building the consumer driven value chain - www · pdf filethe consumerdriven value chain ibm...

The Consumer Driven Value Chain

IBM General Business, ASEAN

Building The Consumer Driven Value Chain

Raymond MoyRegional Segment Manager, Asean

© 2010 IBM Corporation© 2010 IBM Corporation

g g g ,Sep, 2010


Trivia This is a meat slicer made in 1924. It was sold to meat distributors.Which company produced it? IBM

CluesAlmost went bust in 1990’sHired a CEO from a biscuit co to rescue itCelebrating 100th birthday in 201150,000 patents to dateFortune 500 company5 Nobel Prize winners5 Nobel Prize winners5 most valuable global brands

© 2010 IBM Corporation


Agenda

Building The Consumer

CEO survey – Capitalizing on Complexity

The Value Chaing

Driven Value Chain Roadmap to a consumer driven supply chain

We can help you



CEOs are confronted with massive global shifts in the New Economic Environment

14%10Mature markets retain economic powerConsumer demand, economic

Rapidly developing markets gain economic powerConsumer demand, economic

76%

Consumer demand, economic power and innovation skewed towards mature markets

Consumer demand, economic power and innovation shifting to rapidly developing markets

14%16%Small government, light regulationMove or return to unrestrained markets with limited state

Big government, heavier regulationGreater government involvement, more regulation and government

70%

16%17%Slow down or reversal of Continued globalization

ownership or regulatory reformg g

as a stakeholder in strategic businesses

67%globalizationIncreased protectionism, dominance of local interests and local requirements

Global capital flows, trade, access to markets, skills and knowledge


q

Source: Q8 Which of these future scenarios for the next five years do you consider more realistic? Globalization n=1,515; Markets n=1,502; Government n=1,519

Not at all/to a limited extent To a large/very large extentTo some extent


Continued rise of technology as key external factor for CEOs

Th t i t t “ t l” f th t thThree most important “external” forces over the next three years


Source: Q1 What are the 3 most important “external” forces that will impact your organization over the next 3 years? n=1,538


Standouts capitalize on complexity in three ways

C ti it i #1 l d hi lit• Creativity is #1 leadership quality• Drive change in the organization to

stay ahead of market and use of wide range of communication t l d t lstyles and tools

• Break with status quo of industry, enterprise and revenue models

• Simplify operations and products to

• “Getting closer to customers” is the single most important theme

• Better understand customer needs through collaboration and info sharingp y p p

better manage complexity • Use iterative strategies, make quick

decisions and execute with speed• Integrate globally, increase cost

g g• Exploit the information explosion to

deliver unprecedented customer service


g g y,variability and exploit partnering to increase agility


“Simplification and standardization are “When things look very simple, you need key strategies that we have been using for several years to reduce existing and future complexity.”

Brenda Barnes,

to look for a competitive edge. When things are complex, you simplify to get the competitive advantage”

Graeme Liebelt, Chairman and CEO, Sara Lee, United States Managing Director and CEO, Orica Limited, Australia



Consumers are becoming SMARTER – increasingly g g yinformed, empowered, and demanding

Consumers expect choice and flexibility

They want service whenever, wherever,

however. They set the terms on how they will

interactConsumers demand

timeliness and relevance

Consumers are increasingly informed and

knowledgeable

They demand interactions are relevant to their shopping

relevanceknowledgeable

Armed with information relevant to their shopping occasion and fulfilled in a

timely manner

they seek to maximize personal value



It’s the product/service, the difference, the experience, the appeal ………the timeless brand

Based on an enduring idea:

Competition Happiness in a bottle

Thinking differently

Innocence Exhilaration

Differentiated Performance Iconic product Steve Jobs’ Storytelling German by:

pethos

y gengineering

Experienced through:

Nike’s advertising

Social interactions

The design of its products

Theme park and movies

The car: The ultimate driving machine

Appeals to: The athlete Optimist The contrarian The child The adventurerin all of us in all of us



Market ForcesThe Value Chain of Producer or Distributor

Market ForcesBanks

$

SuppliersBusiness Partners

ters

Value Chain Partners

on -

Dis

ast

ManufacturerFactory

Central Dist Centre Regional Dist Centre Internalvalue

d –

Infla

tio

Distributor

valuechains

Dem

and

Wholesaler

Retailer

Hypermart Supermart

Retailer

Consumer


Economy – Competition Opportunityor

Threat


How it is possible to have Smarter Value Chain? The time is right, it’s time Interconnected

Aggregate vast amounts of structured

InstrumentedIntegrate the physical and

f

IntelligentActionable

information. Sense

we must.

structured (unstructured) data from consumers,

customer, partners, social

information aspects of the supply chain in

order to optimize product lifecycles

Sense opportunities & threats. Analyze

trends & patterns.

+ + =media & within the

company.

p yRespond &

create value.

+ + =An opportunity for consumer products systems

to think and act in new ways.

Drive profitable growth through

Deliver innovation driven by consumer

Operate responsibly with


improved collaboration

insights full supply chain visibility


External sourcesSocial Media – Discovering what influences your brand



KRAFT FOODS - Branding

The need

"The work we did with IBM fundamentally changed our business strategy and how we looked at our own

Kraft recognized that there was a whole segment of consumer feedback that was going un-monitored. That segment was user generated content on the web (often referred to as Web 2.0), in Blogs, message boards and other social networking sites. Seeking a better understanding of consumer

brand". “..been the most successful

campaign for Vegemite to date, and that's saying

sentiment ahead of a potential product update, Kraft decided to go on a work with IBM research discovery solutions to identify what was on “The Top fo the minds” of its Vegemite customers worldwide.

The solution date, and that s saying something over 85 years of history.

- Simon Talbot Kraft Australia

The solutionIBM Global Business Services in conjunction with IBM’s Corporate Brand and Reputation Analysis (COBRA) analyze unstructured data across Social Media domain to provide insight and root cause analysis as well as statistical tracking and advanced alerts to events This was the first COBRAstatistical tracking and advanced alerts to events. This was the first COBRA engagement in Australia and was a huge success for IBM and Kraft. The analysis COBRA performed has led to a change in Kraft’s marketing strategy for Vegemite.

The BenefitsThe COBRA analysis helped Kraft Australia identify the strong personal identification that its customers had for Vegemite

Th k ti i lt d i i ifi t i i l ithi


The marketing campaign resulted in a significant increase in sales within the first two months, which was the most successful campaign in 85 years.


My Coke Rewards – Consumer connection thru social interaction in social media



Meat products tracking thru RFIDThe SolutionButchers at Germany's METRO Future Store do more than dress roasts. They also apply RFID smart labels in a solution designed with IBM

p g

RFID smart labels in a solution designed with IBM. Each package is identified and recorded when it is placed into the refrigerated display case,

which is fully equipped with readers and antennas to scan the label of each product as it goes in, as it sits on the shelf and as it goes back out with a consumer.

The benefitThe information helps the store maintain fresh products, control the environment in which they are stored and manage inventory levels with real time sales dataare stored and manage inventory levels with real-time sales data.

Last year, Research and Markets reported that 900 billion food items will be RFID tagged by 2015, and 824 million livestock will have more sophisticated tags.



Shrimp products traceability from Farm to Table

RFID is well suited because it is water resistant unlike other technologies such as

p p y

resistant, unlike other technologies such as barcodes.

Trace the entire production process -receiving, cleaning, beheading, sizing,

Shrimp Producer, Thailand

peeling, cooking, freezing, packaging and storage.

RFID placed in trays.Details from documents issued by theDetails from documents issued by the

Fishery Department would be recorded in a database and in an RFID tag.

Guarantee the safety of it products for the European market.

Traceability solution for the food industry, tracking product safety, quality and origin at any point across the entire supply chainany point across the entire supply chain, from farm to table.

Enables retailers and distribution companies to gain automatic access to food


safety and traceability information


Thailand Chicken & Pork Producer – Premium price with prelevant information to consumer

Sell at 20-30% $$$ higher

Enables customers who buy fresh chicken

Avian/Bird Flu

yand pork stores in Supermarket chains to trace the products

Consumers can discover where products came from the standard farm and productioncame from, the standard farm and production processes through which they passed, the type of goods, farm name and location, age, gender, standard certification, veterinarian, production date and expiry date.

All this from existing Spy on Me kiosks set up to make customers more confident about the quality and safety of the food


the quality and safety of the food.


GS1, UK Food Supply Chain Research Project

The needIncreasing competition -> growing demand for improved business insight -> build smarter business systems & drive improved decision-making. Address knowledge gap in the grocery industry as retailers and suppliers generally do not have a complete view of the accuracy of their data -> lead to hidden costs within their supply chain and a lack of awareness of the business opportunities.

The solutionIBM collaboration with GS1 UK, independent global supply chain data standards and solutions organization, provide analytical services and technology services for UK Grocery Industry Data Crunch Project ("Data Crunch Project"), which aims to assess the business impact of supply chain data inaccuracies.

The benefitDetailed analysis of product data provided by the participating grocery retailers


and suppliers. Industry business impact assessment.


Roadmap to a building a Consumer Drive Value Chain

Banks

$

SuppliersBusiness Partners Foundation - Integrating the internal

value chain with industry specific ERP platform & business model that delivers:

Operational excellence thru

$ Partners


1

Operational excellence - thru automation of transactional back-end business processes in Financials, Production, Sales, Procurement & Inventory management This will help

Manufacturermanagement. This will help executives focus on customer centric agendas instead of administrative transactions –less “fire-fighting”, more tactical actionsDistributor actions.Integration of people & processes to improve internal collaboration across all relevant departments, eliminating

Distributor

WholesalerHypermart Supermartp , g

inefficient processes & costly mistakes.Improvement of delivery quality thru visibility of client’s needs in the entire order cycle

Retailer

Consumer


the entire order cycle.Consumer



Banks

$

SuppliersBusiness Partners Integrating the entire value chain

that provides total value chain visibility, platform for partner & customer collaboration, building of information assets hence reduces operational

$ Partners


2

pcosts & improves partner relationship significantly.

Synchronize demand & supply accurately & working towards closing the gap between

Manufacturerclosing the gap between planning & execution, hence reducing inventory to fulfill demand with high degree of client satisfaction.

Distributor Building strong partnerships between suppliers, customers & consumers by mutual sharing of information.Traceability of goods across the

Distributor

WholesalerHypermart SupermartTraceability of goods across the value chain to ensure safety & quality.Reduce transactional costs with suppliers & distributors thru

Retailer

Consumer


ppprocess automation.Consumer



Banks

$

SuppliersBusiness Partners Business insights which creates

value & growth, sensing opportunities & threats by aggregating vast amounts of data (from consumers, customers, partners, suppliers, social media) &

$ Partners


3

p , pp , )turning it into actionable information to create value.

Insights to consumer demand, action on accurate execution of inventory levels to distributors

Manufacturerinventory levels to distributors.Insights to inefficiencies (in value chain), action on refining processes in the value chain.Insights to brand perceptionDistributor Insights to brand perception, action on refining customer experience.Insights to consumer needs, action on development of new

Distributor

WholesalerHypermart Supermartp

or improvement of products/services.Insights to market segmentation, action on strategies to address these

Retailer

Consumer


strategies to address these segments (eg price).

Consumer


We can help.IBM can help the Consumer Products Producers or Distributors develop a roadmap towards a Consumer driven value chain, a competitive weapon to sense with speed to market opportunity or external threat by integrating IBM products services and businessmarket opportunity, or external threat, by integrating IBM products, services and business solutions in ways others simply can’t match, so that it can respond with speed to create value.

This significantly helps increase growth, profitability & market share, generate cash for working capital & deliver an enduring brand. The journey is a long one & it needs to begin now.begin now.

Why IBM? IBM walked the supply chain transformation journey & tasted success beforebefore….

Began own supply chain transformation journey 1993Before: 30 supply chains costing $45B.After (in 2005):After (in 2005):

Supply chain helped gain market share, grow revenue & profit, improve cash flow & enhance customer satisfaction. Generated $600M in cash.Reduced cost by $6B


Reduced cost by $6B.Improved sales productivity by 25%.


IBM Consumer Products Solutions MapIBM Consumer Products Solutions MapISV

ERPSolution

SCM MES Traceability (PLM)Warehouse Advanced Planning

T T k

Strategy Systems Integration Application ManagementCustomer Driven Supply ChainShared Services

ERP SCM MESFin Proc Sales Prod HR

BIERP SCM MESConsulting

Partners

GBSRamco

Trace Tracker

Corp brand reputation

Acceval

Shared ServicesGIE Transformation

Fin, Proc, Sales, Prod, HRSupply ChainPLM

Advanced planningSupplier management

Performance Mgmt

ERP SCM MES

Sales & Ops Planning

Consulting

Software Master Data Integration

Integrated Information

Plant

Talent Mgmt Partner Collaboration Asset MgmtLotus Cognos Lotus Webshpere TivoliCognos/SPSS/Websphere/iLOG

SWG

reputation analysis

Sales & Ops PlanningDemand Driven ReplenishmentTrack Promotion Management

Software Master Data IntegrationConsumer InsightsCategory Management

PlantMaintenance

CollaborationKnowledge

sharing

Workforce Perf Mgmt & Analysis

B2B Collaboration

e/M-Commerce

STG

I f t t il bilitDynamic

I f t t

ServerSWG

StorageDynamic allocation

I f i Connectivity to integrate Infra mgmt

Biz Resiliency Network EUS OptimizationOptimizing

TivoliFast

iTS

Infrastructure availabilityto support supply chain activities

Infrastructure of processing resources as per appdemand

Information lifecycle mgmt

Connectivity to integrateinternal & external supplychain

Infra mgmt out-tasking

Optimizing infra to addresssupply chain needs

Fast secureddatabackup

Financing to improve working capital & cash flowTh h d f d j i li d

Financing

IGF

IT InfrastructureManaged Business Process

Finance Procurement HROutsourcing

Thru stretched payment, fund projects as cost savings are realized

SO


Finance Procurement HR

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