2011 ferrari consulting supply chain ebook

8/2/2019 2011 Ferrari Consulting Supply Chain eBook

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The Ferrari Consulting and Research Group LLC

The Emerging Adoption of Predictive

Analytics Across Supply Chains Presented by Bob Ferrari, Executive Editor of the Supply Chain Matters Blog and Managing

Director of the Ferrari Research and Consulting Group

Delivered at the Progress Software Revolution Conference

September 2011




Key Messages to Consider

In today’s reality of globally stretched supply chains, the

planning of global supply chain resources is moving

toward the need for prediction of events and outcomes.

The Planets of Business Needs and IT Enablers Are

Aligning and Moving Toward:

• Predictive Analytics plus Constraint Modeling

Equating to Best Outcomes for the Business

• From Key Performance Indicators (KPI’s) to Key

Response Indicators (KRI) of measurements• Enabling more responsive capabilities without

having to rip and replace but rather supplement

and build.




What is a Supply Chain?

A supply chain consists of all the value‐chain planning, physical

movements, information and financial flows required to move

products through design, production, distribution and ultimately

to customers and consumers.

A supply chain consists of a series of business processes and a

common definition of these processes is reflected by the Supply

Chain Operations Reference Model or SCOR. These include the

broad definitions of Plan‐Source‐Make‐Deliver‐Return




End-to-End Supply Chain

The reality of today’s global supply chains are

that the SCOR Model business processes cross

company borders and involve multiple trading

partners which has added to the challenge of

timely visibility and decision‐making. Consider

how Apple’s totally outsourced supply chain is

represented.




The Current State of Global Supply Chains

Globally extended markets and sources of supply have led to new realities:

Multiple geographic markets and sources of supply

Increased complexities, variability and risk

Faster, more pronounced market changes

Shortened product lifecycles

Lean supply chains with more vulnerabilities as witnessed by the recent

devastating earthquake and tsunami that impacted northern Japan.

Fragmented business processes and lack of end-to-end visibility-

thousands of decisions are made every day, many without a context to

profitability or required service level.




Advanced Technology Offers Us Enhanced Tools

The ability to now move from a predominate historic to more predictiveand near real-time planning and information analysis

Cloud computing and composite apps alternatives to fill-in process

gaps

Sense and respond capabilities to orchestrate desired outcomes-

consider how Dell and Amazon offer us recommended choices of buying options.

Mobile and social enabled applications to accommodate virtual

mobility and time-critical needs




The Challenge for Supply Chains is Balancing Highly

Interrelated Performance Objectives

The three dimensions of supply chain performance are either

enhancing top line revenue growth via enhanced customer

service and responsiveness, improved end‐to‐end efficiency, or

better asset utilization by means of outsourcing. Prior to and

as a result of the past global recession, most supply chains were

focused on the bottom quadrants. Post‐recession and recovery

requires an emphasis on the top dimension, while keeping the

bottom dimensions balanced with ongoing business needs.

These tendencies are reflected in current polling data of senior

supply chain executives.




Current C-Level Views of

Supply Chains According to a recent Aberdeen Group

survey of senior supply chain managers, the

predominant concern of these executives has

shifted to the top of our triangle, escalating

customer service needs and increased

market demand volatility. The implications

of managing an increasingly global network,

current volatile business cycles, and rising

supply chain costs makes decision making

more challenging, with the need to context

and consider the implications for each

dimension of supply chain performance.




Benchmarking Survey Data And indeed, when Aberdeen polled for the

key initiatives that senior executives at best‐

in‐class supply chain organizations were

focused upon, it includes:

• The ability to access and find key

decision‐making data

• Well defined cross‐functional metrics

with

• Online visibility into end‐to‐end physical,

disruptive or other important events.




Supply Chain Business Process Evolution

Supply chain business processes

have emerged from the Classic

and Traditional, to the current

Networked Era, each with

different process orientation and

IT enablers.




Supply Chain Teams Tend to Lead in Advanced IT Adoption

Whether it’s the area of physical

tracking, conducting commerce

and fulfilling orders, or data and

information analysis, supply

chain teams have been very

comfortable with successfully

leveraging leading‐edge IT

technology.




Emerging Thinking Concerning Predictive Analytics

Our goal should be to transform multiple forms of available information intomore meaningful insights and key responsive indicators

Weigh and factor constraints and variability with supply chain planning andexecution information

Convert insights into actions and best plan

Actions enable positive outcomes




Predictive Analytics Defined

Standard Reports

Ad Hoc Reports

Query / Drill Down

Alerts

Statistical Analysis

Randomized Testing

Predictive Modeling

Optimization “What’s the best that can happen?”

“What will happen next?”

“What happens if we try this?”

“Why is this happening?”

“What actions are needed?”

“What exactly is the problem?”

“How many, how often, where?”

“What happened?”

Predictive and

Prescriptive

Analytics

(the “so what”)

Descriptive

Analytics

(the “what”)

Degree of

Intelligence

Source: Analytics At Work , Thomas H. Davenport, Babson College

Analytics Defined- Tom Davenport




One of the leading academics speaking

on this area is Professor Thomas H.

Davenport of Babson College. This chart

is a reproduction from his book,

Analytics At Work, and describes the key

degrees of intelligence that make‐up

business decisions, and the important

differences of more descriptive (the

what) vs. predictive and prescriptive

analytics (what happens next). They are

important observations as to where

technology tools are taking us.

Think of recent decisions involving your supply chain:

• In the narrowest sense, a recent truck breakdown or unplanned

order received from a key customer.

• In the broadest sense, the recent earthquake and tsunami that

impacted northern Japan.




Consider Current Supply Process Convergence

More rapid and volatile business cycles are motivating many companies to re-look at sequential planning and execution processes because sequentialprocesses do not align with the current pace of business.

Actions being evaluated: Converge planning with sensing of orders, changed events, disruptions,

market opportunities. Augment planning with analytics, and shift emphasis toward more

predictive process controls. True decision support fueled by embedded analytics.

In my many years of observations of supply chains, this is the “Holy Grail” for

supply chain decision support.




Also Consider Current IT Convergence Forces

From OLTP to in-memory database technology opportunities.

Sequential processing to Multiple Parallel Processing (MPP) of informationutilizing multiple CPU’s.

Data attached to the application to de-coupled streaming databases of information flow.

Data aligned to business constraints, insights and decision-making support.

Data warehouse to bundled analytical appliances.

Centralized to distributed data management, ownership and control of data,

that can reside outside of IT.




Key Takeaway

Every organization needs to have a cohesive roadmap andplan to leverage needs of the business with current business

realities and convergence trends.

Consider the Possibilities and Emerging Areas of Interest




Supply Chain Control Tower

• A single utility view for tracking

information related to supply chain

wide events and information flow.

• An information hub that supports two‐

way decision‐making, interaction and

collaboration.

• The ability to mine information from

multiple systems without having to re‐

architect the existing IT infrastructure.

• A forward‐looking, predictive lens that

provides context to both what is

occurring, and what needs to occur

across the supply chain.




Real-Time Control of Events

Consider the analogy of the airport

control tower at any of the world’s busiest

airports:

• Data and information is in constant

motion

• Involves multiple activities all

occurring simultaneously

• Controllers are event‐driven and focus

particularly on the exceptions

• What needs to happen when an

exception event occurs such as bad

weather, an emergency or unplanned

occurrence such as a near‐miss.




Control Towers According to Gartner

In November 2010, industry analyst firm

Gartner began to articulate supply chain

control tower concepts along with the

transformational steps required to move from

a “Reacting” stage, to a cross‐organizationally

aligned “Orchestrating” stage for the

managing of supply chain decisions and

capabilities.




Control Tower Deployments Will Require New Thinking

and Need to Overcome Current Organizational and

Cultural Challenges

The end-goal is empowered end-users vs. deployment of cool andemerging technology

Emphasis should be on clearly understood cross-organizational and

cross-business metrics Fostering of enhanced collaboration and joint decision-making

processes across functional and inter-company processes. Balancing of operational management, IT and analytical skills Clean, common and integrated data Centralization of expertise to support key planning and decision-

making needs- more centralized analytics function Will take time and revised thinking




My Recommendations

Have a strategy for leveraging predictive analyticscapabilities across your supply chain.

Identify process pain points and opportunities Business and functional teams need to take ownership-

not the IT team.

Executive-level sponsorship/ownership- survey says thetime is right and the need is established.

Supply chain is a great place to start- willingness andtrack record for adoption and deployment of leading-edgeconcepts of decision-making.

Start with a meaningful pilot with clearly defined goals Build with flexibility in-mind- business and supply chains

are in constant motion and agility is the context to assuremomentum.




Key Takeaways

Globally extended markets and supporting supply chainsprovide: New Realities

Agility and business responsiveness to business volatility andsupply chain complexity

Needs for quicker and more timely decision-making

New Opportunities Shape demand to supply Sense and respond to market opportunities/operational risk

better than competitors

Orchestrate desired your business outcomes

Investigate the power of predictive analytics and demonstration of Supply Chain Control Tower concepts from Progress Software.




My Contact Information

Email: [email protected]

Website: http://www.theferrarigroup.com

Social Media Profile

Blog- Supply Chain Matters: http://www.theferrarigroup.com/supply-chain-matters

Linked-In Profile: http://www.linkedin.com/pub/bob-ferrari/0/78/362

Twitter: @Bob_Ferrari




For More Information Related to Supply Chain Control

Towers and Progress Software

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