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© AberdeenGroup 2009
Supply Chain Executive’s Agenda 2010:
Key Trends and Strategies
Nari Viswanathan Vice President/Principal
Analyst Aberdeen Group
© AberdeenGroup 2009 2
Customers
Suppliers
Raw Material
Component Factory
Retail Store System Factory
Enterprise
Demand Network - Buyer of
services and products For e.g: Retailers, Distributors, Value Added Resellers (VARs),
Supply Network – Suppliers,
Contract Manufacturers, ODMs, 3PLs
Enterprise – Sales, Marketing,
Operations, Manufacturing, Procurement
Logistics Network – 3PLs, Shippers, Carriers
Business Context: Integrated Demand-Supply Networks
Financial Network – Banks, Supply Chain Finance
Providers
© AberdeenGroup 2009 3
Session Agenda
Mandate for the CSCO: Aligning Business Goals with Supply Chain Strategies
Priorities for the CSCO: Key Trends Action Plan for the CSCO: Key Takeaways
© AberdeenGroup 2009 4
Top Business Goals of 2010
n=350 for Executive Management ; n=226 for Supply Chain Professionals Aberdeen Business Review
Mis-alignment
© AberdeenGroup 2009 5
Top 2 Challenges in Meeting 2010 Goals
n=350 for Executive Management ; n=226 for Supply Chain Professionals Aberdeen Business Review
Supply chain and management agree on need for execution of strategy
© AberdeenGroup 2009 6
Top 2 Strategic Actions Being Taken in 2010
n=350 for Executive Management ; n=226 for Supply Chain Professionals Aberdeen Business Review
© AberdeenGroup 2009 7
Session Agenda
Mandate for the CSCO: Aligning Business Goals with Supply Chain Strategies
Priorities for the CSCO: Key Trends Action Plan for the CSCO: Key Takeaways
© AberdeenGroup 2009 8
Priorities of the Chief Supply Chain Officer
Gaining Supply Chain Visibility & Responsiveness is key requirement
BI is becoming more focused on Operational Issues
Sales and Operations Planning is evolving into Integrated Business Planning
Collaboration is back: Trading Community Management
Cloud & SaaS approaches are ideally suited to enable Integrated Demand-Supply Networks
© AberdeenGroup 2009 9
Why Should Companies Focus on Supply Chain Visibility? Customer Service Advantage
Best-in-Class versus Laggards - their percentage of complete and on time orders delivered to customers is 15 percentage points higher
A large gap in today’s customer driven environment Landed Cost Advantage
Best-in-Class versus Laggards - more successful in reducing their year-over-year landed costs per unit (an almost 13 percentage point gap with Laggards)
A big achievement in today's cost-conscious business climate
© AberdeenGroup 2009 10
Priorities of the Chief Supply Chain Officer
Gaining Supply Chain Visibility & Responsiveness is key requirement
BI is becoming more focused on Operational Issues
Sales and Operations Planning is evolving into Integrated Business Planning
Collaboration is back: Trading Community Management
Cloud & SaaS approaches are ideally suited to enable Integrated Demand-Supply Networks
© AberdeenGroup 2009 11
Role Based BI Approaches
High-level / KPI reporting (or "overlay") tools - most relevant to C-level executives and top-level directors.
Analytics / data-intensive analytical reports - most relevant to specialized data analysts. These applications should provide advanced analytics capabilities (including historical analysis and forward-looking estimates) for supply chain specialists, with the ability to perform root cause analysis and to drill down into specific business areas. More focused on historical data
Embedded analytics / SCI tools incorporated into other functional applications (e.g. S&OP, procurement, transportation, manufacturing shop floor etc), business analysts or mid-level supply chain / operations managers for which BI is not a primary job responsibility (operational users). More focused on real-time data
Analytics & Operational BI: Enablers of Visibility and Responsiveness
© AberdeenGroup 2009 12
Supply Chain BI Capabilities – Key to Success in Multi-Enterprise Demand-Supply Networks
22%
47%
19%
7%
36%
51%
78%
55% 51%
28%
45%
65%
36% 37% 30%
0%
25%
50%
75%
100%
Internal supply chain performance
dashboards
External supply chain performance
scorecards
Reports Analytics (statistical
analysis, trending, route cause analysis etc)
Supply chain modeling (e.g.
what-if scenarios, network design,
etc.)
Best-in-Class Average Laggards
© AberdeenGroup 2009 13
Priorities of the Chief Supply Chain Officer
Gaining Supply Chain Visibility & Responsiveness is key requirement
BI is becoming more focused on Operational Issues Sales and Operations Planning is evolving into Integrated
Business Planning Collaboration is back: Trading Community Management Transportation and warehousing needs to be Integrated
with overall supply chain Cloud & SaaS approaches are ideally suited to enable
Integrated Demand-Supply Networks
© AberdeenGroup 2009 14
Elements of Integrated Business Planning
© AberdeenGroup 2009 15
Traditional S&OP Integrated Business Planning (S&OP 2.0)
Volumetric supply demand balancing only.
Profitable alignment of supply, demand, product and service. Risk management an important part of the process.
Tactical process with limited linkage to overall business goals.
Strategic technology-enabled process aligned and integrated with financial and corporate goals and metrics (C-Suite).
Primarily spearheaded by Sales or Operations organizations.
Balanced process with equitable participation from key stakeholders: Sales, Operations, Product development, Finance and Service. Financial planning and budgeting process integrates with S&OP process
Limited sponsorship via LOB management. Primarily driven by top executive-level sponsorship (C-Suite).
Internal process—no customer, partner engagement
Engages players in the value chain—active strategic customer and partner engagement.
Typically monthly or bi-weekly static process focused on tactical exception management.
Dynamic, global, even event-driven based on frequently scheduled and on ad hoc basis.
Some technology enablers to support the process. Typically, spreadsheet oriented or a standalone solution.
Advanced technology enablers covering analytics, collaboration, optimization, simulation and what-if analysis. Global and local capabilities with real-time visibility to demand, supply, and product status. Integrated with ERP.
© AberdeenGroup 2009 16
Priorities of the Chief Supply Chain Officer
Gaining Supply Chain Visibility & Responsiveness is key requirement
BI is becoming more focused on Operational Issues
Sales and Operations Planning is evolving into Integrated Business Planning
Collaboration is back: Trading Community Management
Cloud & SaaS approaches are ideally suited to enable Integrated Demand-Supply Networks
© AberdeenGroup 2009 17
Process Steps Associated with Trading Community Management
© AberdeenGroup 2009 18
Priorities of the Chief Supply Chain Officer
Gaining Supply Chain Visibility & Responsiveness is key requirement
BI is becoming more focused on Operational Issues
Sales and Operations Planning is evolving into Integrated Business Planning
Collaboration is back: Trading Community Management
Cloud & SaaS approaches are ideally suited to enable Integrated Demand-Supply Networks
© AberdeenGroup 2009 19
Highest Adoption Rates for SaaS in Supply Chain Execution
© AberdeenGroup 2009 20
Key Takeaways Chief Supply Chain Officer role is becoming a reality Lowered workforce – 63% of companies indicate that
they are not going to hire in 2010 However 38% indicate an increase in technology spend in
2010 50% of companies indicate that sustainability has been
incorporated into some of the SCM processes and 25% indicate that it has been incorporated into ALL SCM processes Improved energy management and changing
transportation strategy are top two approaches towards making supply chain more environment friendly
Now more than ever, supply chain processes needs to be customer facing
© AberdeenGroup 2009 21