Presentation for the Nexus Conference on the Internet of Things and the Evolution of Supply Chain
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Presentation prepared for the Nexus conference on the Internet of Things and the factors that drive Technology Adoption. Focus on Big Data, Digital Supply Chains and Internet of Things.
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Presentation for the Nexus Conference on the Internet of Things and the Evolution of Supply Chain
- 1. Supply Chain Value Networks: Taking Advantage of Big Data, Connectivity and Analytics • Driving Supply Chain Transformations • Lora Cecere, Founder of Supply Chain Insights 9/24/2015
- 2. Disclaimer: I am a Skeptic
- 4. A Fortune-teller of Sorts….
- 5. I Write for the Supply Chain Leader
- 7. 9 out of 10 Supply Chains are Stuck
- 8. Progress: All Industries Industry Snapshots (2006-2013) Industry Year –over- Year Revenue Growth Operating Margin Inventory Turns Cash-to- Cash Cycle Revenue per Employee (K$) SG&A Ratio Retail Apparel Industry 18% 39% 0.39 27% 05 05% 68 26% 325 18% 27% 05% Apparel Manufacturing Industry 14% 82% 0.12 32% 05 68% 150 08% 400 355% 27% 63% Mass Retail Industry 09% 50% 0.06 20% 06 06% 03 148% 350 48% 23% 6% Beverage Industry 09% 61% 0.19 16% 02 04% 53 46% 512 NC 24% 16% Pharmaceutical Industry 08% 47% 0.23 29% 03 16% 155 47% 572 32% 27% 08% Chemical Industry 08% 45% 0.10 10% 06 04% 87 23% 557 23% 14% 27% Medical Device Industry 06% 38% 0.14 32% 02 13% 206 16% 351 12% 34% 04% Grocery Retail Industry 06% 31% 0.03 37% 17 01% 10 50% 405 54% 14% 06% Consumer Packaged Goods 05% 25% 0.14 73% 08 482% 72 17% 333 14% 26% 09% Food Industry 05% 55% 0.10 19% 07 17% 40 04% 534 55% 20% 18% Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2013 Industry Average comprised of public companies (combined food & beverage industry: NAICS 3112% where % is any number from 0-9, 311320, 311520, 311821, 311941 & 312111), (chemical: NAICS 325188 & 325998), (consumer packaged goods: NAICS 3256% where % is any number from 0-9), (medical device industry: NAICS 339112), (pharmaceutical industry: NAICS 325412) reporting in One Source with 20123annual sales greater than $1billion NC=no change
- 9. Descriptors Used by Leaders
- 14. What We Expected
- 15. A Supply Chain is a Complex System with Complex Processes with Increasing Complexity What We Learned….
- 16. The Supply Chain Effective Frontier
- 17. Correlations to Market Capitalization
- 18. Orbit Chart: Wal-Mart (Inventory Turns and Operating Margin)
- 19. Orbit Chart: Apple (Inventory Turns and Operating Margin)
- 20. Orbit Charts: Dow Chemical Company
- 21. 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 20 NVO 0.31, 6.48 201 4 200 6 Best Scenario LLY 0.24, 8.30 Average (Operating Margin, Inventory Turns) InventoryTurns Novo Nordisk Making Progress
- 22. Measuring Supply Chain Improvement Overall Ranking per Company • Balance: Return on Invested Capital & Revenue Growth Vector Trajectory (30%) • Strength: Inventory Turns & Operating Margin Vector Trajectory (30% of score) • Resiliency: Inventory Turns & Operating Margin Mean Distance (30%) 𝑺𝒖𝒑𝒑𝒍𝒚 𝑪𝒉𝒂𝒊𝒏 𝑰𝒏𝒅𝒆𝒙 = 𝟏 𝟑 𝑩𝒂𝒍𝒂𝒏𝒄𝒆 𝑭𝒂𝒄𝒕𝒐𝒓 + 𝟏 𝟑 𝑺𝒕𝒓𝒆𝒏𝒈𝒕𝒉 𝑭𝒂𝒄𝒕𝒐𝒓 + 𝟏 𝟑 𝑹𝒆𝒔𝒊𝒍𝒊𝒆𝒏𝒄𝒚 𝑭𝒂𝒄𝒕𝒐𝒓
- 23. Supply Chains to Admire Methodology Performance Beats the industry average for operating margin, inventory turns and ROIC for 2006- 2014 and 2009-2014 Improvement Ranks above peer group average on The Supply Chain Index for 2006-2014 or 2009-2014 +
- 25. • Continuity of leadership • Supply chain talent development • Focus on a multi-year supply chain strategy • Clear governance to guide cross-functional decision-making • Strength in horizontal processes • Excellence in supply chain planning, network design and inventory management What Drives Top Performance?
- 26. Building the End-to-End Supply Chain
- 27. • Almost all End-to-end Transformation Projects Started with Failure • Each is Culturally Unique: No one Right Answer • Characteristics: - Continuity of Leadership - Alignment to the Business - Business Sponsorship - Slow and Deliberate Characteristics
- 30. Risk Management: Top Disruptions
- 32. 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 = FRUSTRATIO N SHARED VISION + SKILLS + RESOURCES + PLAN + LEADERSHIP = GRADUAL CHANGE Source: J.P. Kotter Collaboration: The Right Stuff
- 33. Bar codes were first used at Marsh Supermarket in 1968
- 34. VMI Performance
- 37. 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 = FRUSTRATIO N SHARED VISION + SKILLS + RESOURCES + PLAN + LEADERSHIP = GRADUAL CHANGE Source: J.P. Kotter Collaboration: The Right Stuff
- 38. Why Big Data and Digital Process Evolution Matters
- 39. Evolution of Digital Processes
- 40. Shift in First Order Processes
- 41. Could the Answer Lie in…. Clouds? Streams? Lakes?
- 43. Maturity on the Internet of Things
- 44. 3D Printing
- 45. Ultimate Ear Case Study
- 46. Supply Chains Don’t Play by the Rules 46 But, what if they could?
- 48. 48 Challenges: • Transactional • Time phased data Structured Data • Social • Channel • Customer Service • Warranty • Temperature • RFID • QR codes • GPS • Mapping and GPS • Video • Voice • Digital Images Unstructured Data Sensor Data New Data Types Volume Velocity Variability Big Data Supply Chains
- 49. Big Data
- 51. Data Types
- 52. • Today 9 out of 10 supply chains are stuck. • We must learn from the past to adopt new approaches for the future. • Making the digital pivot and embracing big data techniques offers the promise for innovation/improvement. Summary
- 54. Books to Educate Your Team Wiley December 2012 Wiley December 2014 Self-published September 2014 Self-published September 2015
- 56. Founder: Lora Cecere • Founder of Supply Chain Insights • “LinkedIn Influencer” • Guest blogger for Forbes • Author of 4 books: Bricks Matter (2012), Shaman’s Journal (2014) and Supply Chain Metrics That Matter (December 2014), Shaman’s Journal (2014) • 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: lora.cecere@supplychaininsights.com • Blog: www.supplychainshaman.com (10,000 pageviews/month) • Forbes: http://www.forbes.com/search/?q=lora+cecere • Twitter: lcecere (6500 followers) • LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (50,000 followers)