Why Every Company in the Value Chain Should Care About the End-Consumer One Network can help your company become consumer-driven. Why is that important? Let’s begin with today’s consumer. There’s you, me, and about 7 billion others... Today’s consumers want the right price, the best quality, and they want it now. What does that mean for your business? Consider that your success - or failure - eventually depends on whether your end consumers are satisfied. This is true for all companies, in every industry, delivering every kind of product or service. They all exist to eventually serve an end consumer. Shouldn’t your company be doing all of the right things to ensure success – and the consumer’s satisfaction? The problem is, you've inherited a tangled mess of disconnected software system that focus on your internal processes and immediate trading partners. This is actually IGNORING the end consumer!

1. THE CONSUMER
DRIVEN
SUPPLY CHAIN
Achieving a Real Time Value Network

2. Let’s set a baseline

3. Traditional Sales and Supply Chain
Approach
 Organizations are segmented and “silos” within and across companies
 Long term planning not connected to Short Term
 Planning is disconnected from execution
CUSTOMERS
SUPPLY CHAIN
RETAILERS
SALES
CPG
MARKETING
MANUFACTURERS
CATEGORY MANAGEMENT
SUPPLIERS
MERCHANDISING

4. What is Consumer (demand)
Driven?
Being demand driven means everyone in the supply
chain is focused on the end
consumer.

5. Consumer-Driven Guiding Principles

A supply chain is actually a “community of trading partners”
»
»

Demand-driven means you must start at point of demand
»
»

Everyone wants to drive value for their business
Everyone should focus on actual sales. It is the only thing that matters
Must be able to model store (point of consumption), SKU, Day
Must be able to adjust based on actual consumer demand
Never forecast what you can compute
»
»
The only sales forecast should be the further most forward node
Everything else should be a calculated order forecast

To optimize the network you must concurrently deal with demand variability, supply variability, constrained
capacity and lead-time variability

Continuous, incremental and interactive planning, execution, and performance management must reside
within the shared community
»
Provides the ability to sense change, rapidly create intelligent responses, execute the responses, and then analyze performance
enabling process improvements

6. Barriers To Achieving Consumer Driven
Inadequate information sharing
Planning to multiple and
disparate forecasts
Organizations are dispersed and not
focused together on lowest cost and
highest service
Change management
Systems are batch and supply
chains are real time

7. Trends in the Consumer Driven Supply
Chain

Visibility has become increasingly
important as companies pay more
attention to supply chain risk, such as
natural disasters, human rights abuses,
raw material shortages, etc.

Cloud solutions have found wide
application in certain industries such as
retail and consumer goods in North
America.

Planning cycles are becoming shorter.

8. Six Benefits Of Supply Chain Visibility
Improve in-store availability, reduce end-of-season markdowns, and increase
supply chain operations efficiency.
Make more profitable decisions, match your strategic and tactical plans with
local customer preferences, and drive overall profitability.
Shorten end-to-end pipeline time.
Reduce uncertainty and the need for safety stock.
Stop missing opportunities when customer orders with short lead times can't
be met – be ready and able to profit.
Increase the quality of information sharing, and build an “informationenriched” supply chain.

9. LeadTime &
LeadTime
Variability
Eliminate Bullwhip Effect
The longer it takes to propagate a supply or
demand shift the longer people are doing the
wrong thing
Inventory
Overstock
Under stock
Time
Store
DC
DC
DIST/TMS
MFG
Teir1
Tier 2

10. Coping with Bullwhip within 4 Walls
Variability
Poor visibility to
real-time demand
signals from
foremost
consumption
locations
Your ERP/APS work
very hard trying to
cope with the
variability
Lead-time to
respond
Your Enterprise
Demand Signal
Response
Signal
Poor visibility to realtime supply signals
from multi-tier
suppliers

11. Your Current Value Network
Demand Signal
Response
Signal
Variability
Customers
Your Enterprise
Suppliers

12. In a Real Time Value Network (RTVN)
Demand Signal
Response
Signal
Variability
Customers
Your Enterprise
Suppliers

13. RTVN Time Compression
Demand Signal
Response
Signal
Variability
Customers
Your Enterprise
Suppliers

14. RTVN Dramatic Variability Reduction
Demand Signal
Response
Signal
Variability
Customers
Your Enterprise
Suppliers

15. Dramatically Improve the Productivity of Your
Investments
Network View of
Variability
Consumer Demand
Peak sales at
9am, 1pm, 8pm
Your Enterprise (IBP)
Networked View of
Demand Signal
Supply
Response Signal
Reduce data staleness from 19
hours to 7 hour
POS 1 – 9 pm
End to End Lead Time and Flow*
POS 2 – 10.am
POS 3 – 2 pm
Approach
Material
Lead Time
Information
Lead Time
BOH
Traditional
33 days
29 days
Othe
Network
Enabled
< 33 days
0 - 1.5 days
ERP / APS
Customers
Your Enterprise
Suppliers

16. Traditional supply chain models are challenged by having all
parties work with linear planning and replenishment processes

Push model with all participants planning and replenishing to forecasts instead of actual demand/real time
consumption

Business rules do not evaluate the supply chain as a single system but as individual nodes each operating
asynchronously. Each node has its own view of demand and inventory with no visibility beyond the next tier.

Demand and information signals are received by each supply chain partner sequentially, therefore it can take
suppliers weeks and even months to react to changes, promotions and stock outs felt by the consumer
Batch Systems
Skewed Demand
Signals
Siloed Supply Chain
3 Days
Stores
Retail DCs
21 Days
MFG DCs
3 Days
Factories
3 Days
T1 Suppliers
T2 Suppliers
3 Days
Consumers
1 Day/Hours
Legend:
7 Days
Material Lead Time & Flow
7 Days
7 Days
7 Days
Information Lead Time & Flow
Traditional Approach with Information Latency and Demand Distortion

17. What is Required to Eliminate Information Latency Across the
Value Network, Reduce Variability & Enable a Demand Driven
Replenishment in Real Time ?
End to End Lead Time and Flow*
Approach
Material
Lead Time
Information
Lead Time
Traditional
< 33 days
Regional/ Customer
Facing DCs
0 - 1.5 days
Companies operate in networked
fashion

Elimination of information latency

Mins-Hours
Mins-Hours
Mins-Hours
Freight
Forwarder
National/ MFG
DCs
Mins-Hours
Mins-Hours
Mins-Hours
Mins-Hours
Demand signal is synchronized across
all companies

T2/ Intl
Suppliers
Initial Demand
Incremental Change
Actual Forecast
29 days
Network
Enabled

33 days
Stores/ Dealers/
Distributors
Real time visibility to changes in demand
and supply
Mins-Hours
EMS/ ODM
Brand Owner/
Manufacturing
3PL’s/ VMI
Legend:
Collaborative Response
Network Planning
The
VALUE
Network
in
REAL
TIME

18. Put Your Supply Chain on Auto Pilot – Decision Making








Real Time
Many to Many
Multi-echelon
Consumer Driven
Decision Making with
Monitoring
Planning married to
Execution
Subscription based
Embrace valued
systems

19. Integrated Business Planning (IBP)
Plan out variability. Plan for Profitability and Business Continuity
IBP provides a single version of the truth for forecasting, promotions, new
product introductions, contracts and financial plans. It supports all areas of the
business: finance, merchandising, supply chain, etc.

20. Continuous Forecast Management
Continuous
Forecast
Management for
forecasting,
replenishment,
promotions, new
product
introductions and
financial plans. It
supports all areas of
the business:
finance, product-

21. Gartner’s 4 Stages to Implementing DDVN
REACTING
Stores
Co-Packer
Supplier
Fwd DC
Factory
Suppliers
Retailer DC
INTERNALLY FOCUSED
NO VISIBILITY
ANTICIPATING
Stores
Co-Packer
Supplier
Fwd DC
Factory
Suppliers
Retailer DC
INTERNALLY FOCUSED
VISIBILITY
COLLABORATING
Stores
Co-Packer
POS Driven
Forecast
POS and Network
Inventory
Calculated
Replenishment
Factory
Suppliers
Supplier
Fwd DC
EXTERNALLY AWARE
Retailer DC
VISIBILITY
ORCHESTRATING
Stores
Co-Packer
Suppliers
Factory
COORDINATED INTERNALLY
Supplier
Fwd DC
Retailer DC
VISABILITY AND INFLUENCE

22. Smaller Steps to Becoming Consumer
Driven
Increase Visibility by
1. Utilizing POS and shelf data
2. All nodes in the chain should be supplied with
customer demand.
3. More frequent down-stream communication.
Improve Planning by
1. Increased planning frequency
2. S&OP
3. Decrease the amount of stock pushed out to
stores

23. High Impact Results (US examples)
A consumer-driven approach achieves balanced cash flow through increased
sales, reduced operating expenses, and working capital improvements.
5% – 10% reduction in
operating expense
1% – 4%
improvement in
sales
Transportation
Headcount
Transportation
Headcount
Sales
Sales*
CoGS
traditional
model
SALES LEVELS
20% – 30%
reduction in
inventory
consumerdriven
traditional
model
CoGS
consumerdriven
EXPENSE LEVELS
* lift from out of stock and forecast accuracy
improvements resulting in recoverable sales
Buffer†
Promotional
Demand
Buffer†
Promotional
Demand
Forecasted
Demand
Actual Demand
traditional
model
consumerdriven
† buffer = safety stock adjustment for reduced
uncertainty and information latency
INVENTORY LEVELS

24. Del Monte
nourishing families, enriching lives, every day
Annual Revenues of $3.7B consumer products manufacturer producing canned
fruits/vegetables and pet food
dedicated marketing integrated supply chain / sales force
Source: Reflects F10 Data

25. Del Monte
Grocery Eco-System
RETAILER STORES
RETAILER DCS
1
DEL MONTE DCS
3
4 5 6
7
8
DEL MONTE PLANTS DEL MONTE SUPPLIERS
2
9
12
10
11
CO-PACKERS
RETAILER PARTNER FOCUS
1
•
Retailer Order Forecast
SUPPLIER PARTNER FOCUS
7
•
Contact Management/AVL
2
•
Deployment (DRP)
8
•
Purchase Order Management
3
•
Transportation Optimization
9
•
Supplier Portal, Shipment, Invoicing
4
•
Inventory Planning
10
•
Consignment and VMI
5
•
DC Capacity Management
11
•
CoMFG Planning, Order Execution
6
•
Automated Carrier Scheduling
12
•
EDI & Supplier Scorecarding
 initial focus was customer order fulfillment and use of retailer data
 incorporated transportation and appointment scheduling
 migrated focus to production planning and supplier collaboration

26. Del Monte
What does high-impact look like?
Network Capabilities Gained:




Improved End to End Network-wide Visibility – Store shelf to Production and Inbound Supply
Deployment Planning – Replenishment to forward DC based on actual demand
Incremental planning integrated with execution – Provides adjustment to execution with a change in demand – POS
or PO
Decision Making vs. Decision Support – enables scalability while increasing the granularity of the planning
parameters
Benefits For Del Monte:





Improved customer order fill rate to 99+%
Decreased inventory by 27%
Invested in strategic projects with 2 year payback
Received Supplier of Year awards and Gold status from
multiple retail customers
Significant headcount reduction
Benefits For Their Customers:


Improved store in stocks to 99+%
Decreased inventory for Del Monte products by 30+%
“game changing” service
levels – WHILE lowering cost
and improving balance sheet

27. Value of the Network Effect

Drive sales and revenue

Sense problems before they happen with predictive analytics

Collaborate with customers for demand forecast

Dramatically improve service levels and on-shelf availability

SaaS/Cloud means lower IT costs

Synchronize your real-time demand data eloquently with your
PLM for faster bring-to-market of new products

28. ONE NETWORK SCOPE
40k+
480 M TRANSACTIONS
LOGISTICS TRANSACTIONS MANAGED IN ONE
COMPANIES
TRANSACTIONS 52 M+
CONNECTED
IN ONE
NETWORK
GROCERY CONSUMER GOODS ON ONE
3 OUT OF TOP 5
ORDERS
INVOICES
APPTS.
SHIPMENTS
TRANSACTION FLOW VIA ONE NETWORK
U.S. GROCERY RETAILERS
EXECUTING
I N
O N E
N E T W O R K
ONE NETWORK CENTERS
HQ; DALLAS, TEXAS USA
LONDON, UK
SHANGHAI, CHINA
BOPODI , PUNE, INDIA
CAPETOWN, S.A.
SINGAPORE
1.3M PER DAY
55k PER HOUR
15 PER SECOND
2 OUT OF 3 LARGEST GLOBAL
DEFENSE CONTRACTORS
LARGEST HI-TECH SUPPLIER
COMMUNITY
TOP 2 AUTO OEM