Smarter Supply Chain The Role of Advanced Analytics in ... · PDF fileSupply Chain Management...

© 2012 IBM Corporation © 2012 IBM Corporation

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


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

Vision for the future


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

3


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

4 Source: IBM Institute for Business Value (IBV)


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. 5


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

6


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

Align / Anticipate / Act


Supply Chain Management analytics is at the core of IBM Integrated Supply Chain (ISC) strategy

Focus on supply chain analytics

8

ISC Strategic

Priorities


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

9

ISC Strategic

Priorities


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 10

Supplier Risk Management


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%

11


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

12


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

13


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 14

© 2012 IBM Corporation

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

Operation Teams must be willing and able to change..

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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Making change real, building business value

http://www-01.ibm.com/software/analytics/excellence-center/


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

16

Advanced Analytics…key to thriving in an ever more complex world


Donnie Haye, Vice President

Smarter Supply Chain Analytics

IBM Integrated Supply Chain

[email protected]

17

Point of Contact

mailto:[email protected]

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