Transparency in Supply Chains
Transparency in Supply Chains Rob Allan January 13, 2015
© 2014 IBM Corporation
What is transparency Why is transparency so difficult How to achieve transparency Benefits of transparency IBM’s road to transparency
2
IBM Confidential
© 2013 IBM Corporation
What is transparency
Concept of supply chain transparency began in 1904 • Upton Sinclair spent two months uncovering details about the meatpacking industry, which he portrayed in the classic book The Jungle • Food and Drug Act and Meat Inspection Act set stage for early transparency • More than a century later; multi national, complex supply chains face massive risks associated with transparency: supplier labor practices, corruption, environmental, quality, etc • California Transparency in Supply Chains Act of 2010 Definition of transparency: driving visibility of information across the extended supply chain for the purposes of improved efficiency and compliance
3
IBM Confidential
© 2013 IBM Corporation
Importance of Supply Chain Visibility The collective insights from 400 Supply Chain Executives identified five major challenges and Visibility was No.1 – IBM CSCO Survey
Based on responses of “to a very great extent” and “to a significant extent”
4
IBM Confidential
© 2013 IBM Corporation
Importance of Supply Chain Visibility Visibility is the keystone of Smarter Supply Chain, driving analytics & collaboration, and enabling resolution of major challenges facing today’s supply chains 70%* 55% SUPPLY CHAIN VISIBILITY
COST CONTAINMENT Fighting integral costs as such might be futile, but being flexible can create cost savings elsewhere.
Supply chain visibility is inhibited by a lack of capabilities and an unwillingness to collaborate.
Orchestration (instrumented)
Visibility (interconnected)
5
RISK MANAGEMENT Process, data and technology are identified as the roadblocks to good risk management, yet they are the key enablers.
43%
56% INCREASING CUSTOMER DEMANDS Customers are continuing to demand more: right product, right place, right time, right price, sooner.
GLOBALIZATION Lead times, delivery and quality are top challenges – however, globalization has been a benefit for the leaders.
Execute seamlessly across internal supply chain processes
Share information to optimize joint responses to changing conditions
Collaboration & Analytics (intelligent)
60%
Analyze and predict the trends and risks that impact your supply chain
Determine the optimal response to changing conditions
Expose supply chain information from multiple disparate systems
Identify and respond to the events that impact your operations or your trading partners
IBM Confidential
* Percentage of Supply Chain Leaders who report this challenge impacts their supply chains to a significant or very significant extent. Source: IBM CSCO study © 2013 IBM Corporation
Companies need to manage constantly changing conditions & visibility across fragmented and multi-partner enterprises will help Lack of visibility inhibits effective supply / demand synchronization Lack of timely information on forecast, supply, or customer orders results in additional costs such as premium routing or redistribution
Lack of visibility into supplier inventory leads to stock outs, late/expedited shipments, quality issues, etc.
Source: Line56 2003
Lack of visibility into changing supplier commits can lead to inaccurate customer commitments or financial projections 6
Sales & Operations Planning Process
Lack of visibility and timely information lengthens the cash-tocash cycle, reducing profitability
Inability to receive timely, accurate demand signals leads to stock outs, excess/obsolete inventory, higher cost, lost revenue, and poor customer satisfaction.
© 2013 IBM Corporation
Features of a Transparent Supply Chain
Source: IBM Institute of Business Value 7
IBM Confidential
© 2013 IBM Corporation
What is transparency Why is transparency so difficult How to achieve transparency Benefits of transparency IBM’s road to transparency
8
IBM Confidential
© 2013 IBM Corporation
Why is Transparency so difficult
Cultural Hurdles • Organizational silos are not comfortable sharing information • Providing real time visibility across supply chain will affect a corporate management system Data • Rare to find a business with enterprise applications that include data structures to support transparency • Assessing >50 companies to examine potential for implementation, significant data effort necessary to enable a transparency initiative Less control over external parties • Suppliers • resellers Business Case • Subtle benefits and longer lead times counter to attractive business cases
9
IBM Confidential
© 2013 IBM Corporation
Transparency among all stakeholders will require change [shift] in cultural paradigm and renewed team work Together we will have to develop the willingness to share data that will enable the use of information as a collaboration tool and not a power tool We will have to undergo a culture shift to stop spending time to manipulate data before consumption of others
We will have to unite and work as ONE team as TSC will necessitate working across traditional process boundaries If you believe in TSC, you will have to believe in this culture [shift] We will need support from our senior leadership team to cascade this message through your entire teams to increase the speed of TSC implementation 10 IBM Confidential
© 2013 IBM Corporation
What is transparency Why is transparency so difficult How to achieve transparency Benefits of transparency IBM’s road to transparency
11
IBM Confidential
© 2013 IBM Corporation
How to achieve transparency
Lay a foundation for success • Metric alignment • Data integrity • Understand the predictive and responsive objectives of transparency Organizational Change Management • Secure stakeholders and define objectives • Alignment on project mission and requirements Select a platform and tool that aligns with objectives • Enterprise wide solutions • Point solutions • Supply side and demand side Implementation • Start small and build on lessons learned from initial deployments • Focus on high profile business issues • Leverage early wins to start breaking down cultural obstacles
12
IBM Confidential
© 2013 IBM Corporation
How to achieve transparency
13
IBM Confidential
© 2013 IBM Corporation
What is transparency Why is transparency so difficult How to achieve transparency Benefits of transparency IBM’s road to transparency
14
IBM Confidential
© 2013 IBM Corporation
While challenging to quantify, improved transparency will yield benefits across the entire supply chain Transparent operations management
Real time order status visibility and exception alerts Credibility and reliable information Increased customer satisfaction levels as they have better access to order status
Issues / risks identification Assess impact to supply chain Next best action initiation Alert / exception driven Single version of truth
Clients
Business Partners
Global Level KPIs with drill downs
IBM Mobile App for alerts
Improved visibility – finished goods inventory Better service level commitments Order status notifications
15
Suppliers
Effective supplier collaboration Reduced inventory levels and operations cost Improved sharing information and collaboration
Geo spatial & other visualizations
© 2014 IBM Corporation
Benefits of transparency
16
IBM Confidential
© 2013 IBM Corporation
What is transparency Why is transparency so difficult How to achieve transparency Benefits of transparency IBM’s road to transparency
17
IBM Confidential
© 2013 IBM Corporation
IBM is undergoing an analytics-led, technology-enabled supply chain transformation Globally Integrated Enterprise
Enterprise efficiencies Streamlined Global processes Information sharing
Smarter Supply Chain
Advanced Analytics, Optimization, Big Data Mgt Supply Chain Visibility Multi-enterprise supply chain transformation
New Era Supply Chain Reinvention
Watson-enabled cognitive analytics Supply Chain Transparency Data Driven /Digitally Executed Cloud, Mobile, Social
Evolving Supply Chain Management from cost center to value center…
Business Impact
18
2013 Cash Collected : $99B 2013 Managed Spend : $53B >20K Employees in 70 countries $7B in procurement saving annually
18K+ suppliers connected online >96% of invoices are electronic 32 Smarter Analytics projects Over 3.9M visits to eTools © 2014 IBM Corporation
TSC is the system of engagement initiative that will leverage data, apply automation & analytics and drive business insights Intelligent Operations & Resolution Center
Get data from manufacturing, procurement, fulfillment, logistics, operational management systems
Visualize, analyze Key Performance Indicators, statistics to see the trends, report on different performance metrics
Automate, notify automated alerts, facilitates intra- and inter-company business process and data collaboration 19
• Leverage Systems of Record, unstructured data, and automate manual processes. • Manage exceptions from the Supply Chain. Order churn, forecast inaccuracy, supplier shortage, as well as prioritize capacity and available supply • Get the right information to the right people at the right time. Enable optimized decision making.
© 2013 IBM Corporation
IBM’s vision is to provide visibility across existing applications and data sources to create a predictive and smarter supply chain Global Level SC IOC*
CPMT Detect
Brand & Site Level SC IOC*
Analyze
Decide
Act
Global Control Tower
IBM Buy Analysis Tool (iBAT)
Brand Control Tower
Site Control Tower
QEWS Supplier Window
Client Window (OSOL)
Business Partner Window Client Window
* Intelligent SC Operation Center 20
IBM Confidential
© 2013 IBM Corporation
New SC Transparency
FROM
21
To
Manually query data from multiple sources and consolidate information
Access information through single framework receiving Need-to-know (alerts) & Want-to-know (drill down)
Spend time on data gathering and data preparation
Focus on working issues & opportunities
Measure results after the fact
Predict and act to optimize client experience
Pre-selected & filtered information
One version of the truth
Communicate with colleagues, suppliers & partners in predefined schedules
Collaborate continuously and in real time across business units, with suppliers and partners
IBM Confidential
© 2013 IBM Corporation
TSC will provide a feature-rich operations center to enable visibility & collaboration among all major stakeholders Key Benefits
Visibility into real time order status will build credibility and drive higher client satisfaction Alert-driven model will provide clients key order information to manage their critical operations
Consolidated information framework – one version of the truth, actionable alerts, drill-down capability Initiates recovery either automatically (self-healing, resilient SC) or through next best action and decision feedback
End to end data visualization, streamlined operations, workflow with automated alerts will help with higher response speeds and reduce overall risk Creation of a cross brand smarter value chain with predictive and prescriptive business intelligence Tracking & prediction of order progression will improve quality and client satisfaction levels ROI between 3X to 5X
Intelligent Operations Center
Ability to provide better service levels to IBM and clients Improved order forecast and sales visibility to effectively manage finished goods inventory 22
IBM Confidential
Frequently updated and accurate demand forecast Effective collaboration and SC management Lower cost of operations
Global Consolidated View
Brand/BU
Site Partner/Clie nt © 2013 IBM Corporation
Transparent Supply Chain Real Time Order Information Crit Sit Alerts
Business Rules & Intelligence to direct people to critical Information
Supply Chain Big Data in the Cloud
Demand Prediction Plug & Play Transparency Framework
Partner Collaboration Demand Mgmt Demand Shaping
Analytics & Automation
Online Order Progression Control
SC Risk Alerts
Supply Chain Visibility for informed Clients, Partners, & Suppliers Alerts sent onto mobile devices
23
Deep T-shaped Analytics skills Supply Chain skills New Roles in an E2E Supply Chain Control Tower IBM Confidential
Quality Alerts Clear to Build Prediction Hub Health Analysis
© 2013 IBM Corporation
ISC supply network: 2020 future vision collaborative, end-to-end, intelligence focused on client value and cash conversion
Transparent Supply Chain
Social & Mobile 24
IBM Confidential
Advanced Analytics
Predictive Risk Management © 2013 IBM Corporation
Questions…
25
IBM Confidential
© 2013 IBM Corporation
© 2014 IBM Corporation
What is transparency Why is transparency so difficult How to achieve transparency Benefits of transparency IBM’s road to transparency
2
IBM Confidential
© 2013 IBM Corporation
What is transparency
Concept of supply chain transparency began in 1904 • Upton Sinclair spent two months uncovering details about the meatpacking industry, which he portrayed in the classic book The Jungle • Food and Drug Act and Meat Inspection Act set stage for early transparency • More than a century later; multi national, complex supply chains face massive risks associated with transparency: supplier labor practices, corruption, environmental, quality, etc • California Transparency in Supply Chains Act of 2010 Definition of transparency: driving visibility of information across the extended supply chain for the purposes of improved efficiency and compliance
3
IBM Confidential
© 2013 IBM Corporation
Importance of Supply Chain Visibility The collective insights from 400 Supply Chain Executives identified five major challenges and Visibility was No.1 – IBM CSCO Survey
Based on responses of “to a very great extent” and “to a significant extent”
4
IBM Confidential
© 2013 IBM Corporation
Importance of Supply Chain Visibility Visibility is the keystone of Smarter Supply Chain, driving analytics & collaboration, and enabling resolution of major challenges facing today’s supply chains 70%* 55% SUPPLY CHAIN VISIBILITY
COST CONTAINMENT Fighting integral costs as such might be futile, but being flexible can create cost savings elsewhere.
Supply chain visibility is inhibited by a lack of capabilities and an unwillingness to collaborate.
Orchestration (instrumented)
Visibility (interconnected)
5
RISK MANAGEMENT Process, data and technology are identified as the roadblocks to good risk management, yet they are the key enablers.
43%
56% INCREASING CUSTOMER DEMANDS Customers are continuing to demand more: right product, right place, right time, right price, sooner.
GLOBALIZATION Lead times, delivery and quality are top challenges – however, globalization has been a benefit for the leaders.
Execute seamlessly across internal supply chain processes
Share information to optimize joint responses to changing conditions
Collaboration & Analytics (intelligent)
60%
Analyze and predict the trends and risks that impact your supply chain
Determine the optimal response to changing conditions
Expose supply chain information from multiple disparate systems
Identify and respond to the events that impact your operations or your trading partners
IBM Confidential
* Percentage of Supply Chain Leaders who report this challenge impacts their supply chains to a significant or very significant extent. Source: IBM CSCO study © 2013 IBM Corporation
Companies need to manage constantly changing conditions & visibility across fragmented and multi-partner enterprises will help Lack of visibility inhibits effective supply / demand synchronization Lack of timely information on forecast, supply, or customer orders results in additional costs such as premium routing or redistribution
Lack of visibility into supplier inventory leads to stock outs, late/expedited shipments, quality issues, etc.
Source: Line56 2003
Lack of visibility into changing supplier commits can lead to inaccurate customer commitments or financial projections 6
Sales & Operations Planning Process
Lack of visibility and timely information lengthens the cash-tocash cycle, reducing profitability
Inability to receive timely, accurate demand signals leads to stock outs, excess/obsolete inventory, higher cost, lost revenue, and poor customer satisfaction.
© 2013 IBM Corporation
Features of a Transparent Supply Chain
Source: IBM Institute of Business Value 7
IBM Confidential
© 2013 IBM Corporation
What is transparency Why is transparency so difficult How to achieve transparency Benefits of transparency IBM’s road to transparency
8
IBM Confidential
© 2013 IBM Corporation
Why is Transparency so difficult
Cultural Hurdles • Organizational silos are not comfortable sharing information • Providing real time visibility across supply chain will affect a corporate management system Data • Rare to find a business with enterprise applications that include data structures to support transparency • Assessing >50 companies to examine potential for implementation, significant data effort necessary to enable a transparency initiative Less control over external parties • Suppliers • resellers Business Case • Subtle benefits and longer lead times counter to attractive business cases
9
IBM Confidential
© 2013 IBM Corporation
Transparency among all stakeholders will require change [shift] in cultural paradigm and renewed team work Together we will have to develop the willingness to share data that will enable the use of information as a collaboration tool and not a power tool We will have to undergo a culture shift to stop spending time to manipulate data before consumption of others
We will have to unite and work as ONE team as TSC will necessitate working across traditional process boundaries If you believe in TSC, you will have to believe in this culture [shift] We will need support from our senior leadership team to cascade this message through your entire teams to increase the speed of TSC implementation 10 IBM Confidential
© 2013 IBM Corporation
What is transparency Why is transparency so difficult How to achieve transparency Benefits of transparency IBM’s road to transparency
11
IBM Confidential
© 2013 IBM Corporation
How to achieve transparency
Lay a foundation for success • Metric alignment • Data integrity • Understand the predictive and responsive objectives of transparency Organizational Change Management • Secure stakeholders and define objectives • Alignment on project mission and requirements Select a platform and tool that aligns with objectives • Enterprise wide solutions • Point solutions • Supply side and demand side Implementation • Start small and build on lessons learned from initial deployments • Focus on high profile business issues • Leverage early wins to start breaking down cultural obstacles
12
IBM Confidential
© 2013 IBM Corporation
How to achieve transparency
13
IBM Confidential
© 2013 IBM Corporation
What is transparency Why is transparency so difficult How to achieve transparency Benefits of transparency IBM’s road to transparency
14
IBM Confidential
© 2013 IBM Corporation
While challenging to quantify, improved transparency will yield benefits across the entire supply chain Transparent operations management
Real time order status visibility and exception alerts Credibility and reliable information Increased customer satisfaction levels as they have better access to order status
Issues / risks identification Assess impact to supply chain Next best action initiation Alert / exception driven Single version of truth
Clients
Business Partners
Global Level KPIs with drill downs
IBM Mobile App for alerts
Improved visibility – finished goods inventory Better service level commitments Order status notifications
15
Suppliers
Effective supplier collaboration Reduced inventory levels and operations cost Improved sharing information and collaboration
Geo spatial & other visualizations
© 2014 IBM Corporation
Benefits of transparency
16
IBM Confidential
© 2013 IBM Corporation
What is transparency Why is transparency so difficult How to achieve transparency Benefits of transparency IBM’s road to transparency
17
IBM Confidential
© 2013 IBM Corporation
IBM is undergoing an analytics-led, technology-enabled supply chain transformation Globally Integrated Enterprise
Enterprise efficiencies Streamlined Global processes Information sharing
Smarter Supply Chain
Advanced Analytics, Optimization, Big Data Mgt Supply Chain Visibility Multi-enterprise supply chain transformation
New Era Supply Chain Reinvention
Watson-enabled cognitive analytics Supply Chain Transparency Data Driven /Digitally Executed Cloud, Mobile, Social
Evolving Supply Chain Management from cost center to value center…
Business Impact
18
2013 Cash Collected : $99B 2013 Managed Spend : $53B >20K Employees in 70 countries $7B in procurement saving annually
18K+ suppliers connected online >96% of invoices are electronic 32 Smarter Analytics projects Over 3.9M visits to eTools © 2014 IBM Corporation
TSC is the system of engagement initiative that will leverage data, apply automation & analytics and drive business insights Intelligent Operations & Resolution Center
Get data from manufacturing, procurement, fulfillment, logistics, operational management systems
Visualize, analyze Key Performance Indicators, statistics to see the trends, report on different performance metrics
Automate, notify automated alerts, facilitates intra- and inter-company business process and data collaboration 19
• Leverage Systems of Record, unstructured data, and automate manual processes. • Manage exceptions from the Supply Chain. Order churn, forecast inaccuracy, supplier shortage, as well as prioritize capacity and available supply • Get the right information to the right people at the right time. Enable optimized decision making.
© 2013 IBM Corporation
IBM’s vision is to provide visibility across existing applications and data sources to create a predictive and smarter supply chain Global Level SC IOC*
CPMT Detect
Brand & Site Level SC IOC*
Analyze
Decide
Act
Global Control Tower
IBM Buy Analysis Tool (iBAT)
Brand Control Tower
Site Control Tower
QEWS Supplier Window
Client Window (OSOL)
Business Partner Window Client Window
* Intelligent SC Operation Center 20
IBM Confidential
© 2013 IBM Corporation
New SC Transparency
FROM
21
To
Manually query data from multiple sources and consolidate information
Access information through single framework receiving Need-to-know (alerts) & Want-to-know (drill down)
Spend time on data gathering and data preparation
Focus on working issues & opportunities
Measure results after the fact
Predict and act to optimize client experience
Pre-selected & filtered information
One version of the truth
Communicate with colleagues, suppliers & partners in predefined schedules
Collaborate continuously and in real time across business units, with suppliers and partners
IBM Confidential
© 2013 IBM Corporation
TSC will provide a feature-rich operations center to enable visibility & collaboration among all major stakeholders Key Benefits
Visibility into real time order status will build credibility and drive higher client satisfaction Alert-driven model will provide clients key order information to manage their critical operations
Consolidated information framework – one version of the truth, actionable alerts, drill-down capability Initiates recovery either automatically (self-healing, resilient SC) or through next best action and decision feedback
End to end data visualization, streamlined operations, workflow with automated alerts will help with higher response speeds and reduce overall risk Creation of a cross brand smarter value chain with predictive and prescriptive business intelligence Tracking & prediction of order progression will improve quality and client satisfaction levels ROI between 3X to 5X
Intelligent Operations Center
Ability to provide better service levels to IBM and clients Improved order forecast and sales visibility to effectively manage finished goods inventory 22
IBM Confidential
Frequently updated and accurate demand forecast Effective collaboration and SC management Lower cost of operations
Global Consolidated View
Brand/BU
Site Partner/Clie nt © 2013 IBM Corporation
Transparent Supply Chain Real Time Order Information Crit Sit Alerts
Business Rules & Intelligence to direct people to critical Information
Supply Chain Big Data in the Cloud
Demand Prediction Plug & Play Transparency Framework
Partner Collaboration Demand Mgmt Demand Shaping
Analytics & Automation
Online Order Progression Control
SC Risk Alerts
Supply Chain Visibility for informed Clients, Partners, & Suppliers Alerts sent onto mobile devices
23
Deep T-shaped Analytics skills Supply Chain skills New Roles in an E2E Supply Chain Control Tower IBM Confidential
Quality Alerts Clear to Build Prediction Hub Health Analysis
© 2013 IBM Corporation
ISC supply network: 2020 future vision collaborative, end-to-end, intelligence focused on client value and cash conversion
Transparent Supply Chain
Social & Mobile 24
IBM Confidential
Advanced Analytics
Predictive Risk Management © 2013 IBM Corporation
Questions…
25
IBM Confidential
© 2013 IBM Corporation
