20131202 Value of supply chain analytics for the electronics industry - a strategic viewpoint - sanitized

IBM Confidential and Proprietary – Thorsten Schroeer for the Electronics Centre of Competence© Copyright IBM Corporation 2013 • All rights reserved

Page - 1IBM Confidential and Proprietary – Thorsten Schroeer for the Electronics Centre of Competence© Copyright IBM Corporation 2013 • All rights reserved

Page - 1

December 2013

Global Trends in Supply Chain Management and role of

Analytics towards a Smarter Value Chain

A strategic Point of View


Page - 2

This presentation covers 3 topics

2Role of Analytics in

Supply Chain

3How to get Started

with Analytics

1Latest Trends in

Electronics Supply Chains


Page - 3

Electronics Trends

Increase in interconnectivity among electronic products leading to explosion of data

and information

Emerging markets stimulating growth for electronics products and services

Industry convergence creating opportunities for new business models

and revenue streams

Empowered customers driving demand for new and innovative products

and services


Page - 44

Volatility

See what others don’t

Exploit globalefficiencies

Value

Visibility

The complexities and challenges of today’s economic environment require new vision and new rules for supply chain*.

Know thecustomer as well

as yourself

* IBM Institute of Business Value - Supply Chain Study


Page - 5

Visionaries and planners are investing to build strategic, smarter supply chain capabilities – Analytics plays key role


Page - 6

New Rule for a New Decade #1: Know the customer as well as yourself

Predict demand and be in a position to react to demand variability and market volatility with rapid response and allocation of all global resources!


Page - 7

New Rule for a New Decade #2: See what others don’t

Collaborate with insight and visibility to events, with suppliers, service providers and customers in an open, action-oriented, environment.


Page - 8

New Rule for a New Decade #3: Exploit global efficiencies

Dynamic Optimization! Optimize pipeline inventory, the global network, and cost structures. Create cost-efficient, sustainable practices while hedging risks.


Page - 99

Visionaries enjoy higher ROIC, high inventory turns, and sustained revenue growth performance.


Page - 10

Who are the Visionaries?

Globally recognized Leaders in Industrial Supply Chain Management


Page - 11

and there is more – the REAL revolution in supply chain will be a…….#1

11

The Software DefinedSupply Chain?


Page - 1212

Centralized Manufacturing

The software defined supply chain will radically change the way we will design supply chains.

Complex Inbound Logistics

Complex Outbound Logistics

Significant Logistical Lead Times

Significant Transportation Costs

Complex Tax & Transfer Pricing

Local/Distributed Manufacturing

“Last Mile” Inbound Logistics

“Last Mile” Outbound Logistics

Near Zero Logistical Lead Times

Minimal Transportation Costs

Local Tax & No Transfer Pricing

Traditional Manufacturing 3D Manufacturing

1

2


Page - 13

FULL REPORT & MODEL NOW AVAILABLE ONLINE AND ON YOUR MOBILE DEVICE


Page - 14

and #2….. The Internet of Things…has not yet taken off with consumers or enterprises….but it will….

14

Proportion of Heavy Industrial

Equipment That Is Networked

Proportion of Smart TVs being

used for Internet Viewing

10%30%Icons from the Noun Project, creative commons license. Data from IBM research as of 2013.


Page - 15

In Summary

A Smarter Supply

Chain is…

…analytics enabled

…connected and integrated

towards E2E visibility

…globally integrated

…supporting a software defined

supply chain design

…recognizing the power of the

Internet of Things


Page - 16



Supply Chain

3How to get Started

with Analytics

1Latest Trends in



Page - 1717

“In God we trust, all

others must bring

data.”

W. Edwards Deming


Page - 1818

How do I ensure that inventory is maintained at

optimal levels?

Can I make a tax optimizedsupply chain? Can I build what

if scenarios to assist decisions?

How can I improve visibility into the overall

supply chain?

?

How can better financial and demand forecastingimprove the performance

of my business?

Can I predict which part or system is about to fail?

To address the challenges of Volatility, Visibility and Value, Supply Chain Officers of Electronics companies must answer these questions

How can I reduce warranty costs by optimizing reverse

logistics?

How do I manage risks and disruptions in a

globalized supply chain?


Page - 19

Analytics can help companies gain visibility, control volatility and create value.

Pervasive

Visibility

Networked

Risk Management

Customer

Collaboration

Decision-support to automate supply chain transactions

Multi-partner collaborative platform

Sense-and-respond demand & supply signal notification

Smart devices & sensors (RFID) to capture real-time visibility

Simulation models of customer behavior

Cost to serve models and analysis

Networked S&OP

Customer collaboration throughout all SC processes

Embedded software & analytics for automated product defect and service alerts

Risk adjusted inventory

optimization

Probability-based risk

assessment & predictive

analysis

Compliance strategies &

policies with suppliers,

service providers, contract

manufacturers


Page - 20

Analytics and Optimization provides value across the key supply chain processes.

Plan Source Make Deliver

Demand Forecasting

Multi-echelon Inventory Optimization

Supply Chain Visibility

Procurement Spend Optimization

Reverse Logistics Optimization

2-5% manufacturingcosts saving

10-30% inventory costreduction

25% procurement spendreduction

5-15% supply chain cost reduction~30% channel inventory reduction

10-15% Improved warranty and repair order fulfillment, reduced spares inventory, and warranty costs

Return

Supply Chain NetworkOptimization 5-15% supply chain costs saving


Page - 21

You could optimize

inventory levels and reduce the risk of customer demand

variations?

What if…Supply Chain Disruption

Inability to optimize inventory due to customer demand / channel variability which eroded sales and increase costs

Solution

Implemented analytics-driven solution that systematically tracks product movement and launches promotional campaigns based on product stock level, availability and current demand forecasts

Analytics Benefits

Improved client’s risk posture, including the ability to optimize inventory, react to demand trends and increase revenue

IBM Client Case Study


Page - 22

You could account for constraints when forecasting sales?

What if…Supply Chain Disruption

Market instability and resultant supply chain network instability lead to customer dissatisfaction with unmet delivery obligations

Solution – Dynamic Inventory Planning

Implemented a predictive, advanced inventory-control system that enables dynamic inventory planning, a “what-if” analyzer and inventory forecasts across distributor locations

Analytics Benefits

Profile and target customers based on buying trends, coupled with a logic-based promotion module,

Launch product-specific promotions and replenish inventory according to actual demand streams



Page - 23

You could identify failure problems

before they occurred?

What if… Supply Chain Disruption

Equipment downtime

Solution – Predictive asset optimization

Analytics solution to predict failure patterns and identify root cause of the problem while determining the reliability of every asset at any point in the future. Inspections and maintenance can be performed at the optimal and most cost-effective moment

Analytics Benefits

Eliminates undue maintenance, prevention of costly downtime / repairs and reduction in MRO inventory carrying costs.

Saved $1 million in two weeks and 1400% return on investment in just four months



Page - 24

Supply Chain Disruption

Determine the financial and environmental impact of changes to any element within that supply chain

Solution – Supply Chain Scenario Modeler

Analytics solution with four predictive analytic models all driving a fifth engine showing actual profit & loss impact to create supply chain optimization with reduction in carbon footprint

Analytics Benefits

Link operational decisions to board room view (P&L impact estimation) Integrated key supply chain planning areas in one model (inventory, network, routing) $100 million in working capital savings


You could optimize

your supply chain while reducing energy

consumption?

What if…

You could optimize

your supply chain while reducing energy

consumption?

What if…


Page - 2525

Global LCD Manufacturer

Reduced manufacturing lead time, inventory and improved delivery commitment using GiView while

significantly reducing IT costs and building a total business system

Integrated five-layered SOA based GiView solution was designed and delivered over seven

phases to efficiently manage flexible and agile production planning and delivery commit

Global PC Supplier

Planning cycle time and accuracy were improved and coordination across multiple plants was achieved.

ILOG Plant Power Ops (PPO) was used to coordinate production plans across different sites producing

finished and semi-finished goods, improve the production planning process, cut down planning cycle time

significantly

A Fortune 500 Internet Portal company

Realized 1.08M USD in savings through efficient management of mobile devices and wireless expenses optimization

Used Emptoris Telecom Expense Management solution for wireless devices with implementation of a multitude

of wireless managed services including end user wireless portal, wireless optimization projects, help desk to

give ROI in under a year. International rate plan optimization reduced call cost per min by 50% even as there was

a 33% increase in international minutes



Page - 26

Telco improves business insight into

huge volumes of data with IBM

InfoSphere Streams

Need

• A solution to perform efficient, near-real-time analytics in order to help drive more meaningful decision making. Sprint wanted to gain strategic insight into the needs of its customers.

Benefits

• Increased transaction capacity by 90 percent

• Enabled informed, near-real-time strategic decision making

• Created cost savings through consolidation of legacy solutions


Page - 27

Telco scales data management success

with PureData System for Analytics

Need

• Provide longer retention and more meaningful results for click

stream data

Benefits• Reduce tax and call-routing fees by using the data stored to

defend against false claims

• Acquire dropped-call and churn-reduction analysis capabilities

• Increase network availability by identifying and fixing any

network “holes”

• Storage capacity increased from 100 TB to 2 PB

2727


Page - 28

Manufacturer improves analysis of

petabytes of data to optimize capital investments

Need

• Model the weather to optimize placement of turbines, maximizing power generation and longevity

Benefits• Reduce time required to identify placement of turbine

from weeks to hours

• Reduces IT footprint and costs, and decreases energy consumption by 40 % -- while increasing computational power

• Incorporate 2.5 PB of structured and semi-structured information flows. Data volume expected to grow to 6 PB

2828



Page - 29

At GE, the biggest part of our company is our installed base – the machines. Embedding them with more sensors and having the ability

to do analytics allows us to get more out of the products. We can offer --as a service -- not just real time data but real time knowledge. We can drive efficiency.

For a long time our service approach was “break-fix.” It was successful model, but not sustainable. Today customers don’t want their products to break; they can’t wait for

the fix, nor can they afford to. They don’t want any unplanned downtime or outages.

They want guaranteed outcomes.

29

Analytics in Service Supply Chain: GE takes holistic view towards its install base and the role of predictive analytics towards GE‘s buttom line.

Jeff Immelt, CEO GE, June 19, 2013


Page - 30



Supply Chain

3How to get Started

with Analytics

1Latest Trends in



Page - 31

Phase 2: PilotPhase 1: BVA

AssessDesign and

SpecifyBuild and Analyze

Conduct

Solution Impact

Assessment

Design and

Build Pilots

Phase 3: Deploy

Recommend Next Steps

Phase 2: Pilot

Prepare

rollout plansTraining and

Deployment

The Supply Chain Analytics journey can start with a Business Value Accelerator followed by a recommended pilot strategy and deployment.

Inventory Optimization

Demand Forecasting

Procurement Spend Optimization

Reverse Logistics Optimization

Supply Chain Visibility

Supply Chain Network Optimization

Focus


Page - 32

� Pilot / Rollout

� Targeted SCM analytics projects

� Analytics Center of Excellence

� Gain data-enhanced insights – delivered rapidly with a

minimal investment to start,

� Get a fresh perspective – opportunity to leverage IBM’s architecting and analytical capability and market-leading

insight,

� Explore potential opportunities – open doors to

opportunities to deliver significant value and competitive

advantage in your business.

Benefits

Potential Follow-on ActivitiesPotential Follow-on Activities

Our BVA offers the following features:

�Current state assessment in supply chain analytics and target state vision

�Target state solution design

�Build prototype for key functions and analytical modeling using your data

�Develop high level business case

�Report back with findings and insights, next steps

How To Get Started

IBM’s supply chain Business Value Accelerator (BVA) helps define a winning strategy and supply chain implementation roadmap for electronics clients


Page - 33

Once we agree on a key focus area, we will deliver results and recommend-dations within 6-10 weeks in a BVA engagement

o Current state assessment based on existing landscape,

capabilities. Identify key pain points (example manual CPFR), impacted metrics like forecast accuracy

o Target state supply chain vision

o Identify key supply chain

opportunities

RecommendBuild & Analyze

Design &Specify

Assess

o Design solution framework aligned to target state vision

o Understand your existing data models in target supply chain process(es), value drivers and how data is currently used (Exploratory Data Analysis)

o Analytics design and approach

o Build prototype of key functions in identified SCM process(es)

o Prepare models and run models using tools and methods agreed

o Prepare proof of concept findings and report

o Develop estimate and quantify SCM benefit opportunity

o Compose final report summarizing analysis results

and recommendations

o Create pilot implementation plan and resource schedule

o High level costs and business case

o Final presentation to stakeholders

o Determine next steps

1 2 3 4

Stage Week 1-2 Week 3-4 Week 4-8 Week 9 - 10

1. Assess

2. Design

3. Analysis

4. Recommendations

Receive data

Test prototype and analytical models

Outputs:

• Assessment Scores

• Exploratory Data Analysis

• Prototypes or Proof of Concept

• Proposed SCM Roadmap


Page - 34

This presentation covered 3 topics


Supply Chain

3How to get Started

with Analytics

1Latest Trends in



Page - 35

"I'd like you to think of big data as the next natural resource”

2013, IBM CEO Ginni Rometty



Page - 36

Let’’’’s Stay In Touch

[email protected]

www.linkedin.com/pub/thorsten-schroeer/2/b40/a77

www.xing.com/profile/Thorsten_Schroeer

IBM Electronics www.ibm.com/electronics

20131202 Value of supply chain analytics for the electronics industry - a strategic viewpoint - sanitized

Technology

proprietary thorsten

rights reservedpage

services ibm confidential

ibm research

electronics products

supply chainibm confidential

rights reserved3

software defined supply