Creating a Supply Chain Analytics Center of Excellence ... · Creating a Supply Chain Analytics Center of Excellence – What’s the Big Deal ... • Individual performance curves

Creating a Supply Chain Analytics Center of Excellence – What’s the Big Deal?

March 17, 2016

Meet the Presenters

Gertjan de Lange Connecting Business and Optimization SVP, AIMMSGertjan has 2 decades of experience in Analytics and Operations Research. He works closely with our customers, partners, academia and research organizations like Gartner as well as our sales, client support and R&D team to make sure we capture the business value of optimization for our customers.

Chris GordonVP, North AmericaChris has worked in supply chain consulting and operations across Europe, the US and India for more than 25 years. He’s driven dozens of supply chain initiatives with a heavy focus on leveraging analytical evidence to promote major business change.

Exec SummaryBusinesses and supply chains are seeking new approaches to get ahead in the analytics age. Are you looking for

fresh ideas to update your organization, methods and tools to make the best of this huge opportunity?

Topics addressed in this webinar:

> How analytics can transform your organization

> Defining the opportunity

> What is a Supply Chain CoE

> The CoE Pyramid

> Getting buy-in and agreement

> Supply Chain Centers of Excellence maturity

> Maturity in the market – some examples

> Q&A & Next steps

3

How Analytics Can Transform Your Organization

4

Tribalknowledge Sacredcows

ExperiencedOperators

Towers/Pillars

Datasupporteddecisions

BusinessPrescriptions

Businessvaluebaseddecisions

…acrosstheenterprise

Business is difficult. Most large companies are driven by ambition,

innovation & chaos

…Butit’snoteasytochange.Technologyshouldbetheeasypart…

Defining the Opportunity

5

PlanningTeams

Manufacturing &Production Teams

Transportation &LogisticsTeams

PricingTeams

SourcingTeams

SupplyChainPlanningCapitalProj.Planning

SupplyPlanningPortfolioOptimization

ProductionPlanningProductionScheduling

InventoryMgmt.WarehouseMgmt.

SKUPricingMarketPricing

PromotionalPlanningShelfOptimization

NetworkDesignNetworkOptimizationRouting&SchedulingOptimalFleetSizing

SupplierOptimizationDisruptionPlanningLTCapacityPlanningProductIntroductions

LowerCostsIncreasedRevenueImprovedEfficiency

Un-realizedrevenueof4%

MinimizeLostSalesIncreasedCustomerSatisfaction

MaximizeProfit

SafetyStockreductionsof25%

IncreasedMarketShareIncreasedRevenueMaximizeProfit

‘Gut-feel’pricing

LowerCostIncreasedReliabilityHigherEfficiency

25%reductioninun-plannedrushshipments

MinimizedDisruptionLowerCost

IncreasedReliability

5%reductioninsupplycosts

01M O D E L

Centralized Team: The supply chain analytics team is a centralized supply chain function.

02M O D E L

Distributed Team: Supply chain analytics competencies reside in individual business units or functions.

03M O D E L

Internal Outsourcing to the Enterprise Analytics Group: A general enterprise analytics team handles supply chain analytics needs.

04M O D E L

External Outsourcing to a Service Provider: An external service provider handles supply chain analytics needs.

What is a Supply Chain Analytics CoE?

Source:Gartner

The CoE Pyramid

7

In-house

Partner

AIMMS

Recruit (INFORMS)

LinkedIn

Operational Research

Linear programming

Multi-integer programming

Non- linear programming

SourceSkills

IT Data, UI & Test

In-house

IT Partner

IT Data, UI & Test

2 days AIMMS training

Data stewardship

UX leadership

Test compliance

Skills Source

In-house

Partner

Users

Training & Change

Change management

Org design

SourceSkills

Business Understanding & functional leadership

Planning, Manufacturing, logistics & sourcing

Takes a huge org to justify full time functional representation

In-house – functional teams

Business advisory

SourceSkills

Getting Buy-in and Agreement to an SC CoE at the Executive Level

One

TwoThree

Four

8

Promotion• Webinars• POCs• Use Cases• Lunch!

Opportunity• Burning Bridges• Quarterly

Statements• Exec Motivations• Wild Cards

Success• Real Problem

Solved• …quickly• Functional

involvement• Revenue upside

Sponsorship• Funding• Scaling• Tooling

Getting Buy-In With Users

9

Applications: Maturity By Supply Chain Area

10

IncreasedMarketShareIncreasedRevenueMaximizeProfit

LowerCostIncreasedReliabilityHigherEfficiency

MinimizedDisruptionLowerCost

IncreasedReliability

MinimizeLostSalesIncreasedCustomerSatisfaction

MaximizeProfit

LowerCostsIncreasedRevenueImprovedEfficiency

68%ofApplications 5%ofApplications 19%ofApplications 3%ofApplications5%ofApplications

PlanningTeams

Manufacturing &Production Teams

Transportation &LogisticsTeams

PricingTeams

SourcingTeams

ProductionPlanningProductionScheduling

InventoryMgmt.WarehouseMgmt.

SKUPricingMarketPricing

PromotionalPlanningShelfOptimization

NetworkDesignNetworkOptimizationRouting&SchedulingOptimalFleetSizing

SupplierOptimizationDisruptionPlanningLTCapacityPlanningProductIntroductions

SupplyChainPlanningCapitalProj.Planning

SupplyPlanningPortfolioOptimization

Maturity in the Market

11

Few ManyOne

#OFAPPS DEPLOYED

Oil, Gas&Chemicals

Manufacturing

Food&Beverage

ForestryProducts

Retail

Transportation

LifeSciences

HighTech

RelativeMaturityofCenterofExcellence

#ofPrescriptiveApps successfullydeployed

Maturity in the Market

12

ModelFocused Application&AdoptionFocused

Novice

MATURITY

Oil, Gas&Chemicals

Manufacturing

Food&Beverage

ForestryProducts

Retail

Transportation

LifeSciences

HighTech

RelativeMaturityofCenterofExcellence

#ofPrescriptiveApps successfullydeployed

The Audience Today

13

Telcom

Tailor-Made Apps for IBP/S&OP, Capable-to-Promise and Profitable to PromiseChallengeJBS is a global leader in beef, lamb and poultry processing with over 200K employees worldwide, the company has 340 production units and businesses. They sell to over 150 countries. The company needed a solution that would allow them to explore the best ways to meet demand and allocate production capacity at their different plants.

Solution• JBS decided to redesign their processes to allow for a systematic assessment and

optimization of multiple scenarios on a much more detailed level. • The system that was developed enables them to respond rapidly to changing market prices

for all of their (intermediate) products on a daily basis at over 45 primary processing plants for 2000+ SKUs. In addition, it allows them to compare these insights with the latest update of their demand scenarios, production capabilities, transport possibilities, and all associated costs.

Results• 25% increase to original margin• 90% improvement on ‘adherence to plan’• Increased adaptability and agility in the planning process• An optimized product portfolio with the right inventory levels• The ability to integrate Cost-to-Serve analysis and considerations into the S&OP process• The ability to collaboratively explore multiple scenarios

Readmore:JBSCaseStudy,SCBlog,GartnerReport

Integrated Planning Solution

ChallengeBRF is a giant in the global food market and one of the main exporters of animal protein on the plant with food that reaches 110 countries. The Sadia division process over 7M birds per day. The team was looking for an integrated planning solution for its poultry business.

Solution• Statistical models for performance and decision support model to select flocks• Individual performance curves per farm

o Growth, consumption, etc.o Other variables taken into consideration

• Longer and integrated horizon o 30/60 days ahead of time

Results• $ 50 million savings in 2 years• Agility in planning & Reacting to adverse situations• Improved Planned vs. Actual• Detailed planning

Driving Profitability with Demand-Pull Respond Planning and Scheduling

ChallengeNampak is a leading packaging company, with a large glass production facility in South Africa. Increasing needs for product flexibility and production efficiency, paired with rising demand volatility required Nampak Glass to improve their ability to deploy the best possible production schedule at all times.

SolutionNampak traded Excel for an AIMMS-based planning and optimization tool. Their solution, an application for Demand-Pull Respond Planning and Scheduling, named GOBSS (Glass Optimization Business Software Solution), leverages AIMMS technology to support the company’s schedulers, sales and management teams to make the best business decisions through the evaluation and optimization of profit scenarios.

Results• Increased ability to respond to market dynamics and internal production changes• Ability to extract more value from their planning process and quantify planning

changes in a financial way• Improved balance between customer service and profitability

Readmore:NampakCaseStudy,SCBlog

Strategic Network Design

ChallengeA regional food company has skyrocketed in popularity to become the best-selling brand in its category in the U.S. Their explosive growth presented some operational and logistics challenges for the manufacturer. With highly perishable products and a large number of SKUs driving complexity, this growing food manufacturer was determined to asses if their existing operations were as efficient as they could be.

Solution• AIMMS was used for a Network Assessment.• The AIMMS model was created in only two weeks and helped the team address key

questions pertaining to logistics and overall fulfilment costs. • Conducting What-If Analysis and reviewing over 20 different scenarios helped the team

identify options for cost reductions

Results• Cost reductions ranged from 10-25%, which amounts to millions of dollars annually. • The cost savings helped the company further invest in R&D and subsequently launch several

new product lines.

Leading U.S. Food Manufacturer

Readmore:FoodCaseStudy,SCBlog

Supply Chain Planning & Scheduling

ChallengeBeing a global chemical company, planners face the daily challenge of different and changing local demands, of different and changing production and transport costs, and changing market prices. They wanted insight into the optimal plan that defines where, and what needs to be produced and how much with respect to costs, lead times, stock and production capacity.

Solution• The BP team actively uses AIMMS in a variety of ways:

o Rail fleet management and schedulingo Barge fleet management and schedulingo Production planning and schedulingo Coordination between production, rail and shipping scheduleso Analysis of project economics for proposed capital projects for multiple years with

consideration of broad range of scenarioso Business continuity planning

Results• Went from 5 users in 1 location to 100 users across 8 locations• Increased transparency and visibility• Reduction of fleet size by several vessels. To keep a vessel in the fleet costs upwards of

$3M/year

Readmore:SCBlogBPInterview,Gartner Report

TNT Express

ChallengeTo remain relevant and effective, and therefore competitive, TNT had to take a more fact-based and analysis-driven approach to decision-making in their complex operational network. The worldwide financial crisis of 2008 further amplified their immediate need for targeted and advanced optimization.

Solution• The initial strategic solution to determine the optimal network,

rolled into a development of a solution to optimize TNT’s parcel and freight flows in Europe

• Development of the TNT Express Global Optimization (GO) Program

Results• Accumulated savings of $260mln in better PUD, network improvement and Supply Chain cost• Having a GO Program• Established Communities of Practice• Benefits the World Food Program

Readmore:SCBlogBPInterview,Gartner Report

Our 6 Key Recommendations1. It’s not about the technology or building cool prescriptive analytics applications – Adoption & business

change is the only goal

20

6. Join us for our 2nd webinar on April 19 to walk through tools and templates that will get help moving

forward towards your own SC Analytics COE success!

2. There’s a bounty of opportunity left on the table in supply chain – look 1st towards planning and

revenue

3. A SC CoE can quickly become a SC Analytics COE with the addition of some Operations Research

talent, technology & a methodology

4. Wait for the right opportunity to launch and earn your executive sponsorship

5. Each project cycle, use a Proof of Concept approach to accelerate adoption and keep energy levels

high

Thank You! Link to slides and recording will be emailed to you

If you have any questions, please contact us:

Chris GordonVP, North [email protected]

Gertjan de LangeSVP, [email protected]

• Join us for Webinar #2: A practical guide to the Supply Chain CoE – Tools, Templates & getting started on April 19

• Go to aimms.com for webinars, white papers and case studies