© Copyright IBM Corporation 2008
A Tale of Ants, Humans and Chaos
Mondher Ben-Hamida, CPIM, CSCPAssociate Partner / Global Electronics SMEIBM GBS Supply Chain Strategy Practice
+1.415.425.7184
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© Copyright IBM Corporation 2008
2009 ELECTRONICS INDUSTRY MAP
(PDIF)
Product Lifecycle Product Lifecycle MgmtMgmt
(IS01, SCM) (IS01, SCM)
Product Lifecycle Product Lifecycle MgmtMgmt
(IS01, SCM) (IS01, SCM)
StrategicDrivers
IndustrySolutions(ISA Code)
SolutionOfferings
IndustryFramework
Infrastructure
Reduce Operating / Infrastructure costs Brand and Product Commoditization/ pressure to innovate
Consumer Driven Innovation / strategic selling and sales execution
Globalization andMerger Integration
Tighter integration and partnering industry ecosystem
Supply, Demand & Supply, Demand & Global IntegrationGlobal Integration(IS09, SCM, FMS, (IS09, SCM, FMS,
HCM)HCM)
Supply, Demand & Supply, Demand & Global IntegrationGlobal Integration(IS09, SCM, FMS, (IS09, SCM, FMS,
HCM)HCM)
Electronics MESElectronics MES(IS10, SCM) (IS10, SCM)
Electronics MESElectronics MES(IS10, SCM) (IS10, SCM)
Marketing, Sales & Marketing, Sales & Service Service
TransformationTransformation(IS05, CRM, S&C)(IS05, CRM, S&C)
Marketing, Sales & Marketing, Sales & Service Service
TransformationTransformation(IS05, CRM, S&C)(IS05, CRM, S&C)
• Requirements Management (Telelogic/Rational)
• Product Innovation management/IPD
• Integrated BOM• Embedded
system/Software lifecycle management
• Test outsourcing• Next generation PDM/web-
based and extended PDM • Unified Verification
Management
• Requirements Management (Telelogic/Rational)
• Product Innovation management/IPD
• Integrated BOM• Embedded
system/Software lifecycle management
• Test outsourcing• Next generation PDM/web-
based and extended PDM • Unified Verification
Management
• eGIE/CBM/Shared Service Design
• Global Supply Chain Planning
• Supply Chain Visibility (VMI/CPFR)
• Master Data Mgmt• Supply Chain Mgmt ERP*• Green Supply Chain• Global Financial System
Consolidation• “Solar Fab In A Box”
• eGIE/CBM/Shared Service Design
• Global Supply Chain Planning
• Supply Chain Visibility (VMI/CPFR)
• Master Data Mgmt• Supply Chain Mgmt ERP*• Green Supply Chain• Global Financial System
Consolidation• “Solar Fab In A Box”
• Semiconductor , Flat Panel Display, Solar MES (SIView, LCDView, SolarView)
• Enterprise MES• View Factory
Suite/Manufacturing Process Improvement
• GIView (Globally Integrated View)/Mfg Cockpit
• Semiconductor , Flat Panel Display, Solar MES (SIView, LCDView, SolarView)
• Enterprise MES• View Factory
Suite/Manufacturing Process Improvement
• GIView (Globally Integrated View)/Mfg Cockpit
• Marketing Transformation / Market Planning
• Sales Transformation• Multi-Channel
Management (MCM)• Service Management• Med Device Contract
Sales & Service
• Marketing Transformation / Market Planning
• Sales Transformation• Multi-Channel
Management (MCM)• Service Management• Med Device Contract
Sales & Service
Product Development Integration Framework
Product Development Integration Framework
Supply Chain Visibility / VCC
Supply Chain Visibility / VCC
Manufacturing Integration Framework
(MIF)
Manufacturing Integration Framework
(MIF)
Infrastructure: Infrastructure: servers, storage, communication networks & associated servicesInfrastructure: Infrastructure: servers, storage, communication networks & associated services
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© Copyright IBM Corporation 2008
ABOUT THE PRESENTERMondher Ben-Hamida, CPIM, CSCPAssociate Partner / Global Electronics SME
IBM GBS Supply Chain Strategy Practice
EducationEducationEducationEducation1997
1995
Master of Science in Industrial Engineering and Operations Research, University of Minnesota, Minneapolis, MN, USA.
Master of Engineering in Industrial Engineering, ENIT, Tunis, Tunisia
LanguagesLanguagesLanguagesLanguages• English• French• Italian• Arabic
FluentFluentFluentFluent
SpecializationSpecializationSpecializationSpecialization• Supply Chain Strategy• Global Issues in SCM• Enterprise Sustainability• Advanced Planning Tools
Experience OverviewExperience OverviewExperience OverviewExperience OverviewMondher is an Associate Partner in the IBM Supply Chain Strategy group. The practice is responsible for providing strategic and operational guidance to senior executives within client organizations. Mondher is an Industrial Engineer and a Global Supply Chain Strategist with over 13 years of global management and manufacturing consulting experience. Primary focus has been the design and implementation of Supply Chain Management strategies and tools, Advanced Planning and Scheduling solutions and Theory-Of-Constraints initiatives. Mondher is a frequent speaker at various supply chain events (APICS, SCC, AMR, etc.) and has published a number of articles on various topics ranging from supply chain strategy to reducing the environmental impact of logistics operations. He is also a co-inventor of a supply chain carbon modeling tool (patent pending). Mondher is a universal citizen and his passion for solving global supply chain problems along with his fluency in 4 languages has led him to operate in four continents
Sample EngagementsSample EngagementsSample EngagementsSample Engagements• Helped one of the world’s largest fabless companies (wireless phone chip segment) define and
implement a comprehensive supply chain collaboration model (VMI, Consignment and Schedule Sharing) with three of its most strategic customers on 3 continents.
• Led a major supply chain strategy definition for one of Europe’s largest industrial conglomerates. Activities included assessing state of current operations model, compiling and documenting appropriate best practices and devising a novel supply chain vision that is customer centric (secured agreement on a new market segmentation) and emphasizes the agreed upon core competency (fulfillment).
• Led a major supply chain strategy redesign effort at McDonald’s. This executive level initiative assessed competitive trends and provided a global vision for the future supply chain integration model along with a ‘playbook’ of practical steps to achieve the vision
• Selected by AMR Research as an SME and voting panelist for the 2007 World’s Top 25 Supply Chains
• Served as the Make Best Practices Lead and co-author of SCOR 7.0
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© Copyright IBM Corporation 2008
OBJECTIVES
Briefly discuss the challenges most companies face in optimizing the integration of their global supply chain operationsBriefly discuss the challenges most companies face in optimizing the integration of their global supply chain operations
Provide a critical analysis of the root cause(s) of these challengesProvide a critical analysis of the root cause(s) of these challenges
Provide an Overview of IBM’s Approach and Competitive DifferentiatorsProvide an Overview of IBM’s Approach and Competitive Differentiators
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© Copyright IBM Corporation 2008
First off, what is Global SCI and why is it important?
The supply chain needs to be aligned with the market needs
The supply chain needs to be aligned with the market needsComplication # 1Complication # 1Complication # 1Complication # 1
Complication # 2Complication # 2Complication # 2Complication # 2
Global competition is, to a large extent, a competition between supply chain models.
Superior supply chain execution, while not sufficient for business success, is a necessary condition
Complication # 3Complication # 3Complication # 3Complication # 3
Supply chain costs need to be minimized
Supply chain costs need to be minimized
Supply Chain Integration is the act of turning a complex and diverse
network of partners and operations into a functioning ecosystem.
Supply Chain Integration is the act of turning a complex and diverse
network of partners and operations into a functioning ecosystem.
ABC, Inc.
Tier 1
Tier 2
The supply chain needs to be flexible and responsive
The supply chain needs to be flexible and responsive
Need to ensure consistency in design and execution
Need to ensure consistency in design and execution
Outsourcing is a key strategic imperative
Outsourcing is a key strategic imperative
Shrinking control yet ultimate accountability to customers
Shrinking control yet ultimate accountability to customers
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© Copyright IBM Corporation 2008
What are the key pain points of our clients?An External View
Make•Make vs. Buy
•Reach of production facilities
•Product mix at each location
Source•Level and scope of collaboration with suppliers
•Global vs. regional sourcing model
Design•Internal vs. external along various dimensions
•Level of integration and upstream design collaboration with suppliers
•How to listen to the needs and wants of a global customer base
Service•Warranty plans and logistics
•Customer service partners
•Reverse logistics
Deliver•3PL/4PL agreements
•Customer segmentation and service agreements
•What to hold and where and how much
Plan
Cu
stom
ers Sid
eC
usto
mers S
ide
• Network Design Decisions
• Centralized vs Decentralized model
• Global demand Planning
• Make vs. Buy
• #, Location and scope of CM partners
• Global Inventory Planning
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What are the key pain points of our clients?An Internal View
Division / BU / GeoDivision / BU / Geo
PeoplePeoplePeoplePeople
ProcessesProcessesProcessesProcesses
SystemsSystemsSystemsSystems
TechnologyTechnologyTechnologyTechnology
MeasuresMeasuresMeasuresMeasures
Division / BU / GeoDivision / BU / Geo
PeoplePeoplePeoplePeople
ProcessesProcessesProcessesProcesses
SystemsSystemsSystemsSystems
TechnologyTechnologyTechnologyTechnology
MeasuresMeasuresMeasuresMeasures
Division / BU / GeoDivision / BU / Geo
PeoplePeoplePeoplePeople
ProcessesProcessesProcessesProcesses
SystemsSystemsSystemsSystems
TechnologyTechnologyTechnologyTechnology
MeasuresMeasuresMeasuresMeasures
People
Processes
Systems
Technology
Measures
Lack of true Supply Chain organization
Excessive customization, often for no reason, with limited, if any, synergies between divisions
Too many systems and instances hindering data consolidation and sharingDisparate systems and supporting technologies hinder integration and collaboration
Inconsistent and often conflicting set of measures
Corporate HQCorporate HQCorporate HQCorporate HQ
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Why Is Global Supply Chain Integration a Difficult Task?The Uncanny Resemblance Between Complex Systems And Supply Chains according to Chaos Theory
1. Complex systems consist of a large number of elements.2. The elements have to interact and this interaction must
be dynamic. 3. The Interaction is fairly rich, i.e. any element in the system
influences, and is influenced by, quite a few other ones.
4. Firstly, the interactions are non-linear. 5. The interactions usually have a fairly short range, i.e.
information is received primarily from immediate neighbours.
6. There are loops in the interaction.7. Complex systems are usually open systems, i.e. they interact
with their environment.
8. Complex system operate under conditions far from equilibrium.
9. Complex systems have a history. Not only do they evolve through time, but their past is co-responsible for their present behaviour.
10.Each element in the system is ignorant of the behaviour of the system as a whole.
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Root Cause # 1The Gap Between Business Needs And Business Models
Phase 1Phase 1Phase 1Phase 1 Phase 2Phase 2Phase 2Phase 2 Phase 3Phase 3Phase 3Phase 3
Business creation and local market
establishment
Business creation and local market
establishment
Aggressive Global Growth
Aggressive Global Growth
SaturationSaturation
Reputation Matters Growth Matters Execution Matters
Suitability of Supply Chain Models and ToolsSuitability of Supply Chain Models and Tools LowHigh
Elapsed Time / Supply Chain Planning ComplexityElapsed Time / Supply Chain Planning Complexity HighLow
ABC, Inc.
Tier 1
Tier 2ABC, Inc.
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Root Cause # 2 – The Challenge Of Internal Integration“Tell Me How You’ll Measure Me, And I’ll Tell You How I’ll Behave”
Corporate HQCorporate HQCorporate HQCorporate HQ
LowHigh
HighLow
CEOCEOCEOCEO
CSO*CSO*CSO*CSO*
(*) – Global Chief Supply Chain Officer
EMEA DivisionEMEA DivisionEMEA DivisionEMEA Division
CEOCEOCEOCEO
CSO*CSO*CSO*CSO*
BU XYZBU XYZBU XYZBU XYZ
CEOCEOCEOCEO
CSO*CSO*CSO*CSO*
A desire to grow rapidly (Phase 2) provided divisions with a great deal of independence
which led to the proliferation of overly localized supply chain
processes and solutions
A desire to grow rapidly (Phase 2) provided divisions with a great deal of independence
which led to the proliferation of overly localized supply chain
processes and solutions
While the division-level supply chain officer might listen to the corporate-level officer, his/her performance/bonus is decided
by the Division/BU head
While the division-level supply chain officer might listen to the corporate-level officer, his/her performance/bonus is decided
by the Division/BU head
The tendency to promote local performance has greatly
diminished the scope and impact of corporate supply
chain officers
The tendency to promote local performance has greatly
diminished the scope and impact of corporate supply
chain officers
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© Copyright IBM Corporation 2008
Root Cause # 3 – The Challenge Of External IntegrationIntegration is about Collaboration; However, Are We Wired For It?
The Idea: Unlike ants and bees, humans aren't hard-wired for cooperation; we tend to act out of self-interest. That inclination repeatedly draws us into "social dilemmas" where, in an attempt to gain more for ourselves, we ultimately fare worse than we would have by cooperating.
The evidence: The trick is to establish an agreement where everyone's self-interest is best served by cooperating. That means removing incentives to violate the agreement.
The Conclusion: Businesses are nothing but federations of human beings. We think we’re different and unique and we behave in ways that protect and promote that uniqueness. We need to overcome some innate apprehensions to build a winning value proposition for key supply chain partners
http://www.newsweek.com/id/170380 11
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© Copyright IBM Corporation 2008
Root Cause # 4 – The Issue of Asymmetric BenefitsWhat’s in it for me?
Many Supply Chain Integration Efforts failed because the incentives were not properly defined and established
Many Supply Chain Integration Efforts failed because the incentives were not properly defined and established
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© Copyright IBM Corporation 2008
Lessons Learned and Tools to Leverage
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© Copyright IBM Corporation 2008
Our Approach – A High Level Overview
Electronics Industry – Globally Integrated EnterpriseElectronics Industry – Globally Integrated EnterpriseElectronics Industry – Globally Integrated EnterpriseElectronics Industry – Globally Integrated Enterprise
Supply, Demand & Global IntegrationSupply, Demand & Global IntegrationSupply, Demand & Global IntegrationSupply, Demand & Global Integration
eGIE / CBM / Shared Service DesigneGIE / CBM / Shared Service Design
Global Supply Chain PlanningGlobal Supply Chain Planning
Supply Chain Visibility (VMI/CPFR)Supply Chain Visibility (VMI/CPFR)
Master Data MgmtMaster Data Mgmt
Supply Chain Mgmt ERPSupply Chain Mgmt ERP
Green Supply Chain (enabling IBM’s Smarter Planet)Green Supply Chain (enabling IBM’s Smarter Planet)
Global Financial System ConsolidationGlobal Financial System Consolidation
“Solar Fab In A Box”“Solar Fab In A Box”
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© Copyright IBM Corporation 2008
Build the Right Model Build the Right Model Build the Right Model Build the Right Model Define the End State Define the End State Define the End State Define the End State
Consulting Guideline # 1
Ensure that the Supply Chain Strategy is Aligned with the Corporate Strategy
Ensure that the Supply Chain Strategy is Aligned with the Corporate Strategy
Core CapabilitiesCore CapabilitiesCore CapabilitiesCore Capabilities
Core CompetencyCore CompetencyCore CompetencyCore Competency
Extended Extended Capability Capability 11
Extended Extended Capability Capability 11
Extended Extended Capability Capability 22
Extended Extended Capability Capability 22
Extended Extended Capability Capability 33
Extended Extended Capability Capability 33
Customer Customer Stream Stream AA
Customer Customer Stream Stream AA
Customer Customer Stream Stream BB
Customer Customer Stream Stream BB
Customer Customer Stream Stream CC
Customer Customer Stream Stream CC
Supporting ProcessesSupporting ProcessesSupporting ProcessesSupporting Processes
High
LowTime to Accomplishment
Val
ue C
hain
Tot
al P
erfo
rman
ce
High
Today
““Incremental” ApproachIncremental” Approach
““Vision / Backward”Vision / Backward”ApproachApproach
World Class Performance
Hurdle
IdealState
The End State Supply Chain vision should be
aligned with the corporate strategy and goals
The End State Supply Chain vision should be
aligned with the corporate strategy and goals
The supply chain working model needs to be built
with as much commonality as possible.
The supply chain working model needs to be built
with as much commonality as possible.
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Consulting Guideline # 2
Define the Right Levers for a Globally Integrated Supply Chain ModelDefine the Right Levers for a Globally Integrated Supply Chain Model
Company ABCCompany ABCCompany ABCCompany ABC
PeoplePeoplePeoplePeople
ProcessesProcessesProcessesProcesses
SystemsSystemsSystemsSystems
TechnologyTechnologyTechnologyTechnology
Measures / ReportingMeasures / ReportingMeasures / ReportingMeasures / Reporting
Most companies’ (and their consultants!) reflex is to consolidate their supply chain supporting systems (e.g. reducing # of SAP instances, etc.)
Always start with these dimensions taking into account
the company structure and working model
For instance:•Does the company want to have a global fulfillment model (e.g. ship from anywhere to anywhere) or prefer to have regional fulfillment centers isolated from each other•Do the various business units (or geo’s) compete for the same resources?
For instance:•Does the company want to have a global fulfillment model (e.g. ship from anywhere to anywhere) or prefer to have regional fulfillment centers isolated from each other•Do the various business units (or geo’s) compete for the same resources?
Global Supply Chain Integration is, above all, about integrating data feeds to provide a holistic view of the system performance. The choice of a centralized or distributed SC infrastructure should not be driven by technology but rather by real business needs
Global Supply Chain Integration is, above all, about integrating data feeds to provide a holistic view of the system performance. The choice of a centralized or distributed SC infrastructure should not be driven by technology but rather by real business needs
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© Copyright IBM Corporation 2008
CASE STUDY – A GLOBAL HIGH TECH COMPANY
GTMGTM GTMGTM GTMGTM GTMGTM GTMGTM
ESBESB
End-StateEnd-State•Consolidated Supply Chain systems onto single
backbone•Integrated “Best of Breed” solutions•Established hubs for business intelligence
SCSC
GTMGTM GTMGTM GTMGTM GTMGTM GTMGTM
ESBESB
HubHub
HubHub
HubHub
Initial StepsInitial Steps•Establish Enterprise Service Bus (ESB)•Implement virtual information hubs
SCSC SCSC SCSCSCSC SCSC
SCSC SCSC SCSC SCSC SCSC
GTMGTM GTMGTM GTMGTM GTMGTM GTMGTM
Current StateCurrent State•Multiple systems with point-to-point interfaces•Poor visibility across supply chain
HubHub
HubHub
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© Copyright IBM Corporation 2008
Why Is IBM Uniquely Positioned To Help With Global SCI? The Three Dimensions Of Our Offering
By leveraging innovative ideas from our research division and proven best practices from our internal supply chain group, we are uniquely positioned to help our clients improve
their supply chain strategy and operations
Advisory ServicesAdvisory Services ResearchResearchInternal Supply ChainInternal Supply Chain
Supply Chain Strategy Practice
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© Copyright IBM Corporation 2008
Why Is IBM Uniquely Positioned To Help With Global SCI? A Rich Portfolio of Tools to lead the Field of Supply Chain Analytics and Enable Smart Design Decisions
(1) – ‘Recent Acquisitions’ refer only to ILOG and Cognos(2) – ILOG can be seen as the Intel Inside of most SCM/APS Solutions
(1)
Some of our Existing Assets
SCPMSCPM(Supply Chain
Process Modeler and Simulator)
SCPMSCPM(Supply Chain
Process Modeler and Simulator)
SNOWSNOW(Supply Chain
Network Optimization Workbench)
SNOWSNOW(Supply Chain
Network Optimization Workbench)
WSPWSP(Warehouse Site
Planner)
WSPWSP(Warehouse Site
Planner)
VCCVCC(Virtual Command
Center)
VCCVCC(Virtual Command
Center)
Recent IBM AcquisitionsRecent IBM Acquisitions
(2)
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