Mainstage presentation given at the Kinaxis conference Kinaxions on October 18, 2012

1. Bricks Matter
October 2012

2. BRICKS Book
Publishes
Matter
December
2012
The Role of Supply Chains
in Building Market-Driven
Differentiation
LORA M. CECERE
CHARLES W. CHASE JR.

3. Right Use Expansion into Supply Chain
of Assets BRIC Countries Process
(Brazil, Russia, Knowledge
India and China)

4. 1 Truth
3 Lies

5. Agenda
Supply Chain Insights LLC Copyright © 2012, p. 5

6. Evolving Practices

7. Days of Inventory
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2011
Supply Chain Insights LLC Copyright © 2012, p. 7

8. Data Latency and Distortion
Retailer DC Manufacturer DC Suppliers
Store
Demand
Signal
Accurate
Almost Weekly
Trivial Easy Difficult Impossible Forecasting
is ...
Instant 3-10 Days 10-20 Days Delay from
20-50 Days
20-45 Days Purchase to
Variable 7-20 Days 45-80 Days Signal
Red Represents Emerging Economies with
Distributor Trade
Supply Chain Insights LLC Copyright © 2012, p. 8

9. Building End-to-End Value Networks
Today
Manufacturer
True collaboration only happens when there is a
sustaining win/win value proposition.
Supply Chain Insights LLC Copyright © 2012, p. 9

10. Collaboration: The Right Stuff
SHARED
VISION
+ SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = CHANGE
SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION
SHARED
VISION
+ INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY
SHARED FALSE
+ SKILLS + INCENTIVE + RESOURCES + LEADERSHIP =
VISION STARTS
SHARED
VISION
+ SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATION
SHARED GRADUAL
+ SKILLS + RESOURCES + PLAN + LEADERSHIP =
VISION CHANGE
Source: J.P. Kotter
Supply Chain Insights LLC Copyright © 2012, p. 10

11. Agenda
Supply Chain Insights LLC Copyright © 2012, p. 11

12. Supply Chain Management:
Top 3 Elements of Pain for Respondent
Supply Chain Insights LLC Copyright © 2012, p. 12

13. Evolution of Supply Chain Process
Excellence
Align: Continuous
Building Horizontal Testing Orchestrate
Market Process Connectors Learning
Improving Demand and Supply
Driven In Market
Adapt:
Demand Resilient
Reliable
Driven
Right Product Efficient
Absorb
Sense Demand
Demand Volatility Right Place Cost
and Supply
Right Time
Procure to
Shape Absorb Supply pay/order to
Demand and Volatility cash
Supply based Right Cost
on Market
Supply Chain Insights LLC Copyright © 2012, p. 13

14. Supply Chain “Excellence”
Definition
Supply Chain Insights LLC Copyright © 2012, p. 14

15. A Supply Chain
is a Complex System
with Complex Processes
with Increasing Complexity

16. The Effective Frontier
Profitable Growth
Revenue Cost of Goods
Working Capital
Corporate Social Responsibility
R&D Strategy and Investment Asset Strategy and Investment
Forecast Accuracy Customer Service Inventory
Channel Strategy Product and Supplier Strategy
Service Portfolio
Sales Distribution Manufacturing Logistics Procurement
Policies Policies Policies Policies Policies
Returns Backorders First Pass Yield Empty Miles Material Yield
Supply Chain Insights LLC Copyright © 2012, p. 16

17. Useful Ratios
Supply Chain Insights LLC Copyright © 2012, p. 17

18. What is Best in Class?
• Performance better than peer group
• Year-over-year improvements
• Consistency in results
• Leadership in managing trade-offs
Supply Chain Insights LLC Copyright © 2012, p. 18

19. Cash-to-Cash Cycle vs. Gross Margin (2000-2011)
SUMMARY SLIDE
Supply Chain Insights LLC Copyright © 2012, p. 19

20. Metric Equations
Supply Chain Insights LLC Copyright © 2012, p. 20

21. Corporate Summary
Supply Chain Insights LLC Copyright © 2012, p. 21

22. Cash-to-Cash Cycle vs. Gross Margin (2000-2009)
SUMMARY SLIDE
Supply Chain Insights LLC Copyright © 2012, p. 22

23. Corporate Summary
Supply Chain Insights LLC Copyright © 2012, p. 23

24. Cash-to-Cash Cycle vs. Gross Margin (2000-2010)
SUMMARY SLIDE
Supply Chain Insights LLC Copyright © 2012, p. 24

25. Inventory Turns vs. Revenue per Employee (2000-2010)
SUMMARY SLIDE
Supply Chain Insights LLC Copyright © 2012, p. 25

26. Value Network Strategy
Business Strategy
What are the right things to do to increase company value?
Value-network Supply Chain Strategy
What are the right ways to support the business strategy?
What are the right trade-offs between value drivers for each value network?
Align demand Right product Design the Build Align supply
Supply chain strategy
relationships platforms supply organizational relationships
response systems and
manage talent
Effective Supply
Demand Networks Design Networks Continuous Networks
Improvement
Joint Value Creation Innovation Supply Chain Execution of buy-
Strategies Methodologies Network Design Capabilities Required side strategies
Business Process
How do I do the right things right?
Source: Supply Chain Insights, LLC
Supply Chain Insights LLC Copyright © 2012, p. 26

27. Agenda
Supply Chain Insights LLC Copyright © 2012, p. 27

28. The Supply Chain of the Future
World
Population
North America Europe Asia
2007 2020 2007 2020 2007 2020
339M 342M 731M 722M 4.0B 4.6B
L America
2007 2020 Africa Oceania
572M 660M 2007 2020
2007 2020
965M 1.3B 34M 40M
Source: “The World at Six Billion” United Nations, 2004; The World UN Population Assessment 2006; “Unsustainable World,” 04/15/08, BBC
MARCO TRENDS
Supply Chain Insights LLC Copyright © 2012, p. 28

29. Supply Chain Tipping Points
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
JIT Supply Chain Internet/Email
RFID
Organization
Evolution of eProcurement
the PC
Re-Engineering the Total Quality
S&OP Organization Management
Theory of
Constraints (Michael Hammer)
Supply Chain Excellence = Supply Chain Excellence =
Islands of Manufacturing Vertical Silo Efficient Order to
+ +
Excellence Excellence Excellence Cash Processes
Inside-Out Inside-Out
Supply Chain Insights LLC Copyright © 2012, p. 29

30. Supply Chain Tipping Points
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
.com Social
Responsibility
Y2K
Demand Driven
Concepts CSCO
Lean Six Sigma
Market-Driven
Value Networks
Supply Chain Excellence = Supply Chain Excellence =
Vertical Silo Outsourcing Value-Based Outcomes
+
Excellence Effectiveness Delivered by Horizontal Processes
Inside-Out Outside-In
Supply Chain Insights LLC Copyright © 2012, p. 30

31. What is a Market-driven Value Network?
An adaptive network focused on a value-
based outcome that senses and translates
market changes (buy and sell-side markets)
bi-directionally with near-real time data
latency to align sell, deliver, make and
sourcing operations.
31
Supply Chain Insights LLC Copyright © 2012, p. 31

32. Supply Chain 2020 Tipping Points
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Orchestration Internet of Things
Talent
Shortage Big Data Learning
Supply Chains Supply Chains
Compliance on
Safe & Secure
Digital Manufacturing
Supply Chain Excellence =
Value-Based Outcomes
Delivered by Value Networks
Outside-In
Supply Chain Insights LLC Copyright © 2012, p. 32

33. Supply Chain Insights LLC Copyright © 2012, p. 33

34. Current State of Planning
Supply Chain Insights LLC Copyright © 2012, p. 34

35. Future State of Planning
Supply Chain Insights LLC Copyright © 2012, p. 35

36. Ease of Getting Total Supply Chain Costs:
Manufacturers, Retailers & Distributors
USERS: Ease of Getting Total Supply Chain Costs
Extremely/very easy 5 Neutral 3 Extremely/very difficult
Users 12% 12% 24% 24% 29%
24% EASY 53% DIFFICULT
___________________________________________________________
Source: Supply Chain Insights LLC, Transportation (Aug-Oct 2012)
Base: Transportation Users (Manufacturers, Retailers and Distributors) (n=34)
Q18. How easy is it for your company to get total supply chain costs for your operations?
Supply Chain Insights LLC Copyright © 2012, p. 36

37. Scenario Planning
Supply Chain Insights LLC Copyright © 2012, p. 37

38. IT Trends Excited About (Top 3)
Supply Chain Insights LLC Copyright © 2012, p. 38

39. Definition
Structured • Transactional
Challenges:
Data • Time phased data
• Social Volume
Unstructured • Channel
Data • Customer Service
• Warranty
• Temperature Velocity
Sensor • RFID
Data • QR codes
• GPS
Variability
New • Mapping and GPS
• Video
Data • Voice
Types • Digital Images
39
Supply Chain Insights LLC Copyright © 2012, p. 39

40. Big Data: What is it all About?
Downstream Data EDI Sentiment Text
Cold Chain Call
Analysis Analytics
Center Logs
eCommerce Social What-if Models Hadoop
Learning Systems
Geolocation Data Visualization
Ratings &
Reviews
RFID Facebook Scorecards Rules-Based
Photographs Map Reduce Ontology
Video
T-Log Data Twitter
R Forecasting
Weblogs Warranty Returns Digital Path To Constraint-
Information
Sensors Mobile Applications Purchase based Planning
Data Mining
Supply Chain Insights LLC Copyright © 2012, p. 40

41. Evolution of Visibility
Value Networks
Value Network
Sense/Act/Response
Supply Chain
Supply Chain
Visualization
Single Function
Visibility
Vertical
Functions
Where is My Stuff? Please Alert me of a Early Warning Learn a Better Way
Track and Trace Problem Predictive Analytics
Query Advanced Analytics
Supply Chain Insights LLC Copyright © 2012, p. 41

42. Connecting the Extended Supply Chain
42
Supply Chain Insights LLC Copyright © 2012, p. 42

43. Connecting the Extended Supply Chain
Supply Chain Insights LLC Copyright © 2012, p. 43

44. Opportunity
at the Intersection
of the Social and Interest Graph(s)
Supply Chain Insights LLC Copyright © 2012, p. 44

45. More than Just “Like”
Supply Chain Insights LLC Copyright © 2012, p. 45

46. Newell Rubbermaid Gets IT!
• Newell Rubbermaid
#Future15SB @bwdumars
Supply Chain Insights LLC Copyright © 2012, p. 46

47. Newell Rubbermaid Gets IT!
#Future15SB @bwdumars
Supply Chain Insights LLC Copyright © 2012, p. 47

48. Historically, We Have…
• Tried to get precise on inaccurate data.
• Been sales-driven or marketing-driven not market-
driven
• Believed that the most efficient supply chain is the
most effective supply chain.
• Built efficient chains, but not effective networks.
• Focused inside-out, not outside-in.
• Rewarded the urgent, not the important.
In the end, Bricks Matter. Processes are Evolving, but
it Matters More than Ever.
Supply Chain Insights LLC Copyright © 2012, p. 48

50. ENRICH
Consulting Technology
NEW
Supply Chain Insights LLC Copyright © 2012, p. 50

51. EDUCATE
SCI Research Supply Chain Index Ask a Supply Chain Wizard Supply Chain Wiki
Blogs Videos, Webinars, and Share Your Own
Podcasts
Supply Chain Insights LLC Copyright © 2012, p. 51

52. EVOLVE
Job Postings Events
Salary Information Help Board
NEW
Supply Chain Insights LLC Copyright © 2012, p. 52

53. Supply Chain Super Heroes
Increasing
Knowledge
Titanium Titan Shaman Ivy Insights
Researcher
Community
Badges Facilitation
Digital Atlas
Community
Facilitator
S-Men Good Karma
Supply Chain Insights LLC Copyright © 2012, p. 53

54. Meet the Superheroes

55. Where is Your Opportunity?
Supply Chain Insights LLC Copyright © 2012, p. 55

56. Who is Lora?
• Founder of Supply Chain Insights
• Partner at Altimeter Group (leader in open
research)
• 7 years of Management Experience leading
Analyst Teams at Gartner and AMR Research
• 8 years Experience in Marketing and Selling
Supply Chain Software at Descartes Systems
Group and Manugistics (now JDA)
• 15 Years Leading teams in Manufacturing and
Distribution operations for Clorox, Kraft/General
Foods, Nestle/Dreyers Grand Ice Cream and
Procter & Gamble.
Supply Chain Insights LLC Copyright © 2012, p. 56

57. Where Do You Find Lora?
Contact Information:
lora.cecere@supplychaininsights.com
Blog: www.supplychainshaman.com
(4000 pageviews/month)
Twitter: lcecere 3350 followers. Rated as the
top rated supply chain social network user.
LinkedIn: linkedin.com/pub/lora-
cecere/0/196/573 (2300 in the network)
Supply Chain Insights LLC Copyright © 2012, p. 57