

22. In 2011…
Supply chains are grappling with
90% skyrocketing costs and supply volatility.
Struggling with the integration of business
87% planning and supply chain planning
technologies.
85% Supply chains experienced a disruption.
62% Companies have multiple S&OP processes.
! Industry progress on working capital has stalled.
Source: Supply Chain Resilience 2011 © 2011 The Business Continuity Institute. All Rights Reserved. Supply Chain Insights, LLC © 2012

23. S&OP Evolution
Greater Benefit
Business- • Growth
Sales Driven • Resilience
planning Driven
Match Demand • Efficiency
Coordination
with Supply
of Plans
Manufacturing- Demand Market Driven
Driven Driven Orchestrate
Deliver a Feasible Sense and Demand
Plan for Operations Shape Demand Market to Market
Supply Chain Insights, LLC © 2012

24. 24
Aligning for Balance
S: Go-to-
OP: Demand
Market
Strategies
& Orchestration
Goal
Supply Chain Insights, LLC © 2012

25. Image by felixj used with Attribution as directed by Creative Commons http://www.flickr.com/photos/felixj/462022653
Where we are Headed
© 2011 Altimeter Group Supply Chain Insights, LLC © 2012

26. Historically, we have:
• Tried to get precise on inaccurate data
• Believed that the most efficient supply chain is the most
effective supply chain
• Built efficient chains, but not effective or adaptive networks
• Wrongly defined the “R”s
• Focused inside-out, not outside-in.
• Rewarded the urgent, not the important
• Responded without sensing.
26
Supply Chain Insights, LLC © 2012

27. Supply Chain Insights, LLC © 2012

28. Supply Chains Don’t Play by the Rules
But, wh
at if they
could?
28
Supply Chain Insights, LLC © 2012

29. Big Data Supply Chains are Evolving
Challenges:
Structured • Transactional
Data • Time phased data
Volume
• Social
Unstructured • Channel
Data • Customer Service
• Warranty
Velocity
• Temperature
Sensor • RFID
Data • QR codes
• GPS
Variability
New • Mapping and GPS
• Video
Data • Voice
Types • Digital Images
29
Supply Chain Insights, LLC © 2012

30. Connecting the Extended Supply Chain
Transactional Transactional Transactional
Applications Applications Applications
Trading Partner Trading Partner Trading Partner
1 2 3
30
Supply Chain Insights, LLC © 2012

31. Evolving Supply Chain Architectures
Collaborative Collaborative Collaborative
Layer Layer Layer
Transactional Transactional Transactional
Applications Applications Applications
Enterprise Data Enterprise Data Enterprise Data
Warehouse Warehouse Warehouse
Trading Partner Trading Partner Trading Partner
1 2 3
Key:
Supplier Signal
Predictive Analytics
Repository
Demand Signal Transactional Adapters
Repository and Intelligent Rule Sets
31
Supply Chain Insights, LLC © 2012

32. Wrap-up
 Move the puck. Supply chain excellence is about
more than supply and cost. Make it about value
and growth.
 Invest in new technologies to harness growth:
make it count.
 For manufacturers and retailers, supply chain is
business.
32
Supply Chain Insights, LLC © 2012

33. 33
Thank you!
Lora Cecere
lora@altimetergroup.com
Blog: www.supplychainshaman.com
Twitter: lcecere
Linkedin: linkedin.com/pub/loracecere/0/196/573
Supply Chain Insights, LLC © 2012