Creating a Supply Chain Analytics Center of Excellence What s the Big Deal? March 17, 2016
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1 Creating a Supply Chain Analytics Center of Excellence What s the Big Deal? March 17, 2016
2 Meet the Presenters Chris Gordon VP, North America Chris has worked in supply chain consulting and operations across Europe, the US and India for more than 25 years. He s driven dozens of supply chain initiatives with a heavy focus on leveraging analytical evidence to promote major business change. Gertjan de Lange Connecting Business and Optimization SVP, AIMMS Gertjan has 2 decades of experience in Analytics and Operations Research. He works closely with our customers, partners, academia and research organizations like Gartner as well as our sales, client support and R&D team to make sure we capture the business value of optimization for our customers.
3 Exec Summary Businesses and supply chains are seeking new approaches to get ahead in the analytics age. Are you looking for fresh ideas to update your organization, methods and tools to make the best of this huge opportunity? Topics addressed in this webinar: > How analytics can transform your organization > Defining the opportunity > What is a Supply Chain CoE > The CoE Pyramid > Getting buy-in and agreement > Supply Chain Centers of Excellence maturity > Maturity in the market some examples > Q&A & Next steps 3
4 How Analytics Can Transform Your Organization Business is difficult. Most large companies are driven by ambition, innovation & chaos Tribal knowledge Sacred cows Data supported decisions Business Prescriptions Experienced Operators Towers / Pillars Business value based decisions across the enterprise But it s not easy to change. Technology should be the easy part 4
5 Defining the Opportunity Planning Teams Manufacturing & Production Teams Pricing Teams Transportation & Logistics Teams Sourcing Teams Supply Chain Planning Capital Proj. Planning Supply Planning Portfolio Optimization Production Planning Production Scheduling Inventory Mgmt. Warehouse Mgmt. SKU Pricing Market Pricing Promotional Planning Shelf Optimization Network Design Network Optimization Routing & Scheduling Optimal Fleet Sizing Supplier Optimization Disruption Planning LT Capacity Planning Product Introductions Lower Costs Increased Revenue Improved Efficiency Minimize Lost Sales Increased Customer Satisfaction Maximize Profit Increased Market Share Increased Revenue Maximize Profit Lower Cost Increased Reliability Higher Efficiency Minimized Disruption Lower Cost Increased Reliability 5 Un-realized revenue of 4% Safety Stock reductions of 25% Gut-feel pricing 25% reduction in un-planned rush shipments 5% reduction in supply costs
6 What is a Supply Chain Analytics CoE? Source: Gartner 01 MODEL 02 MODEL 03 MODEL 04 MODEL Centralized Team: The supply chain analytics team is a centralized supply chain function. Distributed Team: Supply chain analytics competencies reside in individual business units or functions. Internal Outsourcing to the Enterprise Analytics Group: A general enterprise analytics team handles supply chain analytics needs. External Outsourcing to a Service Provider: An external service provider handles supply chain analytics needs.
7 The CoE Pyramid Skills Operational Research Linear programming Multi-integer programming Non- linear programming Source In-house Partner AIMMS Recruit (INFORMS) Skills IT Data, UI & Test 2 days AIMMS training Data stewardship UX leadership Source IT Data, UI & Test In-house IT Partner LinkedIn Test compliance Skills Source Skills Business Understanding & functional leadership Source In-house functional teams Users Training & Change Change management In-house Partner Planning, Manufacturing, logistics & sourcing Business advisory Org design Takes a huge org to justify full time functional representation 7
8 Getting Buy-in and Agreement to an SC CoE at the Executive Level Sponsorship Funding Scaling Four Tooling Success Real Problem Solved Three quickly Functional involvement Revenue upside Promotion Webinars POCs Use Cases Lunch! One Opportunity Burning Bridges Two Quarterly Statements Exec Motivations Wild Cards 8
9 9 Getting Buy-In With Users
10 Applications: Maturity By Supply Chain Area Planning Teams Manufacturing & Production Teams Pricing Teams Transportation & Logistics Teams Sourcing Teams Supply Chain Planning Capital Proj. Planning Supply Planning Portfolio Optimization Production Planning Production Scheduling Inventory Mgmt. Warehouse Mgmt. SKU Pricing Market Pricing Promotional Planning Shelf Optimization Network Design Network Optimization Routing & Scheduling Optimal Fleet Sizing Supplier Optimization Disruption Planning LT Capacity Planning Product Introductions Lower Costs Increased Revenue Improved Efficiency Minimize Lost Sales Increased Customer Satisfaction Maximize Profit Increased Market Share Increased Revenue Maximize Profit Lower Cost Increased Reliability Higher Efficiency Minimized Disruption Lower Cost Increased Reliability 68% of Applications 5% of Applications 5% of Applications 19% of Applications 3% of Applications 10
11 Maturity in the Market # of Prescriptive Apps successfully deployed Relative Maturity of Center of Excellence Oil, Gas & Chemicals Manufacturing Food & Beverage Forestry Products Retail Transportation Life Sciences High Tech One Few Many 11 # OF APPS DEPLOYED
12 Maturity in the Market # of Prescriptive Apps successfully deployed Relative Maturity of Center of Excellence Oil, Gas & Chemicals Manufacturing Food & Beverage Forestry Products Retail Transportation Life Sciences High Tech Novice Model Focused Application & Adoption Focused 12 MATURITY
13 The Audience Today Telcom 13
14 Tailor-Made Apps for IBP/S&OP, Capable-to- Promise and Profitable to Promise Challenge JBS is a global leader in beef, lamb and poultry processing with over 200K employees worldwide, the company has 340 production units and businesses. They sell to over 150 countries. The company needed a solution that would allow them to explore the best ways to meet demand and allocate production capacity at their different plants. Solution JBS decided to redesign their processes to allow for a systematic assessment and optimization of multiple scenarios on a much more detailed level. The system that was developed enables them to respond rapidly to changing market prices for all of their (intermediate) products on a daily basis at over 45 primary processing plants for SKUs. In addition, it allows them to compare these insights with the latest update of their demand scenarios, production capabilities, transport possibilities, and all associated costs. Results 25% increase to original margin 90% improvement on adherence to plan Increased adaptability and agility in the planning process An optimized product portfolio with the right inventory levels The ability to integrate Cost-to-Serve analysis and considerations into the S&OP process The ability to collaboratively explore multiple scenarios Read more: JBS Case Study, SC Blog, Gartner Report
15 Integrated Planning Solution Challenge BRF is a giant in the global food market and one of the main exporters of animal protein on the plant with food that reaches 110 countries. The Sadia division process over 7M birds per day. The team was looking for an integrated planning solution for its poultry business. Solution Statistical models for performance and decision support model to select flocks Individual performance curves per farm o Growth, consumption, etc. o Other variables taken into consideration Longer and integrated horizon o 30/60 days ahead of time Results $ 50 million savings in 2 years Agility in planning & Reacting to adverse situations Improved Planned vs. Actual Detailed planning
16 Driving Profitability with Demand-Pull Respond Planning and Scheduling Challenge Nampak is a leading packaging company, with a large glass production facility in South Africa. Increasing needs for product flexibility and production efficiency, paired with rising demand volatility required Nampak Glass to improve their ability to deploy the best possible production schedule at all times. Solution Nampak traded Excel for an AIMMS-based planning and optimization tool. Their solution, an application for Demand-Pull Respond Planning and Scheduling, named GOBSS (Glass Optimization Business Software Solution), leverages AIMMS technology to support the company s schedulers, sales and management teams to make the best business decisions through the evaluation and optimization of profit scenarios. Results Increased ability to respond to market dynamics and internal production changes Ability to extract more value from their planning process and quantify planning changes in a financial way Improved balance between customer service and profitability Read more: Nampak Case Study, SC Blog
17 Strategic Network Design Leading U.S. Food Manufacturer Challenge A regional food company has skyrocketed in popularity to become the best-selling brand in its category in the U.S. Their explosive growth presented some operational and logistics challenges for the manufacturer. With highly perishable products and a large number of SKUs driving complexity, this growing food manufacturer was determined to asses if their existing operations were as efficient as they could be. Solution AIMMS was used for a Network Assessment. The AIMMS model was created in only two weeks and helped the team address key questions pertaining to logistics and overall fulfilment costs. Conducting What-If Analysis and reviewing over 20 different scenarios helped the team identify options for cost reductions Results Cost reductions ranged from 10-25%, which amounts to millions of dollars annually. The cost savings helped the company further invest in R&D and subsequently launch several new product lines. Read more: Food Case Study, SC Blog
18 Supply Chain Planning & Scheduling Challenge Being a global chemical company, planners face the daily challenge of different and changing local demands, of different and changing production and transport costs, and changing market prices. They wanted insight into the optimal plan that defines where, and what needs to be produced and how much with respect to costs, lead times, stock and production capacity. Solution The BP team actively uses AIMMS in a variety of ways: o Rail fleet management and scheduling o Barge fleet management and scheduling o Production planning and scheduling o Coordination between production, rail and shipping schedules o Analysis of project economics for proposed capital projects for multiple years with consideration of broad range of scenarios o Business continuity planning Results Went from 5 users in 1 location to 100 users across 8 locations Increased transparency and visibility Reduction of fleet size by several vessels. To keep a vessel in the fleet costs upwards of $3M/year Read more: SC Blog BP Interview, Gartner Report
19 TNT Express Challenge To remain relevant and effective, and therefore competitive, TNT had to take a more fact-based and analysis-driven approach to decision-making in their complex operational network. The worldwide financial crisis of 2008 further amplified their immediate need for targeted and advanced optimization. Solution The initial strategic solution to determine the optimal network, rolled into a development of a solution to optimize TNT s parcel and freight flows in Europe Development of the TNT Express Global Optimization (GO) Program Results Accumulated savings of $260mln in better PUD, network improvement and Supply Chain cost Having a GO Program Established Communities of Practice Benefits the World Food Program Read more: SC Blog BP Interview, Gartner Report
20 Our 6 Key Recommendations 1. It s not about the technology or building cool prescriptive analytics applications Adoption & business change is the only goal 2. There s a bounty of opportunity left on the table in supply chain look 1 st towards planning and revenue 3. A SC CoE can quickly become a SC Analytics COE with the addition of some Operations Research talent, technology & a methodology 4. Wait for the right opportunity to launch and earn your executive sponsorship 5. Each project cycle, use a Proof of Concept approach to accelerate adoption and keep energy levels high 6. Join us for our 2 nd webinar on April 19 to walk through tools and templates that will get help moving forward towards your own SC Analytics COE success! 20
21 Thank You! Link to slides and recording will be ed to you If you have any questions, please contact us: Chris Gordon VP, North America Gertjan de Lange SVP, AIMMS Join us for Webinar #2: A practical guide to the Supply Chain CoE Tools, Templates & getting started on April 19 Go to aimms.com for webinars, white papers and case studies
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