WEBINARLeading Through Disruption with Supply Chain Visibility
Pressure on supply chains
Re-emergence of high-cost areasNew business models, means of production, and ways of organizing supply chains have made higher-cost areas attractive again.
Globalization and the decline of outsourcingOutsourcing to lower cost, remote locations is becoming less attractive as low-cost countries become increasingly globalized.
M&A, sprawling production facilities and labor arbitrage have resulted in incredibly complex, and often expensive, supply chains.
Increasingly complex and costly supply chains
COVID-19
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CDC.GovMarch, 17 2020, 4 pm eastern
Managing COVID-19 Shocks to the Supply Chain- MAPI Survey & MSFT COVID-19 Round Table Executive Insights
• Supply chain shocks to continue – While nearly two-thirds of purchasing, logistics and operations executives report that their company experienced some disruption in Q1, nearly all expect at least some impact in the current quarter (Q2), with 1 in 5 rating this impact “high.”
• Two-thirds of companies report supply chain disruption is directly affecting both their productivity and logistics while over half report increased delays and cost.
• Reliance on a single-source supplier of a key commodity or component is the most common challenge, followed by identification of stressed suppliers.
• Preparations focus on visibility and agility in Q2 – The vast majority are contingency planning for closures, tracking suppliers, evaluating alternatives, and shifting some production locations where needed.
• Cash flow concerns – 64% of companies are anticipating increases in the number of suppliers requesting shorter payment terms in Q2, and 60% expect increases in requests for longer customer payment terms.
• Mixed outlook for medium-term – Companies are almost evenly split on whether they will “need at least 6 months to return to normal operating capacity” as a result of supply chain challenges owed to COVID-19.
• Respondents are more likely to say now that their company will consider tactics to increase supply chain visibility and risk monitoring in the future.
• What are Manufacturing Execs saying – Majority of Company Execs reporting after Employee Safety, Data Security, Remote Worker, Remote Assist, Supply Chain Visibility & Insights Visibility (Supply Chain Visibility & Insights are the first step to this) is the next Top Priority
Long lead times, low schedule compliance and lost productivity
High service levels, cost optimized anddynamically responsive
Supply Chain Visibility Today’s supply chain Future supply chain
Layeredplanning
Reactiveexecution
ExcessInventory
Disconnected processes
Orchestrated processes
Predictive operations
Closed loop end-to-end
Insight driven
Manufacturing
Service
Logistics & Distribution
Customer
Engineering
DigitalPlatform
Assembly packaging
Plan
Design SupportDeliverAssembleMake
Spec
ifica
tions
Dim
ensio
ns
Conf
igur
atio
ns
Logi
stics
Cond
ition
s
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Some Example Supply Chain Predictive Analytics2. Retrain Supply Models
Update the model with new purchase data and recalibrate supply constraints
3. Predict DemandCalculate demand with baseline, seasonality, trend, promotions, media events, price elasticity and cross-product effects
5. Optimize Optimize for margins, revenues and
supply constraints at every dimension and every network node
1. Retrain Demand ModelsUpdate the model with new sales data
and derived technical KPIs
4. Predict SupplyGenerate order proposals for every level of every dimension and for every network node
6. AutomateBy exception planning processSupply Chain Control Tower
Planning Sourcing Logistics & distribution
Supply chain visibility & orchestration
Supply Chain Visibility & Insights
ConnectedLeverage the cloud to connect, automate,visualize E2E view of your business
PredictiveMove from reactive to predictive with big data, machine learning, and IoT
CognitiveAmplify with algorithmic decision makingand automated execution
Manufacturing
Service
Logistics & Distribution
Customer
Engineering
Assembly packaging
DigitalPlatform
Digital platform components
Leverage next-gen cloud native supply chain partner solution offerings to drive predictability, accuracy, reliability and stability in supply chain
IoT and Edge | Data | AI | Blockchain Finance & Operations | Mixed Reality | Power BI | PowerApps | Flow | Talent Microsoft 365 | Teams | Graph | Security & Compliance
ntro
122Countries Served
>390Number of Suppliers(includes component suppliers)
~$8B Total Amount of Annual Spend
30KShip To Locations
1TBTotal Daily SC Data Generation
1.7M+ Est. FY17 Number of Retail and Commercial Sales Orders
33Number of Mfg & Distribution Operations
>42,000Number of Active SKU’s
2.0M+Annual Deliveries
>200M Units Manufactured & Shipped
Surface Studio Surface Hub Surface Software
Strategic SourcingCare
Manufacturing
Supply Chain Mgmt./New Product Introduction
Global Supply Chain
Transformation, Technology and Analytics
Integrated Business Planning
Safety,Compliance & Sustainability
Xbox HoloLens PC Hardware
Microsoft Supply Chain challenges
Aging processes and systems were no longer sufficient.A Digital Transformation of Microsoft’s Supply Chain was required
Pricing and Margin Pressure
Increasing Customer Service Expectations
Virtualized and Distributed Supply Network
Shortening Product Lifecycles
1 DigitizedSupply Chain
10
Microsoft Azure enabled Digital Supply Chain platform
11
Warehouse Management
Shop Floor Control System
Transportation Management
BOM Management
CommerceDevice Telemetry CRM
SubscriptionsProduct Catalog Sales
Corporate systems
Point of Sales Freight Management
Enterprise Services
Supplier ERP
HD Insight Event HubsAzure Data Lake
Azure Data Factory
Supply Chain Cloud
Supply Chain Services
Azure API Management Microservices Azure Application
Insights
CareDev/NPI FinanceSource Make(MDS)
Deliver
Supply Chain Partner Systems
Data & Advanced Analytics Platform
Microsoft Supply Chain Core Transactional Systems
Plan
Our Supply Chain transformation journey
Data in Silos; Minimal automation
FY17
All data on a single platform
FY18
Stable, Consistent, Quality Data
FY19
Actionable Insights using Data
FY20
Intelligent Analytics Predictive Supply Chain
FY21
“We have some data, let me pull that Excel/Ppt”
“All our data is in MAX, but we can’t trust it”
Sense & Respond Anticipate & Act
“BI is stable. KPIs, Reports, Dashboards in place”
“Move from Descriptive toPrescriptive”
“Move from Prescriptive to Cognitive”
Getting to a Connected, Predictive, Cognitive Supply Chain
The power of connected data – driving decisions
Personalized Dashboards
Surface Pro 4
Application: Dynamic Network Management
An integrated Global Platform to visualize our Global Network.
Millions of supply chain data points, both internally and externally, are being processed in real time through a data science model and displayed.
The foundation for machine learning and predictive analytics delivery performance.
35+ ELD AGGREGATORS/ GLOBAL GPS PROVIDER
ALL VESSEL VOYAGES GLOBALLY
CELL PHONE TRIANGULATION4.5 million/month
ELECTRONIC DATA INTERCHANGE11K customers3.5K Carriers
ALL FLIGHTSGLOBALLY
Machine Learning and Predictive Analytics As the supply chain industry moves forward and the Internet of Things continues its expansion, the ability to consume, combine, and analyze data from growing number of integrations is essential
Machine Learning and Artificial Intelligence methodologies need to be incorporated to create predictive capabilities that evolve and improve over time
Live Route Calculation
Predictive ETA using Data Science Model
Push Notifications to Customers/Stakeholder
Digital Transformation OutcomeDelivering Measurable Business Results
• Moved from 40% orders committing within 5 days to 95% committed within 48 hours
• $300M reduction in working capital YoY by having the right inventory at the right time
• $50M reduction in Excess & Obsolescence (E&O) YoY
• 40% to 70% mix accuracy within 90 days
• $10M savings in 1 year due to scrap reduction, yield improvements, process optimizations
• Eliminated 850 man hours of data preparation time
• Reduced new product ramp time
E2E Visibility from Incoming to Customer
Incoming PartQuality & Availability
CTF/CTQ IoT Process Monitoring
Product Yield
Outgoing Quality
Field Quality
Returns Repair & Refurb
T2 Quality
Output & Shipment Progress
Incoming Manufacturing Customer
• Creating Clarity via Personalized Dashboards• Increasing Collaboration, Connected Data Streams
enable Teamwork• Improving Factory Productivity/Optimization
Digital Commerce Platform
AI InfusedPlatform
Ecosystem Ready &Aware
PrescriptiveIndustrySolutions
Predict, pivot, and resolve supply chain disruptions with prescriptive, machine learning based applications.
Control Tower - Autonomous Digital Twin
AI/ML Forecasting Supply ResolutionPredictive Time of Arrival Warehouse Tasking
What Can We Do? • Safeguard people
o Remote operationso Crisis response Team
• Manage working capital & business planso Financial and operational scenarios o Balancing supply and demand
• Asses supplier & logistics Riskso Material criticalityo Contingency plan - Alternate supply o Transportation modeo Production optimization o Supplier financial health
Tactical play (Short-term support)
• Supply Chain Visibility• Scenario planning• Real Time monitoring
• Embrace micro supply chains into the TOM• Near-shore options• Building supply chain agility
• Supply Chain Risk Management • More collaborative relationships with critical suppliers • Supplier diversification (domestic vs. internal.)• Make vs. buy• Risk evaluation and monitoring tools • Further Integration to Tier 1 and Tier 2 suppliers
Strategic play (Mid to long term support)
Example of Where to START: VISIBILITY!Financial Return on Investment
Week 1Rework Inventory Recovered
Month 1Yield Improvements
Half 1Ops Improvement
Year 1Excess & Obsolesce Elimination
Agree up-front that data is a corporate asset shared across your entire organization
Determine data governance in advance – decisions impact design & data set-upUse Azure capabilities for security measures and access controlsExpect to invest time in data cleansing – advanced usage will highlight flaws
Adopt a centralized management strategy & include in your governance model
Don’t ‘lift & shift’ from your current platform – creates more clean-up laterEliminate data copies & movementUsed a phased approach to roll-out to manage retirement of legacy systems
Some Guiding Principles & Learnings!Organization
Governance
Master Data
ReconsiderLift & Shift
Plan for Workforce Role Changes
Primary activities will shift, we saw 80% manual operations reduce to 5%Plan for role adjustments and trainingPut change controls in place to avoid workforce introducing bias into process