APICS Presentation on Agility on October 4

transcript

Supply Chain AgilityOctober 2012

Evolving Practices

Agenda

Trends Supply Chain

In Search of Supply Chain Excellence

What is Agility?

Wrap-up

Year-over-Year Growth

Source: Supply Chain Insights 2012

Average Days of Inventory by Year

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Consumer Packaged Goods

59 57 62 64 67 67 68 70 70 64 64 67

Chemical

71.5 71.9 78.2 75.1 62 70.3 68.1 64.3 64.3 78.6 72.9 72.8

Pharma

122.2366910978

133.6991005621

190.1476161659

170.9865224789

184.3426173998

175.5502604768

167.7999511392

149.8151539812

154.9157818825

198.6631341199

154.3134808632

131.8197942402

High Tech

93.1 57.6 46.5 48.5 35.9 37.3 43.8 36.8 34.6 41.3 34.8 30.4

Average

86.45917277446

80.04977514054

94.21190404149

89.64663061974

87.31065434996

87.53756511921

86.92498778481

80.22878849532

80.95394547064

95.64078352999

81.50337021581

75.50494856007

Source: Supply Chain Insights 2012

Average Days of Working Capital by Industry

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Consumer Packaged Goods

-20 -8 -12 -2 -21 -23 -8 -18 -11 -10 -12 -13

Chemical

37.3 44.7 61.7 71.9 64.8 64.1 63.8 57 51.7 74.8 85.6 77

Pharma

64.13122323105

56.40171531995

48.41779078772

56.19153537418

71.83773591464

94.06306457185

92.60818057698

88.05425335219

87.11058785110

111.0400827200

115.9852979100

113.2239261600

High Tech

231.5 290.3 283.5 243.5 173.5 138.9 109.4 103 92.4 131.9 138.9 140.9

Average

78.23280580776

95.85042882998

95.40444769693

92.39788384354

72.28443397866

68.51576614296

64.45204514424

57.51356333804

55.05264696277

76.93502068000

82.12132447751

79.53098154002

Series6

0 0 0 0 0 0 0 0 0 0 0 0

Days o

Demand Signal

Accurate Weekly

Forecasting is ...

Delay from Purchase to

Signal

Data Latency and Distortion

Red Represents Emerging Economies with Distributor Trade

Retailer DC

3-10 Days

7-20 Days

Manufacturer DC

Difficult

10-20 Days

20-45 Days

Suppliers

Almost Impossible

20-50 Days

45-80 Days

Trivial

Instant

Variable

Building End-to-End Value Networks

True collaboration only happens when there is a sustaining win/win value proposition.

Manufacturer

A Story of Value Chain Leaders

Cash-to-Cash Cycle vs. Gross Margin (2000-2011)SUMMARY SLIDE

SHARED VISION

+ SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = CHANGE

SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION

SHARED VISION

+ INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY

SHARED VISION

+ SKILLS + INCENTIVE + RESOURCES + LEADERSHIP =FALSE

STARTS

SHARED VISION

+ SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATION

SHARED VISION

+ SKILLS + RESOURCES + PLAN + LEADERSHIP =GRADUAL CHANGE

Source: J.P. Kotter

Collaboration: The Right Stuff

Agenda

Trends Supply Chain

What is Agility?

Wrap-up

Supply Chain Management: Top 3 Elements of Pain for Respondent

Evolution of Supply Chain Process Excellence

Align:Market Driven

ResilientReliable

Adapt: Demand Driven

Efficient

Building Horizontal Process Connectors

ContinuousTesting

LearningImprovingIn Market

OrchestrateDemand and Supply

Sense Demand

and Supply

Shape Demand andSupply based

on Market

Absorb DemandVolatility

Absorb Supply Volatility

Right Product

Right Place

Right Time

Right Cost

Procure to pay/order to

Supply Chain “Excellence” Definition

Agenda

Trends Supply Chain

What is Agility?

Wrap-up

An Athlete Needs:

What is Agility?

Agility Importance vs. Performance

Scenario Planning

What-if Analysis

The Need for Balance

S&OP Balance

Starts with the Design of Value Network Strategy

Supply chain strategy

Business StrategyWhat are the right things to do to increase company value?

Value-network Supply Chain StrategyWhat are the right ways to support the business strategy?

What are the right trade-offs between value drivers for each value network?

Right productplatforms

Design the supply

response

Build organizational systems and

manage talent

Align supply relationships

Align demandrelationships

Effective Supply Networks

Execution of buy-side strategies

Continuous Improvement

Capabilities RequiredSupply Chain

Network Design

Design Networks

Innovation Methodologies

Demand Networks

Joint Value Creation Strategies

Business ProcessHow do I do the right things right?

Source: Supply Chain Insights, LLC

A Supply Chain

is a Complex System

with Complex Processes

with Increasing Complexity

Conquering the Effective Frontier

Useful Ratios

• Performance better than peer group• Year-over-year improvements• Consistency in results• Leadership in managing trade-offs

What is Best in Class?

Corporate Summary

Metrics Included for Comparison

Cash-to-Cash Cycle vs. Gross Margin (2000-2003)

Cash-to-Cash Cycle vs. Gross Margin (2000-2011) SUMMARY SLIDE

Inventory Turns vs. Revenue per Employee (2002-2003)

Inventory Turns vs. Revenue per Employee (2002-2011) SUMMARY SLIDE

S&OP ProcessPlan Execution

Challenge

• We have spoken for many years about the need for agility in the supply chain, but we have not designed for it or measured it.

• As our supply chains become more central to global success, agility becomes more important.

Wrap-up

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