Building Responsive Supply Chains
- 1. Building Responsive Supply Chains Supply Chain Insights LLC Copyright © 2022 LORA CECERE, FOUNDER | [email protected]
- 2. Introduction Supply Chain Insights LLC. Copyright © 2022 S E C T I O N 1 2
- 3. INFLATION GEO-POLITICAL SUPPLY CHAIN CHALLENGES SLOWED GDP GROWTH Supply Chain Shocks Extremely dynamic and complex macroenvironment impacting performance
- 4. Supply Chain Insights LLC Copyright © 2022 Navigating the Shades of Gray The world becomes more gray through the pandemic. Data requires analytics to provide context. 4
- 5. Supply Chain Insights LLC Copyright © 2022 The Efficient Supply Chain is Not the Most Effective
- 6. Imagining Supply Chains in 2030 IMAGINE 2022 Response During the Pandemic 7% 31% 46% 15% 0% During the pandemic, we managed very well. No issues. During the pandemic, we managed well with some issues. We managed the business by brute force. We did it, but it was tough. The business struggled during the pandemic. The business was not equal to the challenge of the pandemic. TOTAL __________________________________________________________ Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study Q11. When you think of the supply chain’s response during the pandemic, how would you classify your company’s business performance?
- 7. Imagining Supply Chains in 2030 IMAGINE 2022 Response Gaps 43% 33% 51% 24% 28% 9% 28% 3% Shifts in demand Labor availability Supply availability Ocean freight costs Ocean freight variability Availability of air Inadequacies of planning systems Inefficiencies of working remotely 6% 31% 13% 13% 3% 7% 6% Support by the executive team Having the right inventory Labor availability in distribution centers China lockdowns Availability of road transport Price of air freight Price of road transport Greatest Issues __________________________________________________________ Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study Q12. What were your greatest issues? ?
- 8. Industries Struggle with Inventory 8 Supply Chain Insights LLC. Copyright © 2022
- 9. 9 What Is Supply Chain Excellence? Supply Chain Insights LLC. Copyright © 2022 Resilience Ability to drive consistent results year- over-year and weather market factors. Balance Organizational alignment on a balanced scorecard. Performance Outperforming industry peer group on the key metrics. Improvement Driving year-over-year improvement. Delivering Value A shift from cost to value.
- 10. Supply Chain Insights LLC. Copyright © 2021 10 Definitions Agility. An organization’s ability to have the same cost, quality and customer service given levels of demand and supply variability. Responsiveness. A short-cycle supply chain. A process that responds quickly. Proactivity. An organization that senses market and operational shifts quickly and guides the organization for a better response. Resilient. The ability of an organization to produce consistent balance sheet results year-over-year. Working Well. An organizational assessment of the group on the effectiveness of the supply chain.
- 11. Companies Manage Functional Silos Supply Chain Insights LLC. Copyright © 2022
- 12. Supply Chain Insights LLC Copyright © 2022 Efficient Functional Silos Do Not Create Effective Supply Chains
- 13. How Do We Improve Capabilities? Supply Chain Insights LLC. Copyright © 2022 S E C T I O N 2 13
- 14. Change Mental Models Supply Chain Insights LLC. Copyright © 2022 14
- 15. Supply Chain Insights LLC Copyright © 2022 What to do? Plan outside-in Drive alignment Collaboration Digital transformation 15
- 17. Supply Chain Insights LLC. Copyright © 2022
- 18. BSH Case Study
- 19. BSH Latency Distortion Market Latency Demand Latency Process Latency 49% 7 months 2 weeks 4 weeks
- 20. •About LKQ LKQ Corporation is an eCommerce provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles. The Company is global, with operations in North America, Europe, and Taiwan. LKQ offers its customers a broad range of Original Equipment (OE) recycled and aftermarket parts, replacement systems, components, equipment, and services to repair and accessorize automobiles, trucks, and recreational and performance vehicles. Currently, the Company has 44,000 Employees and 1,600 Locations in 31 Countries.
- 21. Pilot Scope SKU Number SKU Description 1343305 BREMSSCHEIBE HA FUER AUDI 1343349 BREMSSCHEIBE HA FUER 1343696 BREMSSCHEIBE HA FUER 2215644 BREMSSCHEIBE 2-TEILIG HA 2256825 BREMSSCHEIBE HA FUER 3124261 BREMSSCHEIBE HA FUER ALFA 3281997 BREMSSCHEIBE HA FUER AUDI 3285253 BREMSSCHEIBE HA FUER AUDI 3521850 BREMSSCHEIBE HA FUER 3573804 BREMSSCHEIBE HA FUER 3681698 BREMSSCHEIBE HA FUER 4607865 BREMSSCHEIBE HA FUER 4625360 BREMSSCHEIBE HA FUER AUDI 4628860 BREMSSCHEIBE HA FUER AUDI 4630096 BREMSSCHEIBE HA FUER AUDI 5271371 BREMSSCHEIBE HA FUER 5271372 BREMSSCHEIBE HA FUER 5415080 BREMSSCHEIBE 2-TEILIG VA 7327083 BREMSSCHEIBE HA FUER 1. No of SKUs- 19 2. Distribution Network - 1 CDC, 150+ Branches (Germany and Austria) 3. Location are grouped under the following: • Garage, E-Commerce, Wholesale • Garage, E-Commerce • Garage, Wholesale, E-Commerce, Key Account • Garage • Garage, Wholesale 4. Sales Region – Austria, Germany, Slovenia
- 23. The Transition to Market-Driven Company Statistical Enterprise Market Driven Inputs Shipments Sales Invoices Sales Invoices + Market Signals Demand Latency Unknown Unknown ~ 6 weeks Forecast Value Added (FVA) 8% 9.9% 17.3% Forecast Bias Positive Negative / Balanced Balanced Bullwhip Amplification 48% 52% 37% COV Analysis Insights: ● Item/Branch locations were not forecastable ● An enterprise forecast slightly improves FVA ● The market-driven forecast significantly improves FVA
- 24. © 2022 Corning Incorporated OPTICAL COMMUNICATIONS CORNING’S LARGEST SEGMENT • Over 25,000 Employees • Over $4 billion in Revenue • Key Segments: Fiber to the home, Wireless technologies, Hyper Scale Data Centers
- 25. Corning Demand Insights Company Statistical Enterprise Market Driven Inputs Customer Orders Customer Orders Customer orders + Market Signals Market Driver Lags Unknown Unknown ~ 3-4 Months Forecast Value Added (FVA) -4.16% 0.55% 5.43% Forecast Bias Negative Negative / Balanced Balanced Pilot Insights: ● Outside-In forecasts consistently outperform inside-out statistical forecasting approaches ● Correlation does not equal causality – but can be helpful in the model (Temperature)
- 26. Corning - Summary Observations • The division has a negative FVA (~4.2%). The FVA technique is new for the group. • ML Drivers that showed strong correlation and ability to enhance FVA by ~+10% • Selling Price • Temperature • GDP • Covid • The organization looks at price management and demand in disconnected processes. • There is a need to enhance insights on pricing communication lead times, and effective dates • Inflation Rate • Housing Starts • 5G Subscriptions • 5G Sites
- 27. Biggest Impact? Redefining Time 27 Supply Chain Insights LLC. Copyright © 2022 • Market Latency: The translation of a market signal to a buying pattern to a visible order pattern. • Demand Latency: The time to translate channel purchase data pattern to an order through replenishment processes. • Process Latency: The time for the organization to make a decision. Market Latency: 3-6 months Demand Latency: 2- 12 weeks Process Latency: 2- 6 weeks
- 28. Potential for Nine New Advanced Planning Applications 28 Supply Chain Insights LLC. Copyright © 2022 1. Market-driven Demand Management 2. Demand Visibility 3. Procurement Buyer Workbench 4. Planning Master Data 5. Unified Planning Data Model 6. Form and Function of Inventory 7. Revenue Management Effectiveness (Test & Learn): Demand Shifting Versus Shaping/ Balanced Scorecard Impact 8. Bi-directional Orchestration 9. S&OP Playbook Execution
- 29. Supply Chain Insights LLC Copyright © 2022 What to do? Plan outside-in Drive alignment Collaboration Digital transformation 29
- 30. Imagining Supply Chains in 2030 IMAGINE 2022 Organizational Alignment Before Pandemic 64% 92% 87% 65% 79% 74% 49% 82% 30% 44% 38% 45% 25% 44% 49% 28% 39% 36% 25% 51% 13% 28% 18% 23% New Product Dev't & Distrib'n Sales and Operations Manufact'g & Procurement Operations & IT Finance & Operations Sales & Finance Marketing & Finance Sales & Marketing Marketing & IT Finance & IT Sales and IT CSR & Operations Team Alignment: Importance vs. Performance* Importance Performance Greatest Gaps
- 31. Imagining Supply Chains in 2030 IMAGINE 2022 79% 91% 64% 76% 67% 64% 73% 58% 52% 73% 21% 30% 45% 18% 30% 24% 24% 33% 24% 21% 42% 9% Logistics and supply chain planning Supply chain planning and manufacturing Logistics and procurement Sales and supply chain planning Supply chain planning and customer service Finance and supply chain planning Procurement and manufacturing Finance and manufacturing Finance and procurement Customer service and distribution Corporate Social Responsibility and Manufacturing Users Vendors __________________________________________________________ Source: Supply Chain Insights LLC, Supply Chain Reset Q9. In your opinion, how important is it for each of the following pairs of teams to be aligned within your supply chain? Q10. How aligned do you believe that these same pairs of teams actually are with your company? Greatest Gaps Between Users and Vendors Organizational Gaps During the Disruption
- 32. What to do? Plan outside-in Drive alignment Collaboration Digital transformation 32
- 33. Imagining Supply Chains in 2030 IMAGINE 2022 33 Definition 34% 63% 85% 46% 54% 69% 15% 27% Supply Chain Finance Order Management Transportation Management Manufacturing Contract Manufacturing Procurement Corporate Social Responsibility Risk Management Q7: When you think of the term “supply chain” in your organization which functions?
- 34. Imagining Supply Chains in 2030 IMAGINE 2022
- 35. Imagining Supply Chains in 2030 IMAGINE 2022 Build a Balanced Scorecard Focused on Value 35 Supply Chain Insights LLC. Copyright © 2022
- 36. Imagining Supply Chains in 2030 IMAGINE 2022 What to do? Plan outside-in Drive alignment Collaboration Digital transformation 36
- 37. Imagining Supply Chains in 2030 IMAGINE 2022 53% 7% 41% 18% 23% 27% 18% 27% Yes, there is a digital transformation strategy. No, there is not a digital transformation strategy. Within the network Extremely satisfied5 Somewhat satisfied4 Neutral3 Somewhat dissatisfied2 Extremely dissatisfied1 __________________________________________________________ Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study Q14: Does your company have a digital transformation strategy? Q41. Satisfaction with the speed at which it gets critical data to make decisions within the network? AVG 3.99 1.63 Companies with Digital Transformation Strategies Did Significantly Better
- 38. Imagining Supply Chains in 2030 IMAGINE 2022 Response Gaps 43% 33% 51% 24% 28% 9% 28% 3% Shifts in demand Labor availability Supply availability Ocean freight costs Ocean freight variability Availability of air Inadequacies of planning systems Inefficiencies of working remotely 6% 31% 13% 13% 3% 7% 6% Support by the executive team Having the right inventory Labor availability in distribution centers China lockdowns Availability of road transport Price of air freight Price of road transport Greatest Issues __________________________________________________________ Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study Q12. What were your greatest issues? ?
- 39. Imagining Supply Chains in 2030 IMAGINE 2022 Innovation? 10% 30% 58% 3% We are usually the last to try a new technology We are usually among the last to try a new technology We are usually in the middle when it comes to trying a new technology We are usually the first to try a new technology __________________________________________________________ Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study Q33: Which of the following best describes your company's approach to investing in new analytics strategies, in general?
- 40. 40 Steps to Take Supply Chain Insights LLC. Copyright © 2022 1. Improve Alignment. 2. Drive Results Based on a Balanced Scorecard. 3. Be a Good Trading Partner.
- 41. . We Must Learn to Unlearn and Build Better Supply Chain Insights LLC. Copyright © 2022
- 42. 42 Insights Supply Chain Insights LLC. Copyright © 2022 01 No Company Was Ready for the Pandemic. The Changing Market Is An Opportunity for Growth. 02 Focus outside-in and translate market data. 03 Imagine the Supply Chain of the Future from the Customer Back.
- 43. 43 2 years Partner at Altimeter Group (leader in open research) 8 years Gartner and AMR Research 8 years Experience in Marketing and Selling Supply Chain Software at Descartes Systems Group and Manugistics (now JDA/Blue Yonder) Supply Chain Insights LLC Copyright © 2022 Who Is Lora? Founder of Supply Chain Insights “LinkedIn Influencer”, Guest blogger for Forbes, Author: Bricks Matter (2012), Supply Chain Metrics That Matter (2014), and Shaman’s Journal (2014-19) 15 Years Leading Teams in Manufacturing and Distribution for Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble.
- 44. Thank You… Supply Chain Insights LLC Copyright © 2022 LORA CECERE, FOUNDER | [email protected]
- 45. Supply Chain Insights LLC Copyright © 2022 45 Engage With us! Visit Us Online www.supplychaininsights.com www.supplychainshaman.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 45
- 46. Supply Chain Insights LLC. Copyright © 2022 Founded in February 2012 by Lora Cecere, Supply Chain Insights LLC is in its eleventh year of operation. The Company's mission is to deliver independent, actionable, and objective advice for supply chain leaders. 46