Presentation at Schulich School of Business MBA course on SCM and IT convergence

1. Supply Chain + IT
Arpad Hevizi – Celestica
VP IT Supply Chain Solutions
Notes form a transformational journey http://twitter.com/ahevizi

2. Sea
Land
Component 3PL Distribution 3PL Service
Manufacturing OEM
Supplier Center Provider
Air
LATENCY
Design Retail
Center Outlet
MISALIGNED
METRICS
INFORMATION 3PL 3PL
Repair Returns
LEADTIME Service Consolidation
Center Center
THE PROBLEM

3. WHY?
3 CRITICAL SHIFTS

4. Supply Chain is no longer about moving parts…
1 7 7 7 7
DAY DAYS DAYS DAYS DAYS
REAL LEADTIME

5. An Often Overlooked Obstacle to
Supply Chain Integration and Excellence
Pressure Center – Customers
Other Other Other Other Other
TSMC TI CLS Cisco Ingram
The ‘forgotten’
Customers Customers Customers Customers Customers
End Customer
Value Chain
View
TSMC TI CLS Cisco Ingram Walmart
Pressure Center – Wall Street
TSM TXN CLS CSCO IM WMT
5 SCOR Benchmarking - Presentation
ALIGNMENT?

6. Technical Success Operational Success Business Success
• Solution Implemented • The solution is in • The solution lead to
within budget and productive use measurable business
resource constraints supporting core benefits
business functions
• Business capabilities • There is a clear
are delivered and • The organizational connection between
tested as an and process changes solution performance
integrated solution are implemented and and key business metrics
accepted
• User and support • Key performance
resources are • The solution reached indicators are monitored
identified and trained maturity (stabilization and the solution is
phase completed) refined to maximize
value realization
IT IS NOT TOOLS

7. WHAT?
THE ANSWER

8. The primary supply chain challenge is to balance a
variable demand profile with a variable supply at the
lowest cost to serve while achieving customer expectations
Customers Company Domain Suppliers
Plan
Deliver Make Source
Demand Management Supply Management and
and Fulfillment Activities Purchasing Execution
Controlling Demand Variability FOCUS: Supply Chain Control Today Controlling Supply Variability
Extended Supply Chain
Replenishment
Forecast Collaboration VMI & Supply Collaboration
Planning (ROP)
FRAGILE BALANCE

9. Supply Chain Networks / Integration
2010s IT: Value Chain Planning solutions
2000s Demand Side Partner Optimization
IT: Collaborative Demand Planning, DDSN
1990s Supply Side Partner Optimization
IT: Collaboration Solutions, Supply eHubs
1980s Cross Operations Excellence / Enterprise Level
IT: ERP revolution
1970s Operations Excellence / Local Level
IT: Statistical Process Control Solutions, MRP II
1960s Process Excellence / Local Level
IT: CAM, MRP Solutions
THE EVOLUTION

10. Managing extended supply Demand driven
chains as one synchronous Supply Network
network. Integration…
TRUE INTEGRATION

11. HOW?
NOT THAT EASY

12. Real life is lagging behind the theory…
Customers Company Domain Suppliers
Demand Management Supply Management
Typical
Supply LOAD CHASE
Chain
Planned
Supply ORDER
LOAD CHASE
Chain CHECK
Advanced VALIDATE PLAN
Supply SIMULATE
Chain LOAD CHASE
SCENARIOS
COLLABORATIVE PLAN
Supply
SHARED ALIGNED
Chain DEMAND / SUPPLY VISIBILITY
SCENARIOS ORDERS
Vision
COLLABORATIVE REPLENISHMENT
Extended Supply Chain
REAL EVOLUTION

13. Sea
Land
Component 3PL Distribution 3PL Service
Manufacturing OEM
Supplier Center Provider
Air
LATENCY
Design Retail
Center Outlet
MISALIGNED
METRICS
INFORMATION 3PL 3PL
Repair Returns
LEADTIME Service Consolidation
Center Center
CONTROL PROBLEM

14. Customers Company Domain Suppliers
Collaborative
Collaborative Plan
Planning
Planning &
Forecasting
Sell Design for Supply
Design
Chain
Collaborative
Replenishment Deliver Make
Hub Management
Service Source & Collaborative
Integration Service Fulfillment
Extended Supply Chain – out of scope for most companies today !!!
SUPPLY CHAIN SCOPE

15. WHERE TO START?
CHANGE FOCUS

16. VALUE FIRST

17. Attribute Metric (Strategic)
Reliability Perfect Order Fulfillment
Customer
Responsiveness Order Fulfillment Cycle Time
Agility Supply Chain Flexibility
Supply Chain Adaptability†
Cost Supply Chain Management Cost
Internal
Cost of Goods Sold
Assets Cash-to-Cash Cycle Time
Return on Supply Chain Fixed Assets
Return on Working Capital
VALUE DRIVERS

18. "Go where the money is...
and go there often."
18
HISTORY LESSON
SCOR Benchmarking - Presentation

19. Understand & use 1 simple equation…
1 7 7 7 7
DAY DAYS DAYS DAYS DAYS
CCC = DSO + DSI - DPO
FOCUS ON CASH

20. NEXT PROCESS

21. Collaborate & Communicate with Customers Suppliers
,
Collaborative Planning
Network Inventory Optimization
Strategize Develop Sell Plan Source Make Deliver Return Service
Integrated Business Planning and Analytics
Idea to Product Quote to Cash Issue to Resolution
Market to
Sell
Plan to Deliver
Procure to Requirement
Pay to Resource
Supply Chain Performance & Risk Management
Legend: CORE ENTERPRISE
Ready to support external service offerings
PROCESSES
IT CAPABILITY
MATURITY
Empowers internal operations
EXTENDED
ENTERPRISE Gap area
EXTENDED PROCESS

22. Sea
Land
Component 3PL Distribution 3PL Service
Manufacturing OEM
Supplier Center Provider
Air
Perfect
Launch
Design Retail
Center Outlet
Synchronized
Supply Chain
Prevent 3PL 3PL
Repair Returns
Returns Service Consolidation
Center Center
LIFECYCLE FOCUS

23. Component Supplier EMS Brand Owner Retailer Customer
Variability Dependency
Mitigating these 2 attributes is a pre-requisite to a touchless supply chain
Current Model (Silo’ed) ‘Managed’ Collaborative Model
Qty / Mix Qty / Mix
Noise
Noise
Baseline
Baseline
Supply Chain Spectrum Supply Chain Spectrum
REDUCE NOISE

24. Critical Items Shortage Report
Qty
C C
C C
B B
B B
C
A A B A
A A Time
Week 1 Week 2 Week 3 Week 4 Week 5
CLS Planning CLS Operations 3PL Partners
Sales Production
Planning Quality
Sourcing Logistics
Supply Chain Command Center - Conference Room
MANAGE EXCEPTIONS

25. ENABLE IT

26. Key Supply Chain Performance Metrics Supply Chain Characteristics
Supply Chain Design
Agility / Flexibility {Efficient} {Responsive}
{Supply Chain Response Time; Production Flexibility}
{Low} {High}
SCOR – Customer Facing
Supply Chain Value-Add Services
{Cost Containment} {Innovation Focus}
Responsiveness
{Order Fulfillment Lead Time}
{Low} {High} Analysis Approach
{Gut Feel} {Data Driven}
Reliability
{Delivery Performance; Fill Rate; Perfect Order Fulfillment}
Ability to Influence Demand
{Limited} {Powerful}
{Low} {High}
Influence on Critical Suppliers
Supply Chain Management Cost {Limited} {Powerful}
SCOR – Internal Facing
{Supply Chain Management Cost; Value-Added Productivity}
{High} {Low}
Operational Execution
{Local Autonomy} {Global Standardization}
Assets Utilization Performance
{Cash-to-Cash Cycle Time; Inventory Days of Supply; Asset Turns}
Planning & Execution Tools
{Low} {High} {On-line}
{Off-line}
Legend:
Current position Desired Supply Chain Characteristics
ALIGN ON VISION

27. DESIGN Customers Visibility & Analytics Partners
Design & Product Data Material Supply
Perfect Network
Collaboration Management Quotation &
Launch Collaboration
Services Services Pricing
(launch)
Design Partners
Supply / Supply
EMS & FULFILLMENT
Synchronized Forecast Network & Materials Network
Demand
Supply Chain Inventory Planning Collaboration
Analysis,
ATP/CTP Optimization & IPC (planning) Components Partners
Supply
Capability
Manufacturing &
Fulfillment
Order Logistics, Supply System Assy. Partners
Demand Pull Replenish
& Order Management Transport. & Network
Demand Collaboration
Fulfillment & Commit Warehouse
Pull (execution)
Mgmt
Shipment
Logistics Partners
AFTER MARKET
Triage / Service Supply
Prevent Returns Repair /
Returns Parts Logistics Network
Redemption Collaboration
Planning
Recycle (returns) Recycling Partners
Shipment
ALIGN ON TARGET

28. Define improvement roadmap and initiatives…
Jan Feb Mar April May June July Aug Sep Oct Nov Dec
Status:
Strategic
Already Started
Team Engaged
7 Scope definition
Supply Chain Command Center
3 Supply Demand Analytics &
Supply Chain Simulation, Inventory Optimization
Tactical
6 Forecast Netting, Split & This initiative will be a customer facing
sub-process for ATP & Order Commit
Collaborative allocation (5) initiative
1 Automatic Supplier
Forecast & Commit Process
2 Automatic Inter-Factory
Forecast & Commit Process
Operational
4 Production Scheduling and
Execution optimization
5
Global ATP Check & Order Commit
LAUNCH PROJECTS

29. WHAT NEXT?
3 PRACTICAL TIPS

30. IQ
FOCUS ON VALUE

31. Understand Supply Chain ClockSpeed…
IQ
UNDERSTAND CYCLES

32. Career Insight #1
It’s Not What You Know. It Never Was.
•Relationships
•Execution
•Transformation

33. I asked executives on my LinkedIn Network in a poll on
What is the most important executive skill to focus on in these times.
180 responded to the survey and 45 followed up with detailed comments
Execution is the most important focus. Business Expertise is the least.
XQ EQ IQ
Full Survey: http://is.gd/qz0G
SOBERING DATA

34. Science of influence & Strong Relationships
EQ
IT’S NOT MAGIC

35. Execution Excellence & Leadership Skills
XQ
LEARN FORM THE BEST

36. Career Insight #2
Status Quo is Shifting. Break New Ground.
•Entire Industries Redefined
•New Businesses Born
•New Jobs Emerging

37. Understand the Future & Create the Future
Organization Structure
LEAD TRANSFORMATION

38. Career Insight #3
Your Career Will Take Longer. Unless…
•Change / Rotation
•Mentorship
•Transformational Projects

39. ahevizi@me.com
ANY QUESTIONS?

40. Arpad Hevizi – Vice President IT Supply Chain Solutions
Arpad brings a unique blend of IT executive leadership and strategic business
transformation and operations experience. He has spent the last 15 years helping
clients to maximize value from their global transformation initiatives. He led the
implementation of global Supply Chain and enterprise solutions, developed
strategies related to emerging market growth, mergers and acquisitions and
value added service operations.
GLOBAL TRANSFORMATION EXPERIENCE:
Global Beverage Manufacturer – As strategic advisor helped the company to develop an effective IT operating model
to reduce cost and increase responsiveness of the ‘global shared application service organization’. Lead the ‘IT Value
Assessment’ effort that helped to develop a cost baseline for all key IT applications and identified areas of support cost
reduction. Applied SCM principles to increase the effectiveness of their global development and support operations.
Sony-Ericsson – As strategic advisor helped Sony Ericsson to develop a global commercial strategy to increase
market share in high-growth markets and enable profitable growth. Helped Sony Ericsson to develop tailored fulfillment
models and differentiated service offerings to high-growth and mature markets to optimize cost-to-serve and improve
profitability. Reduced fulfillment time in Indonesia from 20+ days to consistent 7 days and reduced channel inventory by
14 days.
Motorola – Engagement Manager and Business Architect of the $35M Global Supply Chain Transformation initiative.
Lead the global implementation of Collaborative Planning and Forecasting, Advanced Global Planning and Flexible
Fulfillment Execution Solutions. Helped the process reengineering effort at Fort-worth Customer Fulfillment Center to
enable rapid ramp-up of operations and to become the highest performing DC for the company within 12 months. Lead
the ‘Supply Chain Value Assessment’ effort that helped to develop operational baseline for the companies newly
established Supply Chain Service operation.
Global Wireless Manufacturer –Business Architect and Program Manager of the Global Supply Chain Transformation
initiative. Lead the global implementation of Collaborative Planning and Forecasting, Advanced Global Planning and
Flexible Fulfilment Execution Solutions that enabled the company to support 100% increase in shipping volume while
reducing operational spend.