Presented by:
Lora Cecere
Partner
Altimeter Group
Moderated by:
Carol McIntosh
Business Consultant
Kinaxis
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Let’s start with
9
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#9: What do I avoid?
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The Market Myths
 One number forecasting
 You don’t need a technology.
 80% is good enough.
 Standardize: One solution provider is all you
need.
 Supply chains are moving so fast they don’t
have time to plan.
 Real-time S&OP is needed.
 A COOKIE-CUTTER approach can work.
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#8: How do I get
started?
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The Right Questions
 What is the goal?
 How do you achieve the right balance
between demand and supply?
 How do you make decisions?
 How does your organization measure
success?
 How do you tie S&OP planning to
execution?
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Goal Evolution
1985:
Deliver a
Feasible
Plan for
Operations
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1995:
Match
Demand
with
Supply
2005:
Demand
Driven
2011:
Market
Driven
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Lots of Options
Enterprise Resource
Planning Expansionists
Enrichment
Vendors
Business Intelligence
Reformers
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Advanced Planning
System Traditionalists
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#7: What are the
barriers? Pitfalls?
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Building Value Networks
Business strategy
What are the right things to do to increase company value?
Value-network strategy
What are the right ways to support the business strategy?
What are the right trade-offs between value drivers for each value network?
Align demand
relationships
Right product
platforms
Supply chain strategy
Demand Networks
Design Networks
Joint Value
Creation Strategies
Innovation
Methodologies
Design the
supply
response
Supply Chain
Network Design
Build
organizational
systems and
manage talent
Continuous
Improvement
Capabilities Required
Business Process
How do I do the right things right?
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Align supply
relationships
Effective Supply
Networks
Execution of buyside strategies
Days of Working Capital
95
85
75
65
55
45
35
2000
2001
2002
2003
Household Products
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2004
2005
2006
Chemical
2007
Pharma
2008
2009
2010
Average
Data Source: CFO Magazine
Days of Working Capital Across the Food
Manufacturing Value Chain
70
60
50
40
30
20
10
0
2004
2005
Grocery Retailers
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2006
2007
2008
Food Manufacturers
2009
2010
Packaging and Containers
Data Source: CFO Magazine
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#6: What is the ROI?
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Benefits received from S&OP processes
What benefits have you received from your work with S&OP processes?
Increasing revenue
Improving forecast accuracy
Reduction of inventory
Improving asset utilization
2%
59%
5-7%
57%
50%
10-15%
42%
3-7%
Determining outsourced manufacturing
38%
Determining procurement requirements
36%
Improving new product launch
3-6%
Transportation and warehouse management
2-8%
Capital planning and asset management
Improvements in the perfect order
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34%
32%
32%
3-6%
30%
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Increasing ROI
Stage 1:
Goal: A
Feasible Plan
ROI: 9-12 Months
Late Adopter
Deployments
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Stage 2:
Goal: Match
Demand with
Supply
ROI: 6-9 Months
Majority of Current
Deployments
Stage 3:
Goal: Drive the
Most Profitable
Response
ROI: 3-6 months
Less than 20% of
Deployments
Stage 4:
Demand-Driven
Supply Chains
ROI: Less than 3
Months
Less than 5% of
Deployments
Stage 5:
Goal: MarketDriven Value
Networks
ROI: Within the
Month
Less than 2% of
Deployments
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The Reason: Commodity Price Pressure
400.00
350.00
300.00
250.00
Corn (metric Ton)
Wheat (metric Ton)
$/LB
200.00
150.00
100.00
Coffee, Robusta (Pound)
Sugar (Pound)
Beef (Pound)
Crude Oil (Barrel)
50.00
0.00
Source: Index Mundi
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#5: What is the right
frequency, duration
and granularity of
planning?
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What drives Variability?
Value: Price, trade incentives, new products,
services, freshness, responsiveness
Variety: Configurations, items, platforms,
components, brands, processing technologies
Velocity: Lead-times, order to delivery, inventory
turns, time to market
Volatility: Demand, inventory, schedules,
reliability, yields
Volume: Plants, warehouses, distribution
centers/points, product flow
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Focus
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#4: What is the
Best Reporting
Structure?
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Alignment of metrics: Typical organization
CEO
Chief
Customer
Officer
Chief
Marketing
Officer
COO
Account
Teams
Growth
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VP of Supply
Chain
Sales
Volume
Customer
Service
Procurement
Logistics
Cost
CFO
VP of
Manufacturing
CIO
Quality
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Managing Bias and Error
Reports
to Sales
Reports to
Marketing
Reports to
Manufacturing
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#3: Do I need a
Technology?
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The Stages
Goal
•
•
•
Model the network
Recognize and respect
constraints
Gain plan visibility
Match demand with
supply
•
•
•
What-if analysis
Multi-tier inventory analysis
Network design
Deliver the most
profitable Plan
•
•
•
Demand translation
Supply orchestration
Optimize financial drivers
Demand-driven
•
•
•
Sense channel demand
Shape demand
Drive the most profitable
response
Market-driven
•
Sense buy and sell-side market
conditions
Bi-directionally orchestrate
demand
A feasible plan
•
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#2: Who does it
Best?
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Leaders sensed Market Changes 5X
Faster
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Leaders
(6%)
Sensed
Market
Changes 2
Months
Corrected
Supply Chain
in 3 Months
Followers
(47%)
Sensed
Market
Changes in 4
Months
Corrected
Supply Chain
by 6 Months
Laggards
(47%)
Sensed
Market
Changes in 6
Months
Corrected
Supply Chain
in 15 Months
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#1: What does
Good Look Like?
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Aligning for balance
S: Go-toMarket
Strategies
&
Goal
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OP: Demand
Orchestration
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Definitions
Letter Common
Practice
Ask sales
S
Optimal Practice
Focus on market drivers:
How do we best shape
demand?
&
Direct integration to
supply
Design of the value chain to
optimize trade-offs, minimize
risk, balance cycles, and
orchestrate demand
OP
Manufacturing plan
Trade-offs between make,
source and deliver
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What is the roadmap?
 Value Planning
 Focus on continuous improvement
• Forecast-Value Add Analysis
• True North
 Focus on what is important in YOUR business
 Move horizontal and outside-in
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About Us
Altimeter Group is a research insights group providing companies
with a pragmatic approach to understanding disruptive technologies.
We have four areas of focus: Leadership and Management,
Customer Strategy, Enterprise Strategy, and Innovation and Design.
Visit us at http://www.altimetergroup.com or contact
[email protected].
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Thank you
Lora Cecere
[email protected]
Blog: www.supplychainshaman.com
Twitter: lcecere
Linkedin: linkedin.com/pub/lora-cecere/0/196/573
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Q&A
Please feel free to submit your questions now
Lora Cecere
Partner
Altimeter Group
Thank you for joining us!
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