Achieving Bottom-Line Operational Results Through the Design and Implementation of a Supply Chain Collaboration Center
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1 Sponsored by Brought to you by Achieving Bottom-Line Operational Results Through the Design and Implementation of a Supply Chain Collaboration Center Erwin Hermans Vice President, Supply Chain Solutions John Sicard Chief Operating Officer
2 2 Supply Chain Collaboration Center Erwin Hermans, Vice President, Supply Chain Services, Celestica 2
3 Celestica Overview A $6.5B GLOBAL LEADER IN INNOVATIVE END-TO-END SUPPLY CHAIN SERVICES Services span the entire product lifecycle: design, manufacturing, assembly, order fulfillment, logistics, and after-market services Over 100 customers in the sectors: COMPUTING COMMUNICATIONS CONSUMER INDUSTRIAL HEALTHCARE GREEN TECHNOLOGY AEROSPACE DEFENSE 3
4 Celestica partners with the best-known firms in the world! 4
5 Our operational and supply chain network is aligned to meet our customers needs Galway, Ireland Frankenburg, Austria Gourock, Scotland Ottawa, ON Madison, WI Portland, OR San Jose, CA Ontario, CA Austin, TX Toronto, ON Manchester, NH Dallas, TX Valencia, Spain Oradea, Romania Miyagi, Japan Suzhou, China Kawasaki, Japan Dongguan, China Shanghai, China Song Shan Lake, China Wuxi, China Taipei, Taiwan Shatin, Hong Kong Laem Chabang, Thailand Monterrey, Mexico Reynosa, Mexico Kulim, Malaysia Johor Bahru, Malaysia Singapore
6 The Challenge
7 Complexity in Global Outsourced Supply Chains Sea Component Supplier Land Manufacturing 3PL OEM Distribution Center 3PL Service Provider Air LATENCY MISALIGNED METRICS Design Center Retail Outlet 7 INFORMATION LEADTIME Repair Service Center 3PL Returns Consolidation Center 3PL
8 Optimized to move parts OR information? Real Lead Time 1 DAY 7 DAYS 7 DAYS 7 DAYS 7 DAYS 8
9 Solid Partners. Flexible Solutions. Our Journey 9 Project Light Touch Celestica Confidential November 15, 2010
10 Business transformation through supply chain & IT Driving flexibility and speed for Celestica and our customers How are our suppliers driving value? Supplier TCOO Supplier capabilities and performance Ring Strategy Increasing flexibility How flexible is our supply chain? Tools Platforms to manage change How responsive is our supply chain to changes in customer demands? 10
11 Business transformation through supply chain & IT Driving flexibility and speed for Celestica and our customers Supplier TCOO Scorecard Supplier Capabilities and Performance Ring Score (lead-time management) Payment Terms Strategic Partnerships Quality Performance Market Performance Technology & Innovation Understanding cost/performance of the supply chain Pricing and service level alignment Ring Strategy Increasing Flexibility Ring score - each Ring represent a lead time range Goal is to have sourced from lowest Rings Lead times < 2 wks target Quick replenishment, Inventory Optimization Flexibility up or down Ring Lead Time Ring Flexibility Score Ring 1 < 1 day (Includes parts on SMI2) R1 Ring 2 1 to 13 days (Includes parts on SMI) R2 Ring 3 2 to 4 weeks (Includes parts on RSS) 11 R3 R4 R5 Ring 4 Ring 5 4 weeks to 8 weeks > 8 weeks
12 Business transformation through supply chain & IT Driving flexibility and speed for Celestica and our customers Tools Platforms to manage change Integrated Analytics Integrated Execution Single integrated platform E-collaboration Demand Planning ROP Planning / Execution Available-to- Promise (ATP) Supply Collaboration Speed Visibility Efficiency 12
13 The Supply Chain Collaboration Center 1. Collaborative inventory management & optimization 3. Collaborative Demand Planning 2. Supply-Demand Balancing & Analytics Multi-Enterprise Integration & Collaboration Platform
14 Driving Positive Business Impact Comprehensive inventory reduction program Focused on all facets of inventory creation Improvements from 2006 to 2011 Inventory reduction: 36% E&O reduction 57% Inventory turns improvement 32% Supply chain flexibility Lead time reduction and supply flexibility Ring 1-2 (2 week lead time) 43% parts with lead time of less then 2 weeks Total Cost of Ownership framework (TCOO ) Increased supplier performance Quality 8% Responsiveness (48hrs) 39% 14
15 Value First Solid partners. Flexible solutions.
16 What is Changing Demand & Inventory Planning Limited inventory planning & visibility Integrated S&OP process with what-if capability for financial impact assessment Supply Demand Balancing Sequential planning cycles with limited visibility to material availability for order promising Multi product complex order delivery promising and on line drill down capability Sourcing & Supplier Collaboration Long cycle time for supply commitments and cost based supply decisions Improved accuracy, response time for supply commitments thanks to TCOO based sourcing Technical Architecture & Data 16 Limited integration across supply chain partners Single system of process for planning not constrained by our current ERP landscape
17 Balance value creation with scope Return on Investment Business Releases Investment Annualized Benefits Capability Focus Areas Supply / Inventory Demand Mgmt Optimization BR1 Pilot Demand-Supply Balancing BR2 On-Board Collaborative Demand Planning End-to-end multi tier visibility BR3 Transform Customer collaboration BR4 Operate Process optimization 1 Product Division 1 Region 1 Product Division & Partners Globally All Product Divisions and Key Partners BR 1 - PILOT BR2 - ON-BOARD BR3 - TRANSFORM BR4 - OPERATE OPTIMIZE Solution Deployment & Adaption 17
18 Aligning Process and IT Living the Brand: Success Stories 18 Presentation to Ciena November 21, 2011
19 The building blocks of the Business Process Architecture Order & Project Management Component / Capacity Constraints Proposed Demand Plan Commit Dates Orders Demand Planning and S&OP Critical Component Constraints S&O P Unconstrained Demand Plan Inventory Optimization Critical Component Requirements Planning ROP ROP Demand / Supply Balancing Critical Component Commitment Critical Component Forecast Go Node Data Supply Node Operations Long Term Supply Management Common Data Management Supplier Collaboration execution planning 19
20 IT Architecture supporting the Business Processes Strat. Sourcing Demand Planning & Inventory Optimization Planning Engines Demand Supply Balancing Transp. Mgt. TCOO Sourcing Optimization Demand Planning Demand Analytics Inventory Optimization Key Component Requirements Constrained What-If Analysis Complete To Configure E2E Supply Chain Statusing Track & Optimize Information and Process Integration Platform Data Hub Component Suppliers EMS Partners Regional Distribution and Configuration Project Warehouses Customers Supplier A Supplier B Supplier C VMI Buffer Factories Sub Cons OEM/ODM In-Transit Receive CTO Buffer FG FG Buffer OEM VMI Configure Pack In-Transit Warehouse 1 Warehouse 2 Warehouse 3 Pull s Customer C 1 1 Customer C 2 2 Customer C 3 3 Supply Chain Tiers 20
21 21 Where to Start?
22 Roadmap for Accelerating Collaboration Identify Value First Complete TCOO assessment Identify top value opportunities Launch program with positive ROI Demonstrate Value & Extend Mandate Align & use performance metrics Deliver value in 6 months Refine program scope & mandate Make it sustainable Implement enabling technology Refine organization & metrics 22
23 23 New Focus
24 Transforming our Business Expanding into high-value customer opportunities Commoditized Business TRANSFORMATION Differentiation Investments Printed Circuit Assembly System Assembly Talent Design Services Engineering Services SCM Services After Market Services Mergers & Acquisitions 24
25 Solid Partners Flexible Solutions Thank You 25
26 Sponsored by Brought to you by Achieving Bottom-Line Operational Results Through the Design and Implementation of a Supply Chain Collaboration Center Q&A Please feel free to submit your questions now Erwin Hermans Vice President, Supply Chain Solutions John Sicard Chief Operating Officer
27 Thank you for attending this session Join us at the booth in the exhibition hall to continue the discussion Sponsored by Brought to you by
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