Presentation given by Lora Cecere at the Terra TechnologyConference on March 28, 2012

1. Supply Chain Insights
Delivering Insights to Line of Business Leaders
Supply Chain Insights, LLC © 2012

2. BRICKS Book
Publishes
Matter
in August
2012
The Role of Supply Chains
in Building Market-Driven
Differentiation
LORA M. CECERE
CHARLES W. CHASE JR.

3. Supply Chain
A supply chain is a complex system with
complex processes with increasing
complexity.
Supply Chain Insights, LLC © 2012

4. 4
Who does it Best?
SC Excellence
38%
21%
17%
4% 4%
P&G Apple Dell Wal-Mart Toyota
Supply Chain Insights, LLC © 2012

5. 5
What wereTipping Points Points?
the Tipping
52%
36%
20% 16% 8%
Supply Chain Insights, LLC © 2012

6. Supply Chain Tipping Points
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
JIT Supply Chain Internet/Email
RFID
Organization
Evolution of eProcurement
the PC
Re-Engineering the Total Quality
S&OP Organization Management
Theory of
Constraints (Michael Hammer)
Supply Chain Excellence = Supply Chain Excellence =
Islands of Manufacturing Vertical Silo Efficient Order to
+ +
Excellence Excellence Excellence Cash Processes
Inside-Out Inside-Out
Supply Chain Insights, LLC © 2012

7. Supply Chain Tipping Points
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
.com Social
Responsibility
Y2K
Demand Driven
Concepts CSCO
Lean Six Sigma
Market-Driven
Value Networks
Supply Chain Excellence = Supply Chain Excellence =
Vertical Silo Outsourcing Value-Based Outcomes
+
Excellence Effectiveness Delivered by Horizontal Processes
Inside-Out Outside-In
Supply Chain Insights, LLC © 2012

8. What is a Market-driven Value Network?
An adaptive network focused on a value-based
outcome that senses and translates market changes
(buy and sell-side markets) bi-directionally with
near-real time data latency to align sell, deliver,
make and sourcing operations.
8
Supply Chain Insights, LLC © 2012

9. What is Supply Chain Excellence?
Supply Chain Insights, LLC © 2012

10. Revenue/Employee in Consumer Products
P&G Colgate Unilever Kimberly Clark
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Supply Chain Insights, LLC © 2012

11. EBIT/Employee
P&G Colgate Unilever
140.0
Earnings Before Interest and Taxes
120.0
100.0
80.0
60.0
40.0
20.0
0.0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Supply Chain Insights, LLC © 2012

12. Comparison of EBIT/Employee Plotted Against
Days of Inventory for P&G/Unilever for the Period
of 2002-2010
P&G DOI P&G EBIT/Employee
Unilever DOI Unilever EBIT/Employee
140
120
100
80
60
40
20
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
Supply Chain Insights, LLC © 2012

13. Cost of Sales as a Percent of
Revenue
Kellogg Kraft General Mills Campbell Hershey P&G
70%
65%
Cost of Sales a Percentage of Revenue
60%
55%
50%
45%
40%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Supply Chain Insights, LLC © 2012

14. Where are we Headed?
Supply Chain Insights, LLC © 2012

15. Supply Chain Insights, LLC © 2012

16. Supply Chains Don’t Play by the Rules
But, wh
at if they
could?
16
Supply Chain Insights, LLC © 2012

17. Big Data Supply Chains are Evolving
Challenges:
Structured • Transactional
Data • Time phased data
Volume
• Social
Unstructured • Channel
Data • Customer Service
• Warranty
Velocity
• Temperature
Sensor • RFID
Data • QR codes
• GPS
Variability
New • Mapping and GPS
• Video
Data • Voice
Types • Digital Images
17
Supply Chain Insights, LLC © 2012

18. Evolution of Supply Chain Excellence
Continuous
Align Building Horizontal
Connector
Testing
Learning Orchestrate
Improving
Adapt
Resilient
Reliable
Right Product Efficient
Sense Demand
Demand Volatility
and Supply Right Place Cost
Shape Right Time
Procure to
Demand and Supply pay/order to
Supply based Volatility cash
on Market Right Cost
Supply Chain Insights, LLC © 2012

19. S&OP Evolution
Greater Benefit
Business- • Growth
Sales Driven • Resilience
planning Driven
Match Demand • Efficiency
Coordination
with Supply
of Plans
Manufacturing- Demand Market Driven
Driven Driven Orchestrate
Deliver a Feasible Sense and Demand
Plan for Operations Shape Demand Market to Market
Supply Chain Insights, LLC © 2012

20. Connecting the Extended Supply Chain
Transactional Transactional Transactional
Applications Applications Applications
Trading Partner 1 Trading Partner 2 Trading Partner 3
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Supply Chain Insights, LLC © 2012

21. Evolving Supply Chain Architectures
Collaborative Collaborative Collaborative
Layer Layer Layer
Transactional Transactional Transactional
Applications Applications Applications
Enterprise Data Enterprise Data Enterprise Data
Warehouse Warehouse Warehouse
Trading Partner 1 Trading Partner 2 Trading Partner 3
Key:
Supplier Signal Predictive Analytics
Repository
Demand Signal Transactional Adapters
Repository and Intelligent Rule Sets
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Supply Chain Insights, LLC © 2012

22. Historically, we have:
• Tried to get precise on inaccurate data
• Believed that the most efficient supply chain is the most
effective supply chain
• Built efficient chains, but not effective networks
• Wrongly defined the “R”s
• Focused inside-out, not outside-in.
• Rewarded the urgent, not the important
• Responded without sensing.
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Supply Chain Insights, LLC © 2012

23. 23
Thank you!
Lora Cecere
Lora.cecere@supplychaininsights.com
Blog: www.supplychainshaman.com
Twitter: lcecere
Linkedin: linkedin.com/pub/loracecere/0/196/573
Supply Chain Insights, LLC © 2012