kellogg's latin america - · pdf file · 2012-05-23supply demand s & op a...

Contents

© Competitive Capabilities International

End to End Supply Chain

Performance Improvement &

Transformation Best Practices

Roddy Martin

SVP Supply Chain Transformation

CCI

&

Industry SC Leaders Panel

Contents


Roddy Martin

Roddy Martin

• End to End SC Transformation Thought Leader

• Executive South African Breweries ( SABMiller) – Engineering Leadership

– Manufacturing Strategy

– IT Leadership

– Change Management Leadership

• AMR Research SC leadership – Distinguished Analyst

• CCI SVP SC – Integrative Improvement Thought

Leader

Contents


Today’s Presentation

SC Transformation

5

Contents


“Linear” Supply Chains Lack Scale Process &

Visibility ……….P&G Chief Supply Chain Officer

.Disconnects… Silo’d & Functional Focus Vs End to End Demand –driven Processes

Materials

Mgmt Manufacturing Distribution

Suppliers

New Product or Service

Merges to the Base

Supply Process

Customers

Patients

Consumers

Suppliers

Partners

Manufacturers

Assemblers

Distributors

Wholesalers Customers Consumers

Users; Buyers

Risk

Risk

Risk Risk

Risk Risk

Risk

Projects and Programs

5 day demand change 90 day response time

Manufacturer

•Agility and responsiveness •Sustainable performance improvement

•End to end process capabilities •Managed complexity & risk

•Structure for “global operations” •End to end talent & skills, people development •Enabling end to end process "information”

X

“Change”

Risk

“Agility to Change”

Contents


The Challenge ……Bringing It All Together!

Product

Supply Demand People Process

Technology

IIS

5 Stage Maturity Journey

Performance Culture

Organizational Effectiveness

Codified Ways of Working

Adapted from Gartner- AMR Research

End to End Process Capabilities

Contents


The Challenge ……The Devil Is In The Details !

Act

ual

Mar

ket

Dem

and

Mo

men

ts o

f Tr

uth

Adapted from AMR Research

Product

Supply Demand

? “How”

Contents


Consumers, Shoppers & Buyers

Make Choices

Point of Purchase

Stock Outs

Product Quality On The Shelf

Costs to Serve Account Profitability

Winning in New Markets

Complexity Costs or

Differentiates

Demand Supply

Product

“Supply Chain” Starts with the Buyer Choice ;Is Outside-In; End to End & An Interdependent Network

Risk

Embedded

Risk Management

“Integrative Improvement

Actions & Trade Offs”

…& Impacts Capabilities Here Starts here …..

Open Innovation

9

Contents


The Demand-driven Value Network Framework

Product & Service Innovation

Segmented Pull

Cu

sto

me

rs ,

Bu

yers

, Use

rs,

&

Co

nsu

me

rs

Channel Demand

& Demand

Management

Demand Visibility

User/

Consumer/ Demand Insights

Sup

pliers &

Partn

ers

Segmented Push

Reliable, Profitable Response

from Supply Network Based

on Demand

Supply Visibility

decoupling

Demand Translation

& Trade Offs

Integrated Strategy, Business Sufficiency &

Value Network Planning


Customer Consumer back design

10

Contents


12

FOCUS

ON THE

FUNDAMENTALS

Reliability Program

CREATE

END TO END

SUPPLY CHAIN

Build a Competitive advantage through a reliable and sustainable customer/consumer

driven supply chain

Demand Driven Excellence Supply Chain Excellence

FOOD SAFETY PEOPLE SAFETY REGULATORY PRODUCT QUALITY

2009-2011

PRODUCT NETWORK PRODUCT AVAILABILITY HOLISTIC GROSS MARGIN OPERATING SYSTEM ELEVATE CS/L ROLE

2012-2013

END TO END SUPPLY CHAIN MANUFACTURING EXCELLENCE CS/L AS A COMPETITIVE ADVANTAGE

2014-2016+

BUILD

STABLE

SUPPLY CHAIN

Industry Leader Example – LATAM Strategic Statement

Contents



Redefine “Supply Chain”

13

Contents




Segmented Pull

Cu

sto

me

rs ,

Bu

yers

, Use

rs,

&

Co

nsu

me

rs

Channel Demand

& Demand

Management

Demand Visibility

User/


Sup

pliers &

Partn

ers

Segmented Push



on Demand

Supply Visibility

decoupling

Demand Translation

& Trade Offs





14

Win

Play Lead

Contents


Executing the Business Operating Strategy

Vision

Strategic Intent

Cu

sto

me

rs

Inn

ova

tio

n

Sup

ply

Net

wo

rk

Re

liab

le S

up

ply

Tale

nt

& S

kills

Sup

plie

rs

Prioritized Work

15

Strategic Focus Areas

Sup

ply

Ch

ain

Executing the “Integrative Challenge”

Leading and Managing The Change Transformation COE

Contents


No Systemic Continuous

Improvement Plans or structure.

Fire Fighting

The 5 Stages Performance-Improvement Maturity Im

pact

Expert Led /Based

Projects

Implementation of

Improvement Projects led by

Experts

(Ad Hoc - Projects)

Integrated Functional Excellence

Structured Integration Within

Core Functions

(Systemic – Limited Integrated of Functions )

End-to-end Integrative

Improvement System

Codified

Integrative

Improvement

(Situational and Systemic)

Learning Network

Culture of Innovation and

Sharing

(Situational, Systemic and

Strategic) Reactive

Fixes

Stage 1

Stage 2

Stage 3

Stage 5

Stage 4

Average

Leaders

”The Promise Of IT”

16

Stages Of Performance Improvement Maturity

Contents


Transformation - Two Core Thrusts of Work; Today and Tomorrow! ………..Aligned Through a Transformation “Office”

Business Management

Role

Control & Manage the Business

& Compliance

Compliant &

Controlled Business

Performance

Leadership Role Business Strategy,

Intent, & Focus Areas

Prioritized Work

Build Sustainable Improvement & Compliance

Capabilities

Sustained &

Compliant Agility

Capabilities

Future-ize The Business

Vision

Strategic Intent

Managing The Change

Sustainable & Compliant Performance Improvement Culture

Change Management & Alignment COE

Vision

Strategic Intent

Managing The Change

Im

pact

1950 2010

Expert based

Functional

Excellence

Integrative

Improvement

System

Learning

Network

N

o

C

on

tin

uo

us

I

m

pr

ov

e

m

en

t

Pl

an

s

or

str

uc

tu

re

.

I

m

pl

e

m

en

ta

tio

n

ap

pr

oa

ch

ba

se

d

on

th

e

ca

pa

bil

ity

of

th

e

lo

ca

l

ex

pe

rt

(A

d

H

oc

)

St

ru

ct

ur

ed

im

pl

e

m

en

ta

tio

n

ap

pr

oa

ch

wi

thi

n

th

e

fu

nc

tio

ns

(S

ys

te

mi

c)

C

od

ifi

ed

an

d

int

eg

ra

te

d

im

pl

e

m

en

ta

tio

n

(S

itu

ati

on

al

an

d

Sy

st

e

mi

c)

Culture of Innovation

and Sharing of

Production Know How

(Situational, Systemic

and Strategic)

No Cont. Imp.

2013

Stage 1 Stage 2

Stage 3 Stage 4

Stage 5

Contents


The Integrative Performance Improvement System (IIS) Connects the Dots in Supply Chain Transformation from Traditional to Demand -driven

The Execution Challenge !

“Evolving READINESS”

1 2 3 4 5

Projects Processes Demand-driven Value Network > >

GOAL ALIGNMENT

Strategy

Metrics

Organization

IT

INTEGRATED PROCESSES

Supply

Demand

S & OP

A Strategic Enterprise

Initiative to Lead Alignment & Develop

Capabilities Using IIS Platform

Transformation COE

Process –based Performance Analytics

Contents


Integrative Improvement…Business Goal ; Eliminate Stock Outs

19

Pra

ctic

e b

ase

d P

erf

orm

ance

Dev

elo

pm

en

t

Team

wo

rk &

C

han

ge M

anag

em

en

t

Info

rmat

ion

an

d T

ech

no

logy

De

man

d F

ore

cast

Acc

ura

cy

Ass

et

Rel

iab

ility

& p

erfo

rman

ce

New

Pro

du

ct L

aun

ch a

nd

Intr

od

uct

ion

-

Inve

nto

ry L

eve

l Op

tim

izat

ion

Kn

ow

led

ge m

anag

eme

nt

and

Sta

nd

ard

s

S &

OP

20%

10%

5%

Stock O

ut P

erform

an

ce

1.9

2

.3

3.1

Man

ufa

ctu

rin

g G

ate

Qu

alit

y

Pe

rfe

ct O

rder

per

form

ance

Sou

rcin

g an

d P

rocu

rem

en

t C

ost

s

+ + + + + + + + + + +

“When you get this right , it rains money”

“Difficult” in Project –driven Silo Mentality

p. 20

Supply Chain Insights, LLC © 2012

Supply Chain Pain Points: All vs. Largest

KLA Leading and Managing Supply Chain Alignment through TRACC

67%

62%

62%

51%

33%

33%

28%

26%

28%

18%

13%

25%

16%

2%

2%

3%

5%

16%

Dirty data

Product proliferation

Rising commodity prices

Talent shortage

Changing market preferences

Cost of IT

Compliance and legislation

Competition

Other

Supply Chain Pain Points

Any Pain Largest Pain

Top Supply

Chain Pain

Points

“Other” Pain Points

Lora Cecere Supply Chain Insights

p. 21


Supply Chain Excellence Definition


70%

57%

52%

38%

20%

Right product, right place, right time at the right cost.

A responsive supply chain that can adapt as markets change.

A resilient supply chain that can withstand the shocks of demand and supply volatility.

The Efficient Supply Chain. Lowest cost per unit.

Right product, right place, right time.

How Define Supply Chain “Excellence”

Most Mature


p. 22


Examples of Supply Chain Excellence: Open-Ended


67%

33%

30%

26%

13%

13%

11%

8%

8%

5%

5%

5%

5%

ANY MENTION

P&G

Apple

Wal-Mart

Amazon

Dell

Unilever

Kraft

Pepsi

Coke

FedEx

General Mills

Nike

Top Examples of Supply Chain Excellence Other Examples

Bayer Chemicals L’Oreal

Best Buy McDonalds

Black and Decker Nestle

Campbell Soup Nokia

Cisco Novartis

Colgate-Palmolive Samsung

ConAgra Southwest Airlines

DuPont Stanley

Fashion Industry (gen) Starbucks

5 Guys Hamburgers Target

Ford Tesco

HP Toyota

IBM UPS

Intel Walt Disney

Johnson and Johnson Zappos

Kimberly Clark


Contents


2020

Growth

Today

Process capability to be

agile across end to end

Demand-driven Value Network

Journey to build agility

“Rea

l” M

on

ey

Requires “More” than Projects & “Integration”…………

An Integrative Transformation Journey to Build

Agility

Today, Tomorrow, 2020 Capabilities Challenge… Future Proofing

$1.10

$1.08

$1.06

$1.04

$1.02

$1.00

$0.98

$0.96

$0.94

$0.92

$0.90

2.4

2.3

2.2

2.1

2.0

1.9

1.8

1.7

1.6

1.5

1.4

1.3

1.2

1.1

1.0

86/87 88/89 90/91 92/93 94/95 96/97 98/99 00/01

No

rmal

ize

d c

ost

/cas

e

No

rmal

ize

d v

olu

me

Normalized $/Stat Normalized Volume

Flat Goal: 90/91 - 94/95

Reliability

Historical Trend + 2% per case per year

Stage 2-3

Stage 4-5

23

p. 24


Supply Chain Focal Points

for Next 2 Years


74%

70%

66%

62%

48%

30%

26%

18%

23%

21%

21%

8%

10%

3%

7%

7%

Improving demand planning

Saving costs

Shortening cycles

Network design

New product launch effectiveness

Channel sensing

Revenue management

Other

Supply Chain Focal Points for Next 2 Years

Total Primary

Top Supply

Chain Focal

Points

“Other” Focal Points


Contents


The Ultimate Goal… Sustainable, Anchored Capabilities, Integrative Improvement

Exc

ell

en

ce i

n R

es

ult

s

Excellence in Work Practices

Sustainable Business Performance Improvement

Necessary but not Sufficient

“ lean and efficiency improvements”

“si

lo c

ost

fo

cus

”

•Balance •Capabilities •Processes

•Change Leadership

Unsustainable Performance

Integrative Improvement

Journey

Contents


Bringing The Pieces Together Into A Demand-driven Value Network based Business Operating Strategy Is A Maturity-based Transformation Journey……….

A

ctu

al M

arke

t D

em

and

Product

Supply Demand

?

How !

Transformation COE

27

Contents


© 2006 AMR Research, Inc.

The Role of The Transformation COE …………. How ?

Evaluate Options & Estimate ROI

Leadership Sets vision & Goal for “One Company”

Reports -Budget & Schedule

-Achievement - Cumulative ROI

Designs Common Business Processes

Process Lead

Process Lead

CIO

Manages Portfolio

of Approved and Potential

Projects

Process Lead

Process Lead

BU Leader

Business Unit

Process Lead

Process Lead

BU Leader

Send CFO Savings Assumptions for Future Budgets

Process Owner

Process Owner - Victor

SC Strategy Program Director

Finance Director

Pro

jects

Processes

Business Goal Scope

Project

Lists

“K Lean”

Governance Victor

Process Owner - Victor

Project Management Office

Business Unit

Information Technology (IT)

Process Improvement Governance

ERP

Glo

bal

HQ

CPIO

S & OP

SC TRACC Mfg TRACC

Evaluate Options & Estimate ROI

Reports -Cumulative

-Business ROI

Executive Leadership Team

? HR / Change Management

Contents


The Transformation COE …. Benefits Realization & Capability Building

Leadership Sets vision & Goal for “One Company”

Designs Common Business Processes

Process Lead

Process Lead

CIO

Process Lead Process

Lead

BU Leader

Business Unit

Process Lead Process

Lead

BU Leader

SC Strategy Program Director

Finance Director

Pro

jects

Processes

Project

Lists

“Lean”

Execution Owner

Process Owner

Executive Leadership Team

Project Management Office

Business Unit

Information Technology (IT)

ERP

Glo

bal

HQ

CPIO S & OP

SC TRACC Mfg TRACC

Process Owner

Process Improvement & Governance

Governance Committee

C TxO Manages Portfolio

of Approved and Potential

Projects

HR / Change Management

Im

pact

1950 2010

Expert based

Functional

Excellence

Integrative

Improvement

System

Learning

Network

N

o

C

o

n

t

i

n

u

o

u

s

I

m

p

r

o

v

e

m

e

n

t

P

l

a

n

s

o

r

s

t

r

u

c

t

u

r

e

.

I

m

p

l

e

m

e

n

t

a

t

i

o

n

a

p

p

r

o

a

c

h

b

a

s

e

d

o

n

t

h

e

c

a

p

a

b

i

l

i

t

y

o

f

t

h

e

l

o

c

a

l

e

x

p

e

r

t

(

A

d

H

o

c

)

S

t

r

u

c

t

u

r

e

d

i

m

p

l

e

m

e

n

t

a

t

i

o

n

a

p

p

r

o

a

c

h

w

i

t

h

i

n

t

h

e

f

u

n

c

t

i

o

n

s

(

S

y

s

t

e

m

i

c

)

C

o

d

i

f

i

e

d

a

n

d

i

n

t

e

g

r

a

t

e

d

i

m

p

l

e

m

e

n

t

a

t

i

o

n

(

S

i

t

u

a

t

i

o

n

a

l

a

n

d

S

y

s

t

e

m

i

c

)

Culture

of

Innovati

on and

Sharing

of

Producti

on Know

How

(Situatio

nal,

Systemic

and

Strategic

)

No Cont. Imp.

2013

Stage 1

Stage 2

Stage 3

Stage 4

Stage 5

SCA IA’s

Transformation COE

Transformation Program Management Office

Sets & Aligns Priorities

SCA IA’s

SC TRACC

Reports -Cumulative Business ROI

SCA IA’s

29

p. 31


Examples of Supply Chain Excellence: Open-Ended


67%

33%

30%

26%

13%

13%

11%

8%

8%

5%

5%

5%

5%

ANY MENTION

P&G

Apple

Wal-Mart

Amazon

Dell

Unilever

Kraft

Pepsi

Coke

FedEx

General Mills

Nike

Top Examples of Supply Chain Excellence Other Examples

Bayer Chemicals L’Oreal

Best Buy McDonalds

Black and Decker Nestle

Campbell Soup Nokia

Cisco Novartis

Colgate-Palmolive Samsung

ConAgra Southwest Airlines

DuPont Stanley

Fashion Industry (gen) Starbucks

5 Guys Hamburgers Target

Ford Tesco

HP Toyota

IBM UPS

Intel Walt Disney

Johnson and Johnson Zappos

Kimberly Clark


p. 32


0

100

200

300

400

500

600

700

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Reven

ue/T

ho

usan

ds o

f E

mp

loyees

Comparison of Revenue/Employee: 2000-2011

P&G Colgate Unilever Kimberly-Clark Nestle Kraft



Contents




Transformation Organization

35

Contents



Bringing The Pieces Together Into A Demand-driven Value Network based Business Operating Strategy Is A Maturity-based Transformation Journey……….

A

ctu

al M

arke

t D

em

and

Product

Supply Demand

?

How !

Transformation COE

36

Contents




S& OP Transformation

40

Contents





Segmented Pull

Cu

sto

me

rs ,

Bu

yers

, Use

rs,

&

Co

nsu

me

rs

Channel Demand

& Demand

Management

Demand Visibility

User/


Sup

pliers &

Partn

ers

Segmented Push



on Demand

Supply Visibility

decoupling

Demand Translation

& Trade Offs





41

Win

Play Lead

Contents


Example …….. S&OP must Confront Conflicting Goals & Adapt with Increasing Business & Process Maturity

Demand-side Supply-side

Fin

ance

Goal: Make the financial budget. Tops-down Focus.

Desires control and wants predictability of operations.

Forecast definition: The budget

Goal: A feasible plan. Bottoms-up focus. Wants to minimize risk and disruption Forecast definition: The demand plan

Su

pp

ly

Ch

ain

Operations

Goal: Factory optimization,

improve costs and minimize demand

uncertainty

Forecast definition:

Manufacturing Plan

Sales and

Marketing

Goal: Maximize revenue & market

share, wants guaranteed

product availability

Forecast definition: Sales

plan Mold, color, ship-to at the customer

level

Mold, color, manufacturing

location



43

Contents


The Challenge ……Bringing It All Together!

Product

Supply Demand People Process

Technology

5 Stage Maturity Integrative Improvement

Journey

IIS

Performance Culture

Organizational Effectiveness

Codified Ways of Working

Adapted from Gartner- AMR Research

End to End Process Capabilities

S&OP Evolution

Manufacturing- Driven

Deliver a Feasible Plan for Operations

Match Demand with Supply

Sales Driven

Match Demand with Supply

Business- planning Driven

Maximize Profitability

Demand Driven

Maximize Opportunity Sense and

Shape Demand

Market Driven

Maximize Opportunity and

Mitigate Risk. Orchestrate

Demand Market to Market

Greater Benefit

• Growth

• Resilience

• Efficiency

KLA Leading and Managing Supply

Chain Alignment through TRACC 45


Yes 87%

No 10%

Not sure 3%

Have a Sales & Operations Planning Process

S&OP Process Existence, Goals & Processes

Base: Total Sample (117)

Q17. Does your company have a Sales and Operations Planning (S&OP) process? A S&OP process is a tactical

43%

32%

14%

8%

3%

Match demand with supply

Maximize opportunity and mitigate risk

Develop a feasible plan

Determine the most profitable plan

Other

S&OP Process Goal

27% 14% 20%

12% 9% 19%

1 2 3 4 5 More than 5

# Distinct S&OP Processes

5 S&OP

processes

on average


Contents


Integrated Business Planning

Planning Integration Evolves Through Stages of Maturity…..

Demand Planning

Supply Planning

S&OP

Supply Chain Alignment

Demand Planning

Supply Planning

S&OP


Integrated Business Planning


Supply

Chain

Alignment

Stage 2 Stage 3 Stage 4 Stage 5

Risk, Complexity, Organization Design, Leading and Managing Change, Enabling IT

Projects Integrated Processes & IT End -End SC Improvement Demand-driven Value Network

p. 50


• The most effective supply chains are designed and created. Today, supply chain fundamentals are more important. Talent development essential.

• In 2012, we celebrate 30 years of supply chain management. There is still much to be done.

Summary



Contents


52

High Performance Transaction Processing Application Architecture

High Performance Information Technology

Enabled Work Flow System & Business

Process Management

High Performance

Business Operating

System

Integrative Improvement System Deployment & Capability Development

ERP

CRM

SCM

PLM

S & OP

CPFR

1 2 3 4 5

VMI

RFID Traceability

Planning

Stages of Process-based Operating & Performance Improvement Maturity to Demand Driven Value Network Sufficiency

The end to end way the business actually operates

Technology modeled workflows and business processes using business &

transactional data

Technology based applications, data processing & data management

Systems of Record

System of Process

Business Operating System of Venture

and Sufficiency S & OP

Balancing Process &

Profitability Analyses

Business Sufficiency Planning

Demand Forecast Accuracy & Planning

Innovation & Value driven Business Tradeoffs

?

?

Technology Enabled Work Flow Processes & Data Management

Business Operating Strategy, Execution, & Culture

Improvement Goals & Projects

Functional Process Integration

Demand-driven end- end SC process integration

Value driven Business tradeoffs & network

“MES”

Supply Reliability & Supply Planning

Integrated Quality

& compliance

Performance Maturity – based context of data & information

Master data & process-based context of data

Systems of Process and

Control

Real time & Process Control Data

High Performance Automation Architecture Machines Controls Measurements

SRM

Sourcing &

Procurement

Logistics & Distribution

WHM

Layers of “Management Systems

Business Operating System Integrative Improvement System

Application, Data and IT Process Architecture

Flexible Decoupling Information & Analytics Model Layer

Contents


Conclusions

1. Supply chain must move from functional outputs focus to business outcome driven – cultural transformation is required from leadership and strategy development levels

– more haste less speed

– REFRAME “Supply Chain”

– A change management journey

2. Basic foundational processes and capabilities for end to end demand driven supply chain operations:

– To be defined and mapped in stages of maturity ( end state clarity to “pull” vs “push”

– To be designed with roles and accountabilities appropriate for the stage

– To be deployed with change management

– To be synchronized and anchored through transformational COE

– To be assessed for governance and progress reporting

53

Contents


Recommendations

1. Actively address transforming “project to process” culture

2. Formally structure COE based Transformation Strategy actively and visibly led by ELT and inclusive of BU’s

3. IIS “plus” as basis of deployment strategy and COE priorities

4. Regularly review and reflect on evolving process developments and maturity in sync with business performance improvement

5. Establish business financial assessment capabilities to fund and fuel ongoing transformation from wins

6. IT and SC alignment – institute a decoupling layer !

7. Start working on “cost to serve” capabilities !

54

Contents


Thank You [email protected]

55

Contents


kellogg's latin america - · pdf file · 2012-05-23supply demand s & op a...

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