Supply Chain Insights
Customer CollaborationAPICS & IBF Best of the Best Conference
Supply Chain Insights, LLC © 2012, p. 2
“When it comes to driving volume, a dollar spent in working with a customer in developing customer programs is worth three spent in trade promotion.”
North American Supply Chain Leader
BRICKSMatterThe Role of Supply Chains in Building Market-Driven Differentiation
LORA M. CECERE CHARLES W. CHASE JR.
BookPublishes in August
2012
Supply Chain Insights, LLC © 2012, p. 4
Agenda
Current State
Pitfalls and Potholes
Devil is in the Detail
New Ways to Work Together
Wrap-up
Supply Chain Insights, LLC © 2012, p. 5
CostVolumeGrowth
Typical Organization5
CEO
Chief Customer
Officer
Chief Marketing
OfficerSales
Account Teams
COO
VP of Supply Chain
Customer Service Procurement Logistics
CFO
CIO
VP of Manufacturin
g
Quality
Supply Chain Insights, LLC © 2012, p. 6
A Supply Chain is a Complex System
with Complex Processes with Increasing Complexity
Looking at Supply Chain as a Complex System
Supply chain strategy
Business strategyWhat are the right things to do to increase company value?
Value-network strategyWhat are the right ways to support the business strategy?
What are the right trade-offs between value drivers for each value network?Right productplatforms
Design the supply response
Build organizational systems and manage talent
Align supply relationships
Developing the Supply Chain Strategy
Align demandrelationships
Effective Supply NetworksExecution of buy-side strategies
Continuous ImprovementCapabilities Required
Supply Chain Network Design
Design NetworksInnovation Methodologies
Demand NetworksJoint Value Creation Strategies
Business ProcessHow do I do the right things right?
Supply Chain Insights, LLC © 2012, p. 9
Yes 87%
No 10%
Not sure 3%
Have a Sales & Operations Planning Process
S&OP ProcessExistence & Processes
Base: Total Sample (117) Q17. Does your company have a Sales and Operations Planning (S&OP) process? A S&OP process is a tactical planning process to forecast sales and plan operations.Base: Have a S&OP process (102)Q18. Which one of the following best defines the goal of your current S&OP process? Q19. How many distinct S&OP processes does your company currently have? Your best estimate is fine. OPEN-ENDED
1 2 3 4 5 More than 5
27%14% 20%
12% 9%19%
# Distinct S&OP Processes5 S&OP processes on average
59% have 3+ processes
Supply Chain Insights, LLC © 2012, p. 10
Multiple S&OP Processes
Executive S&OP
Regional S&OP
Processes
Supply Chain Planning Processes with Key Suppliers
S&OP Processes With Key
Customers
Supply Chain Insights, LLC © 2012, p. 11
Importance of S&OP Process for Agility
Base: Have a S&OP process (102)Q22. How important do you think your S&OP process is to improving the agility of your supply chain?
28%
42%
20%
7%3%
Importance of S&OP Process to Agility
Not important (1-3)
(4)
(5)
(6)
Extremely important (7)
90% Important
Supply Chain Insights, LLC © 2012, p. 12
Agenda
Current State
Pitfalls and Potholes
Devil is in the Detail
New Ways to Work Together
Wrap-up
Organizational Alignment to Improve Value Chain Relationships
P&G Efficient Consumer Response adoption as a change program…
based on J. P. KOTTER
+ ++ = CONFUSIONINCENTIVESKILLS PLANRESOURCES
+ + = ANXIETYRESOURCESINCENTIVE PLAN+ LEADERSHIP+
++ + =INCENTIVESKILLS RESOURCES FALSE STARTSSHAREDVISION LEADERSHIP+
LEADERSHIP+ ++ =SKILLS INCENTIVE PLAN FRUSTRATIONSHARED
VISION +
++ + = GRADUAL CHANGESKILLS RESOURCES PLANSHAREDVISION LEADERSHIP+
SHAREDVISION
+ ++ = CHANGESKILLS INCENTIVE PLAN ++ RESOURCES LEADERSHIPSHAREDVISION
Supply Chain Insights, LLC © 2012, p. 14
Health Care Providers
Goal: Working Capital Turns
Pharma BioTech
Goal: Growth Goal: Innovation
True collaboration only happens when there is a sustaining win/win value proposition.
Goal Alignment
Supply Chain Insights, LLC © 2012, p. 15
Goal Alignment
Retail
Goal: Working Capital Turns
CPG 3rd Party Supplier
Goal: Growth Goal: Costs
Sale
s
Time
Manufacturing
Sale
s
Retail Warehouse
Retail StoreConsumer
Sale
s
Time
Suppliers
Time
Sale
s
Time
Inventory and Costs
Inventory data source: CFO Magazine September 2010-2004
Demand
Retailers Food Manufacturers Containers and Packaging1015202530354045505560
200920082007200620052004
Days of Working Capital
Food Value Chain Working Capital
Demand Signal
Accurate Weekly
Forecasting is ...
Delay from Purchase to
Signal
The Bullwhip Effect.
Red Represents Emerging Economies with Distributor Trade
Retailer DC
Easy
3-10 Days7-20 Days
Manufacturer DC
Difficult
10-20 Days20-45 Days
Suppliers
Almost Impossible
20-50 Days45-80 Days
Store
Trivial
InstantVariable
Store
Traditional Supply Chains do not Respond Fast Enough with Market Data
Production
POS store
Shipments to DCPOS demand
Production
Shipments
Kraft Foods Presentation MIT Supply Chain Forum, November 2011
Supply Chain Insights, LLC © 2012, p. 19
24%
24%
26%
22%
25%
21%
31%
24%
33%
24%
22%
25%
28%
33%
30%
36%
27%
34%
28%
47%
30%
24%
28%
23%
36%
27%
29%
33%
20%
24%
27%
21%
17%
23%
8%
16%
12%
6%
9%
26%
In-store advertisements
Every day low price
Pricediscounts/changes
Joint marketing w/retailers
Buy one get one free
Market basket or cross-category promos
Coupons
Custom products
Floor displays or endcaps
Special packaging
Less than 50% 50-70% 70-90% Greater than 90%
Trade Promotion Compliance w/ Retailers?
Q. What percent of your trade promotion tactics have compliance at the retail level?Sample Size = [varies by # of companies using each promotion type]
Supply Chain Insights, LLC © 2012, p. 20
Agenda
Current State
Pitfalls and Potholes
Devil is in the Detail
New Ways to Work Together
Wrap-up
Supply Chain Insights, LLC © 2012, p. 21
S&OP Plan Execution
Base: Have a S&OP process (102)Q25. After your S&OP plan is generated, how is it executed? Please pick the one that describes it best.
Execution is not connected to S&OP plan
We try to execute the S&OP plan, but hardly do in practice
We execute the S&OP plan most of the time
We execute the S&OP plan nearly all of the time
We monitor market events and adjust to S&OP plan within limits
9%
25%
35%
19%
13%
S&OP Plan Execution
Sense & Respond
Supply Chain Insights, LLC © 2012, p. 22
Supply Chain Focal Points for Next 2 Years
Base: Total Sample (61)Q23. What do you expect to be your primary focus on your supply chain over the next 2 years? Please select the one that is most important. Q24. What other supply chain elements, if any, will you be focusing on over the next 2 years? Please select all that apply.
Improving demand planning
Saving costs
Shortening cycles
Network design
New product launch effectiveness
Channel sensing
Revenue management
Other
74%
70%
66%
62%
48%
30%
26%
18%
23%
21%
21%
8%
10%
3%
7%
7%
Supply Chain Focal Points for Next 2 YearsPrimary Total
Top Supply Chain Focal
Points
“Other” Focal Points
Supply Chain Insights, LLC © 2012, p. 23
Manufacturing View (Units)
Sales View ($) Marketing View
($, Units) Logistics View
(Units, Cases)
Ship-from Locations
Warehouses
Global
Production L
inesPlants
Global
Supply-side Views
Downstream Data
Account-LevelA VMI C
DistributionNetwork
Supplier Supplier Supplier Supplier
DistributionNetwork
DistributionNetwork
Demand-side Views
Hole in Enterprise Architectures
Supply Chain Insights, LLC © 2012, p. 24
Manufacturing View (Units)
Channel View ($)
Accounts (Ship-to
locations
Countries
Global
Marketing View
($, Units)
Brands
Produc
t Cate
gorie
s
Global
Logistics View
(Units, Cases)
Ship-from Locations
Warehouses
Global
Production L
inesPlants
Global
Supply-side Views
DemandTranslation
Downstream Data
Account-LevelA VMI C
DistributionNetwork
Supplier Supplier Supplier Supplier
DistributionNetwork
DistributionNetwork
Demand-side Views
Supply Chain Insights, LLC © 2012, p. 25
Connecting the Extended Supply Chain
25
Trading Partner 1 Trading Partner 2 Trading Partner 3
Transactional Applications
Transactional Applications
Transactional Applications
Store
Supply Chain Insights, LLC © 2012, p. 26
Connecting the Extended Supply Chain
Collaborative Layer
Collaborative Layer
Collaborative Layer
Enterprise Data Warehouse
Enterprise Data Warehouse
Demand Signal RepositorySupply Signal Repository
Predictive Analytics
Key:
Transactional Adapters and Intelligent Rule Sets
Trading Partner 1 Trading Partner 2 Trading Partner 3
Transactional Applications
Transactional Applications
Transactional Applications
Enterprise Data Warehouse
Store
Supply Chain Insights, LLC © 2012, p. 27
Agenda
Current State
Pitfalls and Potholes
Devil is in the Detail
New Ways to Work Together
Wrap-up
Supply Chain Insights, LLC © 2012, p. 2828
Smartphone Integration
2/3 of smart phone owners use them in the
grocery store
49% recipe searches
38% shopping lists
Allrecipies.com Today’s Recipe Box Study April, 2010
Supply Chain Insights, LLC © 2012, p. 29
Campaign Objectives:
Reduce Out of Stocks at targeted retailers by
5%Increase Shopper
satisfaction and brand loyalty
“Where’s My Bud” Viral Campaign
Concept:Execute a viral campaign
focused on leveraging shoppers to identify out of
stocks and potentially pricing compliance issues
Leverage a combination of consumer, internet, and in-store technical capabilities
Validation:Identify a key leader or market that wants to pilot. 50/50 shared risk in effort and resources to pursue. Keep costs to a minimum for pilot, under $75K
Supply Chain Insights, LLC © 2012, p. 30
Retailer Experience
New text message to 612-961-7802:
A customer at Denny and Doug’s Liquor Emporium has just snapped a tag. You’re out of stock on Bud Light.
Please contact your wholesaler.
Supply Chain Insights, LLC © 2012, p. 31
Here are some locations near you where you can find Bud Light. Be sure to use this promotion code to get your discount:ABBL12456
Supply Chain Insights, LLC © 2012, p. 3232
Stop & Shop and Giant Are Leveraging Mobile In Store
• Twice the basket size
• 16% higher store frequency rate and
• 18% higher coupon redemption rate than that of general grocery shoppers
Supply Chain Insights, LLC © 2012, p. 33
Supply chain planning
Sales
Senior management
Production/manufaturing operations
Corporate strategy
Procurement
Marketing
Finance
Manufacturing outsourcing
Channel partners in the buy-side of your market
Channel partners in the sell-side of your market
61%
36%
48%
36%
43%
15%
22%
18%
3%
4%
5%
25%
46%
33%
40%
27%
52%
46%
48%
42%
23%
21%
86%
83%
81%
75%
70%
68%
67%
66%
45%
27%
26%
Who’s Responsible for Running the S&OP ProcessPrimary Secondary Any Responsibility
S&OP Responsibility
Base: Do NOT Have S&OP Experience; Total Answered (135)Q5. In your organization, who takes responsibility for running the S&OP process?
Supply Chain Insights, LLC © 2012, p. 34
Agenda
Current State
Pitfalls and Potholes
Devil is in the Detail
New Ways to Work Together
Wrap-up
Supply Chain Insights, LLC © 2012, p. 35
• For 90% of supply chains, customer collaboration in S&OP improves agility.
• We say that we are collaborating, but we are only really sharing data. Collaboration is a sustainable win/win value proposition.
• Today’s supply chains respond. They don’t sense. To be able to sense, the supply chain needs to be redefined..
• S&OP is not just about product. It is about joint planning of new opportunities.
Summary
Supply Chain Insights, LLC © 2012, p. 36
“When it comes to driving volume, a dollar spent in working with a customer in developing customer programs is worth three spent in trade promotion management spending.”
North American Supply Chain Leader
Supply Chain Insights, LLC © 2012, p. 37
Who is Lora?
• Founder of Supply Chain Insights• 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.
Supply Chain Insights, LLC © 2012, p. 38
Where do you find Lora?
Contact Information: [email protected]: www.supplychainshaman.com (3500 pageviews/month)Twitter: lcecere 2950 followers. Rated as the top rated supply chain social network user.Linkedin: linkedin.com/pub/lora-cecere/0/196/573 (2300 in the network)