presentation on customer-centric supply chains for barcelona cscmp event in may 2016

Building the Customer-

Centric Supply Chain

Supply Chain Insights LLC Copyright © 2016, p. 2

Disclaimer: I am a Skeptic


A Social Scientist


A Curmudgeon


A Fortune-teller of Sorts….


I Write for the Supply Chain Leader

How Effective Is Today’s

Supply Chain in Serving

the Customer?

Who is Your Customer?

Start at

the

basketStore needs

the productShip to

store

Sit in

warehouse

Ship to

warehouse

Make

Old View

New View

The Evolution of the Long Tail


Bullwhip Effect


Descriptors Used by Leaders


Who Has a Supply Chain That Is Working Well?


Customer Priorities


Customers vs. Employee Perspective


Need for Network Ownership


• Need to sense and actively shape demand using channel data.

• Organizations need to build outside-in processes to test and learn.

• Price/volume should be orchestrated across the supply chain.

• Organizational alignment and incentive gaps need to be closed.

• We need to embrace new ways of thinking.

What Needs to Change?

Current State


What We Expected

A Balancing Act on The Supply Chain Effective

Frontier

Chemical Industry a Look at Orbit Charts: Dow & DuPont(Inventory Turns and Operating Margin)

A Closer Look at Automotive

Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014

2006

4.0

5.0

6.0

7.0

8.0

9.0

10.0

-0.10 0.00 0.10 0.20 0.30 0.40 0.50 0.60

Operating Margin

Eli Lilly and Company Novo Nordisk

20 NVO

0.31, 6.48

201

4

200

6

Best Scenario

LLY

0.24, 8.30

Average (Operating Margin, Inventory Turns)

Inve

nto

ry T

urn

s

A Closer Look at Pharmaceuticals: Novo Nordisk Making

Progress

2006

2014

2006

2014

6

7

8

9

10

11

12

13

0.09 0.10 0.11 0.12 0.13 0.14 0.15 0.16 0.17 0.18 0.19

Inve

nto

ry T

urn

s

Operating MarginThe Emerson Electric Company

Best

Scenario

SBGSY

0.13,

7.37

EMR

0.16,

10.95

Average (Operating Margin, Inventory Turns)

Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014 from YCharts

Electrical Equipment: Operating Margin vs. Inventory Turns

(2006 – 2014)


Organizational Alignment


Role of Order Management

94%

88%

87%

84%

82%

78%

40%

52%

47%

22%

30%

28%

Order Management

Enterprise Resource Planning

Demand Planning

Warehouse Management

Production Planning

Manufacturing ExecutionSystems

ImportanceImportant Extremely Important

60%

55%

53%

50%

50%

48%

26%

30%

25%

31%

20%

24%

Order Management

Enterprise Resource Planning

Manufacturing ExecutionSystems

Warehouse Management

Demand Planning

Production Planning

Satisfaction

Satisfied Extremely/Very Satisfied

IT Systems: Importance vs. Satisfaction*

Top 2

____________________________________________________________________________

Source: Supply Chain Insights LLC, Supply Chain Leaders Speak Study (Jan-Sep 2015)

Base: Manufacturers, Retailers, Distributors – Have IT system operational (n=30-35) – only showing those with 30+ base size

Q16. How important are each of your current IT systems to your supply chain organization? SCALE: 7=Extremely important – 1=Not at all important

Q17. How satisfied are you with each of your current IT systems shown below? SCALE: 7=Extremely satisfied – 1=Extremely dissatisfied

*Importance and satisfaction data are those who rated it 5-7 vs. 7 on 7-point scale (top 3 box)

Becoming More Customer

Centric


Consumer-driven Supply Networks: Defined by P&G in the 1990s as a shelf-driven, outside-in process defined by successful execution of the two moments of truth. (The two moments of truth are: Was the product in stock? Was the customer delighted?)

Demand-driven Supply Networks: As defined by AMR Research in 2004: a supply chain that senses and translates market signals in real time.

Demand-driven Value Networks: As defined by AMR Research in 2007: A network that senses demand with minimal latency to drive a near-real time response to shape and translate demand.

Market-driven Value Networks: As defined by Supply Chain Insights in 2010: an adaptive network focused on a value-based outcomes that senses, translates, and orchestrates market changes (buy and sell-side markets) bi-directionally with near-real time data to align sell, deliver, make and sourcing organizations outside-in.

Evolution of Demand-driven Concepts


APO

Kimberly-Clark has built significant capability through consistent investment in people, process, systems and tools

20142008 2009 2010 2011 2012 20132005 2006 2007

Kimberly-Clark‘s Supply Chain Capability Journey

Order to Cash

Terra

Complexity

SC Network

RSI / Promax

Planning Process Redesign

DC Network Redesign

Cash Generation

Segmentation

Cost-to-Serve

Inventory Optimization

LEAN

i2 TMS

2001 Demand Driven Journey

Production Cycle Time Compression

S&OP Transformation

Customer Engagment Strategy / Customer Trading Strategy

Multi-channel

Case Study


Understanding Demand

• Aligning the lines?

• Pursue clear, simple connections for product and information

flow

Shelf take-away

Forecast

Shipments

5/11/2016

Seagate Supply Chain of the Future

Roadmap

October 2004

© Seagate Confidential

Seagate

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Desktop Enterprise Notebook Non-Mission Critical PVR Gaming Other CE/Non-Compute Handheld

Note: % Growth/Qtr is compoundedSource: Seagate market Research

Minimize Labor

Costs- Asia Operations

Mfg.

Automation-FoF

- FIS

Flawless

Execution- Inbound VMI

- eKanban

Process

Automation- Supply Chain

Dashboards

-Enterprise Planning

- End-to-End

Synchronization

Mass

Customization- Configure-to-Yield

- Waterfall-to-

Demand

- (DBR) Drum,Buffer,Rope

- TOC Decision

Support

Many Barriers To Adoption

In The End To End Supply Chain

Channels & Customers Inside The Enterprise Suppliers & Service Providers

Reluctance To Share

Data

Immature &

Inadequate Systems

Slow Internal

Processes

Many Battlefronts

Win-Lose Mentality

Metrics Split, Conflicting

Rewards Based On

Legacy Drivers

Petty Kingdoms & Perks

Slow/No Information

Sharing

Attitudes Stuck In The

Past

Silos Of Optimization

Reluctance To Share

Data

Immature &

Inadequate Systems

Slow Internal

Processes

Many Battlefronts

Win-Lose Mentality

Channels &

Customers

Product

Marketing

Supply Chain

Planning

Finance

Sales

R&D

Logistics

Manufacturing

& Operations

Suppliers &

Service Providers

Sourcing &

Procurement

Building Strong Channel

Relationships


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

Bar codes were first used at Marsh Supermarket in 1968

Pull Push

Cu

stom

ers

an

d C

on

sum

ers

Channel

Demand

&

Demand

Management

Demand

Translation

Reliable,

Profitable

Response from

Supply Based

on Demand

Su

pp

liers

Demand Visibility Supply Visibility

Typical Organization

Regional

Team

Regional

Team

Regional

Team

Regional

Team

Regional

Team

Regional

Team

Regional

Team

Over 300 teams

One Face

to the

Supplier

C

u

s

t

o

m

e

r

T

e

a

m

S

u

p

p

o

r

t

Cost-to-serve analysis calculates

the profitability of products,

customers and routes to market -

and to give a fact-based focus for

decision making -- on service mix

and operational changes for each

customer.


Cost to Serve in Consumer Products

What Is Demand Driven?


1. Sales-driven is demand-driven.

2. Marketing-driven is the same as demand-driven.

3. Better forecasting is the foundation for a demand-driven initiative.

4. An order represents demand.

5. Demand-driven is an evolution of traditional supply chain

approaches.

6. The answer is tight integration.

7. We must wait for standards.

7 Misconceptions

Demand-driven initiatives are designed outside-in from the consumer back

with a focus on execution at the moments of truth.


Customer-driven Supply Networks: Defined by P&G in the 1990s as a shelf-driven, outside-in process defined by successful execution of the two moments of truth. (The two moments of truth are: Was the product in stock? Was the customer delighted?)

Demand-driven Supply Networks: As defined by AMR Research in 2004: a supply chain that senses and translates market signals in real time.

Demand-driven Value Networks: As defined by AMR Research in 2007: A network that senses demand with minimal latency to drive a near-real time response to shape and translate demand.

Market-driven Value Networks: As defined by Supply Chain Insights in 2010: an adaptive network focused on a value-based outcomes that senses, translates, and orchestrates market changes (buy and sell-side markets) bi-directionally with near-real time data to align sell, deliver, make and sourcing organizations outside-in.

Evolution of Demand-driven Concepts


• Demand Sensing: The reduction of time to sense consumer purchase

and take away. The translation of channel pull to outside-in flows.

• Demand Latency: The latency of demand signal due to demand

translation from shelf take-away to order receipt.

• Demand Translation: The translation of demand by role (sell, make,

within the organization.

• Adaptive Buffers: In the demand-driven supply chain, adaptive buffers

flex to accommodate changes in flows.

• Synchronization. The demand signal must be connected from node to

node in the supply chain and then mapped. The most frequently

mapped data elements are product hierarchies, time/calendars, and

locations.

• Harmonization. Data harmonization enables data of differing granularity

and structures to be harmonized into a common database.

Demand Terminology

0.0

0.5

1.0

1.5

2.0

2.5

3.0

WK 1

WK 2

WK 3

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WK 5

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WK 8

WK 9

WK 1

0

WK 1

1

WK 1

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WK 1

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WK 1

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0

WK 2

1

WK 2

2

WK 2

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WK 2

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0

WK 3

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0

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9

WK 5

0

WK 5

1

WK 5

2

WM WEEK

PO

S B

AS

E I

ND

EX

Profile CA-40 MID-N SOUTH NORTH PAC

Aligning Demand Patterns


For Both Sales and Purchase Orders,

Over Half of Orders are Exchanged via EDI/XML


Greatest Gaps in Visibility


History of Retail Scorecards

Making the Digital Pivot


Automation of the four moments of truth in the

purchase cycle through the use of social, mobile,

digital, and analytics technologies.

Digital Path to Purchase


Four Moments of Truth

The List:• Digital

Recipe

• Digital

Coupons

• Online

Rating and

Reviews

The Basket:• Shelf-sensing

• QR Codes

• In-store

coupons

• IP Address

Sensing

• Localized

assortment

The Check-out• Downstream

Data

• Loyalty Data

Usage• Sentiment Data

• Ratings and

Reviews


Emergence of Digital Path to Purchase


Funding for the Digital Path to Purchase


Thank you for letting

BudHunters know

about your beer being

out of stock.

We’re working to get

your Bud Light for you.

If you’re in a hurry, why

not grab some Bud

Select?

“Where’s My Bud!” – The Process Flow

New text

message to

612-961-

7802:

A customer

at Denny

and Doug’s

Liquor …

http://www.budweiser.com/


Where’s my Bud?

Finally make it to the aisle, and…

Where’s My Bud?

Use your mobile phone to snap the tag

above to get your Bud!

http://demos.dennyboynton.com/RetailLocation

OutOfStock.aspx

http://demos.dennyboynton.com/RetailLocationOutOfStock.aspx


Thank you for letting BudHunters know about your beer being out of stock.

It looks like Denny and Doug's Liquor Emporium is out of Bud Light. Why not grab some Bud Select and take $2.00 off on your purchase on us? Just bring the code below with yout to the register.

ABBL12456




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.

Case Study: Internet of Things

Demand-driven

Replenishment


Supply Chains Don’t Play by the Rules

57

But,

what if

they

could?

Micro Demographic Analysis of Flavor Preference by

Demographics


Opportunity

at the Intersection

of the Social and Interest Graph(s)


• Newell Rubbermaid

Listening: Newell Rubbermaid

#Future15SB @bwdumars


#Future15SB @bwdumars

Newell Rubbermaid


Listening: Lenovo


0

0

0

0

0

0

0

Canada

-Customer A calls about a blue screen on a Yoga

-Customer B posts on Facebook about his X220’s AC/DC adapter issues

Large Enterprise Client experiences 5 keyboard malfunctions in their latest

shipment. Complaints received through account executive

[Critical Situation]

Brazil

-Customer F submits a service from on

esupport.lenovo.com regarding

their W530 hard drive

Morocco

-Customers G & H comment on their

X220’s electrical issues on Twitter.com

-Customer I called about Yoga screen

issues

Australia

-Customer J write a review on

NewEgg.com about AC/DC adapter

issues on X220

-Customer K had an eChat with Lenovo

about Yoga screen issues

China

-Customer L wrote on Weibo about

Yoga screen issues

-Customer M calls about a Tablet 8battery issues

Voice of Customer Comes in Many Forms

USA

-Customers C & D write X220 product

reviews on amazon.com and mention

issues with AC/DC adapters

-Customer E posts on

forums.lenovo.com that they are

experiencing blue screens on their Yoga


0

0

0

0

0

0

0

Lenovo

- 6 recorded issues about X220’s

AC/DC adapter

- 5 recorded issues about

keyboard issues on X1 Carbon

- 5 recoded issues about Yoga

screen

- 1 recorded issue about W530

hard-drive

- 1 recorded issue about Tablet 8

battery

One Voice – A Single View of Perceptual Quality


Evolution of Analytics


• Supply Chain for 2020 is about Growth.

• The Digital Supply Chain is a great opportunity.

However, do not push digital for the sake of

digital. Instead, define a business problem, and

attack it in a new way.

• Learn from the Past to Unlearn and Then Drive

New Outcomes.

Summary


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 (7,200 followers)

• LinkedIn: www.linkedin.com/in/loracecere (95,724 followers)

• LinkedIn Influencer: www.linkedin.com/today/author/446631

presentation on customer-centric supply chains for barcelona cscmp event in may 2016

Business