Let's put consumer in charge!
- Margin killers in last mile delivery
- Innovations in last mile delivery
- New kids on the block leading the way
- The omni channel challenge in last mile delivery
- Using ICT to put the consumer in charge
1. The omnichannel supply chain:
single view of stock, shipments and returns
Walther Ploos van Amstel
VU University Amsterdam
Hogeschool van Amsterdam
delaatstemeter@gmail.com
www.delaatstemeter.nl
March 2015
3. Supply chains in ‘one day’
• How to build a supply chain?
• How to analyze cost of e-fulfilment
and support supply chain
decisions?
• How to manage omnichannel supply
chains?
• What are future challenges in
omnichannel supply chains?
• Innovations in omnichannel supply
chains
Inventory
Warehousing
Transport
7. Transport decisions
Strategic Tactical Operational
Modes of transport (long
haul versus last mile)
Collaboration
Outsourcing strategy
ICT for transport
HRM strategy
Risk management
Capacity planning
Outsourcing plan
Purchasing services
Purchasing material
HRM planning
Modal shift
Planning trips for pick up
and delivery
Tracking and tracing
Fleet management
HRM day-to-day
schedules
8. Warehousing decisions
Strategic Tactical Operational
Locations (central,
decentral and in store) for
delivery and returns
Lay-out planning
Mechanization
Collaboration
Outsourcing strategy
ICT for warehousing
HRM strategy
Risk management
Capacity planning inboud
and outbound
Outsourcing plan
Purchasing services
Purchasing material
HRM planning
Planning inbound and
outbound warehouse
operations (and loading)
Workflow
management/shopfloor
control
HRM day-to-day schedules
9. Inventory decisions
Strategic Tactical Operational
Stock locations (central,
decentral and in store) for
delivery and returns
Collaboration
ICT for inventory
management and data
alignment
HRM strategy
Risk management
Trade compliance
Service levels and safety
stock levels
Assortment (phase
in/phase out) life cycle
management
Sales and operations
planning
Vendor managed
inventories and drop
shipment
HRM planning
Ordering
Monitoring (PDCA)
HRM day-to-day schedules
15. Operational excellence Customer intimacy Product leadership
Processes Core competences
Optimize networks
Outsourcing
Purchasing
Standardization
Transactional/operational
Economies of scale
Zero defects OTIFNENC/
cost to serve
Utilize capacities
End-to-end processes
Focus on relationship
Economies of scope
Customer satisfaction
Continuous innovation in processes
and services
Partnerships in service
development
Fast and reponsive
Control Strict S&OP: tactical and operational
focus on efficiency/total landed cost
Demand management
Collaborative S&OP: strategic,
tactical and operational
S&OP: tactical and operational
focus on maximizing profit during
life cycle
ICT Support low cost, standardized
operations
Paperless processes
Community platforms
Customer-focused ICT (shared ICT
platforms)
SOA: flexible, plug & play
Organization Centralized
Product focus
Functional specialists
Transparent
Decentralized
Costumer orientation
Account management
Collaborative teams
Centralized
Innovators
External focus
18. Webstores offer later cut-off times and
shorter lead times
Less than 24 hr 2 to 3 days 4 to 7 days More than 8 No information
19. Shopper segmentation
Passive
Shopping is a necessary evil.
Wants security, simplicity and
convenience in service
Passionate
Shopping is fun, impulse driven.
Sensitive for brands, hypes and
experiences. Fast, flexible and special
delivery services; many options
Calculating
Focused on savings, well informed,
insensitive to brands and hypes.
Reliable low cost delivery options
Thorough
Motivated customers looking for the
best in quality and service. Offer
options and reliability in delivery
services
Spontaneous
Prepared
Needdriven
Pleasureseeking
20. Customer requirements
• Segmentation: passive,
passionate, calculating and
thorough shopper
• Options, options and more
options: day, time, location,
click-and-collect, service
provider and in car
• Pay for ‘same day’ and ‘your
time’ delivery
• Safe
• Customers in control
• OTIFNENC
22. …only in one step of the supply chain.
Total supply chain cost range from 15-50% of sales value...
Who is in control?
Fulfilment cost range from 8-30%
of sales value of a product…
22
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Book
Fridge
Pharma
Transport
Storage
Handling
Interest
Planning
23. Different products, different cost
patterns, different requirements…
Transport
and
Storage
Value
density
Packaging
density
Physical
Handling
Interest
24. Problems in logistics cost control…
• Cost are available per function and/or location, but
not per product (group)
• Cost are allocated differently in each location (and
generally arbitrarily)
• Cost data don’t support management decisions
25. Location
Cost centres
Article groups and/or customers
• factory
• central store
• degrouping point
• transshipment point
• warehouse sales organisation
• transport
• handling in
• handling out
• storage
• interest
• reconditioning
Add dimension
product/customer
Make allocations
consistent and
comparable
Cost reporting in three directions…
26. Central network
Transport Warehousing Inventory
Pro’s Economy of scale
Consolidation incoming and outgoing
flows
Purchasing power
Economies of scope
Cost control
Economies of scope
Economy of scale
Automation and mechanization
Lean processes
Flexibility
Cost control
SLA’s controlled
Purchasing power
Economies of scope
Product availability
Safety stock
Assortment management
European S&OP
Trade compliance
Con’s Distance to the market
Unclear responsibilities
Complex LSP’s
Complex contract management
Distance to the market
Complex outsourcing
Unclear responsibilities
Complex contract management
Complex ICT
Risk management
Complex procedures
Complex ICT
Unclear responsibilities
Obsolescence
29. Decentral and instore network
Transport Warehousing Inventory
Pro’s Close to market: fast
Simple LSP's
Clear responsibilities
Close to market
Traffic
Simple ICT
Risk management
Clear responsibilities
Close to market
Traffic
Simple procedures
Simple ICT
Clear responsibilities
Con’s No economies of scope
Cost control
Contract management
No economies of scope or scale
Double handling
Limited flexibility
Limited outsourcing
Cost control
Supply chain control (returns)
No economies of scope
Product availability
High safety stock
Assortment management
Obsolescence
Data quality
Trade compliance
31. Operational
Strategic
Outsourcing the network:
pro’s…
• Reduce operating cost
• Improve functional and technical quality
• Tighten controls
• Increase staffing flexibility
• Access supplier’s tactical resources
• Improve back office services to the business
• Focus in-house staff on higher value work
• Access supplier’s strategic resources and capabilities
• Radical transformation of business services
• Help business create new products and services
• Help business establish presence in a new market
• Commercialization
33. Summary:
Building the supply chain…
• Step 1: Organization
• Step 2: External factors
• Step 3: Economical factors
34. Step 1: organizational considerations
• Organizational considerations:
– business strategy and value discipline
– local or central responsibilities for sales, service
levels, inventories and forecasting
– flexibility
– risk attitude
• External factors
• Economical factors
35. Step 2: external factors
• Organisation
• External factors:
– Customer requirements
– transportation time and cost
– perishability/General Food Law
– legal and tax issues
– ISO28002/risk management
• Economical factors
39. From operational to tactical planning and
control…
Supply Planning Demand Planning
Order
Promising
Sales and Operations
Planning
Materials
Planning
Production
Scheduling
Distribution
Scheduling
Supply Chain Execution/Monitoring
SupplierCollaboration
CustomerCollaboration
SC Network Design
Allocation
Transport
Planning
Supply Chain
Operational
Tactical
Strategic
OPERATIONAL
Sense and respond
TACTICAL
Predict and prepare
40. Inventory: fire-and-forget?
• Increasing Assortment Dispersion Index
(ADI) leads to higher inventory levels
• Flow: S&OP changes to product life cycle
management ‘predict and prepare’
• Increase clockspeed: senseful ‘sense and
respond’
• Most inventory is at your consumers
• Data quality: Big Data is dumb…
• Collaboration in the supply chain
• Coordination as a service (CAAS)
50. From strategy to execution:
Integration on all levels…
Strategy
Balanced scorecard
Supply Chain Objectives
supply
chain
plan and
control
ICT
organization
Strategy
Balanced scorecard
Supply Chain Objectives
supply
chain
plan and
control
ICT
organization
GLOBAL SUPPLY CHAINS AND PROCESSES:
End-to-end solutions for OTIFNENC delivery
CROSS CHAIN COLLABORATIVE PLANNING AND CONTROL
SHARE AND ALIGN SUPPLY CHAIN DATA
GOVERNANCE, COMMON LANGUAGE AND SKILLS
ALIGN STRATEGY FIRST:
Options, options and more options
51. Many questions still unanswered…
• Local-for-local delivery networks
• Peer-to-peer fulfilment/sharing economy
• Cross chain European fulfilment retail
supply chains
• Non-EU cross border
• omnichannel product life cycle
management
• Data sharing and gain sharing models for
collaboration
• CAAS business model
52. E-fulfilment
Mega loser in omnichannel?
• No segmentation
• Not balancing cost to serve:
inventory, handling and transport
• No process management from order-to-euro
• Not OTIFNENC
• No data alignment in supply chain
• Transformation is necessary
53. Competences:
World class people
• Architect of a profitable customer value chain
• Create successful alliances
• Plan and control based on financial data
• Use ICT to create excellent processes:
ERP, WMS, TMS, EDI, agents, etc
• Successfully implement innovations:
Train your team as you fight…