amr may 27 supply chain excellence mburkett

8/6/2019 AMR May 27 Supply Chain Excellence Mburkett

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5/25/2010

Michael BurkettVP Research, AMR Supply Chain [email protected]

May 2010

Supply Chain Excellence:Rebuilding Global Supply Chain

Infrastructure for SustainableGrowth
mailto:[email protected]:[email protected]


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2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates.__

Mike Burkett

Managing VP Supply Chain Process and Technology

Research focus on Global Product Innovation and Lifecycle

Management. Published the first industry report defining thePLM market

Experience: 15 years in manufacturing supporting new

product introduction, supply readiness, programmanagement, industrial / applications engineering.

Six Sigma Master Blackbelt & Lean process improvement

Employment: Invensys, EG&G, and BBN Communications

MBA from Babson College and BS in manufacturing

engineering technology from Wentworth Institute of

Technology.


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Agenda

Why rebuild global supply chain infrastructure

Principles of becoming demand driven Best-practice leaders in the journey

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Ford: serving global markets profitably

2008

We cant make money with capacity utilization numbers in the70swe study our global operationsto make sure were doing the

right thinga global platform strategyallows for better utilizationacross product segments.

Joe Hinrichs, Ford group vice president for global manufacturing,

2008 Autoline Detroit interview

2009

Ford reported its second consecutive quarterly profitand moreimpressively, a swing from a $7.7 billion cash burn a year earlier topositive cash flow of $1.3 billionin the just-ended third quarter.

Wall Street Journal, How Ford Is Making Its Comeback, November 4, 2009


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Global development strategy drivers

79%

70%

54%

59%

49%

37%

38%

26%

11%

9%

6%

6%

30%

13%

17%

9%

10%

17%

Move into new or

emerging markets

Take advantage of low

cost strategy labor

Global requirements

from M&A's

Gain access to

localized knowledge/

skill of specific mkts

Access talent not

available centrally

Utilize global

resources to conduct

24-hr development

Current drivers

Primary today

Primary in 2 years

N = 185 US-based manufacturers


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8

Forces contributing the most to yourorganization's supply chain complexity?

2%

15%

16%

17%

19%

21%

31%

31%

39%

50%

56%

0% 20% 40% 60% 80% 100%

End customers' expectations and needs

Product proliferation (stock-keeping units/SKUs)

Supporting increasing numbers of locations (customers, supplier,

internal operations)

Globalization of supply chains

Pace of new product introduction and innovation

New competitors in your organization's market

Compliance with government and trading partner mandates

Increasing supply chain risk

New emerging markets

Advances in technology

Other

n=340Up to three responses allowed


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64%

59%

58%

57%

56%

48%

50%

56%

Evaluating manufacturing cost impact ofdesign options during development

Evaluating impact of design complexityand the level of reuse from previous

products

Evaluating manufacturing and supplychain costs during a make versus buy

analysis

Developing products that can bemanufactured with reduced

environmental impact

Importance

PerformancePerformance

Gap

1%

8%

11%

8%

Product supply / manufacturing planninggaps in global product development

N = 142 High-Tech manufacturing companiesSource: AMR Research, 2009

Gl b l d t d l t & d t


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Global product development & productsupply / manufacturing strategies

DevelopDevelop

Single

Plant

Single

Plant

Plant 1Plant 1

Plant 2Plant 2

Pilot

Facility

Pilot

Facility

Geo.

Region

Geo.

Region

Geo.

Region

Geo.

Region

Plant 2bPlant 2b

DevelopDevelop

DevelopDevelop

PlantsPlants

PlantsPlants

Design NetworksDesign Networks Mfg. NetworksMfg. Networks

Regional

Variants

Regional

Variants

Source: AMR Research, 2009


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2010

GHG emission data supplied to supply chainpartners 2008 vs. 2009

Source: AMR Research, 2009GHG = Green House Gas

N ld t i l h i


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New world strains supply chaininfrastructure

Global opportunity with constrained resources

Demand for variety explodes supply complexity

Pressure to reduce carbon footprint of products

Physical supply chains pushed to deliver more

New infrastructure needs for profitable response.

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L d l ti l b l l h i


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Leaders evaluating global supply chaininfrastructure

Coca-Cola and PepsiCo buy bottling plants

- cut costs allowing more flexible pricing to retailers

Ford platforms improving factory utilization

- increase factory utilization & serve global markets

Boeing 787 moves to global design partners

- scale des. / manf. capacity and improve ROA

Wal-Mart sustainability index for suppliers- drives increased focus on supply chain carbon footprint

135/25/2010


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Poll questionParticipate in live research

How ready is your supply chain infrastructure to meetnew world demands?

1. We have the supply chain infrastructure to win today2. Needs are defined and in process of implementing

3. Needs are defined and we are exploring next steps

4. We are beginning to evaluate our needs now

5. We have no idea if we are prepared to compete

Please select the option that best fits your situation.

Responses are confidential.

Rebuild infrastructure for Demand driven


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Product

Demand Supply

Insights Risk

Opportunities

Rebuild infrastructure for Demand-drivenValue Networks

BecomeMarketDriven

Orchestrate theDemand-driven

Response

Build Valuein supplyNetworks

Drive innovation in products andservices

Sustainability

Source: AMR Research, 2010


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#1 Supply chains must be market driven

Segmentation

- for supply chain & market alignment.

Sense demand

- At point of consumption and share signal with partners.

Shape demand

- Influence with common parts or reduced cost / pricing.

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Caterpillar Lane Strategy


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Channel /Distribution Customer

Tier-NSuppliers

Caterpillar Lane Strategy

-Shape Demand to Reduce Volatility & Risk

Time

Sales

Sales

Time

Sales

Time

Sales

Time

Bull Whip Effect

OEM /Systems

IntegratorTier-1

Suppliers

Supplier capability

Supplier yield

Material shortages

Production downtime

Supply volatility

Customer priorities

Engineering change

Production yield

Service demands

Demand volatility

If Caterpillar increases production 15% many suppliers would more than

double their shipments to us Caterpillar CEO Jim Owens, WSJ 01/27/10

#2 Orchestrate the demand driven


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#2 Orchestrate the demand drivenresponse

Network design

Sales & Operations Planning

Product Portfolio Management.

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Orchestrate the demand driven response

SanDisk

- Orchestrate response for global flash memory demand

- Shift from U.S. single to global multi-channel

Used third-party logistics partner

Installed a governance team and analytics

Profitably allocate scarce flash memory supply.

Use postponement assy. in distribution network

Eliminate 60%+ supply chain infrastructure costs

Improve service levels to global customers19

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#3 Build value in supply networks

Agility for unpredictable demand response

Collaborative supply networks

Predictive supplier management

Operationalized innovation

Capabilities maximize infrastructure utilization

- eliminating wasteful non-value added activities

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Build value in supply networks

Intel

- Predicting supplier risk

Missing days production can cost $100M.

Ensure a reliable and profitable response

Supplier credit coming due flagged & assessed

Metrics improve supplier sensing

Better decision making with a 12- to 24-monthforward-looking view on potential risk.

215/25/2010

#4 Drive innovation in products and


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#4 Drive innovation in products andservices

Observing how customers experience products

Impact by deploying supply chains in new ways

Requires supply chain to understand needs

Define customer need beyond product attributes

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Innovation-operations excellence maturity


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Innovation operations excellence maturityI II III IV

Active

Governance

Developmentisolated from the

business

Phase reviewsintegrate hand-off

to the business

Cross-functionalsteering committee

monitors progress

Decisive leadersactively own

innovation results

Integrated

Teams

Serial product

developmentstages with handoff

to operations

Early input from

operations onproduct innovation

Concurrent

development ofproduct & process

Early customer

insights drive bothoperation &

product innovation

Develop for

TotalCustomer

Experience

Product innovation

is internal with

limited customer

insight

Customer input

captured on needs

and sought for

product concepts

Customer behavior

observed driving

product innovation

to meet total needs

Product, supply,

and service

combine to meet

customer needs

Learning

Organization

Product & process

requirements &

specifications

rigidly defined early

Singe specification

for prototype

product or method

refined

Multiple alternative

specifications and

prototypes tested &

tradeoffs studied

Iterative

improvement with

knowledge capture

& sharing

Technology No alignment to

business needs

Business adapts to

commercialapplications

Value stream map

to eliminate wastedinformation flow

Enhance business

differentiation whileeliminating waste


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Drive innovation in products and services

Lockheed Martin

- combines product & service innovation F-35 JSF

Guaranteeing aircraft availability

Coordinating all service.

Incorporated this need into the aircraft design

Modular platform, autonomic logistics sensors

- to monitor aircraft health.

Partner with defense depots ensuring support

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#5 Sustainability maximizes planet


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#5 Sustainability maximizes planetresources

Sustainability Maturity Model three keys:

- strategic transformation

- structural normalization

- operational implementation.

Reactive or tactical sustainability insufficient- Drives down costs & qualifies for green markets

- wont allow an organization to emerge as leaders.

255/25/2010


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Sustainability maximizes planet resources

Subaru of Indiana boasts a zero-waste, carassembly plant

Dell the first carbon-emission-neutralizedoperation in PC manufacturing.

Nike is pursuing off-grid energy distributioncenters in Belgium

MillerCoors is recycling hop waste into animalfood and compost.

265/25/2010


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Summary

Rebuild your global supply chain infrastructure

Being demand driven paves the way Leaders are winning with demand-driven today

275/25/2010

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amr may 27 supply chain excellence mburkett

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