Approaching Supply Chain Performance From the Market Side In20 April 2010 - Logichem
Dramatic Improvement by extending supply chain,
process improvement & management practices to
the demand side of the business
Peter Murray, CIRMEI DuPont and Nemours CompanySupply Chain Development & Innovation Leader
1
Introduction
DuPont– Market Driven Science Company– Creating sustainable solutions essential to a better, safer and healthier life for people
everywhere. – Evolving for our 3rd Century
• Gunpowder � Petrochemicals � Sustainable Solutions for a better life
Peter Murray – Supply Chain Development and Innovation Leader–Supply Chain Center of Competency–10 years with DuPont – Supply Chain Transformation–11 years in defense, industrial equipment, software, consumer products–Supply Chain, Operations, S&OP, Demand, Product, Business Management - Sustainability–APICS Board of Directors, Supply Chain Council, Institute of Business Forecasting
2
Of Supply Chain’s and Volcanoes
Losses – Euro 2B and climbing – chaos with travel, good not moving time marches on …
With Flights Grounded, Kenya’s Produce Wilts
Volcanic Ash Cloud Map - Europe
European Flights Resume, London Remains Closed
Applause, cheers and whoops of joy rang out from Asia to
New York to Paris on Tuesday as airplanes gradually took to
the skies after five days of being grounded by the drifting
volcanic ash that has crippled European air travel.
3
Supply Chain Saves The World
Lessons learned and applied to emerge stronger at DuPont – and their foundation in the APICS body of knowledge and AMR’s forward thinking and experience – all this you can apply as well
Why businesses exist and what we take how with us – there is
more when it comes to the company you choose and APICS
4
Steps to success – lessons from our 8 year and continuing journey
1. Educate to build the foundation – do it widely and deeply start with the most interested
2. Develop a standard process approach to identify and place issues and opportunities
3. Create a vision and strategy that incorporates supply chain strategy with the rest of your business strategy
4. Learn from others, learn, ask, check, compare, share, build - repeat
5. Apply standard solutions and methods that focus on reality vs perception or aspiration alone
6. Execute, Execute, Execute, improve execution and Repeat
7. Don’t ever give up
5
Evolution – Long Term Path
Optimizing The Safe Production Of The Molecule• 197 years
Competitive Imperative Strategic Supply Chain Capability• 8 years
Effective and Efficient Advanced S&OP �Integrated Business Management
• 4 years
Demand Driven Enterprise• Near future
Market Driven Science Company• Our goal
6
How to go from great concept
To Reality
Mark
eting E
ffe
ctiveness
Supply Chain Capability
Dem
and M
anag
emen
t
7
The Challenges of the last two years and for a least the next few
Was and will not return for awhile
Today
Somewhere in the future
Sep-Jan
Time into the future �
De
ma
nd
�
Trouble!
Yes!
How Do I deal
with this?
Emerge stronger, use the new reality as an
opportunity…. Ellen Kuhlman CEO DuPont
8
Excess / Wrong InventoryLost MarginStock-outsMix Issues
The essential defect ….
Market or demand side realities collide with asset or supply side / supply chain designs … if you don’t address the root causes
Supply Side Out Market Side In
9
How fast can you change ? Sustainably Change?
COST
TIMETODAY
EMERGENCY CHANGES
STABILIZEPRODUCTIONCUSTOMER
COMMITMENTS MADE
TRADING AREA
CAPACITY FIRM MATERIAL ORDERED
CUSTOMER REQUESTS/PROMISES
ADDING & CHANGING
FUTURE PLANNING
Don't change your inventory or service strategy faster than yourtotal supply chain can effectively respond
You can either change your lead-times to customers, your supply chain responsiveness or agility, or significantly improve your demand sensing or accept lower fill rates for customers
1
2
EAME 0324-02 ~
AGILITY
Demand
Supply
10
Numbers
•$3.4 Billion in free cash flow•$1.5 Billion of cash from inventory•$1.9 Billion in cost and capital •$1.5 Billion in revenue gained or defended•Margin improved by 2% - reversing a 12 year slide•3 people�50�200�5000�55000•One business, one project, one team, one person at a time, it multiplies, you can leverage it, it grows and sometimes slips back•20 APICS Certified People � 50 � 200 � 250
Back in the Fortune 50 after 53 years,
APICS Article, DD has stabilized and is
improving – Supply Chain is strategic!
11
Competitively advantaged supply chains are shifting much more demand driven models
Long and slowForecast-basedProduct forwardCost-reduction
Function-driven Supply Chain
From
supplier
Fast and flexible
Demand-based
Customer back
Value and growth
Company Strategy-driven
Networked
To
MFGdistrib-
utorcustomer
MFG
supplier
distrib-utor
Customers
Sustainable Does this
come in
GREEN?
Pressures
Pressures
Action
Capability
12
What is a Supply-Chain its evolving to cover the “value chain”.
SCOR Benchmarking Workshop
Supplie
r pro
cesses
Product DesignDCOR™
Custo
mer p
rocesses
Supply Chain SCOR™
Sales & SupportCCOR™
Product Management
12
The picture form the Supply Chain Council represents processes not
functions or departments
13
The Future Of Supply Chain Management Is Now
1. View your supply chain as a strategic asset
2. Develop an end to end process architecture
3. Design your organization for performance
4. Build the right collaborative model
5. Use metrics to drive business success
Practical Application – Read the Book
14
15
Breaking Down ComplexityTwo Types of Demand and address with two basic approaches
UnpredictablePredictable <
Dem
an
d P
redic
tabili
ty
Business Value/ReturnConsensus Planning
Sales Input
Marketing Input
Statistical Analysis
Product/BrandManagement
Input
CustomerInput
CustomerCollaboration
Strategy and
Business Plans
Demand Plan
1-18/24 Months($ and Volume)
Sales Input
Marketing Input
Statistical Analysis
Product/BrandManagement
Input
CustomerInput
CustomerCollaboration
Strategy and
Business Plans
Demand Plan
1-18/24 Months($ and Volume)
Supply Chain Optimization Adv S&OP & Demand Chain
16
Targeting Demand Improvement – Read On Your Own
•Match demand plan purpose and detail to minimize time spent on analysis•Don’t fool yourself with unrealistic aspirations•Control the inputs – don’t chase the outputs•Adapt the demand plan rhythm to the rhythm of your markets
Aim For What Makes SenseTarget Significant Variability
Demand TeamOrganization
Dem
and ProcessD
eman
d Strat
egy
Enabling The Team
•Build the competency and expertise in your organization•Make the process transparent, realistic, honest and disciplined–enabling a continuous improvement mindset
•Fix the aggregate plans first•Apply the 80/20 rule•Learn from existing practices – don’t reinvent the wheel•Speed matters –minimize data gathering time
17
Supply Chain Performance + Demand Performance = Business PerformanceDemand Driven Supply Chains
Reactive• Expedite and Firefight• Change only when necessary • / unavoidable
Responsive• Built on Anticipation• Acts with Speed• Agile when change is needed
Demand Driven• Starts with Market and Sell• Demand Sensing• Demand Shaping• Products That Drive Demand
DMD
Business
DMD
Business
Business
DMD
Reactive
Responsive
Demand Driven
18
Competing
“The ability to learn faster than you competitors may be the onlysustainable competitive advantage” – Arie De Geus
19
How you can get the benefit all the knowledge and experience
All that we have accomplished in DuPont is available to you via APICS, the Supply Chain, Council, Institute of Business Forecasting, ISM and fine research groups like AMR and the sharing amongst colleagues at functions like Logichem
“Coming together is a beginning. Keeping together is progress. Working together is
success.” – Henry Ford
1 Joined up decision making or Integrated Management
2 The knowledge is out there – take advantage of it – combine it with you will
to succeed
“We shall neither fail nor falter; we shall not weaken or tire … give us the tools and
we will finish the job.” – Winston Churchill
3 You have to effectively apply the knowledge with good timing to succeed
over time
“Take time to deliberate; but when the time for action arrives, stop thinking and go in.” –
Napoleon Bonaparte
20
Final Message
21
Thank YouThank You
Questions or comments
[email protected] or [email protected]
The task of integrated management is to make the strengths of people effective and their weaknesses irrelevant. paraphase of wisdom from Peter F. Drucker
