The Coming Revolution in Supply Chain Finance

Transcription

1 Operating for Profit: The Coming Revolution in Supply Chain Finance February 9, 2012 produced by event sponsor

2 Jonathan L.S. Byrnes President Jonathan Byrnes & Co. Ranga Bodla Director, Industry Marketing NetSuite Supply Chain Finance Revolution Webcast Speakers Thomas P. Gale Publisher Modern Distribution Management

3 Who is NetSuite? Background Founded 1998 Public, NYSE: N, since 2007 Second largest public SaaS company Offices in 8 countries $200M+ revenue, 1000 employees High Growth 12,000+ Organizations Top 10 highest growth Financial solution according to Gartner and IDC Grew revenues 25% over past 2 years NetSuite runs NetSuite #1 Cloud Business Suite Recognition NetSuite ERP NetSuite for Wholesale Distribution Fastest Growing Top 10 FMS Vendor3 Top 10 Cloud Companies to Watch

4 NetSuite s Cloud-Based Suite Enables the 21 st Century Wholesale Business Customers CEO CFO Shipping Manager Ecommerce SINGLE DATA SOURCE FINANCIALS / ERP CRM+ Sales Rep/ Manager Production Manager Ecommerce Manager NetSuite for Wholesale Distribution Vendors Partners

5 Operating for Profit: The Coming Revolution in Supply Chain Finance Jonathan L.S. Byrnes

6 Today s Menu From Logistics to Supply Chain Management The Case of Baxter s Stockless Inventory The Supply Chain Finance Star of Value Three Eras of Markets Managing Supply Chain Finance Huge New Opportunities

7 From Logistics to Supply Chain Management Broadening Focus - From internal company focus to links to customers and suppliers

8 From Logistics to Supply Chain Management Broadening Focus - From internal company focus to links to customers and suppliers Broadening Focus - From simple cost control to maximizing supply chain productivity

9 The Case of Baxter s Stockless Inventory Stuck in the Mud What Business Are We In? Major Cost Reductions Foreseen and Unforeseen Surprise Revenue Increases Pile On!

10 What s Going On? Huge New Revenue Increases Decisive Strategic Differentiation Enduring Financial Gains It s Not About the Products! 30-60% Supplier Base Reductions Across Industries Who Wins Big? Who Gets Pushed Out?

11 The Moral of the Story for Supply Chain Managers Enormous Impact - On Strategy - On Revenues and Profits - On Competitive Positioning

12 The Moral of the Story for Supply Chain Managers Enormous Impact - On Strategy - On Revenues and Profits - On Competitive Positioning Requires Deep Involvement - In Sales - In Marketing - In Finance

13 The Supply Chain Finance Star of Value Revenues Risk Management Costs Supply Chain Finance Asset Productivity Profitability Cash Flow

14 Improvements In All Financial Aspects Revenues % increases, even in highly-penetrated accounts - Eliminates price sensitivity Costs - Major cost reductions in Supply Chain Management, and Sales & Marketing % cost reductions Profitability - Targeted profitability improvement initiatives - 25%+ gains Cash Flow - Immediate cash flow increases, as inventory lowered and excess cost reduced - No investment needed Asset Productivity - Fast elimination of non-earning assets - Assets put to higher and more productive use Risk Management - Enormous switching costs in key accounts - Shed unneeded assets and expenses

15 Parallel Improvements for Key Customers Virtuous Cycle Mutual Value Creation Revenue Increase Revenue Increase Risk Reduction Cost Reduction Risk Reduction Cost Reduction Supplier Customer Asset Productivity Improvement Profitability Improvement Asset Productivity Improvement Profitability Improvement Cash Flow Increase Cash Flow Increase Deeper Business Relationship

16 New Frontier of Strategic Differentiation was What is Customer Service? What s Your Worst Nightmare? Why Not Me?

17 Three Eras of Markets Inchoate Markets Mass Markets Precision Markets

18 New Locus of Value Creation Mass Markets Watershed Precision Markets Locus of Value Creation Product Go-to-Market Process General Foods P&G Wal-Mart Alliance Baxter-Cardinal

19 New Era, New Imperatives Mass Markets Precision Markets Passive, Reactive Supply Chain Finance Stable, Homogeneous Markets Product Driven Product Innovation Crucial Broad-Market Targeting Supply Chain Finance Drives the Business Dynamic, Heterogeneous Markets Account Driven Supply Chain Innovation Crucial Precision Account Targeting

20 Drivers of Change Mature, Sophisticated Buyers Exerting Pressure to Increase their Profitability Increased Competition Filling the Ecological Niches Sophisticated IT Both Inside and Between Channel Partners Sophisticated Supply Chain Management Capabilities Throughout the Channel Strong Offshore Competitors

21 Where Are Companies? Go-to-Market Process Product Your activities are here! Your customers are here!

22 Problematic Consequences Islands of Profit in a Sea of Red Ink high Profitability low 0 loss Accounts/Products/Orders

23 New View of Supply Chain Finance Our Company Mass Markets

24 New View of Supply Chain Finance Our Company Our Customers Mass Markets Precision Markets

25 Managing Supply Chain Finance Profit Mapping Profit Levers Partnering with Counterparts in Sales, Marketing, and Finance and with Channel Partners

26 Profit Mapping The Problem with Accounting Transaction Analysis The Hunt for Profitability and ROIC Laser-targeted Initiatives

27 Profit Mapping Five-step process Extract a Sample Income Statement for Each Line Database Analysis Hunt for Profits Targeted Actions Tips and pitfalls

28 Profit Levers Priorities, Priorities, Priorities Standardize your Customer Offer Map the Market Develop your Account Relationships Manage your Product Flow Differentiate your Service

29 Service Differentiation No More One Size Fits All Always Keep Your Service Promises, but... Different Promises to Different Customers Matches Supply Chain Assets and Cost Structure to Account Potential Good for Customers Can Plan Around a Consistent Level of Service

30 Account Relationship Matrix Large Account Size Small Integrated Accounts Aligned business strategy and scorecard - Collaborative, trustworthy actions Process-driven alignment - Coordinated supply and demand chain - Dedicated resources when the business case warrants Reliable service - Consistent - Cost-efficient Stable Accounts Menu approach to product and service offerings Strategic Accounts Aligned, long-term business strategy year joint long-range planning - Innovative - Shared risk Fully integrated - Integrated supply and demand chain (process and systems) - Dedicated cross-functional teams - Approach opportunities through the eyes of the customer Emerging Accounts Functionally excellent service - Flexible - Innovative Some unique needs met Pioneer scalable innovations Low Account Willingness and Ability to Partner High

31 Partnering with Sales, Marketing, and Finance Profit Mapping Customer Relationship Definition Market Mapping Account Management and Service Differentiation

32 Huge New Opportunities Huge New Opportunities - Strategy - Revenues and Profits - Competitive Positioning Major New Requirements - Information - Capabilities - Management Processes

33 The New World of Supply Chain Finance Supply Chain Management Driving Huge New Sales Increases

34 The New World of Supply Chain Finance Supply Chain Management Driving Huge New Sales Increases Sales and Marketing Driving Huge New Supply Chain Efficiencies

35 The New World of Supply Chain Finance Supply Chain Management Driving Huge New Sales Increases Sales and Marketing Driving Huge New Supply Chain Efficiencies Financial Performance Going Through the Roof

36 The Coming Revolution in Supply Chain Finance Decisive Factor for: Revenue Increase Risk Reduction Cost Reduction Market Share Asset Productivity Improvement SC Finance Profitability Improvement Cash Flow Increase Profitability Strategic Advantage

37 Operating for Profit: The Coming Revolution in Supply Chain Finance Jonathan L.S. Byrnes