Smarter Supply Chain The Role of Advanced Analytics in Optimizing Supply Chain and Managing Complexity

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Smarter Supply Chain – The Role of Advanced

Analytics in Optimizing Supply Chain and Managing

Complexity

Donnie Haye, Vice President

Smarter Supply Chain Analytics

IBM Integrated Supply Chain

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Agenda

 Point of View: Supply chain complexity, big data, advanced

analytics

 Key analytics solutions at IBM



Practitioner’s note: lessons learned from initial idea

through global implementation

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Typical multi-enterprise supply chain – complexity at each tier & compounded across tiers

A highly complex operational environment makes effective &

timely supply chain planning & execution very difficult

Tier 0 Tier 1 Tier N..

The multi-enterprise SC challenge

Clients, channel partners

Suppliers

Business Partners _{End users}

Owners, stakeholders

Customers

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Top challenges from recent research reveal that supply chain

complexity is driving the need for visibility, analytics, collaboration

Visibility is both a challenge and a key enabler…

Supply chain visibility as challenge and enabler

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To address these challenges, Visionaries & Planners are investing to build strategic, smarter supply chain capabilities – with financial rewards

Value of smarter supply chains

3 year average ROIC

3 year average revenue growth

VISIONARIES

PLANNERS

OPERATORS

Source: IBM Institute for Business Value New Rules For A New Decade Study 2010. Analysis based upon IBM study and on publicly available data from Thomson Financial.

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Big Data: complexity & proliferation of supply chain data both

demand and facilitate a smarter approach

Velocity

Volume

----

Variety

INCREASING

Intelligent buildings

Statistical Process Control Tracking Inbound shipments Warranty Claims

Purchase Orders Late shipments

Invoices Tracking Outbound Shipments

Hub Inventory

Customer Records

Real Time Data

 Order Drops

 End User sell through  Warranty Returns  Channel Pulls  Inventory status

Overnight Batch

Processing

Smarter supply chain analytics

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What happened?

Get in touch with reality, a single source of the truth

- Standard reporting - Ad hoc reporting - Query/drill-down - Dashboarding,

visualization

How many, how often, where?

What will happen?

Understand the most likely future scenario, and its business implications

- Simulation

- Advanced forecasting models

- Predictive modeling

How are market or business trends likely to change? Can we develop a better forecast? What should we do about it? Collaborate for maximum business value, informed by advanced analytics - Multi-factor optimization - Trade-off analysis - Automated, collaborative business process execution - Role-based alerting

Given best information and predictive models, what actions should we employ to manage multiple constraints, variability, risk? 7

Descriptive

Predictive

Prescriptive

Business intelligence & advanced analytics generates real

value from big data

Advanced analytics

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Supply Chain Management analytics is at the core of IBM

Integrated Supply Chain (ISC) strategy

Focus on supply chain analytics

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ISC Strategic Priorities

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Supply Chain Management analytics is at the core of IBM

Integrated Supply Chain (ISC) strategy

Driving the IBM transformation… cost to value…

Multinational Era Globally Integrated Enterprise

Smarter Supply Chain

Focus on supply chain analytics

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ISC Strategic Priorities

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We employ analytics on an evolving platform of Big Data and

multi-enterprise supply chain visibility

 Volume  Velocity  Variety  Descriptive  Predictive  Prescriptive

Business Analytics

Big Data Platform

IBM Buy Analysis Tool

Critical Parts Management Tool

Quality Early Warning System

IBM Supply Chain Examples Smarter supply chain analytics

More than 25 Supply Chain Analytics and Visibility solutions are deployed or under development in ISC

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IBM Buy Analysis Tool (iBAT) is a visibility and analytical

platform to enable better channel management

Solution profile: iBAT

iBAT enabled System X recognized by the industry with multiple awards; Tech Data 2010 Inventory Optimization award, CRN Channel Champion award

The Solution

Channel collaboration solution with advanced analytical modeling of daily demand signals to supply pipeline. Optimized

replenishment decisions under price protection

Key Benefits

Price protection expense reduce by 80%

Inventory reduced by 30% Returns reduced by over 50%

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Critical Parts Management Tool provides upstream multi-tier

visibility with analytics & optimization

Solution profile: CPMT

Critical Parts Issues

Industry awards in 2012

 Excellence in Supply Mgt award from Institute of Supply Mgt / MSU

 ML100 Manufacturing Leadership award

The Solution

Advanced analytical tool provides

visibility, management & optimization of critical parts

across all upstream tiers of supply chain

Key Benefits

Comprehensive network visibility, 60K SKUs, 100+ suppliers

Resource savings of 10%+ of costs associated with managing shortages

Higher levels of Customer Satisfaction

Allowed significant agility in

handling supply constraints in Asia during 2011

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The Quality Early Warning System (QEWS) identifies trends

before traditional Statistical Process Control (SPC)

Solution profile: QEWS

Results from QEWS POC at external client

The Solution

Software system using proprietary IBM technology to detect &

prioritize quality problems earlier

with fewer false alarms, coupled with push alert functionality for IBM & suppliers to proactively detect &

manage quality issues at any stage of product lifecycle

Key Benefits

Cost savings – $50M (2015 Financial Roadmap period), approximately $10M per year in hard warranty savings, with additional soft savings and benefits in other areas

Proactive quality mgt – identify and resolve issues before they become problems, weeks or even months earlier than traditional SPC

Improved quality processes – improves quality process efficiency and effectiveness

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Supplier total risk tool & process provides systematic approach

to understand & mitigate supply chain supplier risk

Solution profile: Risk Management

Risk Mitigation Planning On-going Risk Monitoring and Control Risk Assessment

Catalogue full supplier risk exposure across multiple risk categories

Perform probability-based risk assessment

Implement automated tool

Develop risk mitigation strategies with process for executive approval

Establish control limits for each risk element

Drive new business processes, escalation pathways

Monitor risks against specified threshold limits

Update proactive risk mitigation strategies as risk exposure evolves

Work within sourcing community to handle crisis situations

Supplier Total Risk Tool & Process

Industry Recognition

 CSCMP finalist for Supply Chain Innovation award  Highest accolades from

Business Insurance Risk Management 2012 Summit

The Solution

Provides comprehensive

risk assessment and ongoing mitigation,

protecting against loss of revenue and profits by minimizing the likelihood and severity of supply chain disruption

Key Benefits

 Uncovers multiple risks, assesses likelihood and impact of each

 Addresses risks with formal mitigation plans  Provides consistent risk management approach

across brands/commodities

 Trends and patterns are revealed by systematic risk analysis

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

Design Compelling business benefits for each supply chain participant (win/win/win)..



Reflect benefits in terms and conditions..

 It is OK to start small and build towards major impact..

 Iterative approach allows you to improve your capabilities along

the way and build progressively stronger stakeholder support.. Business Alignment

Strategy

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Operation Teams must be willing and able to change..

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As critical as the math is, process leadership and execution

expertise is even more important.. Readiness To Change Iterative Approach Incentive Alignment Smarter Analytics ALIGNED Collaboration across business objectives AGILE Highly responsive to changing priorities PREDICTIVE

Able to anticipate, look forward and set expectations

FOCUSED Clear understanding of what’s important AWARE Alert, observant, informed and perceptive

Critical success factors for successfully building value through

advanced analytics

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Globally Integrated

Enterprise

Multinational Era

Across the industry, the application of analytics is transforming supply

chain from cost center to value center

Evolving supply chain

 Point solutions to

cost & serviceability issues

 Enterprise-wide

effectiveness & efficiency

 End-to-end, multi-enterprise

visibility & optimization

 Source of competitive

advantage

 Client satisfaction and

bottom line performance

Smarter Supply

Chain

Homegrown IT ERP Analytics

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Donnie Haye, Vice President

Smarter Supply Chain Analytics

IBM Integrated Supply Chain

[email protected]

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