Using Analytics to Build Solid Supply and Supplier Management Relationships

The Supply Chain Intelligence Company

Using Analytics to Build Solid Supply and Supplier Management Relationships

Keith Peterson, President & CEO | HaloLora Cecere, President & CEO | Supply Chain Insights

Nate Weaver, Senior Director of PreSales Engineering | Halo

Supply Chain Insights LLC Copyright © 2016, p. 3

About Lora Cecere

• Founder of Supply Chain Insights• “LinkedIn Influencer”

• Guest blog for Forbes

• Author of 4 books: Bricks Matter (2012), Shaman’s Journal (2014), Supply Chain Metrics That Matter (2014), Shaman’s Journal (2015)

• Partner at Altimeter Group (leader in open research)• 7 years of Management Experience leading Analyst Teams at Gartner

and AMR Research• 8 years Experience in Marketing and Selling Supply Chain Software at

Descartes Systems Group and Manugistics (now JDA)• 15 Years Leading teams in Manufacturing and Distribution operations for

Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble.

Contact Information: • Email: [email protected]• Blog: www.supplychainshaman.com (15,000 pageviews/month)• Forbes: www.forbes.com/sites/loracecere• Twitter: twitter.com/lcecere (7,500 followers)• LinkedIn: www.linkedin.com/in/loracecere (90,000 followers)• LinkedIn Influencer: www.linkedin.com/today/author/446631

Pressure Is On!


Current State


Top Five Elements of Business Pain:Volatility, Alignment, Data, Talent, Visibility


Who Has a Supply Chain That Is Working Well?


Not as Easy as We Thought….


Greater The Number of ERP Instances: The Larger Pain with Data

Differences by Number of Instances

Need for an Analytics Layer

ERP

SRM

APS

PLM

CRM

Operational Investments Workforce ProductivityAnalytics


Project Management


Growing Talent Gap

Maximizing the Value of Technology Trends


Confluence of Technologies


Data Strategy for….

Clouds?

Streams?

Lakes?


Analytics Maturity


Traditional Progressive

Project definition Large projects with known outcomes

Small projects that evolve

Funding Licensed deployments Cloud deployments

Type of data Structured transactional data

Unstructured and structured data

Data characteristics Data with low velocity Data with high velocity

Leadership Led by IT Led by the business

Process focus Inside-out Outside-in

Capabilities Better response Test and learn

Technologies Large, established vendors

Small and evolving technology sources

Shifts


Wrap-up

• Adopt new forms of analytics.• Business leaders must own

analytic platforms.• We must learn from the past to

unlearn, and then rethink supply chain processes. The starting point is rewiring our brains.

Effective Supply Chain Management

Focus on the things that matter

Inventory Management

Sales and Operations Planning

Executive and Financial Analytics

What do I know?When did I know it

When should I have known it?What should I know now?

Supply and Supplier

Management

Customer and Channel

Management

Supply and Supplier

Management

What we are• Heterogeneous data from multiple sources• Sit “on top” of enterprise, supplier, customer,

provider systems• Pre-Built Supply Chain templates• Comparisons and “What-Ifs”• Data Cleansing• Easy-to-Change, Configure• Executive/Manager/User-oriented• Rapid Time to Value• Alerting and Collaboration• Mobile

What makes Halo different?

What we are not• An ERP System• A functional process management system• A workflow system• A transaction reporting system

Halo Business Analytics for Supply Chain IntelligenceIncreasing transparency from customers to suppliers⏵ For business users and

data experts alike⏵ Leverage legacy tools and

data - No “rip and replace” ⏵ Non-proprietary platform at

fraction of the cost⏵ Easy to get up and running

– 4 to 6 weeks⏵ Collaborate with external

suppliers and data experts⏵ 252 global customers 96%

retention

About Halo

Manufacturing Retail Food and Beverage

Data driven companies trust their analytics to Halo

The Supply Chain Intelligence Company

Applying Business Analytics to Supplier Development

An Example

⏵ 7–10% average annual improvement in delivery responsiveness

⏵ 10–13% average annual improvements in quality

⏵ 22% lower product development times

The potential of supplier development

“(At GE) Over two years, emergency air shipments fell to nearly zero,

quality defects were almost eliminated, productivity more than doubled, and lost-time accidents

declined by 99 percent without GE expending any capital.”

Source: Best Practices in Supplier Relationship Management and Their Early Implementation. Rand Corp (2012).

Supplier Management

Supplier Scorecards have become the Holy Grail of supplier performance measurement, although most companies are less than satisfied with their systems in place to measure supplier performance.

Supply and Supplier Management

• Supply delivery network is fragmented• Data is spread across multiple systems,

difficulty in data integration• Historical data is not trusted, data lacks

credibility• Assessing trends is time consuming• Sharing data with suppliers is not easy• Metrics not strategically aligned with

the business goals• Too complex and difficult

Why is Supplier Management difficult and why does it fail?

• Major supply chain disruptions

• Lost Sales and Revenue

• Delivery problems (late or partial orders)

• Poor quality issues (returns from dissatisfied customers)

• Customer Satisfaction issues(and other issues that damage a company’s brand equity and credibility)

• High Expediting Costs and Penalties

• High Total Acquisition Costs

Failure to Manage Critical Supplier Performance

The Time Value of Supplier Intelligence

TIME“Event Horizon”Product not shippedInventory drops below

min.Order Cancelled

No time to respond

Why didn’t I know?Supplier Information and Metrics not defined

Poor, inaccurate dataData not available to executives from key sources

Supplier Management

Lost RevenueLost MarginHigh Total Acquisition Costs

High expediting costs

E2E Supplier VisibilitySuppliers at risk

Alternative SuppliersStrategic decisions

Standard costs

Solution• Automated Supplier Scorecard, dashboards, and reports to manage your global supplier base• Instant visibility into the metrics that matter (Cost, Delivery, Quality, Risk)• Clarity across the enterprise, purchasing and procurement department, and supplier base• Easily share reports with suppliers (how you measure them and how they can better perform)

Benefits • Improved efficiency and response times (proactive vs. reactive)• Reduce overall inventory and manufacturing downtime caused by shortages• Reduce spend and rush shipment costs (working capital)• Replace underperforming suppliers by understanding alternate suppliers• Clear goals

Halo for Supplier ManagementThe solution and the awesome benefits


• How does my supplier base look in terms of performance?

• Which of my suppliers are performing the worst? Whom should I be concerned about?

• What is the performance scorecard of a particular supplier? How are they performing?

• Which suppliers should I consider replacing? Should I split my commodity purchases further to mitigate risk?

• What information do I need for the next QBR and/or negotiation session?

Concerns and problems we address

The road to supply and supplier developmentHow to achieve the best value

#1Know your

supplier

#2Scorecard

every supplier

#3P2P

Model

#4Develop Supplier

Base

#5Integrate

d Partnerin

g

“Golden Record”Master data mgmt.

Distributed reportingSolve supplier deficiencies

Supply sensingCollaboration tools

Payment-Invoice-PurchaseData integration

N-tier developmentSupplier networks

Image adapted from http://www.hicxsolutions.com/blog/compliance/purchasing-fraud-prevention/

Halo for Supplier Management

Your Control Tower for increased visibility, shared information, and better relationships with your suppliers.

Visibility Agility SharingTotal Spend by Supplier

Late Deliveries

Alternate Suppliers

Supplier Risk

Supply Disruptions

Late Shipments, Returns

Increased Demand

Quality Issues/Returns

Delays


Cost: 30% (EPPV = 70%, Pay Terms = 30%)Quality: 30% (PPM = 100%)Delivery: 30% (OTD = 75%, Lead Time = 25%)Risk: 10% (SSI = 50%, SER = 50%)Economic Purchase Price Variance: the difference between the previous price paid and its current price, multiplied by the actual number of units purchased

Payment Terms: # of days allowed to pay off the amount due

Defective Parts Per Million: calculated based on the total number defects received versus the total number of items received

On-Time Delivery: Percentage of on-time product deliveries against promise dates under normal operating conditions

Lead Time: Days between order date and delivery date

Supplier Stability Index and Supplier Evaluation Risk: Financial health of your suppliers, who is likely to cease operations and close their doors

Completely configurable based on your needs

Supply and supplier relationshipsHow to achieve the best value?

1. Manage the total business with each supplier

2. Measure and shape supplier performance

3. Involve key suppliers in product

4. Promote dialogue with suppliers

5. Recruit skilled personnel

6. Develop personnel to know suppliers in-depth

Source: Best Practices in Supplier Relationship Management and Their Early Implementation. Rand Corp (2012).

Let’s keep talking

Keith PetersonPresident & CEO

www.slideshare.net/[email protected] |888.300.0219

@Halo_BI

Date post:	15-Apr-2017
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