Supply chain collaboration
across multiple tiers
1/17/2008
Supplying Your Business Advantage
Introducing Inspirage
• Consulting firm founded by former Oracle APS
Development & Consulting managers.
• Consultants have tremendous business process /
domain knowledge and have provided support,
advice, and consulting services to over 75+ Oracle
APS implementations
Oracle APS & Demantra Specialists
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Agenda
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Outsourced business environment
Business challenges in collaboration
Introduction to Collaborative Planning
Modeling the supply chain
Leveraging Collaborative Planning
Conclusions
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Outsourced business
environment
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Outsourced manufacturing and distribution
OEM
Customer
Assembly &
Test
Customer
•Completely outsourced
business environment
•Globally dispersed
operations
•Common to see materials
go through several
continents before it
reaches customers
•Growing number of
products are
manufactured and
distributed in an
outsourced environment
Distribution
Contract
Customer
Foundry
Manufacturer
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Multi tiered supply chain
•Some suppliers
interact with OEMs
directly - Tier 1
suppliers
OEM
TIER 1
Contract
Manufacturers
Sub assembly
suppliers
Subsidiaries
•Other suppliers are
removed at least one
level away from OEMs
- Tier 2 suppliers
TIER 2
Component
Manufacturers
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Operational challenges
•Work is outsourced but execution
across the companies should be
seamless
OEM
OEM
•Companies operate in different tiers
but are part of the same supply chain
•Service levels achieved depends on
performance of all companies in all tiers
Contract
Manufacturer
•Monitoring demand across the
extended supply chain is crucial
•Timely exchange of information on
supplies are very important
•Value of inventory forces OEMs to
track inventories across all tiers
Component
Manufacturer
•Need systems that operate across
enterprises
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Business issues
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Collaboration process
OEM
Austin
OEM
Order
forecast
TIER 1 SUPPLIER
•
•
Supply
commit
•
Contract manufacturer
China
•
Order
forecast
Supply
commit
•
TIER 2 SUPPLIER
Component manufacturer
Dallas
OEM provides
forecast to Tier 1
suppliers
Tier 1 supplier
provides forecast to
Tier 2 suppliers
Tier 2 supplier
provides commits
back to Tier 1
supplier
Tier 1 supplier
provides commits
back to OEM
Tier 2 provides
commits to both Tier
1 and OEM
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Operational control
OEM
Los Angeles
Order
forecast
TIER 1
Contract manufacturer 1
China
Order
forecast
TIER 2
Order
forecast
Contract manufacturer 2
Taiwan
Order
forecast
Component manufacturer
Dallas
Component manufacturer
Dallas
Demand for 1000 chips
Demand for 2000 chips
•Both Tier 1 suppliers order
the same part from Tier 2
supplier
•OEM does not want
individual Tier 1s to place
orders for the part
•OEM would like to collect
the demand across all
suppliers for the same part
for better prices and delivery
•In addition inventory of
these parts need to be
carefully managed as it
could be very expensive
Total demand is 3000 chips
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Authorized order forecasts
•Not all Tier1
suppliers can
provide forecast for
Tier 2 suppliers
OEM
Order
forecast
authorized
Contract
Manufacturers
Sub assembly
suppliers
Order
forecast
not
authorized
Subsidiaries
•Only specific Tier
2 suppliers are
authorized to
receive order
forecasts from Tier
1 suppliers
Component
Manufacturers
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Authorized supply commits
•Tier2 suppliers
cannot provide
supply commits to
all Tier 1 suppliers
OEM
Supply
commit
authorized
Contract
Manufacturers
Sub assembly
suppliers
Supply
commit
not
authorized
Subsidiaries
•Only specific Tier
1 suppliers are
authorized to
receive supply
commits from Tier
2 suppliers
Component
Manufacturers
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Permissions
Contract
Manufacturers
Sub assembly
suppliers
Component Manufacturers
Subsidiaries
•OEMs authorize
specific Tier 1
suppliers to
provide order
forecast to specific
Tier2 suppliers
•Tier 2 suppliers
provide permission
to Tier 1 suppliers
to view supply
commits based on
OEMs instructions
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Business issues - Users in the system
•Privileges provided at very
granular level i.e. specific
item, order type, site, user
etc.
Order
forecast
Component
Manufacturer –SITE1
Contract
manufacturer-SITE1
Component
Manufacturer –SITE 2
•Ex: User 1 at Contract Mfr.
SITE1 is provided privileges
to provide Order forecast for
part ‘X’ to procure from
Component Mfr. SITE1
•Once users are provided
access to the system, the
access should be restricted
to relevant data to the users
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Business issues – OEMs operational control
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OEM should be able to monitor all forecasts
published by Tier 1 suppliers
OEM should be able to override Tier 1 forecasts
and provide overrides as necessary
OEM should be able to monitor all supply
commits from all tiers
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Introduction to
Collaborative
Planning
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Traditional collaboration
CUSTOMERS
SUPPLIERS
Tier 2

Response 1:
Maintain Excess Inventory

Response 2:
Reserve Production Capacity

Response 3:
Expedite Everything!
Tier 1
Fax
Paper
Paper
Distribution Production Manufacturing
plans
plans
plans
Marketing
?
Sales
Manual
reconciliation
Mfg.
Demand Planning
Supply Chains built on
INVENTORY
Long planning cycles
Supply Planning
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Oracle collaboration process
E-Business planning solution: zero latency, real-time collaboration
CUSTOMERS
SUPPLIERS

Enable closed loop
collaborative planning
processes across your value
chain
•
Have complete supply chain
visibility
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Make better decisions
•
React immediately to
disruptions in supply chain
Tier 2
Tier 1
Portal
Portal
Automated Exceptions
Marketing
Manufacturing
Sales
Mfg.
Demand Hub & Multidimensional analysis
Consensus forecast and
production plan
S&OP Process
Single
holistic plan
Supply Planning
Supply Chains built on
INFORMATION instead of
Inventory
Business Intelligence
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Collaborate with suppliers
OEM
Consensus
forecast
Plan
•
Supplier
Sales
Forecast
–
–
Forecast
•
Order
Forecast
Constraint
capacity
Reduce shortages and improve
supplier delivery performance
Respond better to supplier
exceptions
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–
Plan,
Spreadsheet
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Provide order forecasts to your suppliers
Identify supply-demand mismatches
Get visibility to your supplier’s constraints
Review constraints in your S&OP process
Reduce non-value added costs
and exception overload
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–
User-configurable exceptions
Automated exception handling via workflow
Supply commit
(capacity)
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Multi-tier collaboration
Full visibility and synchronization across the extended supply chain
CUSTOMER
OEM
Demand
‘systems’
Run plan
CONTRACT
MANUFACTURER
SUPPLIER
Consensus
forecast
Supply
forecast
Demand ‘boards’
Run plan
Supply commit
‘boards’
Supply commit ‘memory’
Forecast ‘memory’
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Modeling & set up
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Modeling – trading partners
Modeled as
Inventory
Organization
OEM
Los Angeles
OEM Employees
Order
forecast
Supply
commit
Contract manufacturer
San Jose
Modeled as
‘Supplier’
Organizations
Supplier users
Order
forecast
Supply
commit
Component manufacturer
Dallas
Modeled as
suppliers
Supplier users
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Modeling – trading partners
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OEM is set up as User company as OEMs own and
administer ‘Collaborative Planning’ application
OEM facilities need to be modeled as regular inventory
organizations
Tier 1 suppliers need to be modeled as ‘supplier
organizations’
Tier 2 suppliers can be modeled as regular suppliers
with multiple sites as necessary
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Modeling – OEM (inventory Org)
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Modeling – Contract Manufacturer - supplier organization
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Modeling – Component manufacturer - Supplier
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Users
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Modeling – Users
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OEM users are modeled as employees
Users from Tier 1 modeled as ‘supplier’ users
Users from Tier 2 are also modeled as ‘supplier’ users
Supplier users from Tier 1 are associated with
corresponding supplier contacts in procurement
Tier 1 supplier is on OEM’s Approved Supplier List
Tier 2 supplier is on Tier 1’s Approved Supplier List
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Modeling – OEM users
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Modeling – Supplier users (both contract and component manufacturer users)
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ASL
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Approved Supplier Lists
Inventory Org
OEM
Los Angeles
Approved Supplier
List and Sourcing
rules
Contract manufacturer
San Jose
Supplier Org
Contract manufacturer
San Jose
Approved
Supplier List
Component manufacturer
Dallas
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Modeling – ASL
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Security rules
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Security rules
•
Security rules in CP specify specific data that can be
shared by trading partners
Do not need rule to view your own data
Need to specify rules to enable data from other trading
partners
Examples
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OEM specifies a rule for a Tier 1 supplier to share order
forecast with specific Tier 2 supplier
Tier 2 provides a rule that enables Tier1 to view supply
commits from Tier2
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Security rules
Access given by
COMP MFR
OEM
Order Type
Supply Commits
Order forecast
Supplier
COMP MFR
COMP MFR
Supplier Site
XXXX
XXXX
Privilege
view
update
Access given to
company
company
Assigned to
CONTRACT MFR
CONTRACT MFR
Effective from Date
20-Nov-2006
20-Nov-2006
Order number
Item
Org
Customer
Customer Site
Effective to Date
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Security rules
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Process
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Process
OEM to Tier 1
•
OEM prepares and publishes order forecast for contract manufacturers (Tier 1) based on over
all end demand
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Order forecast is available for Contract manufacturer
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Contract manufacturer logs into the system, reviews demand (order forecast from OEM)
Tier 1 to Tier 2
•
Contract manufacturer provides order forecast for Component manufacturer (Tier 2)
•
Component manufacturer logs into the system, reviews demand (order forecast from Contract
manufacturer – Tier 2)
•
Component manufacturer (Tier 2) provides commits to Contract manufacturer (Tier 1)
Tier 1 to OEM
•
Contract manufacturer provides commits to OEM
•
OEM logs in and reviews commits provided by Contract manufacturer
Over all control by OEM
•
OEM monitors Order Forecast provided by Contract Manufacturers (Tier 1) to Component
manufacturers (Tier 2)
•
OEM monitors commits provided by Component manufacturers (Tier 2) to Contract
manufacturers (Tier1)
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Publish order forecasts by OEM
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Review order forecasts by Tier 1
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Tier 1 loads publishes order forecast to Tier 2
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Tier 2 and Tier 1 load commits
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OEM and Tier1 review commits
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Summary
• Outsourced business environment poses significant
operational challenges
• Key challenges involve collaborating with trading partners in
several tiers
• Oracle collaborative planning offers comprehensive
capabilities to address collaboration requirements in an
outsourced environment
• Attention to modeling, set ups, data security, and processes
are required
• Seamless collaboration can be achieved across tiers with
careful system planning
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Contact Information
Sridhar Hoskote – [email protected]
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