Supply Chain From The Backroom To The Boardroom GENERAL SESSION. Roddy Martin Vice President, SCM Cloud Product Marketing Oracle
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1 Supply Chain From The Backroom To The Boardroom GENERAL SESSION Roddy Martin Vice President, SCM Cloud Product Marketing Oracle
2 Safe Harbor Statement The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle s products remains at the sole discretion of Oracle.
3 Roderick - Roddy Martin Vice President Cloud SCM Product Marketing, SC Transformation Thought Leadership Oracle Corp. 35 years Engineering, Manufacturing and SC operations, Team Building and Leadership, and Consulting. Company-wide Transformation Change Leadership Previous : SABMiller Executive Led SC AMR Research - Gartner SVP SC Competitive Capabilities International ( CCI) Managing Director Partner at Accenture SC Thought Leader Zinata SI VP Oracle
4 Why Change? The End to End Supply Chain is the New Business Operating Model ( todays focus is cost reduction, but leaders are focusing SC capabilities on growth)
5 The Market Patients, Buyer, Consumer, User, Customer The Integrated Supply-Driven Operating Model True Demand ( Sensing & Shaping) Integrated Product Supply Network Finance Customer & Consumer Facing Processes Selling, Order & Account Management Consumer Collaboration Joint Value Creation Demand Sensing Demand Shaping Segmentation Analytics? Planning Integrated Product & Manufacturing Supply Network Reliable Products & Services Profitable Compliant Networked Suppliers, Partners, CMO Logistics / Procurement Integrated Push
6 The Integrated Supply-Driven Operating Model Integrated Product Supply Network Finance On Premise, Transactional Integrated IT Data-driven Fragmented Silos Complex Lacks Agility to Change Planning Logistics / Procurement Integrated Product & Manufacturing Supply Network Reliable Products & Services Profitable Compliant Networked Suppliers, Partners, CMO Integrated Push
7 In Today s Reality : Supply driven Operating Models are Challenged! Volatility, Uncertainty, Complexity, and Ambiguity is Driving the Need to Transform Capabilities V U C A
8 Context Shapes Transformation Winning on the Seas Let s SPEED things up!
9 Change the Game A Paradigm Shift! Technology- enabled thousands of data points and analytics!
10 Challenges The Supply driven Operating Model is Barely Sufficient but not Good Enough! Demand forecast in accuracy and lack of downstream demand-driven visibility is inefficiently translated to operations( and vice versa) ; results: Leadership alignment, performance management complexity Lack of responsiveness to market events and response time Excess and inventory shortages Complexity of the Business Operating Model ( people, process and technology) IT driven by Order to Cash and Integrated Data in on-premise ERP Costs of Ownership It Difficulty is complex in maintaining for the margins Boardroom and competitiveness Leadership Team to maintain and grow competitiveness of the total business
11 The Market Patients, Buyer, Consumer, User, Customer Leaders Move to an End to End, Market driven Operating Model True Demand ( Sensing & Shaping) Responsive & Agile Product Supply Network Finance Product & Innovation Management Information & Insights Customer & Consumer Facing Processes Selling, Order & Account Management Consumer Collaboration Joint Value Creation Demand Sensing Demand Shaping Segmentation Analytics Integrated Business Planning / S&OP Local Resources Sufficiency Global Regional Analytics Integrated Product & Manufacturing Supply Network Reliable Profitable Compliant Networked Products & Services Suppliers, Partners, CMO Logistics Procurement Segmented pull analytics Segmented push
12 Top SCM Business Drivers EFFICIENCY Multiple System Rationalization Modern & Integrated Processes Global Visibility & Collaboration GROWTH Global Expansion New Market Entry Acquisitions & Divestitures INNOVATION Product & Market Disruption Organizational Responsiveness Non-traditional Competitors RISK MITIGATION Reduce legacy dependencies Minimize skills gaps Cost Reduction Process Innovation Faster Time to Value
13 = A Business-led Transformation Journey Outside In, End to End, Networked Supply Chain is the New Business Operating Model & Leading and Managing Change Priority
14 Demand Value Leaders Recognize & Engage the 5 Stage Maturity Based Journey Stage 1 React Historic Accidental Stage 2 Anticipate Grouped for Focus Stage 3 Integrate Balanced Mix Stage 4 Collaborate Value Discovery Stage 5 Orchestrate Value innovation React Improvement Projects Integrated Functional Excellence Demand - driven Integrated E2E Processes Value Translation Network Demand Supply Shape for Value Synchronize Demand Reactive X Product Supply Reactive Projects Demand X Product Projects Projects Supply Demand Product Integrate Supply Product Demand Sense Product Supply Product Evolving Digital & Cloud Capabilities
15 Maps to the 5 Stage Analytics Capability Journey.. Migrating from What happened to Best possible business outcome & Demand insights What s the best that can happen? What will happen next? What if these trends continue? Why is this happening? Prescriptive Analytics (the so what and the we should, Learn from what s the pattern ) Predictive Analytics (the what if and the now what Model and simulate ) What actions are needed? Where exactly is the problem? How many, how often, where? What happened? Stages of Maturity Descriptive Analytics (the what with context ) Transactional reporting (the what from data and events)
16 The Market Indicates : Transforming Business Capabilities Is Needed to Change The Operating Model (People, Process and Technology )
17 Strategic Changes Over Next 3 Years Q3D. What do you think will be the most important strategic change(s) your organization will make in your supply chain operations over the next 3 years? 13% Top Responses: Most important strategic changes in SC operations 9% 7% 7% 6% 6% 6% 6% 5% 5% 5% 5% 4% 4% 2% 2% 2% 2% 1% 1% 1% 1% 1% n=283 Total answering OPEN TEXT: SEE VERBATIM FILE FOR DETAILED RESPONSES
18 Reality Check! What Are Your Capabilities & Readiness Levels Today?
19 Respondent Profile Your workplace location and For which geographies are you responsible for your company s decisions regarding Supply Chain Management (SCM) processes, strategies or supporting technologies? S. Africa, Latin 4% America, 4% By Region Middle East, 4% Global North America Geographies-Responsibility Level 26% 38% APAC, 14% Local Country 19% Europe 9% Europe, 22% North America, 52% APAC Latin America Middle East & Africa 8% 5% 5% Other, please specify 1% n=357
20 SC Business Goals, 2015/2016- by region Thinking of your supply chain organization s business goals for 2015/2016, what do you expect will be the top three business priorities for your supply chain organization? 0% 10% 20% 30% 40% 50% 60% Drive business process improvements Reduce costs Improve efficiency and/or productivity Leveraging SCM to help drive business growth Foster process innovation Improve customer service, attract/retain customers Accelerate end-to-end cycle time (speed) Improve point in time/forward looking decision making 24% 39% N. America (n=182) Europe (n=77) APAC (n=49)
21 SCM Initiatives 2016 Most important initiative to achieving each of your top three business priorities? SC visibility and transparency BI and analytics S&OP/integrated business planning Asset and Inventory optimization Customer collaboration & service Supply chain/network redesign Visibility into manufacturing capabilities Supplier collaboration & service Talent management programs Collaborative logistics programs New product introduction/plm Outsourcing to third parties Globalization initiatives SKU rationalization Supply chain segmentation programs Supplier rationalization Big Data initiatives Multi-channel/Omni-channel commerce Global sourcing IoT (Internet of Things) initiatives Other, please specify Top Priority 2nd 3rd 9% 10% 10% 7% 10% 8% 7% 7% 9% 8% 8% 6% 6% 6% 8% 6% 7% 7% 6% 5% 6% 6% 6% 5% 3% 6% 7% 6% 6% 3% 6% 4% 4% 5% 4% 5% 4% 4% 3% 4% 3% 4% 4% 3% 3% 3% 3% 3% 3% 3% 3% 2% 3% 3% 3% 1% 3% 2% 1% 2% 2% 1% 2%
22 Top Obstacles Q04. What do you consider to be the top three obstacles to achieving your organization s supply chain goals and objectives? Top Ranked 2nd 3rd Sum Inability to orchestrte e-to-e SCM processes 17% 18% 13% 48% Forecast accuracy and demand variability 15% 12% 12% 39% Lack of cross-functional collaboration 12% 12% 10% 34% Supply chain network complexity 10% 10% 12% 32% Poor Visibility across SC 10% 10% 8% 28% Poor Leadership Corporate Culture 11% 8% 8% 27% Develope, retain and manage SCM talent 6% 7% 10% 23% Cost mitigation and control 7% 6% 7% 20% Inability to exploit growing volumes of data 4% 8% 8% 20% Supplier performance, supply variability 5% 6% 8% 19% Other 2% 3% 3% 7% n=357
23 What Are Your Operational Excellence Priorities? Standardization of best practices and processes Developing systemic CI approaches 46% 52% Increasing factory flexibility Improving access to production information and data Improving quality 30% 29% 33% Standardized performance metrics Manufacturing COE development Formalized outsourcing and partner strategy Skills development Increasing automation Aligning product portfolios with local markets 22% 19% 17% 17% 16% 13% n = 83 Source: Gartner 2015 IP security 4%
24 Management Practice + Process, Technology, People - Integratively Deployed for New Capabilities Path to The Cloud Strategy Lean and CI Initiatives Lean, + Operating System Initiatives Codified Best Practices, End to End Architecture 75 th percentile and above Process Standards +8% +20% Business Transformation Enabled by IT [Use Technology to make more informed trade-offs, build end to end agility ] 25 th percentile and below 0% Intensity of IT Deployment + 25th percentile and below IT Standards 75th percentile and above +2% ERP, MES, +. IT and Technology Initiatives Source: London School of Economics survey and analysis of top 100 companies in France, Germany, United Kingdom and United States
25 Adoption Profiles Quicker win, but less Strategic Ability to Change (Leadership, Personality, Regulations, ) Why bother to go SaaS? INNOVATE AT THE EDGE (Tactical Addition) (Feature/Function Compete) CONSOLIDATION & HOSTING (No Change) (Tech Option Compete) The Chasm COMPLETE TRANSFORMATION (Strategic Change) (Overall Risk Challenge) DIVISIONAL MODERNIZATION (Tactical Change) (Interim Disruption Challenge) Higher Risk/Effort but Higher Reward Pressure to Change (Restructuring, Acquisitions, New business model, Burning platform, New regulations, Competitive pressures, Poorly implemented processes, Loss of skills,.)
26 START! Understanding Your Capabilities & Readiness Levels; & Reducing Complexity From Leadership Level Do You Know How?
27 Lora Cecere Supply Chain Insights What makes The Difference
28 2017! Focus on Building Outside-In End to End Overarching Planning & Analytics Capabilities?
29 Supply Chain & Procurement Overarching Cloud-based Architecture Bridges Business Planning Integrated Business Planning / Processes & Capabilities Goal: Make the financial budget. Top-down Focus. Desires control and wants predictability of operations. Forecast definition: The business plan and budget Demand-side Business & Finance Supply-side Goal: Maximize revenue & market share, wants guaranteed availability Forecast definition: Sales plan Sales and Marketing Operations Goal: optimization, improve costs and minimize demand uncertainty Forecast definition: Plan Ship-to at the customer level Demand/orders at customer Location Suppliers Goal: A feasible plan. Bottoms-up focus. Wants to minimize risk, disruption & cost Forecast definition: The demand and sourcing plan
30 The Market Patients, Buyer, Consumer, User, Customer Not Just One Integrated Supply Chain! True Demand ( Sensing & Shaping) Responsive & Agile Product Supply Network Finance Product & Innovation Management Information & Insights Customer & Consumer Facing Processes Selling, Order & Account Management Consumer Collaboration Joint Value Creation Demand Sensing Demand Shaping Segmentation Analytics Integrated Business Planning / S&OP Local Resources Sufficiency Global Regional Analytics Integrated Product & Manufacturing Supply Network Reliable Profitable Compliant Networked Products & Services Suppliers, Partners, CMO Logistics Procurement Segmented pull analytics Segmented push Industry Characteristics Core Capabilities Core Process Key Personas Digital Life Sciences New Product Innovation & Launch E2E Quality & Compliance Integrated Compliance & R & D Launch & SC Planning Logistics E2E Processes not Silo Functions PLM, IM Manufacturing SC, Planning Integrated E2E IT processes R & D CIO Operations Tech Ops Chief SC Officer ( CSCO) Data mining analytics and insights IoT Industrial Portfolio Complexity Engineering, B2B Reliable Supply Visibility Logistics Supplier & Customer Collaboration SC & Logistics PLM, IM CSCO Procurement Innovation Data mining analytics and insights IoT Consumer Demand & Innovation driven, Consumer insights Responsive, Reliable Supply Insight Analytics End to End SC Processes & Visibility Innovation and Speed to Market Predictive Analytics Logistics Planning CSCO CIO R & D Data mining analytics and insights IoT Electronics Demand and Innovation driven, Consumer insights CMO and Supply driven New Product Development, Innovation and Launch Reliable Supply Visibility PLM & IM Logistics, Procurement CSCO CIO R & D Data mining analytics and insights IoT
31 Relationship with customer John Gattorna. Segmentation..Cloud based Analytics Services Not Just One Supply Chain.. Reducing Complexity & Driving a Need for Deep Analytics Differentiates Outside-In Capabilities Continuous Replenishment Predictable demand, easily managed through tight collaboration with customers. Focus on retention of customer relationships and maximized OPEX. Four (4) Generic supply chain types Tight Continuous Fully Flexible Replenishment 1 Analytics Services Fully Flexible 2 Fully Flexible Respond opportunistically & manage yield. Focus on providing creative solutions for premium price. Lean Demand predicable, (e.g. from historic offtake), loose customer relationship does not necessitate an extreme service level. Focus on efficiency. Loose Lean High 3 Predictability of demand Agile 4 Low Agile Unplanned or unforeseen demand, and a sometimes loose relationship with customers - almost always demands an agile response at higher cost-to-serve. Focus on the service-cost equation
32 Cloud Is A Deployment Model; Leading And Managing The Journey To The Cloud Is Critical
33 Your Digital Transformation EFFICIENCY Costs, Margins & Quality Command & Control Processes & Transactions My Office, Home Office AGILITY Operational Efficiency plus Growth, Speed & Flexibility Learning & Adapting Insight & Collaboration Anywhere, Any Device
34 Conclusions Plot your SCM journey to the End to End Business Operating Model
35 Example : From The UPS Book of 2017 SC Trends 1. Increased collaboration and sharing. 2. End-to-end visibility. 3. Big data, better decisions. 4. Next-shoring. 5. Agile inventory management. 6. A push for redundancy. Yes; What projects means $$$. But..think about How to Create Business Value, with Reduced Complexity, and Agile Capabilities for a Dynamically Changing Market
36 How to Get There Flexible paths to end-to-end supply chain in the cloud ENTERPRISE TRANSFORMATION BUSINESS FUNCTION Logistics, Innovation & PLM Product MDM Sourcing & Contracts Supply Chain Planning END-TO-END PROCESS Procure to Pay Order to Cash Idea to Commercialize Plan to Produce DIVISIONAL MODERNIZATION DIVISIONAL MODERNIZATION DIVISIONAL MODERNIZATION Complementary Incremental Transformational
37 Conclusions! Engage the End to End SCM Leadership Journey and bring People, Process and Enabling Technology elements together to create new business growth capabilities Surface the driving business forces and capabilities and identify your 4-6 supply chain segments. Build a Path to the Cloud Strategy that holistically embraces People, Process and Technology elements understand and track your level of maturity. Reduce the complexity of technology by architecting the digitally enabled cloud-based, overarching end to end supply chain journey. Lead and manage the change strategically top down and execution bottom up Institute a business leader-led cross-functional Center Of Excellence
38 Change the Game Digital Drives The Paradigm Shift! Technology- enabled thousands of data points and analytics! In 2013, the name of the game was live performance data. According to Forbes, Team Oracle USA s winning boat had over 300 sensors analyzing 3000 variables ten times per second
39 What s Next!
40 Warehousing and Distribution in the Sky! A recent Amazon patent for an "airborne fulfillment center utilizing unmanned aerial vehicles for item delivery" - i.e., a giant flying drone mothership zeppelin warehouse. The patent envisions the airborne fulfillment center (AFC) in the form of a giant airship, that would fly at high altitudes of around 45,000 feet in the air, and would then deploy individual drones to deliver Amazon's goods to customers. Additional, smaller airships would be used to return the drones back to the AFC, resupply the mothership with more inventory and fuel, and shuttle workers to the flying factory. Amazon's patent filing for an airborne fulfillment center utilizing unmanned aerial vehicles for item delivery Due to the aerial deployment, drones would be able to have a much wider delivery range while consuming less power as they descend to deliver packages. And the mobile nature of the warehouses would allow Amazon greater flexibility in managing inventory in the face of changing demand. For example, the patent offers a hypothetical case of deploying a AFC near a sport stadium to allow for immediate delivery of team merchandise and snacks during a game. For now, the flying drone warehouses remain just a patent - Amazon has given no indication that it will actually be darkening the skies above our cities with huge, drone-swarm-deploying blimps anytime soon. Given that the drone delivery program is still mired in a sea of regulatory tape in the United States, it could still be a while before we even see terrestrial Amazon drones, which have just begun testing in the UK. That said, it s clear that the scale of Amazon s drone dreams - as seen in the airborne fulfillment center patent - could go far beyond what anyone had imagined. Related: Amazon Ships More Than One Billion Items Globally
41 Thank You to Our Modern Business Experience London Sponsors
42
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