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Jane Barrett
Research Director, AMR Research jbarrett@amrresearch.com 617 350 1727
Jane Barrett
Research Director, Supply Chain AMR Research
As an analyst with AMR Researchs Research and Advisory Group, Jane Barrett specializes in supply chain research for manufacturers. Jane covers trends and best practices in Sales & Operations Planning, Supply Management and Collaborative Commerce. Jane brings over 20 years of experience in business consulting and ERP to her role as a research director. She has helped global organizations and midmarket manufacturers plan, design, and implement solutions that achieve their business objectives, involving globalization, standardization and change management. She has led the development of tools and methodologies to enable project management, process design, lean initiatives, and performance metrics. Jane earned her Bachelor of Arts from the University of Natal, South Africa. 20+ years in IT, manufacturing, technology, ERP and consulting industries: 2 years at AMR Research focusing on core supply chain for Manufacturing organizations 5 years in the US helping industrial and medical device manufacturers and automotive suppliers reorganize, improve processes and deploy ERP 9 years in South Africa working with multi-nationals and large South African organizations in industrial, auto, CPG and pharma (own business) 7 years with Hewlett Packard and Unilever in South Africa
AMR Research is an advisory and research firm focused on manufacturing and retail supply chains, enterprise applications and software strategies. Since 1986, we have focused on the intersection of business process with supply chain, and enterprise technologies. We help clients through retained advisory services and peer networking forums.
Bottom Line: Companies change during a recession. Will the changes you make just help you survive or will you emerge stronger than before?
Demand
Supply
Traditional Definition of Supply Chain Management
customer
supplier
Product
design partner
2008 AMR Research, Inc. | Page 5
Demand-driven Processes
Supply
Product
Technology Opportunities
Agenda
Supplier relationship and risk management Managing commodities Customer profitability through cost to serve Agility - become more efficient, scalable and responsive Product portfolio management
Assess
Cash-to-Cash
AP
Supplier Quality Cost Detail
Inventory Total
Supplier OnTime RM Inv
Diagnose
AR
Dir Mtl Costs Perfect Order Detail
Plant Utilization
Correct
Collaborative Practices
Individual role driven IT project centric Silo metrics
5 4 3 2 1 Enablers: Commerce Networks/Integration Hubs CPFR VMI programs Supplier performance management EDI, B2B and Portals
2
Scope positioning
Region
3
Relationship attractiveness
High
Bottleneck
Supplier market complexity
Strategic
Regional
Non critical
Low Low
x
Leverage
High
Market offer
Supplier power
Value to
Company
Local
Local 1 division
Low
Business Impact
Divisional scope
Value to Supplier
Manufactured Parts
Supplier Surveillance
(early detection of defects)
Commodities
Agenda
Supplier relationship and risk management Managing commodities Customer profitability through cost to serve Agility - become more efficient, scalable and responsive Product portfolio management
Six factors to consider: 1. Build demand-driven multi-tier supply management capabilities 2. Consolidate suppliers and get a handle on master data 3. Improve cost analysis capabilities to redefine the value network 4. Get good at contract management 5. Break down those internal silos and get aligned 6. Design for supply and postponement
Agenda
Supplier relationship and risk management Managing commodities Customer profitability through cost to serve Agility - become more efficient, scalable and responsive Product portfolio management
Cost to Deliver
Sell Deliver Make Source
3% of Supply Chains Make Decisions Based on Cost to Serve 20% of Supply Chains Make Decisions on Total Supply Chain Costs
Sell
Deliver
Make
Source
Definition
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.
19
Da t a u s e d i n a n a l y s i s
Q. What data do you use as part of your cost-to-serve analysis?
Ch a l l e n g e s b e h i n d h a r m o n i zi n g d a t a : T OP CH A L L EN GE
Q. What challenges do you face when collecting and harmonizing data for cost-to-serve analysis? Q. Which do you consider your top challenge?
Agenda
Supplier relationship and risk management Managing commodities Customer profitability through cost to serve Agility - become more efficient, scalable and responsive Product portfolio management
7 Levers of Agility
Postponement/late-stage differentiation Drive transparency through VMI and SMI Design for supply and reuse Logistics policies Adaptive networks Flexible manufacturing strategies
Technology
Responsiveness 7 8
Short Long
Technology
Efficiency
4 3 Long
Specialized
Specialized Short
Volume
Commoditized 14
Lifecycle
Commoditized 13 10
Lifecycle
Technology
Agility 16
Lifecycle
Technology
15
Responsiveness 11 12
Short Long
Specialized
Lifecycle
High
Demand Predictability
2008 AMR Research, Inc. | Page 25
Low levels of demand shaping 6 5 Pull-based VMI & SMI Use of downstream data Technology Postponement 8 7 Pooled inventories Specialized Flexible transportation networks Long Short
Lifecycle
Commoditized
Efficiency
2 1 High levels of demand shaping Lean production techniques Technology Use of third-parties for 3 4 Manufacturing Specialized Direct plant shipments Short
Commoditized
Long
Volume
Lifecycle
Agility
14
13
Low
Flexible manufacturing work Technology systems 15 16 Design for supply Specialized Design networks Short Pooled inventories
Lifecycle
Low
Opportunistic demand shaping Technology optimization Stochastic 12 and inventory simulation 11 Specialized Daily calculations of inventory levels
Long Short Long
Responsiveness 10
Commoditized
Lifecycle
High
Demand Predictability
Metrics Alignment
Responsive
Demand Forecast Perfect Order SCM Cost
The ability to respond to unforeseen changes in market demand (+/- 20%) for existing products Differentiate on Availability
Quality
AP Supplier Quality Cost Detail
ne ss
AR
po ns ive
Ef f e ici
y nc
Re s
Efficient Agility
Time
Cost
The degree to which a system can minimize total delivered cost and waste Differentiate on Total Landed Cost
Demand Forecast
Agile
The ability to adapt to changing market requirements related to commercializing new products and technologies Differentiate on Adaptability
AP Supplier Quality
Perfect Order
SCM Cost
AR
Productio Orde Perfect Order Perfect Production FG FG Plant n r Order Cost Schedule Inventor Cycle Order Inventory Utilization Cycle Detail Detail Schedule Time Variance y Detail Variance Time
Agenda
Supplier relationship and risk management Managing commodities Customer profitability through cost to serve Agility - become more efficient, scalable and responsive Product portfolio management
Item Proliferation
0.7
60%
40%
Number of Items
Source: AMR Benchmark Analytix, CPG
100%
80%
Perfect Order
60%
Number of Items
Source: AMR Benchmark Analytix, CPG
Complexity
SKU rationalization Need to rationalize product attributes against customer attributes Differentiate between good and bad complexity Initiate a process: Product portfolio owner Review and rationalization Ensure trades ability to execute End of life/product phase out planning Include this on your S&OP agenda
Bottom Line: Companies change during a recession. Will the changes you make just help you survive or will you emerge stronger than before?