rise of digital solutions to optimize local & regional supply … · 2019-05-24 ·...

1© 2019 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Rise of Digital Solutions to Optimize Local & Regional Supply ChainsEuroCham Breakfast, Ho Chi Minh City22 May 2019

Today’s Speakers

Nguyen Tuan Hong PhucDirector, Head of Customer & Operations, Digital ConsultingKPMG Vietnam & Cambodia

Peter LiddellSenior Partner, Asia-Pacific leader for Supply Chain & Operations AdvisoryKPMG Australia

Sharne UsherwoodDirector, Head of Customer & OperationsKPMG New Zealand

Michael SeitzPartner, Head of Procurement Advisory KPMG China


Cross-sector business disruptors

Supply chain must disrupt itself to stay in front of change.

Supply Chain

Convergence of industry models

“Growth or die”

Emerging technology

Big data

Shifting geopolitical &

regulatory environment

Changing workforce

demographics

Experience centricity

New business models


What will supply chain look like in the future?

Supply chain in the future…Supply chain today…

Business model disruptors are changing the demands of supply chain, and supply chain as we know it will be radically different in 10 years.

Additive manufacturing utilized during the prototyping cycle

Leveraging additive manufacturing for “printing” new components on the spot to service customers

Predictive/Prescriptive data analytics – What will happen?/What should we do about it?

Increased use of robotics in materials movement Widely adopted autonomous vehicles for materials movement and customer deliveries

Control towers provide data points for SC visibility Cognitive control towers predict/prevent supply chain disruptions, outages, and cyber-attacks

Descriptive/diagnostic analytics - What happened? / Why?

Summarize physical, financial, and digital information within individual best of breed applications

Physical, financial, and digital information brought together in a single platform using blockchain

Manual processes and physical location dependencies Utilization of virtual and augmented reality to enable real-time facility view and assist with order fulfillments

Value Creation through Data Driven & Digital Supply Chains


CEOs remain focused on Driving Growth; but are also embracing the digital agenda. They see agility and intuition key to turning digital disruption into opportunity. This digital business path has critical implications for Operations

Current Situation

Our clients understand the case for change

95% 50% 28% 23% 33% 70%

Respondingto disruption

Risk Rethinking Operating Model

Increase focus on Customer-centric strategy

Growth Emerging markets

CEOs see technological disruption as more of an opportunity than a threat and 54% are actively disrupting the sector in which they operate, rather than waiting for competitors to do the disrupting

Over 50% of CEOs say that a strong cyber strategy is critical to engender trust with our key stakeholders

Over a quarter of CEOs (28%)say that changes to tax laws are causing them to think about changing their business operating model

Only a quarter (23%) of CEOs say they are currently exceeding customer expectations for a personalized experience

33% of CEOs say that strategic alliances would drive growth over the next 3 years, followed closely by organic growth (28%) and then mergers and acquisitions (16%)

70% of CEOs say their biggest priority for geographical expansion is emerging markets, with just 28% saying that developed markets are their priority

Within that 70% say Central/South America is the most important region for them

Source: Global CEO Outlook 2018, KPMG International

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Customer expectations continue to grow and evolve…..

greater customization

faster delivery

instant communication and tracking

smaller batch sizes

a transparent, sustainable supply chain: visibility over all suppliers, sources and materials

ethical sourcing

no contamination or tampering

Sources: https://www.campaignlive.co.uk/article/meet-dawn-customer-future/1433579https://www.unilever.com/news/Press-releases/2017/report-shows-a-third-of-consumers-prefer-sustainable-brands.htmlhttp://www.tradeready.ca/2018/topics/supply-chain-management/4-companies-succeed-focusing-ethical-sourcing-manufacturing/

Gartner predicts that more than 50% of

organizations will redirect their

investments to customer experience

innovations.

52% of consumers said they choose products that don’t make them wait

A new international study by Unilever

reveals that a third of consumers (33%) are now choosing to

buy from brands they believe are doing

social or environmental good

Giants such as Starbucks and H&M are making ethical sourcing and supply chain transparency a key part of their customer strategy

Customers expectations

Increasing Focus on Customer


Agility in the supply chain operating modelRethinking Operating Model

Future operating models need to be more responsive to the changing requirements of customer expectations; driving fundamental shifts in the operating model and Supply Chain strategies

Description Industry examples Potential Value Creation

Servitization • Faster delivery expectations • Sharing of supply chain network capabilities to enable faster delivery (eg Uberization of Transport)

• Amazon – rent warehouses from suppliers to keep stock nearer to consumers

• Increased consumer experience index by 2% - 7% through faster deliveries

HyperPersonalization

• Greater segmentation and customisation of products and offerings

• Capability to customize size, type and location of delivery

• Adidas - Speed Factory

• Revenue from sales increased by 1%-4%

ChannelConvergence

• Elimination of boundaries across sales and distribution channels to enable omni-channel

• E.g. Supply chain is able to work seamlessly with end-customers, providing and end-to-end experience

• Provide seamless customer experience in both physical and virtual channels

• Hointer – combine online and in store

• Reduced cost od sales by 3%-10%

Platforms / ecosystems

• Smaller batch production vs traditional long batch runs

• Maximizing capacity utilization through sharing excess production capacity with industry to keep variable costs within control

• Decrease variable costs by 3-5% through the increase of asset utilization between 5-25%


More value can be created through data driven supply chain by making the right decisions

Descriptive Analytics

Center of Excellence

Targeted (tailored)

Supply Chain Segmentation

DiagnosticAnalytics

Supply Chain Management Business-Process-as-a- Service(BPaaS)

Supply Chain

Visibility

Social Learning Platforms

Solution-Centric Supply Chains

Big Data

The next 5 years will very much be a make or break for many companies who find themselves, mid-air, having yet to notice they have jumped into the Digital world, prepared or not1

In KPMG’s view, the five highlighted time sensitive technologies displayed in the diagram on the left are those which require immediate attention

Emerging technologies

Source: 1 Gartner Supply Chain Hype Cycle July 2017; KPMG Project Experience

“ “


Predictive SCM Blockchain Track & Trace

Case Studies – Emerging Technologies

Emerging technologiesThere are 3 emerging technologies that are helping to create value in the Life Sciences industry


Executivedashboard

The Dashboard in the home screen shows a number of important parameters with respect to the Organization’s supply chain health check.

Forecast events

The real power of our solution comes into play when you consider the predictive capability to forecast events. Unlike traditional risk management approaches, our solutions forecasted events are not predicted based on historic data alone, but rather on the use of internal and external smart data points enabled by digital supply chains.

Supplier, product &raw material view

Solution highlights the number of components that’s being supplied by a Supplier, along with supplier performance details such as lead times, risk ratings, revenue at risk, and alternative suppliers.

Planning & strategy model

The Planning module allows you to create a digital twin of your current supply chain and quick model contingency supply chains around forecast and current events. Providing impact to sales, lead time, and cost to implement. Module provide customisable rules to create the contingency plans.

Predictive Supply Chain ManagementCase Studies – Emerging Technologies

Collate data to provide insights to identify and mitigate the impact of disruption and variability through predictive risk management


Case Studies – Emerging Technologies

With a trackster device, an asset can now be found within or outside a scanning network at a fraction of the cost of traditional tracking technologies

Track & TraceHaving full visibility of the supply chain will enable value added decisions to be made in real-time

Geo TrackingReal time visibility of assets and packages across the entire supply chain without the cost of satellite technology

Automated Scan EventsActive devices unlike GPS and RFID, removing the need for human scan intervention and eliminating error scans

Data AnalyticsDigitally maintain continuous visibility of an article/asset in transit throughout the complete supply chain

Asset ManagementReal time, visibility of assets and packages across the entire supply chain

Multi-senseAbility to measure temperature, shock, tilt, moisture, gases and light

Chain of CustodyAbility to validate chain of custody and independently verify time and locations of adverse /significant events


Leveraging digital in Retail:

AvailabilityOn Shelf

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is changing the world in which we live and work. This change is driving increasing expectations with customers, and the pace of change is unlikely to slow any time soon.

Digital disruption

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To deliver on changing customer expectations, every business needs a digital roadmap. The challenge is knowing where to start. A steadfast focus on core capabilities is vital.

Below are the five building blocks to a digital supply chain:

1. Define digitalAim to make processes frictionless and decisions effortless

2. Start with performanceFocus on intended results not with data or technology

3. Focus on ROI and paybackSmart sequence your initiatives

4. Develop your people Nurture and develop new capabilities

5. Partner for successBuild an ecosystem

Your digital journey

16© 2019 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.© 2019 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Introducing On Shelf

Availability:

What is OSAOn Shelf Availability (OSA) measures the availability of your products for customers to purchase at the shelf, which is a direct inverse of out-of-stock rate. Very few retail businesses are effectively monitoring on shelf availability, and those that are do not have a comprehensive understanding of the root causes underlying out-of-stock events. As a result, most organisations struggle to improve their OSA levels.

The gap effectWhile it differs by country and organisation, OSA levels in big box retail is typically around 90 – 95%, which is around 5-9% lower than most businesses expect.

Any out of stock has some impact on a customer experience, but depending on the industry and the product loyalty, the customer faces a dilemma:

1. Purchase a substitute product (typically for elastic or low-loyalty products)

2. Postpone the purchase (typically for inelastic and high-loyalty products)

3. Not buy it at all (typically for impulse or inelastic products)

4. Try finding the product at another retailer (typically for high-loyalty products).

Regardless of the decision, gaps have a tangible impact on both a retailers immediate sales potential, as well as their in-store experience (and therefore retailer loyalty).

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An innovative

KPMG has developed a predictive analytics engine, the KPMG OSA Analytics Engine, to help retailers identify, understand the reasons for, and sustainably improve their OSA. It is designed to leverage existing data to automatically determine root causes and highlight them to the relevant parties.

• All data is daily or weekly, and at a SKU and Store level:• Demand forecasts• Promotional plans• Replenishment • Purchase orders• Logistics data

(Advanced shipping notice, purchase order acceptance, inwards goods scan data)

• Bin location data• Stocktake data• Gap scan data• Planogram data

• What is my OSA level by item, store, supplier, day etc

• Combination of:• Stock on hand data• Sales velocity data• Inwards /

replenishment data• Physical audits• Visual / digital

merchandise

• Why is it happening?• 12 individual root

causes in total• Level 1 in the root

cause tree:• Shelf replenishment

issue• Inventory data issue• Forecasting /

planning issue• Purchasing issue• Supplier issue

• Visualising OSA levels and root causes in customised interactive workbenches designed for specific uses:• Store focus – Store

inventory controllers or Store managers

• Operations focus –Head office supply chain team members

• Product focus –Suppliers and retailer category managers / merchandise planners

Analysis of different data sources

What is OSA?

01What are the rootcauses of my out-of-stock?

02Who needs to do what to resolve them?

03

Growing the Future of Procurement

19© 2019 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 19© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 807686

Extreme Automation

Big, Intuitive, Insightful, Data

Twice as much with half the resources

Self-Service as the norm

How not to get disintermediated?

How are we contributing to value? Cost savings not enough

Does procurement have a role?

How does procurement stay relevant?

Procurement

Procurement must disrupt itself to grow and stay in front of change

Disruptors are shaping the future


Procurement should lead the functional shift to digital

by …Procurement will …Where Procurement is going

1990’s: Purchasing 2000’s: Sourcing Today: Digitalization

capitalize on market data leveraging technology that perpetually monitors changes in variables that comprise should-cost models

shift towards marketplaces directing tactical spend to supplier networks and marketplaces

become invisible to customers providing simple interaction with chatbots, Digital Assistants, and Artificial Intelligence (e.g., Cognitive Contract Authoring)

using technology to make decisions, improve processes, propose actions, and automate repeatable activities

model collaborative behaviors finding new insights from data that connects the front, middle & back office

directly impact 70% of the organizational role structure


Key contributor in the business planning process (ex. Zero-Based Budgeting, Should-Cost Modeling)

Driver of spend behavior using key insights into spend data, supplier

relationships, and risks

Broker to products, skills, and sources of innovation to solve the

business’ problems

Responsible for long term decisions that benefit the business, its customers,

environment, and society.

Instill a human-centered approach to solving problems and measure true customer satisfaction

Focus on reducing the cost of change and adapt quicker- Invest in digital technologies

Monitor market trends and assess potential impacts to procurement- Foster a culture of innovation

Drive spend behavior proactively by making the right data available at the right time - Invest in artificial intelligence

Transforming Procurement’s Role

Transforming Procurement’s Behavior

Customer centricity will require new roles and behaviorsBecoming a “User Friendly Function” and delivering a “seamless commerce experience”


Internal and external Big data used to develop and support strategies Should-cost analyticsinform decisionsPredictive analytics drive action

Utilizing AI agents to monitor/ forecast market changes, events and trendsMonitoring leading indicators within the organization

Actively testing disruption hypotheses for step-change performance improvement

Engaging suppliers in disruption opportunity identification

Category demand and costs linked to business activitiesZero-based category cost budgets utilized for financial management

Supply market knowledge injected into functional/business strategies

Insights “on-demand”via AI assistants

Tactical activities fully automatedBasic category management

via tech-enabled “self-service”

Category innovation is needed to unlock untapped valueIntegrated business planning driven through deep supply market insights and predictive analytics

Supplier centricity focuses on integrated relationships

Supplier Centric Procurement

Driving supplier performance and relationships to a new level while fostering innovation and mitigating risk

Extremeintegration

— Visibility through deep interconnection of systems and data— Supplier-managed storefronts and content

Supplier innovation

— Suppliers contribute to business, product, and category innovation— Evaluated based on value added to the business

Optimized performance

— Proactive / predictive AI management of performance— Integrated view (sentiment, community and, 3rd party data)

— Automation of transaction, contract, and regulatory compliance— Predictive compliance management leveraging community data

Perfect compliance

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The Digital Procurement Platform will enable modernization

Extreme automation— Robust technology enablement across end-to-end

Procurement cycle — Continuous pursuit of process automation

Extreme integration— End-to-end integration beyond Procurement— Simple and adaptive integration (Cloud integration,

Blockchain)

Value-added services— Managed services used to maximize Procurement ROI— External insights available seamlessly, on demand

AI everywhere— AI and machine-learning deployed to be seamless

and invisible— Automation of decisions and decision implementation

Digital Platform


Future Challenges and Needs….

Millennial workforce replacing the institutional knowledge of retirees and desiring a different “employee experience”

Digital transformation eliminating the work of the transactional & tactical procurement workforce

Training programs to accommodate future skills and different learning environments

Contingent labor required to support the highly skilled analytical positions

Future Skills Required for Procurement…

Relationship management both internal and external

Analytical modelling capability and the need for the “Citizen Data Scientist”

“Bot Managers” who manage virtual AI teams

Cross functional expertise, improved business acumen, and negotiation readiness

Delivering the future relies on a workforce of the futureDigital acumen will be as important as procurement acumen to growand serve your organization


Methods, decision making, and governance— Strong continued importance on simplifying the governance and

decision authority frameworks with cross-functional alignment

Behaviors within the organization— More proactive focus on defining

the right culture needed to support the procurement strategy and sustain long term value

Ability to undertake & manage changes — Continuous improvement, Kaizen,

innovation, future proofing to be agile and continuously improve

Role of Procurement, Size, Shape, Automation, and Delivery Model— Procurement organization structure will

be lean, right-sized, and focused on higher-value services

Strategic, direction, support& communication Cross-functional & cross-business unit leadership involvement will be more prominent. — Procurement leadership sets the

stage, and drives accountability

Process & measurement of organizational performance— Procurement Effectiveness at the Enterprise level will be a key

indicator for success along with clear line of sight into what drives value for the organization

Agile operating models tie it all together Organizations will move to operating models with a high degree of flexibility in the digital age


How do we start?

— Agile Operating Model

Optimize the Value

— Digital Platform, Workforce of the Future, Intelligent Automation

— Robotic Process Automation, Base Spend Analytics

Target the Value and Roadmap

Early Value Opportunity Execution

Close Foundational Gaps

— Category Innovation, Managed Services, Supplier Storefront

Continuous Optimization

— What can be shifted to self-service

— How many people should I have

— What high ROI automation opportunities exist

— What insights will maximize procurement

— What impact can I have on resources in/out of procurement


P365D addresses these typical challenges by offering a central digital workplace with innovative functionalities. In a nutshell, the platform enables all stakeholder groups to collaborate using a world-class category management process that is aligned with and supported by all procurement systems.

Our Solution – Procurement 365 Digital

Platform Functionalities

Process Orchestration

Cognitive Procurement

Knowledge Capturing & Continuous Improvement

Automation & Augmentation

Collaboration

KPMG Asset: Procurement 365 DigitalJoint development project with:

Technology partner

Contact us: Nguyen Tuan Hong PhucDirector, Head of Customer & Operations, Digital ConsultingKPMG Vietnam & [email protected]

Peter LiddellSenior Partner, Asia-Pacific leader for Supply Chain & Operations AdvisoryKPMG [email protected]

Sharne UsherwoodDirector, Head of Customer & OperationsKPMG New Zealand [email protected]

Michael SeitzPartner, Head of Procurement AdvisoryKPMG [email protected]


Experience demos and interact with KPMG Digital experts in your areas of interest:

Digital Summit 2019

Enterprise applications

Procurement & sourcing

Customer experience

Human resource management

Technology risk and cyber security

ABCDE

Date : 8:30 – 11:30am, 12 June 2019Venue : Gem Center, 8 Nguyen Binh Khiem, District 1, HCMCRegister : Contact us at [email protected]

Rise of Digital Solutions to Optimize Local & Regional Supply Chains�Today’s SpeakersCross-sector business disruptorsWhat will supply chain look like in the future?Slide Number 5Our clients understand the case for change Customer expectations continue to grow and evolve…..Agility in the supply chain operating modelMore value can be created through data driven supply chain by making the right decisions Emerging technologiesPredictive Supply Chain ManagementTrack & TraceSlide Number 13Slide Number 14Slide Number 15OSASolutionGrowing the Future of ProcurementDisruptors are shaping the futureProcurement should lead the functional shift to digitalCustomer centricity will require new roles and behaviorsCategory innovation is needed to unlock untapped valueSupplier centricity focuses on integrated relationshipsThe Digital Procurement Platform will enable modernizationDelivering the future relies on a workforce of the futureAgile operating models tie it all together How do we start?Our Solution – Procurement 365 DigitalContact us:Slide Number 30

rise of digital solutions to optimize local & regional supply … · 2019-05-24 ·...

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