Turning supply and demand uncertainty into competitive advantage Morning: 1. Demand : Improve performance at customer moment of truth 2. Supply : Proactively plan for demand variability and forecast uncertainty After lunch: 3. S&OP : Quantify and manage impact of supply and demand uncertainty on performance in S&OP uncertainty on performance in S&OP
Copyright Blake Johnson Demand: Improve performance at customer moment of truth Supply chain challenges: – Gain access to and evaluate detailed demand data – Leverage information across supply chain (execution and planning) Business opportunity: – Optimize performance and risk at product and customer level – Better understand customer value drivers Who’s doing it: – Today: Top retailers (store/SKU) – Emerging: Leading suppliers • Own/impact customer relationship and moment of truth • Better performance and less risk (customer / financial / operational)
less risk (customer / financial / operational) • Differentiate vs. competitors Copyright Blake Johnson Demand: Improve performance at customer moment of truth Speakers: ­ Joe Young, Toy ‘R Us: “S&OP and Demand Joe Young, Toy ‘R Us: “S&OP and Demand­based Replenishment” ­ Bert Crump, Saks Fifth Avenue: “The Road to Efficient Inventory Bert Crump, Saks Fifth Avenue: “The Road to Efficient Inventory
Replenishment and Allocation” Panel: ­ Speakers + ­ Ewout Schneider, Disney ­ Greg Moore, Teradata ­ Alex Brown, Xilinx Copyright Blake Johnson Supply: Proactively plan for demand variability and forecast uncertainty Size supply chain “pipe” to forecast uncertainty over planning horizon Dist. Production Materials Capacity Customer FGI buffer Supply chain challenges: ­ Demand variability and forecast uncertainty differ by product, market, stage of product lifecyc
Demand variability and forecast uncertainty differ by product, market, stage of product lifecyc
­ Supply chains differ across products Supply chains differ across products Business opportunity: ­ Tailor product­level cost, availability and liability to customer, market and financial objectives level cost, availability and liability to customer, market and financial objectives Who’s doing it: ­ Today: Big companies with long supply chains Today: Big companies with long supply chains ­ Emerging: Wherever lead times are significant and flexibility has costs Emerging: Wherever lead times are significant and flexibility has costs
Copyright Blake Johnson Supply: Proactively plan for demand variability and forecast uncertainty Speakers: ­ Gary Graham, Western Digital: “Building a Consumer Products Gary Graham, Western Digital: “Building a Consumer Products Supply Chain in a B2B Company” ­ Wolfgang Hoffman, Nike: “The Nike Futures Model” Wolfgang Hoffman, Nike: “The Nike Futures Model”
Panel: ­ Speakers + ­ Nathan Kelly, Palm ­ Scott Komar, Organic Girl ­ Maithili Shenoy, Nike Copyright Blake Johnson S&OP: Bring the pieces together to quantify and manage impact of supply and demand uncertainty on performance 2 Supply chain 1 Demand Potential supply chain solution “Problem to solve” +5% Quantify demand uncertainty over planning horizon 3
S&OP +1% ­4% Maximize savings opportunity for predictable demand ­10% Quantify impact of supply chain plans on KPI’s ­ Financial, operational, customer Financial, operational, customer ­ Across potential demand outcomes Across potential demand outcomes Low Performance of supply chain solution over demand range Minimize cost of upside flex by lead time Base High Service level 100% 99% 97% Inventory $2.2M $1.8M $0.3M Cost $8.3M $11.3M $13.7M Gross margin $2.5M $2.9M $4.1M Liability $2.1M $0.8M $0.3M Choose supply chain plan with best KPI performance ­ Cross­functional input, alignment and accountability functional input, alignment and accountability à “No surprises, no excuses” performance, across demand outcomes “No surprises, no excuses” performance, across demand outcomes Copyright Blake Johnson #1 and #3 should be standardized and consistent Necessary foundation for efficient development, deployment, and continuous improvement of #2
Organizational process, metrics and accountability S&OP: Bring the pieces together to quantify and manage impact of supply and demand uncertainty on performance Speakers: ­ Brad Tallman and Andy Fisher, Cisco: “S&OP at Cisco” Brad Tallman and Andy Fisher, Cisco: “S&OP at Cisco” ­ Grant Hoffman, Motorola: “The Next Step: Supplier S&OP” Grant Hoffman, Motorola: “The Next Step: Supplier S&OP”
Panel: ­ Speakers + ­ Jerry Hill, Teradata ­ EJ Tavella, Steelwedge Copyright Blake Johnson