apics presentation on agility on october 4

Supply Chain AgilityOctober 2012

Supply Chain Insights LLC Copyright © 2012, p. 2

Evolving Practices


Agenda

Trends Supply Chain

In Search of Supply Chain Excellence

What is Agility?

Wrap-up


Year-over-Year Growth


Source: Supply Chain Insights 2012

Average Days of Inventory by Year

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Consumer Packaged Goods

59 57 62 64 67 67 68 70 70 64 64 67

Chemical

71.5 71.9 78.2 75.1 62 70.3 68.1 64.3 64.3 78.6 72.9 72.8

Pharma

122.2366910978

69

133.6991005621

75

190.1476161659

68

170.9865224789

89

184.3426173998

59

175.5502604768

77

167.7999511392

47

149.8151539812

83

154.9157818825

91

198.6631341199

76

154.3134808632

44

131.8197942402

94

High Tech

93.1 57.6 46.5 48.5 35.9 37.3 43.8 36.8 34.6 41.3 34.8 30.4

Average

86.45917277446

74

80.04977514054

37

94.21190404149

19

89.64663061974

72

87.31065434996

47

87.53756511921

92

86.92498778481

17

80.22878849532

07

80.95394547064

77

95.64078352999

41

81.50337021581

1

75.50494856007

36

25.0

75.0

125.0

175.0

225.0

Da

ys

of In

ve

nto

ry


Source: Supply Chain Insights 2012

Average Days of Working Capital by Industry

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Consumer Packaged Goods

-20 -8 -12 -2 -21 -23 -8 -18 -11 -10 -12 -13

Chemical

37.3 44.7 61.7 71.9 64.8 64.1 63.8 57 51.7 74.8 85.6 77

Pharma

64.13122323105

75

56.40171531995

71

48.41779078772

81

56.19153537418

53

71.83773591464

44

94.06306457185

06

92.60818057698

52

88.05425335219

4

87.11058785110

32

111.0400827200

36

115.9852979100

64

113.2239261600

93

High Tech

231.5 290.3 283.5 243.5 173.5 138.9 109.4 103 92.4 131.9 138.9 140.9

Average

78.23280580776

44

95.85042882998

93

95.40444769693

2

92.39788384354

63

72.28443397866

11

68.51576614296

27

64.45204514424

63

57.51356333804

85

55.05264696277

58

76.93502068000

89

82.12132447751

61

79.53098154002

33

Series6

0 0 0 0 0 0 0 0 0 0 0 0

-25.0

25.0

75.0

125.0

175.0

225.0

275.0

325.0

Days o

f W

orkin

g C

ap

ital


Demand Signal

Accurate Weekly

Forecasting is ...

Delay from Purchase to

Signal

Data Latency and Distortion

Red Represents Emerging Economies with Distributor Trade

Retailer DC

Easy

3-10 Days

7-20 Days

Manufacturer DC

Difficult

10-20 Days

20-45 Days

Suppliers

Almost Impossible

20-50 Days

45-80 Days

Store

Trivial

Instant

Variable

Store


Building End-to-End Value Networks

Today

True collaboration only happens when there is a sustaining win/win value proposition.

Manufacturer


A Story of Value Chain Leaders


Cash-to-Cash Cycle vs. Gross Margin (2000-2011)SUMMARY SLIDE


SHARED VISION

+ SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = CHANGE

SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION

SHARED VISION

+ INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY

SHARED VISION

+ SKILLS + INCENTIVE + RESOURCES + LEADERSHIP =FALSE

STARTS

SHARED VISION

+ SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATION

SHARED VISION

+ SKILLS + RESOURCES + PLAN + LEADERSHIP =GRADUAL CHANGE

Source: J.P. Kotter

Collaboration: The Right Stuff


Agenda

Trends Supply Chain


What is Agility?

Wrap-up


Supply Chain Management: Top 3 Elements of Pain for Respondent


Evolution of Supply Chain Process Excellence

Align:Market Driven

ResilientReliable

Adapt: Demand Driven

Efficient

Building Horizontal Process Connectors

ContinuousTesting

LearningImprovingIn Market

OrchestrateDemand and Supply

Sense Demand

and Supply

Shape Demand andSupply based

on Market

Absorb DemandVolatility

Absorb Supply Volatility

Right Product

Right Place

Right Time

Right Cost

Cost

Procure to pay/order to

cash


Supply Chain “Excellence” Definition


Agenda

Trends Supply Chain


What is Agility?

Wrap-up


An Athlete Needs:


What is Agility?


Agility Importance vs. Performance

Scenario Planning

What-if Analysis


The Need for Balance


S&OP Balance


Starts with the Design of Value Network Strategy

Supply chain strategy

Business StrategyWhat are the right things to do to increase company value?

Value-network Supply Chain 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

Align demandrelationships

Effective Supply Networks

Execution of buy-side strategies

Continuous Improvement

Capabilities RequiredSupply Chain

Network Design

Design Networks

Innovation Methodologies

Demand Networks

Joint Value Creation Strategies

Business ProcessHow do I do the right things right?

Source: Supply Chain Insights, LLC


A Supply Chain

is a Complex System

with Complex Processes

with Increasing Complexity


Conquering the Effective Frontier


Useful Ratios


• Performance better than peer group• Year-over-year improvements• Consistency in results• Leadership in managing trade-offs

What is Best in Class?


Corporate Summary


Metrics Included for Comparison


Cash-to-Cash Cycle vs. Gross Margin (2000-2003)


Cash-to-Cash Cycle vs. Gross Margin (2000-2011) SUMMARY SLIDE


Inventory Turns vs. Revenue per Employee (2002-2003)


Inventory Turns vs. Revenue per Employee (2002-2011) SUMMARY SLIDE


S&OP ProcessPlan Execution


Challenge


• We have spoken for many years about the need for agility in the supply chain, but we have not designed for it or measured it.

• As our supply chains become more central to global success, agility becomes more important.

Wrap-up


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Who is Supply Chain Insights?

Supply Chain Insights is focused on delivering actionable advice for supply chain leaders. A company dedicated to research, turn to us when you want the latest insights on supply chain trends, technologies to know and metrics that matter.


Where is Your Opportunity?


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.


Where do you find Lora?

Contact Information: [email protected]

Blog: www.supplychainshaman.com (4000 pageviews/month)

Twitter: lcecere 3300 followers. Rated as the top rated supply chain social network user.

Linkedin: linkedin.com/pub/lora-cecere/0/196/573 (2300 in the network)

apics presentation on agility on october 4

Business

supply chain agility

supply chain management

supply right timeprocure

supply payorder todemand

right cost

right things

right ways

right tradeoffs