best run supply chain practices
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Flawless Supply Chain ExecutionChicagoMarch 8, 2011
Supply Chain ExecutionOverview
March 2011
© 2011 SAP AG. All rights reserved. 3
Business Realities“The only constant is change itself”
1 Billion New Capitalists and Consumers
TATA Motors
launches $2500
Car “Nano”
1 Billionth Phone SoldMay 2007
New Container
Shipped: Every
0.1 Second
Oil crosses $100 / Barrel
Increasing
Numbers of
Product Recalls
2008
Dow Jones drops 40% in 2008
Dow Jones Industrial Average 2008
7000
8000
9000
10000
11000
12000
13000
14000
Global Bail Out
67,000 factories in
China closed
2008 auto sales drop by 3 million
EU calls for global
carbon trading
system to fight
climate change
2009 2010
© 2011 SAP AG. All rights reserved. 4
What did 2010 bring?
2010
Increased risk across the supply network
Globalization and resulting complexity is here to stay….
Increasing focus on Sustainability / Green Supply Chains
Retailers See Holiday Sales
Rebound From 2008
Jan 2010
Shoots of recovery are appearing….
Jan 2010
China surpasses Germany as world's top exporter
THE ASSOCIATED PRESS
China auto sales more than double to 1.3 million units in
January
Feb 2010
2009 Infant Product Recalls Set Record High
15.2m cars recalled in
2009!
15.2 million car recalls in
2009
670,000 small companies have
closed in China due
to the global crisis
Supply Chain Risk: It's Time to Measure It
Feb 2010Feb 2010
Global companies become serious
about green supply chain strategies
© 2011 SAP AG. All rights reserved. 5
Economic Turmoil Economic Turmoil Economic Turmoil Economic Turmoil Economic Turmoil Economic Turmoil
Complex Global Networks
Complex Global Networks SustainabilitySustainabilityIncreased RiskIncreased Risk
Manage Fluctuating Demand & Supply
Poor demand visibility and responsiveness
Demand and supply not aligned
Escalating costs and inefficient operations
Leverage Network Wide Collaboration Lack of visibility
across distributed network
Ineffective capacity and asset utilization
Delayed response to customer demand
Improve Visibility Across Logistics
Increased inventory and warehousing costs
Fluctuating transportation costs
Increased complexity & risk across the network
Decrease Inventory and Increase
Service Increasing products
and supply chain complexity
Escalating inventory targets across the supply chain
Buffer stocks , increased write-offs and discounts
Safe & Sustainable Supply Chains
Government and Retailer regulations
Consumer trust and Brand value impacted
Need to manage safety, quality, and traceability at no additional cost
Global Trends and their Impact on Supply Chain…are you ready for the upturn?
Economic Turmoil Economic Turmoil
Economic Turmoil Economic Turmoil
© 2011 SAP AG. All rights reserved. 6
Is your Supply Network ready for the upturn?
Long Term Forces
Short Term Realities
The “New” Normal
“CEO and senior executive top priorities are changing — with revenue growth becoming more important than cost cutting for most in 2010.”
Source: 2010 Gartner CEO and Business Executive Survey
© 2011 SAP AG. All rights reserved. 7
Optimize Inventory
Manage through downturn, Position for upturnFive Tenants of a Responsive Supply Network
Synchronize
Supply to
Demand
Visibility &
Collaborati
on
Supply Chain
Sustainability
Excellence
in
Execution
Supply Chain ExecutionEWMTMSNCSCPM
March 2011
© 2011 SAP AG. All rights reserved. 9
Excellence in Execution paysDid you know …
…you can increase on-time delivery to customer 10-30% by automating warehouse processes?
…you can lower your carrier contracts by 10% when complying with your routing guide?
…overall shipment volumes are down by 18-20% this year impacting capacity, cost and service?
… you can reduce your transportation spend by 10-20% by automating transportation processes?
…you can increase inventory turns by 30% when more accurately allocating inventory based on current and future demand?
…you can increase employee productivity by 20% when streamlining operations and reducing exceptions and expedites?
Source: CAT Logistics
Source: ARC
Source: ARC
Source: Empresas Polar
Source: Gartner
Source: SC Digest
Logistics and Fulfillment Management is an end-to-end, cross-functional process
VP of Supply Chain
Cross-Dept Supply Chain Mgt
Sales
LogisticsDistribution
Effective Logistics and Fulfillment Management requires alignment between several stakeholders with differing objectives
Inbound Freight Management
Logistics
Outbound Freight
Management
Logistics
Storage and Fulfillment
Storage and Fulfillment
Distribution
Customer Commitment
Customer Service
Logistics
Risk / Compliance
Finance
Procurement
Customer Invoice
ProcessingAR Processes
Delivery CommitmentOrder Capture
Outbound Delivery Creation
Supplier Invoice
Processing
Supplier Invoice
ProcessingAP ProcessesAP Processes
PO Management
PO Management
ASN / Inbound Delivery Creation
ASN / Inbound Delivery Creation
Freight Settlement
Freight Settlement
Transportation Execution
Transportation Execution
Inbound Trans. Planning /
Optimization
Inbound Trans. Planning /
Optimization
Freight Settlement
Freight Settlement
Transportation Execution
Transportation Execution
Outbound Trans. Planning /
Optimization
Outbound Trans. Planning /
Optimization
Import Management
Export Management
Inventory Management
Inventory Management
Order Fulfillment
Order Fulfillment
Sourcing and Supply
Commitment
Global Supply Chain Visibility, Event Management, Alerting, Reporting, Traceability, RFID / Auto-IDGlobal Supply Chain Visibility, Event Management, Alerting, Reporting, Traceability, RFID / Auto-ID
Global Trade Management
Logistics
© 2011 SAP AG. All rights reserved. 12
SAP Extended Warehouse ManagementSolution Overview
Inbound Processing Storage and OperationsStorage and Operations Outbound Processing
Co
re W
areh
ou
se O
per
atio
ns
and
In
ven
tory
Man
agem
ent
Receive ASN data
ASN Validation & Correction
Transporation Unit Arrival
Manage Transportation Unit
Goods Receipt
Putaway Bin determination
Unload Transportation Unit
Internal Routing
Slotting
Deconsolidation
Putaway
Returns / Reverse Logistics
Rearrangement Order deployment
Inventory Counts / Record Accuracy
Replenishment
Freight Order Management
Route Determination
Wave Management
Picking Bin Determination
Warehouse Order Creation
Work Assignment
Picking
Packing
Staging
Loading & Goods Issue
Kit-to order
Transportation Cross Docking
Picking fr. Inb./ Push Deployment
Yard Management
Packaging Specification
GTS Integration
EH&S Integration
Integration to QIE
RF support for all exec.processes
Batch Management
Material Flow System
Serial Numbers
Cro
ssP
roce
sses
Su
pp
ort
ing
Fu
nct
ion
s
SAP SCM-EWM 5.0.
Goods Receipt - Optimization
Kit-to stock
Manual outbound deliveries
RFID Enablement
Warehouse Cockpit
eSOA enablement
Catch Weight
Labour Management
SAP SCM-EWM 5.1.
Production Supply
Opportunistic Cross Docking
Merchandise Distr. X-Docking
Task Interleaving
Execution Constraint
Semi-System-Guided work
Graphical Warehouse Layout
SAP SCM-EWM 7.0.
SAP EWM has closed the gap with Best of Breeds and is the way to go for SAP customers
“From this retail customer's perspective [Indigo Books], SAP has narrowed (closed?) the functionality gap with best-of-breed WMS solutions. This milestone is reflected in the hockey-stick growth in EWM implementations SAP experienced in 2009 compared to previous years.”
“Case Studies from SAP Insider: Indigo Books and Newell Rubbermaid” by Adrian Gonzalez, ARC in Logistics Viewpoints Blog, 03/2010
“Some of these [SAP EWM] customers claim that the functionality is on par or exceeds that of well known best of breed solutions. They [SAP] are poised for very fast growth as they penetrate their installed base.”
“Warehouse Management Systems Worldwide Outlook” by Steve Banker, ARC Advisory Group , 07/2010
“For SAP users considering upgrading WMS, the Extended Warehouse Management (EWM) application is to the point where it at least deserves to be put on the short list. EWM has more functionality, and is far more flexible.”
Dwight Klappich, Gartner quoted in article “SAP shops holding onto SAP WMS, but there are benefits to upgrading” by Marc Fortier, Search SAP 07/15/2010
“The offering was designed to provide functionality for complex warehouses and increasingly broad capabilities, such as yard management, slotting, material flow solutions and engineered labor standards.”
“Magic Quadrant for Warehouse Management Systems” by Dwight Klappich, Gartner, 07/29/2010
© 2011 SAP AG. All rights reserved. 14
SAP Extended Warehouse Management Selected implementing Customers
© 2011 SAP AG. All rights reserved. 15
Coverage: Comprehensive transportation mgmt.
- For core operations- For shipper industries &
foundation for freight forwarders
Focus:- Usability & configurability- Performance & process
simplification- Customer & SAP TCO
Coverage: Integrated transportation planning & execution
- Stand-alone solution- Inbound & outbound transp.- Central transportation charge
engine
Limitations: - TCO- Restricted availability
SAP Transportation Mgmt. combines a long history of transportation business, process and IT expertise
SAP Transportation Solution History Strong, Continued Investment to Deliver
Coverage: Shipping planning & optimization- Order-based planning- Integrated with
ERP LE-TRA
Limitations:- No combined in-/outbound
movements ….
Coverage: Shipment execution Limitations:- No shipments combining
in/outbound movements- Delivery-based only- No transportation capacity
planning
Transportation Management (TM 8.0)
Transportation Management (TM 6.0 & 7.0)
APO – Transport. Planning/ Vehicle Scheduling (TP/VS)
ERP - Logistics Exec. Transportation (LE-TRA)
© 2011 SAP AG. All rights reserved. 16
Analytics & Reporting
Overview SAP Transportation Management Solution Coverage
OrderManagement
Freight Planning &Tendering
Freight Execution &Monitoring
Freight Settlement
Event Management
Import / Export, Dangerous Goods & Compliance
Document & Output Management
Integration & Connectivity
TransportationCharge Clerk
Transportation Planner
TransportationDispatcher
Specialist(i.e.Tendering)
SAP Transportation Management
© 2011 SAP AG. All rights reserved. 18
ChemicalsConsumer Products Consumer Products
Company: Chemicals company specializing in silicone-based materials
Implementation:SAP TM 7.0 ca. 50 sites with 300 shipping points
Goal: Efficient, accurate transportation settlement and invoicing
Implementation Scope:Transportation charge management, with extensive charge calculation, invoice creation and verification
Shipment creation in SAP ERP. Charge calculation with carrier verification & freight settlement in TM. Automated invoicing in SAP ERP.
Company: Consumer packaging for beverage, personal care, healthcare, food
Implementation:SAP TM 6.0
Goal: Complete automation of thetendering process (subcontracting)
Implementation Scope:Transportation optimization - freight unit building, truck planning, carrier selection.
Sales order processing in SAP ERP.Transportation planning in SAP TM. Logistics execution in SAP LES(ERP-Logistic Execution System).
Company: World leading company for food and beverages, health & performance nutrition
Implementation:SAP TM 8.0
Goal: A common transportation mgmt. system to eliminate legacy TM systems. Transportation spend reduction & operational efficiency increase.
Implementation Scope:Full TM implementation across freight order mgmt., transportation planning & carrier selection, tendering, subcontracting and freight settlement.
Selected Transportation Management ProjectsSAP Transportation Management 6.0, 7.0 & 8.0
© 2011 SAP AG. All rights reserved. 19
Supply Network Collaboration
Suppliers
Contract Manufacturers
Customers
My Company
Central hub to share real-time supply / demand data across the holistic supply networkCentral hub to share real-time supply / demand data across the holistic supply network
Flextronics: One strategic SNC system services 13 countries, 14 ERP systems (non-SAP) and transacts with 12 000 suppliers, 16 000 users, 300K transactions/week
Philips: One central SNC instance manages collaboration for several divisions to have a single Philip’s interface to the outside world, including multiple tiers of suppliers.
Johnson & Johnson: A single corporate SNC platform for internal collaboration between different regions and line of businesses (Consumer, Pharma, Medical Devices, etc)
Flextronics: One strategic SNC system services 13 countries, 14 ERP systems (non-SAP) and transacts with 12 000 suppliers, 16 000 users, 300K transactions/week
Philips: One central SNC instance manages collaboration for several divisions to have a single Philip’s interface to the outside world, including multiple tiers of suppliers.
Johnson & Johnson: A single corporate SNC platform for internal collaboration between different regions and line of businesses (Consumer, Pharma, Medical Devices, etc)
Enterprise-Wide Strategic Platform for All Supply Chain Collaboration Needs
Supplier Collaboration
Supplier Collaboration
Outsourced ManufacturingOutsourced
Manufacturing
Customer CollaborationCustomer
Collaboration
SNC
Typical collaboration flows: VMI Forecasting Order sharing/acknowledgement (POs,
Releases, Kanban) Shipping Invoicing Quality reporting Work order tracking Multi-tier supply and demand visibility
Typical collaboration flows: VMI Forecasting Order sharing/acknowledgement (POs,
Releases, Kanban) Shipping Invoicing Quality reporting Work order tracking Multi-tier supply and demand visibility
© 2011 SAP AG. All rights reserved. 20
SNC is really a “3-in-1 Solution” Supplier Collaboration, Outsourced Manufacturing, Customer Collaboration
Traditional Users Questions Answered
Supplier Collaboration Procurement Operations Warehousing
“How can I enable suppliers to see changes in my forecasts and POs quickly and automatically?”
“How can I get visibility to in-transit material?”
Outsourced Manufacturing Manufacturing Procurement Quality
“How can I get real-time insight to production progress and projection of end dates and quantities at my contract manufacturer’s site?”
“How can I reduce the number of expedited shipments to customers?” How can I improve product safety and traceability?
Customer Collaboration Sales\Sales Ops Operations Customer Service
“How can I prevent stock-outs, especially during promotions?” “How can I reduce finished goods inventory while still maintaining service
levels?”
“3-in-1 Solution” allows for flexible deployment with ability to growOne Platform for Many Needs Equals Lowered TCO
Suppliers
Contract mfg.
Customers
My companySupplier Collaboration Supply chain efficiencies for raw materials and components
Outsourced Manufacturing Visibility to production progress
Customer Collaboration Automated replenishment of finished goods
SNC
© 2011 SAP AG. All rights reserved. 21
Customers Benefit from SNC
Reduced inventory by 50 – 70%Improved on-time delivery by 70%
Live in 4 Months10-15% stock reduction in the chain using supplier managed inventory
50% FTE reduction at GR processing
66% reduction in early shipments 100% improvement in errors associated with direct material invoice
discrepancies
Acknowledgement rate increased from 40 – 80 %Inbound decreasing for Stock/JIT : - 30 %
Purchase order processing productivity gains 3–5 times Reduction in nonqualified returns 20%
© 2011 SAP AG. All rights reserved. 22
Inter-enterpriseend-to-end processes
DESIGN SOURCE MAKE STORE MOVE SELL SERVICE
Collaborative Demand and Supply Planning
Logistics and Fulfillment management
Manufacturing Network Planning & Execution
Execution
Tactical
Strategic
Supply Chain Costs
ReduceWorking Capital
Supply ChainReliability
Supply Chain Performance ManagementPulling it all Together
financial impactstrategic impact compliance impact
Supply ChainPerformanceManagement
Logistics Manager
SC Analyst
CEO / CFO
VP Supply Chain
© SAP 2010 / Page 22
© 2011 SAP AG. All rights reserved. 23
Excellence in ExecutionPerformance Management
Gain visibility and control across network– Measure, monitor and control KPIs across
trading partners to proactively manage risk and performance
– Gain insights and control, by focusing on metrics that matter (based on best practices such as SCOR, or company specific metrics)
– Powerful visualization and Drill-down via cascading metrics hierarchies
Align stakeholders– Measure and visualize impact between
metrics, across supply chain network
– Metric management functionality provides flexibility to define department-specific metrics, and assign accountability
Automate data collection & analysis– Timely insights, with tight operational
application integration
© 2011 SAP AG. All rights reserved. 24
7 Key Points to Take Home
1.Logistics and Fulfillment are key drivers of today's supply chain
2.It is critical to streamline internal organizations and processes to maximize assets (labor, inventory, etc.) while minimizing costs
3.It is critical to align the enterprise with your trading partners and share information seamlessly, allowing for more effective and cost conscious decisions to be made and executed
4.SAP has the key business processes on a single platform to deliver an integrated supply chain from the point of origin to the point of consumption
5.SAP’s customers are leveraging these solutions to execute an integrated supply chain with successful results
6.Your supply network can have significant impact on providing the ultimate customer experience
7.Companies can either use their supply chain as a differentiator from the competition or not – it’s up to you!