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Presentation Given at the SAS Manufacturing Forum in August 2017
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Presentation Given at the SAS Manufacturing Forum in August 2017
1.
Driving a Digital Transformation August
2017 For the Supply Chain Leader Who Wants to Rise Above
2.
Supply Chain Insights
LLC Copyright © 2017, p. 2 What I Believed
3.
Supply Chain Insights
LLC Copyright © 2017, p. 3 The Supply Chain Is a Complex System with Increasing Complexity. Each Supply Chain Operates on an Effective Frontier
4.
Supply Chain Insights
LLC Copyright © 2017, p. 4 The Supply Chain Is a Complex System with Increasing Complexity. Each Supply Chain Operates on an Effective Frontier
5.
Supply Chain Insights
LLC Copyright © 2017, p. 5 Only 12% Of Companies Are Driving Improvement and Performance Better Than Their Peer Group at the Intersection of Operating Margin and Inventory Turns.
6.
Supply Chain Insights
LLC Copyright © 2016, p. 6 2004 2016 2004 2016 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 -0.03 -0.01 0.01 0.03 0.05 0.07 0.09 0.11 InventoryTurns Operating Margin Toyota Honda Best Scenario HMC 0.06, 6.88 TM 0.06, 11.35 Average (Operating Margin, Inventory Turns) Source: Supply Chain Insights LLC, Corporate Annual Reports 2004-2010 from YCharts An Example: Toyota and Honda Operating Margin vs. Inventory Turns (2004 – 2016)
7.
Supply Chain Insights
LLC Copyright © 2016, p. 7 2006 2016 2006 2016 3 4 5 6 7 8 0.07 0.10 0.13 0.16 0.19 0.22 0.25 0.28 0.31 InventoryTurns Operating Margin Mondelez Nestle Best Scenario NSRGY 0.13, 5.20 MDLZ 0.12, 5.90 Average (Operating Margin, Inventory Turns) Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2016 from YCharts Mondelez and Nestle Operating Margin vs. Inventory Turns (2006 – 2016)
8.
Supply Chain Insights
LLC Copyright © 2017, p. 8 Productivity From the Third Industrial Revolution Stopped in 2004
9.
Supply Chain Insights
LLC Copyright © 2017, p. 9 What Makes a Difference?
10.
Supply Chain Insights
LLC Copyright © 2017, p. 10 • Autonomous Supply Chain: Automation of supply chain processes through cognitive learning and artificial intelligence eliminating labor and reducing the need for people to touch data. • Value Chain Uberization: A platform to enable shared resources across a community. • 3D Printing: Localization of manufacturing through the sharing of digital images using additive manufacturing. • Internet of Things: The use of machine-to-machine streaming data to improve supply chain outcomes. • Multi-Tier Networks and Redefinition of B2B: The building and execution of multi-tier networks for data sharing, collaborative workflows, and improved decision making. This includes a discussion of blockchain, network canonicals, and interoperability. • Cloud-Based Computing. The promise of cloud is federation and democratization of data, in both private and public clouds, with the promise of lower cost of ownership. • Listening: The use of unstructured data–social sentiment, warranty, and quality data–to improve organizational productivity and outside-in processes to be market-driven. Market- Driven Value Networks is a more mature definition of demand-driven. What Does Digital Transformation Mean for You? There Is No One Definition
11.
Supply Chain Insights
LLC Copyright © 2017, p. 11 What Is Next-Generational Thinking?
12.
Supply Chain Insights
LLC Copyright © 2017, p. 12 Current Supply Chain Process Thinking Rows and Columns: Transactional Data Fixed Hierarchies with Structured Data One-to-One Enterprise Linear Flows Descriptive and Predictive Analytics
13.
Supply Chain Insights
LLC Copyright © 2017, p. 13 Eating My Own Dogfood: Experimenting with Hadoop Lora Cecere Founder & CEO Alina Beskrovna Research Associate Kathi Gagliano Enterprise Data Architect Michael Hambrick System Administrator Heather Hart Research Director Data Experts Survey Export Experts
14.
Supply Chain Insights
LLC Copyright © 2017, p. 14 GOALS PROCESS DELIVERABLES • Build a structured, foundational data lake of relevant qualitative and quantitative data. • Practice data mining and visualization techniques to test hypotheses and uncover new intelligence about supply chain excellence. • Peer group definition and tier grouping, keeping companies anonymous. • Data identification and collection. • Cross-metric analysis, partnering with experts. • Present preliminary findings in September. • Develop reports & infographics. • Invite others into a “hack-a-thon” to uncover further insights. DATA SOURCES • Financial Metrics (YCharts) – 500 metrics for 1500 public companies • Market & Industry Indices – 20 unique measures • Supply Chain Index – measuring improvement (strength, balance, & resiliency); calculated for 400+ companies across pre-recession (2004-09) and post-recession (2010-16) periods • Survey Responses – 40 surveys conducted 2012-17; includes quantitative and open- ended responses What Drives Supply Chain Excellence? Project Overview
15.
Trend #1: Outside-In
Processes
16.
Supply Chain Insights
LLC Copyright © 2017, p. 16 Today’s Reality
17.
Supply Chain Insights
LLC Copyright © 2017, p. 17 Traditional Approaches of ERP/MRP/DRP Amplify the Bullwhip Effect
18.
Supply Chain Insights
LLC Copyright © 2017, p. 18 Impact of Outside-In Processes
19.
Supply Chain Insights
LLC Copyright © 2017, p. 19 Impact of Channel Data
20.
Supply Chain Insights
LLC Copyright © 2017, p. 20 POS Cost Profile by Year 2006 - 2009 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 W K 1 W K 3 W K 5 W K 7 W K 9 W K 11 W K 13 W K 15 W K 17 W K 19 W K 21 W K 23 W K 25 W K 27 W K 29 W K 31 W K 33 W K 35 W K 37 W K 39 W K 41 W K 43 W K 45 W K 47 W K 49 W K 51 WMT Week BaseIndex 2006 2007 2008 2009 Claritin Case Study: Spring and Allergies • 40% of Annual POS done in 16 spring weeks • Every Year the Season Flows Essentially the Same In Aggregate – WM Store and DC build strategies the same across the country Source: IRI
21.
0.0 0.5 1.0 1.5 2.0 2.5 3.0 W K 1W K 2W K 3W K 4W K 5W K 6W K 7W K 8W K 9 W K 10 W K 11 W K 12 W K 13 W K 14 W K 15 W K 16 W K 17 W K 18 W K 19 W K 20 W K 21 W K 22 W K 23 W K 24 W K 25 W K 26 W K 27 W K 28 W K 29 W K 30 W K 31 W K 32 W K 33 W K 34 W K 35 W K 36 W K 37 W K 38 W K 39 W K 40 W K 41 W K 42 W K 43 W K 44 W K 45 W K 46 W K 47 W K 48 W K 49 W K 50 W K 51 W K 52 WM WEEK POSBASEINDEX Profile CA-40
MID-N SOUTH NORTH PAC Wal-Mart Allergy Regional Inventory Flow • Utilized store level data to develop 5 regional profiles based on average 5 year POS – Worked with Walmart to develop Store and DC Build and Exit Strategies Based on Profiles – Implemented Throughout Entire Allergy Category at Walmart
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Supply Chain Insights
LLC Copyright © 2017, p. 22 The Need to Listen
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Supply Chain Insights
LLC Copyright © 2017, p. 23 • Newell Rubbermaid Listening: Newell Rubbermaid
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Supply Chain Insights
LLC Copyright © 2017, p. 24 Newell Rubbermaid
25.
Trend #2: The
Autonomous Supply Chain
26.
Supply Chain Insights
LLC Copyright © 2017, p. 26 Data Needs to Move Securely Through Value Networks In… Clouds Streams Pools
27.
Supply Chain Insights
LLC Copyright © 2017, p. 27 Need for New Forms of Analytics
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Supply Chain Insights
LLC Copyright © 2017, p. 28 Autonomous Supply Chain Cognitive Computing Machine Learning Text Mining and Pattern Recognition Predictive and Prescriptive Analytics Building the Autonomous Supply Chain
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Supply Chain Insights
LLC Copyright © 2017, p. 29 Evolution of Insights
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Supply Chain Insights
LLC Copyright © 2017, p. 30 Supply Chains Don’t Play by the Rules But, what if they could?
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Trend #3. Real-Time
Data
32.
Supply Chain Insights
LLC Copyright © 2017, p. 32 Redefining Time
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Supply Chain Insights
LLC Copyright © 2017, p. 33 1.5M sku locations ~ 95% slow or intermittent Seasonal demand (at the item level) is identified down to a specific location. Simplified for clarity In reality, looks more like this •365 days •150+ local climates •Avg 3,000 items / location (165M) •15 year lifecycle changing amplitude Lennox International
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Supply Chain Insights
LLC Copyright © 2017, p. 34 •Replace •Compressor •Engines • Dealer gets service event • We get parts sales • Customer has non-event • Customer - Dealer & Brand loyalty Your compressor shows that it will fail within the next 30 days. What day would be good for us to come replace it? Lennox Redefining Service
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Supply Chain Insights
LLC Copyright © 2017, p. 35 Internet of Things
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Supply Chain Insights
LLC Copyright © 2017, p. 36
37.
Supply Chain Insights
LLC Copyright © 2017, p. 37 Rich user interface in full HD Evocative sound track with burring grinder and tinkling of spoons Memorable flavours and fragrances Cutting edge reliable / ultra efficient computer processing hardware Stunning curved design by Italian automotive designers Irresistible aromas of Costa’s coffee shops Innovative coffee-making system providers Redefining Replenishment
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Supply Chain Insights
LLC Copyright © 2017, p. 38 Proven operation & back office system Real time demand planning and supply chain Operational Support The perfectly prepared Mocha Italia coffee Proprietary equipment Unique telemetry & monitoring World-class helpline support Redefining Service
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Supply Chain Insights
LLC Copyright © 2017, p. 39 AUTOMATED COMMISSIONING LIVE OPERATIONAL DATA BY MACHINE IMPROVED MACHINE MONITORING AUTOMATED OPERATOR ALERTS DYNAMIC MACHINE LOCATION INFO RESILIENT MACHINE CONNECTIVITY REINVENTING BACK OFFICE SYSTEMS
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Supply Chain Insights
LLC Copyright © 2017, p. 40 Transforming Inbound Logistics Mobile Device Apps AIS Vessel Location Sensors
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Supply Chain Insights
LLC Copyright © 2017, p. 41 • Shipment Plan – Truck from Atlanta to Jacksonville – Ocean vessel ‘ABC’ from Jacksonville to Limon, Costa Rica – Truck from Limon to Retail Store • Actual Route – Truck from Atlanta to Jacksonville – Rail from Jacksonville to Port Everglades – Ocean vessel ‘XYZ’ from Port Everglades to Kingston, Jamaica – Ocean vessel ‘XYZ’ from Kingston to Limon, Costa Rica – Truck from Limon to Retail Store • EDI Message Data – After it had already departed Port Everglades on Vessel ‘XYZ’ • Gate in at Jacksonville • Vessel ‘ABC’ departure from Jacksonville • Container loaded on vessel ‘ABC’ – After it had already arrived in Limon • Container loaded on to vessel ‘XYZ’ • Vessel ‘XYZ’ departed Port Everglades • Vessel ‘XYZ’ arrived in Limon • Streaming Sensor Data – Departed Atlanta – Arrived Port of Jacksonville – Moved to Rail Yard Jacksonville – Departed Jacksonville – Arrived in Port Everglades – Departed Port Everglades on Vessel ‘XYZ’ – Arrived in Kingston – Departed Kingston – Arrived in Port of Limon – Departed Port of Limon – Arrived at Retail Store Streaming Data vs. EDI Messages
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Supply Chain Insights
LLC Copyright © 2017, p. 42 • EDI Messages – Significant latency – Arrived out of order – Significant data quality issues – Based on carrier version of the truth • Streaming Sensor Data – Real-time, what is happening right now – End-to-end visibility – Notifications on geo-fence arrival and departure – Alerting on deviations from the plan – Significant learnings about your carriers and shipping lanes – “Observed” version of the truth Streaming Data vs. EDI Messages
43.
Supply Chain Insights
LLC Copyright © 2017, p. 43 Improved On-Time Delivery
44.
Trend #4. Digital
Manufacturing
45.
Supply Chain Insights
LLC Copyright © 2017, p. 45 What Is Digital Manufacturing? Additive Manufacturing Paperless Processes Robotics
46.
Supply Chain Insights
LLC Copyright © 2017, p. 46 Evolution of 3-D Printing Organs
47.
Supply Chain Insights
LLC Copyright © 2017, p. 47 Ultimate Ear
48.
Trend #5: Network
of Networks
49.
Supply Chain Insights
LLC Copyright © 2017, p. 49 The adoption of distributed and open technology by the ecosystem of technology providers and business users to drive inter-operability in value networks to improve business outcomes. What Is the Network of Networks?
50.
Supply Chain Insights
LLC Copyright © 2017, p. 50 What Did Not Work
51.
Supply Chain Insights
LLC Copyright © 2017, p. 51 The View in 2016
52.
Supply Chain Insights
LLC Copyright © 2017, p. 52 Network and Company Nodes Community Directory of Supplier Data Blockchain Blockchain Blockchain
53.
Supply Chain Insights
LLC Copyright © 2017, p. 53 Confluence of Technologies Blockchain Distributed Processing Cognitive Learning Artificial Intelligence Hadoop Distributed Massive Parallel Processing Spark Streaming Data
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Supply Chain Insights
LLC Copyright © 2017, p. 54 Write once and use company and contact information many times.Community Directory Reduce onboarding through once source of data. Blockchain redefines visibility and track and trace.Traceability Confluence of Blockchain and Spark/Internet of Things Redefine Lineage. Bitcoin and Blockchain disintermediate traditional banking.Supply Chain Finance Emergence of the supply chain digital wallet An alternative to EDI Cognitive computing eliminates the need for master data management and standards.Interoperability Data is mined through patterns and translated for context through cognitive computing. Shift from standards to process canonicals. What Could Change?
55.
Moving Forward
56.
Supply Chain Insights
LLC Copyright © 2017, p. 56
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Supply Chain Insights
LLC Copyright © 2017, p. 57 Wrap-up • Adopt new technologies and challenge current thinking. • Manage the supply chain as a complex system. • Build with the goal in mind outside-in.
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Supply Chain Insights
LLC Copyright © 2017, p. 58 Time to Take a Different Path?
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60.
Visit Us Online www.supplychaininsights.com www.supplychainshaman.com www.beetfusion.com www.linkedin.com/company/supply-chain-insights www.slideshare.com/loracecere Follow
Us on Twitter @scinsightsllc @lcecere Attend a Live Event www.supplychaininsightsglobalsummit.com www.supplychaininsights.com/the-shamans-circle
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Supply Chain Insights
LLC Copyright © 2017, p. 61 About Lora Cecere • Founder of Supply Chain Insights • “LinkedIn Influencer” • Guest blog for Forbes • Author of 5 books: Bricks Matter (2012), Shaman’s Journal (2014), Supply Chain Metrics That Matter (2014), Shaman’s Journal (2015), Shaman’s Journal (2016) • 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 (15,000 pageviews/month) • Forbes: www.forbes.com/sites/loracecere • Twitter: twitter.com/lcecere (8,200 followers) • LinkedIn: www.linkedin.com/in/loracecere (210,000 followers) • LinkedIn Influencer: www.linkedin.com/today/author/446631
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Supply Chain Insights
LLC Copyright © 2017, p. 63 Five Themes: 1.Supply Chains to Admire 2.Changing Economies and Changing Times 3.Digital Supply Chain Innovation to Power Growth 4.Driving Supply Chain Transformation 5.Leadership and Supply Chain Talent Register Now! • Registration is $1750 and includes breakfasts, lunches and receptions • Seating is limited to 150 attendees • Discounted room rates at The Ritz-Carlton expire August 15th • Email us at regina.denman@supplychaininsights.com www.SupplyChainInsightsGlobalSummit.com Fifth annual event Designed for line-of-business leaders Explore the future of business processes
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Supply Chain Insights
LLC Copyright © 2017, p. 64 Three Options: Next-Generation Supply Training SEVEN COURSES OFFERED 1. Supply Chain Metrics That Matter 2. Building the Customer-Centric Supply Chain 3. The Market-Driven Value Network Journey 4. Making the Digital Pivot 5. End-to-End Supply Chain Orchestration 6. Driving Improvement in Decision Making Through Supply Chain Planning 7. Building Agility Through Horizontal Processes www.SupplyChainInsights.com/Services/Training
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