Framework For Smarter Supply Chain V10 Jonathan Austin - IBM · MES CRM 3PL WMS Inventory ......

IBM Industry Solutions

A Framework For The Smarter Supply Chain IBM Smarter Business and Technology Series 2010

Jonathan Austin

Industry Frameworks Leader for Industrial Sector

ASEAN

2 © Copyright IBM Corporation 20092

Agenda

�Mid-market View from IBM CEO Study 2010

�Smarter Supply Chain

�Frameworks for the Smarter Supply Chain

�Supply Chain Performance Management


Today’s complexity foreshadows an even more complex future for Midmarket CEOs who are challenged to close the gap

78%Expect high/very high level of complexity over the next 5 years

60%Currently experiencing high/very high level of complexity

54%Feel prepared for expected complexity

24%Complexity gap*

* Complexity gap = difference between expected complexity and the extent to which CEOs feel prepared to manage complexity

Not at all/to limited change some change large/very large change

Required amount of change to respond to external factors 67%25%9%

IBM CEO Survey 2010

4 © Copyright IBM Corporation 2009© SAP 2008/Page 4

Within a Complex Supply Chain

The ability to act smarter will optimize performance

Supply Chain Demand Chain

ConsumerManufacturer

Equipment Supplier

Materials Supplier

Sub Contractor

Distribution Center

Retail Customer

Distributor or Wholesaler

Advertising Agency

Broker


6% –up to 20% during promotions 12% out-of-stock

Forecast accuracy 50-70% Customer order fulfillment 80%

Average of 50 days of supply in inventory

Only 16% manufacturer’s trade promotions turn a profit

70% to 90% of new product launches fail.

More than 100,000advertised brands exist in the industry

$1T in inventory across the entire value chain results in average customer fill rate of 70%.

Ten’s of thousands new items will be introduced –the vast majority will fail

Problems that may limit performance


Forecasting & Inventory Management

• In general, the forecasting accuracy shows similar trends, with midsize manufacturers marginally better

• However, the small manufacturers have more FG stock, probably due to more uncertainty from demand side.


Successful companies capitalize on complexity in three ways

• Creativity is #1 leadership quality• Drive change in the organization to

stay ahead of market and use a wide range of communication styles and tools

• Break with status quo of industry, enterprise and revenue models

• Use iterative strategies, make quick decisions and execute with speed

• Integrate globally, increase cost variability and exploit partnering to increase agility

• “Getting closer to customers” is the single most important theme

• Better understand customer needs through collaboration and info sharing

IBM CEO Survey 2010


Overall Business Drivers next 12-18 months

• Midsize manufacturers are driven by Productivity/ efficiency, geographic expansion and capacity addition

• Small manufacturers are more cost conscious, and want to retain existing customers

• Top 3 drivers overall are cost, new business, and productivity improvement


Global trend – digital convergence, globalization...…the world is changing and becoming more…

The explosion of new information, when integrated, analyzed, and acted upon using new types of intelligence, enables solutions that

… help build a Smarter Planet

Instrumented

Interconnected

Intelligent

9


What is “smarter supply chain”?

Inst

rum

ente

d

Interconnected

Intelligent

Risk Mitigation

Sense and Respond

Globalization

Cost ContainmentInsightful

VisibilityImprove Yield

Improve Quality

Your answer to renewed manufacturing agenda!


Key Operational Initiatives

• Quality improvement is the single most important operational initiative

• Other initiatives are fragmented, but reduction of delivery time, and manufacturing cost are the other 2 overall initiatives.

• In general, responsiveness and customer-centricity emerge as central themes


1Smarter Supply Chain: Powerfully Instrumented

MEASUREManufacturing Equipment is Instrumented and Automated

EVENTS

ACTIVITIES

EXCEPTIONS

STATUS

SCADA DCS MES Historian SPC Databases

We can measure everything.

MONITORProviding Live Broadcasts of Smarter

Manufacturing Information

Insightful

Visibility

We can see everything.

Instrumented


2 Smarter Supply Chain: Extensively Interconnected

Synchronize the Pulse

Create a Sense and Respond action from your manufacturing network to your

customersSynchronize All Manufacturing Functions

A holistic approach to pulse, constraints, and event triggers

A Single Point of View

The manufacturing network tightly integrated

Interconnected


3 Smarter Supply Chain: Faster and Intelligent

SMARTER Manufacturing:� The pulse is visible.� Decision making is fast and intelligent.� Status is known real-time.

Predictive and Adaptable

Learn As You Execute Production

Event-Triggered Manufacturing Network:

Match the Pulse

Intelligent


Extent of implemented Integration PracticesLeaders vs. Others

* Leaders determined based on respondents’ ranking in AMR Research Supply Chain Top 25 for 2008

Customer Inventory Planning & Deployment

Planning with Suppliers

Shared, real-time electronic

data

Continuous Replenishment with customers

30% 16% 24% 9%24% 19%

Sum:extensive

& some extent

Extensive

86%

79%

72%

53%

11%

63%

16%

62%

72%

61%

7%

11% 19%

1%

ExtensiveLeaders:

ExtensiveOthers:

Largest gap�Decision-support based

advanced analytics and optimization to automate and self-actuate supply chain transactions.

�Multi-partner collaborative platform

�Sense-and-respond demand & supply signal notification

�Smart devices & sensors (RFID) to capture real-time visibility:� forecasts/orders� schedules/commitments� pipeline inventory� shipment lifecycle status

Instrumented

Interconnected

Intelligent

Key Capabilities

Some Implementation

Some Implementation

Future Outlook: The Smart Supply Chain will require more connectivity, collaboration, and integrated processes to improve visibility among network partners as demonstrated by leaders


Quick Wins…Through Data Automation

Long TermWins…Through

Structural Process

Transformation

Example: Airbus Strategic Vision & Plan for Business Value Creation

EBIT,Cash, Cost Avoidance

�� Business Savings�� Business SavingsBusiness Savings

Improvethe ‘Wayof Working’

�� Business Process�� Business ProcessBusiness Process

Where isIt Working,Not Working?

�� Measurability�� MeasurabilityMeasurability

InformationAbout Working,Not Working

�� Visibility�� VisibilityVisibility

Accurate& Efficient Information

RFIDRFIDRFID

“Improving visibility is a pre-requisite

to improve the‘Way of Working’ & to deliver business

savings”

– Carlo Nizam,Head of Value Chain Visibility

& RFID, Airbus


Key Takeaways for ASEAN small manufacturers

• Overall business drivers are cost, productivity and expansion

• There is a strong focus on quality, responsiveness and customer centricity

• Medium-sized manufacturers need help in their supply chain processes, inventory management, delivery performance as well as in managing their cash

• Smaller manufacturers need help in managing their financial performance, and they are not investing enough in IT

18 © Copyright IBM Corporation 2009Infrastructure Platform

Source Make DeliverDesign – NPI Return - EOL

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Customers & Channels

Manufacturing Value Chain

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Supply Chain Enterprise Applications

Supply Chain Strategy

Supply Chain Collaboration

Supply ChainPerformance Management

Supply Chain Visibility

Supply ChainPlanning

Asset Management

Product Lifecycle Management / R&D

IBM’s Smarter Supply Chain Management Framework are organized around key functional areas


Supply Chain CollaborationSupply Chain Performance Mgmt

Supply Chain Operations

Supply Chain Planning

Asset Management

Product Lifecycle Management / R&D

• Supply Chain Assessment• Business Transformation Strategy

• Package Selection• Version Upgrades

• Training and Learning Services• Systems Harmonization

• Business Process Improvement, Design and Implementation

• Business Modeling & Governance• Operations Improvement• Green / Carbon Assessment

• Technology Assessment• Mergers & Acquisitions Solutions

Supply Chain Enterprise Applications

Supply Chain Strategy

IBM Global Business Services Consulting Offerings

IBM Global Business Services Consulting Offerings

Maximo

Business Events

DW Solutions

Business Events, BPM Solutions, Manufacturing Integration Solutions, Remote Server

Traceability Server

MDM Server

Business Integration Solutions, Commerce Server

Collaboration

Product Development & ePLMSolutions

Telelogic


��

Business Need

60’s – 70’s 80’s – 90’s 00’s – 10’s

Singular Process Control & Visibility

Process Efficiency

Integrated Business

Activities Across the Firm

2020’s

Insight applied to business operations

• Prescriptive analytics

• Insight visualization

• Information Governance

• Content Analytics

• Prescriptive analytics

• Insight visualization

• Information Governance

• Content Analytics

Automate Processes Integrate Processes Optimize the Enterprise

Technology Evolution … the Age of Business Optimization

IndustryResponse

DriverInternal & External Process

Collaboration

��


Business Analytics Answers 4 Key Questions …..

OPEN DATA STRATEGYERP Supply

ChainMES CRM 3PL WMS Inventory

Analytical ReportingDrill

Real-Time What is

Scenario ModelingWhat-if

Advanced AnalyticsWhat might be


Business Optimization - Electronics

Single Viewof Product

Asset LifecycleManagement

Supply ChainVisibility

BusinessPerformanceSingle View

of Product

Gains control over its Master Data Management System (MDMS) when it deploys IBM InfoSphere MDM Server for PIM and realizes cost savings and increased productivity.

Tracks and analyzes production processes and issues more effectively with IBM Cognos BI software and improves on-time delivery for customers.

Proactively manage growth of transactional data in Accounting, Sales and Logistics applications Improves service

levels and key business operations with IBM Optim Data Growth Solution

Panasonic required a more effective way to create consistent and complete information about its products for customers, dealers and Websites. Used MDM, WAS, GBS


Business Analytics Framework

Supply Chain MetricsSCOR Metrics Blueprint

Operations Data

• ERP• Inventory• Supply Chain• Logistics / 3PL• MES • Customer CRM• Syndicated Data• POS Data• Trade Promotion

ResultsDemand

FinanceSupply

Optimized S&OP Executive ReviewIntegrated Financial Plan

Go!Mobile

Scorecards

EventNotification

Reports& Analysis

Dashboards

IBM Cognos 10

Analytic ApplicationsSales, Procurement,

Finance, Workforce, etcOperational Planning

& Execution

Predictive Models

• Demand• Quantities• Inventory• Maintenance• Customer Behavior• After markets

Real TimeMonitoring


��




Customer Examples

� VICOR�Dashboards for all aspects of operations; 92% increase in Gross Margin

� Avaya�Supply Chain visibility solutions; 356% ROI with payback in 4 months

� Daimler Trucks of NA�Supplier performance & shortage focus; Shortages cut 50%; Rejects cut 30%

� Dole�S&OP to simulate demand and supply in an SAP/i2 environment


Customer Need:• Customer returns led to poor

financial performance and excessive financial reserves for warranty claims

� Cognos BI:� Reports� Analysis� Query

SolutionSolution

� $11 million savings attributed to Cognos through reducedwarranty claims reserve

ResultsResults

Approach:• Analyze customer return data• Root cause analysis• Take corrective action in the

production process to avoid future failure

Ryobi – Customer Warranty Analysis


IBM – Value Creation for Customers

Global Technology

Services

Global Business Services

Systems and

Technology

Software

S&D and

Research

Provides outsourced IT infrastructure services and business process

services

Provides professional services and

application outsourcing

services

Provides advanced computing, storage and

semiconductor technology and products

Provides middleware that enables clients to integrate systems, processes and applications, as well as computer operating systems

Our Sales and Research, Development and Intellectual Property organizations provide a wide spectrum of client support and additional value

GlobalFinancing

Provides financing solutions that can be customized to address specific IT needs, from competitive rates to flexible payment plans and loans

ValueFor

Customers

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Framework For Smarter Supply Chain V10 Jonathan Austin - IBM · MES CRM 3PL WMS Inventory ......

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