Using Analytics to Build Solid Supply and Supplier Management Relationships
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Supplier Scorecards have become the Holy Grail of supplier performance measurement, although most companies are less than satisfied with their systems in place to measure supplier performance. Learn how to: - Leverage internal and external data sources to foster collaboration with suppliers and get up-to-the minute visibility across your extended supply chain. - Improve supplier relationships through on-time payments and rapid problem resolution.
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Using Analytics to Build Solid Supply and Supplier Management Relationships
- 2. The Supply Chain Intelligence Company Using Analytics to Build Solid Supply and Supplier Management Relationships Keith Peterson, President & CEO | Halo Lora Cecere, President & CEO | Supply Chain Insights Nate Weaver, Senior Director of PreSales Engineering | Halo
- 3. Supply Chain Insights LLC Copyright © 2016, p. 3 About Lora Cecere • Founder of Supply Chain Insights • “LinkedIn Influencer” • Guest blog for Forbes • Author of 4 books: Bricks Matter (2012), Shaman’s Journal (2014), Supply Chain Metrics That Matter (2014), Shaman’s Journal (2015) • Partner at Altimeter Group (leader in open research) • 7 years of Management Experience leading Analyst Teams at Gartner and AMR Research • 8 years Experience in Marketing and Selling Supply Chain Software at Descartes Systems Group and Manugistics (now JDA) • 15 Years Leading teams in Manufacturing and Distribution operations for Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble. Contact Information: • Email: lora.cecere@supplychaininsights.com • Blog: www.supplychainshaman.com (15,000 pageviews/month) • Forbes: www.forbes.com/sites/loracecere • Twitter: twitter.com/lcecere (7,500 followers) • LinkedIn: www.linkedin.com/in/loracecere (90,000 followers) • LinkedIn Influencer: www.linkedin.com/today/author/446631
- 5. Supply Chain Insights LLC Copyright © 2016, p. 5 Current State
- 6. Supply Chain Insights LLC Copyright © 2016, p. 6 Top Five Elements of Business Pain: Volatility, Alignment, Data, Talent, Visibility
- 7. Supply Chain Insights LLC Copyright © 2016, p. 7 Who Has a Supply Chain That Is Working Well?
- 8. Supply Chain Insights LLC Copyright © 2016, p. 8 Not as Easy as We Thought….
- 9. Supply Chain Insights LLC Copyright © 2016, p. 9 Greater The Number of ERP Instances: The Larger Pain with Data Differences by Number of Instances
- 10. Need for an Analytics Layer Operational Investments Workforce ProductivityAnalytics
- 11. Supply Chain Insights LLC Copyright © 2016, p. 11 Project Management
- 12. Supply Chain Insights LLC Copyright © 2016, p. 12 Growing Talent Gap
- 13. Maximizing the Value of Technology Trends
- 14. Supply Chain Insights LLC Copyright © 2016, p. 14 Confluence of Technologies
- 15. Supply Chain Insights LLC Copyright © 2016, p. 15 Data Strategy for…. Clouds? Streams? Lakes?
- 16. Supply Chain Insights LLC Copyright © 2016, p. 16 Analytics Maturity
- 17. Supply Chain Insights LLC Copyright © 2016, p. 17 Traditional Progressive Project definition Large projects with known outcomes Small projects that evolve Funding Licensed deployments Cloud deployments Type of data Structured transactional data Unstructured and structured data Data characteristics Data with low velocity Data with high velocity Leadership Led by IT Led by the business Process focus Inside-out Outside-in Capabilities Better response Test and learn Technologies Large, established vendors Small and evolving technology sources Shifts
- 18. Supply Chain Insights LLC Copyright © 2016, p. 18 Wrap-up • Adopt new forms of analytics. • Business leaders must own analytic platforms. • We must learn from the past to unlearn, and then rethink supply chain processes. The starting point is rewiring our brains.
- 19. Effective Supply Chain Management Focus on the things that matter Inventory Management Sales and Operations Planning Executive and Financial Analytics What do I know? When did I know it When should I have known it? What should I know now? Supply and Supplier Management Customer and Channel Management Supply and Supplier Management
- 20. What we are • Heterogeneous data from multiple sources • Sit “on top” of enterprise, supplier, customer, • Pre-Built Supply Chain templates • Comparisons and “What-Ifs” • Data Cleansing • Easy-to-Change, Configure • Executive/Manager/User-oriented • Rapid Time to Value • Alerting and Collaboration • Mobile What makes Halo different? What we are not • An ERP System • A functional process management system • A workflow system • A transaction reporting system
- 21. Halo Business Analytics for Supply Chain Intelligence Increasing transparency from customers to suppliers ⏵ For business users and data experts alike ⏵ Leverage legacy tools and data - No “rip and replace” ⏵ Non-proprietary platform at fraction of the cost ⏵ Easy to get up and running – 4 to 6 weeks ⏵ Collaborate with external suppliers and data experts ⏵ 252 global customers 96% retention
- 22. About Halo Manufacturing Retail Food and Beverage Data driven companies trust their analytics to Halo
- 23. The Supply Chain Intelligence Company Applying Business Analytics to Supplier Development An Example
- 24. ⏵ 7–10% average annual improvement in delivery responsiveness ⏵ 10–13% average annual improvements in quality ⏵ 22% lower product development times The potential of supplier development Source: Best Practices in Supplier Relationship Management and Their Early Implementation. Rand Corp (2012).
- 25. Supplier Management Supplier Scorecards have become the Holy Grail of supplier performance measurement, although most companies are less than satisfied with their systems in place to measure supplier performance.
- 26. Supply and Supplier Management • Supply delivery network is fragmented • Data is spread across multiple systems, difficulty in data integration • Historical data is not trusted, data lacks credibility • Assessing trends is time consuming • Sharing data with suppliers is not easy • Metrics not strategically aligned with the business goals • Too complex and difficult Why is Supplier Management difficult and why does it fail?
- 27. • Major supply chain disruptions • Lost Sales and Revenue • Delivery problems (late or partial orders) • Poor quality issues (returns from dissatisfied customers) • Customer Satisfaction issues(and other issues that damage a company’s brand equity and credibility) • High Expediting Costs and Penalties • High Total Acquisition Costs Failure to Manage Critical Supplier Performance
- 28. The Time Value of Supplier Intelligence TIME “Event Horizon”Product not shippedInventory drops below min. Order Cancelled No time to respond Why didn’t I know? Supplier Information and Metrics not defined Poor, inaccurate data Data not available to executives from key sources Supplier Management Lost Revenue Lost Margin High Total Acquisition Costs High expediting costs E2E Supplier Visibility Suppliers at risk Alternative Suppliers Strategic decisions Standard costs
- 29. Solution • Automated Supplier Scorecard, dashboards, and reports to manage your global supplier base • Instant visibility into the metrics that matter (Cost, Delivery, Quality, Risk) • Clarity across the enterprise, purchasing and procurement department, and supplier base • Easily share reports with suppliers (how you measure them and how they can better perform) Benefits • Improved efficiency and response times (proactive vs. reactive) • Reduce overall inventory and manufacturing downtime caused by shortages • Reduce spend and rush shipment costs (working capital) • Replace underperforming suppliers by understanding alternate suppliers • Clear goals Halo for Supplier Management The solution and the awesome benefits
- 30. Supply and Supplier Management • How does my supplier base look in terms of performance? • Which of my suppliers are performing the worst? Whom should I be concerned about? • What is the performance scorecard of a particular supplier? How are they performing? • Which suppliers should I consider replacing? Should I split my commodity purchases further to mitigate risk? • What information do I need for the next QBR and/or negotiation session? Concerns and problems we address
- 31. The road to supply and supplier development How to achieve the best value #1 Know your supplier #2 Scorecard every supplier #3 P2P Model #4 Develop Supplier Base #5 Integrate d Partnerin g “Golden Record” Master data mgmt. Distributed reporting Solve supplier deficiencies Supply sensing Collaboration tools Payment-Invoice- Purchase Data integration N-tier development Supplier networks Image adapted from http://www.hicxsolutions.com/blog/compliance/purchasing-fraud-prevention/
- 32. Halo for Supplier Management Your Control Tower for increased visibility, shared information, and better relationships with your suppliers. Visibility Agility Sharing
- 33. Supply and Supplier Management Cost: 30% (EPPV = 70%, Pay Terms = 30%) Quality: 30% (PPM = 100%) Delivery: 30% (OTD = 75%, Lead Time = 25%) Risk: 10% (SSI = 50%, SER = 50%) Economic Purchase Price Variance: the difference between the previous price paid and its current price, multiplied by the actual number of units purchased Payment Terms: # of days allowed to pay off the amount due Defective Parts Per Million: calculated based on the total number defects received versus the total number of items received On-Time Delivery: Percentage of on-time product deliveries against promise dates under normal operating conditions Lead Time: Days between order date and delivery date Supplier Stability Index and Supplier Evaluation Risk: Financial health of your suppliers, who is likely to cease operations and close their doors Completely configurable based on your needs
- 34. Supply and supplier relationships How to achieve the best value? 1. Manage the total business with each supplier 2. Measure and shape supplier performance 3. Involve key suppliers in product 4. Promote dialogue with suppliers 5. Recruit skilled personnel 6. Develop personnel to know suppliers in-depth Source: Best Practices in Supplier Relationship Management and Their Early Implementation. Rand Corp (2012).
- 35. Let’s keep talking Keith Peterson President & CEO www.slideshare.net/HaloBI info@halobi.com |888.300.0219 @Halo_BI
Notas del editor
- This is a sample customer logo slide. More images are available on the Marketing Dropbox folder \\HALOBIFILE\Shares\Dropbox (Halo)\Global\Marketing\Slide deck\Images\Customer logos.
- A survey of leading companies found a 7–10 percent per year average improvement in delivery responsiveness attributable to supplier development and management initiatives (Trent and Monczka, 1998). Rockwell Collins reported that supplier on-time delivery increased from 83.8 percent to 96.5 percent in three years after it developed a portal through which suppliers can gain access to engineering designs and forecasts, download scorecards that monitor their performance, and send invoices to and receive payment from Rockwell Collins.6 Sun Microsystems’ Enterprise Services organization reported improvements in repair-parts-vendor turnaround times from 34–40 days to 4–5 days after it fully integrated its technology platform and systems with those of 12 of its key vendors in the Americas (Pazmany, 2000). Cessna reported a 113 percent increase in production inventory turns over six years, with dramatically higher material availability. Cessna achieved this improvement by creating a strategic plan and cross-functional commodity teams that rationalized the company’s supplier base;
- Few people look at their suppliers’ performance and risk potential in a comprehensive manner that includes delivery, quality, cost and time – whether this is for their broad supply base or for individual suppliers Suppliers are managed in a fragmented manner through the Procurement organization of Commodity Managers and Buyer-Planners It is difficult to obtain data from multiple enterprise, provider and supplier systems Few people look at Supplier performance over time to assess trends and capability Historical data is often suspect in an organization and is not trusted Few companies share their performance data with their suppliers with a view towards improving performance
- The Consequences of a failure to manage and monitor Critical Supplier Performance can be significant.
- How has my supplier base changed over time? How has my suppliers’ performance changed over time? Should I be concerned? What should I be concerned about? What are the financial and customer consequences? What do I tell my Commodity Managers/Buyer-Planners to focus on?
- Visibility into Cost, Quality, Delivery, and Risk. Agility is the ability to make better/more informed decisions. Share this information with Suppliers.