Supply Chain Control Towers: Concept and Impact

Transcription

1 Supply Chain Control Towers: Concept and Impact October 31, 2012

2 2 Webcast Panel Bryan Ball Kirk Munroe Aberdeen Group Kinaxis VP and Principal Analyst VP of Marketing SCM Research Practice

3 Supply Chain Control Towers: Concept and Impact Bryan Ball Vice President and Principal Analyst Supply Chain Practice OCT 2012

4 4 Agenda About Aberdeen and SCM Practice Our Methodology The Control Tower Business Case Pressures Actions Capabilities Power of the Tower Enablers Summary

5 Aberdeen s SCM research coverage addresses the problems of today s complex supply chains 5

6 6 Aberdeen Supply Chain Research At a Glance Over 4100 of Supply Chain Executives Surveyed over the past year In-depth Online Supply Chain Research over 450 published reports Over 27,000 Report Downloads Yearly Over 79,000 Subscribers Annual Supply Chain Management leadership Summits Library of Research Topics If your program has trouble displaying this message, click here to view online. To ensure proper delivery of future Aberdeen Group s, please click here. About Aberdeen Complimentary Research Contact

8 Aberdeen s Methodology The Maturity Class Framework Selected Performance Criteria (KPI) Best-in-Class Top 20% Revenue Metrics Cost Metrics Total Respondents: Industry Average Middle 50% Campaign Metrics Respondents are scored individually across KPI Laggard Bottom 30% Twitter: #scm #supplychain 8

9 Aberdeen s Methodology Aberdeen Maturity Class Framework What are Best-in-Class companies doing differently? What pitfalls are they avoiding? Pressures: Actions: External and internal forces that impact an organization s market position, competitiveness, or business operations. The strategic approaches that an organization takes in response to industry pressures. Why are they achieving greater success? What technologies and services are enabling them to succeed? C E Twitter: #scm #supplychain The business competencies (organization, process, etc ) Capabilities: required to execute corporate strategy. Enablers: The key technology solutions required to support the organization s business practices. 9

11 11 The Business Challenge What if we could remove all information delay and operate in real time for decision making? Responses to customer inquiries on the spot. What if questions answered in minutes, not hours/days Is this notion of real time visibility and actionable insight even feasible? The "Holy Grail" for supply chain leaders has always been to remove as much latency as possible in every aspect of the supply chain Control Towers have the potential to make this possibility come alive!

12 Concept and Definition Control Towers as a concept A solution spanning the supply chain creating an end-to-end seamless and holistic view Alerts are provided in real time and the problem can be solved from that view from anywhere in supply chain Latency in process and data delay is reduced substantially Control Towers - Definition through capabilities Centralized supply chain function Ability to drill down to root cause and solve problem from that perspective. Data by companies with these capabilities compared to those without Value of the Tower Time to problem resolution! Across the board performance metrics from superior processes. 12

14 14 Pressure to Grow While Managing Cost/Complexity Need to improve top line revenue 51% Growing complexity of global operations 37% Escalating demand for service from customers 34% Diminishing control over supply chain operating costs 34% 0% 10% 20% 30% 40% 50% 60% Percentage of Respondents, n = 59

15 15 Behind the Pressures Growth how to manage profitably Capacity, capital, systems, controls Complexity Additions of suppliers, partners, networks and geos Lead time increases with extension of supply chain Maintain current position and service level a challenge Demand for service Value added services, design, marketing, advertising Installation or field support Potential added cost in some form Diminishing control over supply chain costs Sum of challenges related to first three pressures Speed of decision amplifies the cost challenge

17 Percentage of Respondents, n = Control Tower Actions To Address Pressures 60% Control Tower Non Control Tower 50% 48% 50% 44% 40% 36% 35% 30% 24% 20% 10% 0% Streamline processes for easier monitoring Create multiple scenarios to analyze S&OP Create collaboration initiatives with suppliers

18 18 Control Tower Actions Similar actions between control tower vs. non control tower Streamlining processes to enable profitable growth. End-to-end view Getting the most out of processes and capacity Multiple scenarios to support S&OP Enabled by CT capabilities View the challenge by testing the limits All options considered, tradeoffs vetted Breeds commitment at all levels, confidence before execution End-to-end view considered at planning level

20 Percentage of Respondents, n=62 20 Process & Organization Capabilities 60% Control Tower Non Control Tower 50% 50% 40% 41% 40% 30% 30% 20% 10% 8% 3% 12% 15% 0% Manage critical relationships end to end Create and manage multiple operational scenarios View the supply chain holistically Profit optimized supply demand matching

21 21 Control Tower Advantages Understanding the Impact Managing relationships end-to-end making it happen with confidence, 50% to 8%. Multiple scenarios, 41% to 3%. Command of the data, options and the timing. Solution from end-to-end perspective. Understanding the cross functional tradeoffs quickly. Not guessing and hoping. Confidence in plan prior to execution. View the supply chain holistically, 40% to 12%. More than three times as likely the basic premise behind CT s. Profit optimized supply demand match, 30% to 15%. Twice as likely Improved financials as a result

22 22 Agenda About Aberdeen and SCM Practice Our Methodology Maturity Class Index Pressures Actions Capabilities Benefits Enablers Summary

23 Avg. Days Needed, n=62 23 Power of the Tower - Benefits Control Towers Cut Problem Resolution Time! Control Tower Non Control Tower

24 Avg. number of days, n=62 24 Power of the Tower Benefits Reduced Latency = Cash-to-Cash Cycle Gain! Control Tower 49 Non Control Tower 56

25 Control Towers Perform and Deliver 25

26 26 Power of the Tower Control Towers Perform and Deliver 40% less time to problem resolution - Primary benefit of Control Towers Huge process latency reduction. Minimizes error throughout supply Reduced Latency lowers Cash-to-Cash cycle by 13% Control Towers have better metrics across the board. Better forecast accuracy at SKU level, 68% to 48%. Better forecast accuracy at product group level, 71% to 53%. Better customer service, 94% to 89%.

27 27 Agenda About Aberdeen and SCM Practice Our Methodology Maturity Class Index Pressures Actions Capabilities Enablers Summary

28 Technology Enablers 28

29 29 Technology Enablers for Control Towers Must assume that at least some of all are used. Emphasis on greater technology adoption across the board by CT companies Critical point the closer to ONE solution delivering all the capabilities the fewer the handoffs, integration points, data models and process delays.

30 30 Agenda About Aberdeen and SCM Practice Our Methodology Maturity Class Index Pressures Actions Capabilities Enablers Summary

31 31 Key Takeaways The definition of Control Towers will continue to evolve. Regardless of the ultimate definition, key capabilities are: The ability to determine the impact of an event. Who needs to know. What team needs to be brought together to resolve the issue. From our definition, we do know that CT companies Have a centralized view with root cause drill down capability. Are three times more likely to have personnel that view their supply chains holistically as linked processes. Are over 13 times more likely than their peers to have the ability to create and manage multiple supply chain operational scenarios. Have a substantial savings in time to problem resolution of 40%. Cash-to-Cash cycle improvement of 7 days, equating to a 12.7% reduction in deployed cash.

33 Limited to Functional Excellence Decision Latency INVENTORY OPTIMIZATION APO-PS Incomplete Global Representation LCP ASPC DEMANTRA SCP APO-DM D&F SUPPLIER COLLABORATION S&OP 33 Copyright 2012 Kinaxis Inc. All Rights Reserved.

34 A NEW PARADIGM: Global Control Tower for Operations Outsourced Manufacturers (ERP) Channel Partners (various) Enterprise History (EDW) Brand Owner (ERP) Suppliers (EDI, portal) Customers (CRM) 34 Copyright 2012 Kinaxis Inc. All Rights Reserved.

35 A NEW PARADIGM: Global Control Tower for Operations End-to-End Process Enablement Global Visibility and Alignment Fast and Accurate Decisions Outsourced Manufacturers (ERP) Channel Partners (various) Enterprise History (EDW) Brand Owner (ERP) Suppliers (EDI, portal) Customers (CRM) 35 Copyright 2012 Kinaxis Inc. All Rights Reserved.

36 Disaster Management Collapsing Planning Cycles What if You could reduce your planning cycle by 43% Total Planning Cycle New Order Assessment & Commit Kinaxis Legacy HOURS 36 Copyright 2012 Kinaxis Inc. All Rights Reserved.

38 38 Questions and Discussion Bryan Ball Vice President/Principal Analyst Supply Chain Management Aberdeen Kirk Munroe Vice President of Marketing

39 Conclusion 39 Thank You