Building Responsive Supply Chains

Building Responsive
Supply Chains
Supply Chain Insights LLC Copyright © 2022
LORA CECERE, FOUNDER | lora.cecere@supplychaininsights.com

Introduction
Supply Chain Insights LLC. Copyright © 2022
S E C T I O N 1
2

INFLATION GEO-POLITICAL
SUPPLY CHAIN
CHALLENGES
SLOWED GDP GROWTH
Supply Chain Shocks
Extremely dynamic and complex macroenvironment impacting performance

Navigating the
Shades of Gray
The world becomes more gray through the
pandemic. Data requires analytics to provide
context.
4

The Efficient Supply
Chain is Not the
Most Effective

Imagining Supply Chains in 2030
IMAGINE 2022
Response During the Pandemic
7%
31%
46%
15%
0%
During the pandemic, we managed very
well. No issues.
During the pandemic, we managed well
with some issues.
We managed the business by brute force.
We did it, but it was tough.
The business struggled during the
pandemic.
The business was not equal to the
challenge of the pandemic.
TOTAL
__________________________________________________________
Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study
Q11. When you think of the supply chain’s response during the pandemic, how would you classify your company’s business performance?

IMAGINE 2022
Response Gaps
43%
33%
51%
24%
28%
9%
28%
3%
Shifts in demand
Labor availability
Supply availability
Ocean freight costs
Ocean freight variability
Availability of air
Inadequacies of planning systems
Inefficiencies of working remotely
6%
31%
13%
13%
3%
7%
6%
Support by the executive team
Having the right inventory
Labor availability in distribution
centers
China lockdowns
Availability of road transport
Price of air freight
Price of road transport
Greatest Issues
__________________________________________________________
Q12. What were your greatest issues? ?

Industries
Struggle with
Inventory
8

9
What Is Supply
Chain
Excellence?
Resilience
Ability to drive consistent results year-
over-year and weather market factors.
Balance
Organizational alignment on a
balanced scorecard.
Performance
Outperforming industry peer group on
the key metrics.
Improvement
Driving year-over-year improvement.
Delivering Value
A shift from cost to value.

10
Definitions
Agility. An organization’s ability to have the same cost, quality and customer service
given levels of demand and supply variability.
Responsiveness. A short-cycle supply chain. A process that responds quickly.
Proactivity. An organization that senses market and operational shifts quickly and
guides the organization for a better response.
Resilient. The ability of an organization to produce consistent balance sheet results
year-over-year.
Working Well. An organizational assessment of the group on the effectiveness of the
supply chain.

Companies Manage
Functional Silos

Efficient Functional
Silos Do Not Create
Effective Supply
Chains

How Do We Improve
Capabilities?
S E C T I O N 2
13

Change Mental Models
14

What to do?
Plan outside-in
Drive alignment
Collaboration
Digital transformation
15

BSH Latency
Distortion Market Latency Demand Latency Process Latency
49% 7 months 2 weeks 4 weeks

•About LKQ
LKQ Corporation is an eCommerce
provider of alternative and specialty parts
to repair and accessorize automobiles and
other vehicles.
The Company is global, with operations in
North America, Europe, and Taiwan. LKQ
offers its customers a broad range of
Original Equipment (OE) recycled and
aftermarket parts, replacement systems,
components, equipment, and services to
repair and accessorize automobiles, trucks,
and recreational and performance vehicles.
Currently, the Company has 44,000
Employees and 1,600 Locations in 31
Countries.

Pilot Scope
SKU Number SKU Description
1343305 BREMSSCHEIBE HA FUER AUDI
1343349 BREMSSCHEIBE HA FUER
2215644 BREMSSCHEIBE 2-TEILIG HA
3124261 BREMSSCHEIBE HA FUER ALFA
5415080 BREMSSCHEIBE 2-TEILIG VA
1. No of SKUs- 19
2. Distribution Network - 1 CDC, 150+ Branches (Germany
and Austria)
3. Location are grouped under the following:
• Garage, E-Commerce, Wholesale
• Garage, E-Commerce
• Garage, Wholesale, E-Commerce, Key Account
• Garage
• Garage, Wholesale
4. Sales Region – Austria, Germany, Slovenia

The Transition to Market-Driven
Company Statistical
Enterprise
Market Driven
Inputs Shipments Sales Invoices Sales Invoices +
Market Signals
Demand
Latency
Unknown Unknown ~ 6 weeks
Forecast Value
Added (FVA)
8% 9.9% 17.3%
Forecast Bias Positive Negative /
Balanced
Balanced
Bullwhip
Amplification
48% 52% 37%
COV Analysis Insights:
● Item/Branch locations
were not forecastable
● An enterprise
forecast slightly
improves FVA
● The market-driven
forecast significantly
improves FVA

© 2022 Corning Incorporated
OPTICAL
COMMUNICATIONS
CORNING’S LARGEST SEGMENT
• Over 25,000 Employees
• Over $4 billion in Revenue
• Key Segments: Fiber to the home, Wireless
technologies, Hyper Scale Data Centers

Corning Demand Insights
Company Statistical
Enterprise
Market Driven
Inputs Customer
Orders
Customer
Orders
Customer orders
+ Market Signals
Market Driver
Lags
Unknown Unknown ~ 3-4 Months
Forecast Value
Added (FVA)
-4.16% 0.55% 5.43%
Forecast Bias Negative Negative /
Balanced
Balanced
Pilot Insights:
● Outside-In forecasts consistently outperform inside-out statistical forecasting approaches
● Correlation does not equal causality – but can be helpful in the model (Temperature)

Corning - Summary Observations
• The division has a negative FVA (~4.2%). The FVA technique is new for the group.
• ML Drivers that showed strong correlation and ability to enhance FVA by ~+10%
• Selling Price
• Temperature
• GDP
• Covid
• The organization looks at price management and demand in disconnected processes.
• There is a need to enhance insights on pricing communication lead times, and effective
dates
• Inflation Rate
• Housing Starts
• 5G Subscriptions
• 5G Sites

Biggest Impact? Redefining Time
27
• Market Latency: The translation of a market signal to a buying pattern to a
visible order pattern.
• Demand Latency: The time to translate channel purchase data pattern to an
order through replenishment processes.
• Process Latency: The time for the organization to make a decision.
Market Latency: 3-6 months
Demand
Latency: 2-
12 weeks
Process
Latency: 2-
6 weeks

Potential for Nine New Advanced Planning Applications
28
1. Market-driven Demand Management
2. Demand Visibility
3. Procurement Buyer Workbench
4. Planning Master Data
5. Unified Planning Data Model
6. Form and Function of Inventory
7. Revenue Management Effectiveness (Test & Learn):
Demand Shifting Versus Shaping/ Balanced Scorecard
Impact
8. Bi-directional Orchestration
9. S&OP Playbook Execution

What to do?
Plan outside-in
Drive alignment
Collaboration
29

IMAGINE 2022
Organizational Alignment Before Pandemic
64%
92%
87%
65%
79%
74%
49%
82%
30%
44%
38%
45%
25%
44%
49%
28%
39%
36%
25%
51%
13%
28%
18%
23%
New Product
Dev't &
Distrib'n
Sales and
Operations
Manufact'g
&
Procurement
Operations &
IT
Finance &
Operations
Sales &
Finance
Marketing &
Finance
Sales &
Marketing
Marketing &
IT
Finance & IT Sales and IT CSR
&
Operations
Team Alignment: Importance vs. Performance*
Importance Performance
Greatest Gaps

IMAGINE 2022
79%
91%
64%
76%
67%
64%
73%
58%
52%
73%
21%
30%
45%
18%
30%
24% 24%
33%
24%
21%
42%
9%
Logistics and
supply chain
planning
Supply chain
planning and
manufacturing
Logistics and
procurement
Sales and
supply chain
planning
Supply chain
planning and
customer
service
Finance and
supply chain
planning
Procurement
and
manufacturing
Finance and
manufacturing
Finance and
procurement
Customer
service and
distribution
Corporate
Social
Responsibility
and
Manufacturing
Users Vendors
__________________________________________________________
Source: Supply Chain Insights LLC, Supply Chain Reset
Q9. In your opinion, how important is it for each of the following pairs of teams to be aligned within your supply chain?
Q10. How aligned do you believe that these same pairs of teams actually are with your company?
Greatest Gaps Between
Users and Vendors
Organizational Gaps During the Disruption

What to do?
Plan outside-in
Drive alignment
Collaboration
32

IMAGINE 2022
33
Definition
34%
63%
85%
46%
54%
69%
15%
27%
Supply Chain Finance
Order Management
Transportation Management
Manufacturing
Contract Manufacturing
Procurement
Corporate Social Responsibility
Risk Management
Q7: When you think of the term “supply chain” in your organization which
functions?

IMAGINE 2022

IMAGINE 2022
What to do?
Plan outside-in
Drive alignment
Collaboration
36

IMAGINE 2022
53%
7%
41%
18%
23%
27%
18%
27%
Yes, there is a digital
transformation strategy.
No, there is not a digital
transformation strategy.
Within the network
Extremely satisfied5 Somewhat satisfied4 Neutral3 Somewhat dissatisfied2 Extremely dissatisfied1
__________________________________________________________
Q14: Does your company have a digital transformation strategy?
Q41. Satisfaction with the speed at which it gets critical data to make decisions within the network?
AVG
3.99
1.63
Companies with Digital Transformation Strategies
Did Significantly Better

IMAGINE 2022
Innovation?
10%
30%
58%
3%
We are usually the last to try a new
technology
We are usually among the last to try a
new technology
We are usually in the middle when it
comes to trying a new technology
We are usually the first to try a new
technology
__________________________________________________________
Q33: Which of the following best describes your company's approach to investing in new analytics strategies, in general?

40
Steps to
Take
1. Improve Alignment.
2. Drive Results Based on
a Balanced Scorecard.
3. Be a Good Trading
Partner.

.
We Must Learn to
Unlearn and Build Better

42
Insights
01
No Company Was Ready for the
Pandemic. The Changing
Market Is An Opportunity for
Growth.
02 Focus outside-in and translate
market data.
03 Imagine the Supply Chain of the
Future from the Customer Back.

43
2 years Partner at Altimeter
Group (leader in open
research)
8 years Gartner and AMR
Research
8 years Experience in
Marketing and Selling
Supply Chain Software at
Descartes Systems Group
and Manugistics (now
JDA/Blue Yonder)
Who Is Lora?
Founder of Supply Chain
Insights
“LinkedIn Influencer”, Guest
blogger for Forbes, Author:
Bricks Matter (2012), Supply
Chain Metrics That Matter
(2014), and Shaman’s
Journal (2014-19)
15 Years Leading Teams in
Manufacturing and
Distribution for Clorox,
Kraft/General Foods,
Nestle/Dreyers Grand Ice
Cream and Procter &
Gamble.

Thank You…
LORA CECERE, FOUNDER | lora.cecere@supplychaininsights.com

45
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@scinsightsllc
@lcecere
Attend a Live Event
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45

Founded in February 2012 by Lora Cecere, Supply Chain
Insights LLC is in its eleventh year of operation. The
Company's mission is to deliver independent, actionable,
and objective advice for supply chain leaders.
46

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