Transcript

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Reflections on Supply Chain Excellence in the context of trends in the globalbusiness environmentJune 2016

Content

Trends 3

Supply Chain Concepts 14

Supply Chain Excellence 26

Syncronic’s Business Consulting Methodology 34

Case descriptions 40

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Megatrends impacting our business environment towards 2025

Trends

1 billion+ new

consumers

Urbanization

Demographic and social

change

Changing economic

power balance

Climate change &

scarce resources

Disrupting technology

Sources: 1. PwC (2014). Global Annual Review 2014, PwC2. Sander, A. et al. (2010). Megatrends: Tailwinds for Growth in a Low-Growth Environment, Boston Consulting Group3. Chatterjee, I. et al. (2010). The decade ahead: Trends that will shape the consumer goods industry, McKinsey & Company 3

1 billion+ new consumers

By 2020, more than 1 billion new consumers are expected to spend between $10 and $100 per day

Country growth opportunities versus riskSelected countries in top 50 for growth and risk

Growth in consumer segment poses both potential and risk,hence Supply Chains must be agile and flexible.

1. Karas, H (2010). The emerging middleclass in developing countries, OECD Development Center, Working paper no. 2852. O’Marah, K. et al. (2014). The Chief Supply Chain Officer Report 2014, SCM World

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Sources:

Urbanization

In year 1800, 2% of the world’s population lived in cities. Currently, it is 50% and increasing by 1,5 million new urban people each week. By 2025, there could be nearly 40 cities, each with a population exceeding 10 million.

Urbanization brings new market opportunities, while the Supply Chains serving those markets must adapt to the new infrastructural landscape.

Infrastructure is under pressure; Increasing demands put pressure on roads, electricity, energy, water, wastewater and waste. Many cities are forced to make huge investments to cope with these changes.

CNN January 30th 2014: New Delhi has outstripped Beijing and gained the inglorious title as the world's most polluted major city.

New ways of living

New social patterns

Changing consumer needs

Changing consumption habits

1. PwC (2014). Global Annual Review 2014, PwC2. Sander, A. et al. (2010). Megatrends: Tailwinds for Growth in a Low-Growth Environment, Boston Consulting Group

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Sources:

The centre of gravity of Supply Chains will shift towards emerging markets, hence the physical Supply Chain structure might need to change or as a minimum become significantly more flexible.

An aging population represents new market opportunities for everything from medicine, housing, pleasure etc. Private labels put pressure on brand owners, forcing them to reduce operating costs.

Demographic and social change

The global financial crisis has driven consumers towards value offerings instead of branded goods

The population in mature markets are shrinking whilst it is growing massively in emerging markets

Immigration is widespread, i.e. in the US; the Hispanic population will make up 23% of the population in 2030

Soaring health costs in Western Europe

In 2050, the average age in Japan is expected to be 53 years, versus 21 years in Nigeria

Sources: 1. PwC (2014). Global Annual Review 2014, PwC2. Sander, A et al (2010). Megatrends: Tailwinds for Growth in a Low-Growth Environment, Boston Consulting Group

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Changing economic power balance

• October 2014: China became the world's largest economy followed by the US (IMF)

• Annual infrastructure spending will more than double by 2025 – previously, these spending were largest in Western Europe, but by 2025 60% will be in the Asia Pacific region

• Emerging markets will

• Challenge developed markets in producing high end products

• Have highly talented people leading global multinationals

• Developed countries will benefit from re-shoring (near shoring, in sourcing) as wage differentials will cancel out

There is a big market potential to be explored, but the associated operating risks will force Supply Chains to cope with uncertainty by being agile and flexible.

Sources: 1. PwC (2014). Global Annual Review 2014, PwC

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Climate change & scarce resources

The world’s continuous growth in both population and consumption will, unless changed, empty our planet’s natural resources while changing our climate.

• 50 years of supply left in proven oil resources

• CO2 emissions dramatically increased as a consequence of the industrial revolution

• Governments fight for domestic resources while failing to address global climate damage

Businesses must adapt to green demand from the market, whilst ensuring a closer tie to strategic resource suppliers. Change in transportation cost might trigger changes in supply networks.

• The average global temperature rises, sea level rises

• Extreme weather events

• CSR demands for People & Planet

• Volatile input costs

• Subsidiaries for green energy/technology increases

• Focus on energy saving appliances

• Recycling and re-use

• Consumers ”going green”

Source: http://climate.nasa.gov/evidence/

Sources: 1. PwC (2014). Global Annual Review 2014, PwC2. Sander, A et al (2010). Megatrends: Tailwinds for Growth in a Low-Growth Environment, Boston Consulting Group3. Chatterjee, I et al (2010). The decade ahead: Trends that will shape the consumer goods industry, McKinsey&Company 8

Disrupting technology

Big data

The internet of things (IoT)

Cloud computing

3D Printing

Advanced robotics

Autonomous vehicles & drones

Digital Consumer

Depending on what business you are in, the disruptive technologies are either an opportunity or threat Make sure to understand: ”What business are you really in?”

The widespread use of electronic devices (mobiles, cameras, RFID’s, sensors etc.) generates huge amounts of data that businesses can analyse to spot profit potentials, trends, correlations and future demand.

IoT is the network of physical objects or "things" wirelessly connected through the internet used in many different fields. Examples are heart monitoring implants, biochip transponders on farm animals, electric clams in coastal waters, automobiles with built-in sensors and many more.

Cloud computing enables data storage and online access to very advanced computer services or resources in “the cloud”. Cloud computing gives businesses and people access to very advanced computing technology to carry out big data analysis, advanced Supply Chain Planning, real-time simulations etc.

A 3D printer is an industrial robot that sequentially deposit material onto a powder bed with inkjet printer heads based on a 3D model. It can produce almost everything as long as it is built from equal layers of material.

Sensor-based robots that attempt to mimic human intelligence. They are used in a variety of fields ranging from manufacturing, nuclear, construction, space and health care.

An autonomous vehicle is any kind of vehicle that does not require real-time instruction from a human operator to function. Making a vehicle autonomous employs a significant level of internal decision-making capability made possible by artificial intelligence and machine learning. Autonomous submarines and cars have been developed for a variety of purposes.

As consumers increasingly utilize electronic devices for basically everything and that demand are often shaped through digital social medias, businesses must incorporate digital supply chains, social media strategies and Omni channel strategy into their services to the customers.

Sources: 1. PwC (2014). Global Annual Review 2014, PwC2. O’Marah, K. et al. ( 2014). The Chief Supply Chain Officer Report 2014, SCM World3. Alicke, K. (2014). SCM 2020 – the new differentiator, McKinsey & Company at Den Danske Logistik konference October 28th 2014 9

What business are you really in?

In such a chaotic world, stay true to your value proposition to customers

Facebook is selling friends

Nemlig.com is selling happy family time

Nike is selling healthy lives

Syncronic is selling value creation for our customers

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Depending on your business – you face industry specific trends

Pharma & HealthcareA. Changing from site stability to site agilityB. Increased regulatory pressure, e.g.

serializationC. Growing pressure on reimbursement will

impact marginsD. Increased need for flexibility in productionE. Better integration with quality

management to ensure efficiency and compliance

F. Consumers as decision-makers

Consumer Goods and Food & BeverageA. Fragmented market, top and bottom is

growing, while the middle-market is shrinking

B. Major growth in internet shoppingC. Increased customer demands in terms of

value and varietyD. Managing product-line complexity in a

cost-efficient way can create a competitive advantage

E. Need for effective handling of multichannel delivery and marketing

RetailA. Increasing sales in online channelsB. Omni channel shopping creates new

ways to purchase goodsC. Application of digital technologies

enhance in-store experiencesD. Investments in digital capabilities, user-

friendly web-sites, data collection and analytics

E. Increased pressure on logistical performance and inventory management

IndustrialsA. Profitable growth based on increased

productivity and cost-efficient manufacturing techniques

B. Closer collaboration and co-development between SC partners

C. Large investments in digitalization and new technology

D. Focus on core competencies and differentiation

E. Skilled people are a prerequisite for growth, but they are more difficult to hire and retain

Chemicals & BiotechA. Changing from blockbuster products to

innovative solutions targeted for particular purposes

B. Growth opportunities in emerging markets require a new mind-set

C. Big investments in specialized equipment, which needs to change to accommodate flexible capacity

D. Price sensitive markets put pressure on costs

E. Closer integration/collaboration with customers to develop solutions

TelecommunicationsA. Huge transformation in digitalization and

exploding volumes in data traffic require big investments in new technology

B. Customers require high speed, fresh content and full mobile coverage

C. Increasing demands regarding security and identity authentication

D. Optimize revenue based on segmentation

E. Developing digital ecosystems, based on joint ventures

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Mega & industry trends cause challenges in Supply Chain Management

Top Challenges in Supply Chain Management Expected Optimization projects in the short horizon

Sources: 1. Lora Cecere (2014). Research in Review, Supply Chain Insights

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Are these also the pain points and challenges that you experience in your Supply Chain?

• S&OP as enabler for improvements• Improve Demand Planning & Forecasting• Inventory Optimization• Break down organisational silos and create

alignment• Create visibility and stability in Supply and Demand• Use and visualize the available data

?

Responses to Mega & Industry trends in Supply Chain Management

Sales & Operations Planning

Supply Chain Strategic remodelling

Supply Chain KPI & Meeting alignment

Demand Planning & Forecasting

Product Lifecycle Planning

Inventory Optimization

Process OptimizationSupply Chain

Planning Concepts

Strategic Demand & Capacity Management

Continuous Improvement

Collaboration with Customers & Suppliers

Available to Promise

Sources: 1. O’Marah, K. et al. ( 2014). The Chief Supply Chain Officer Report 2014, SCM World2. Alicke, K. (2014). SCM 2020 – the new differentiator, McKinsey & Company at Den Danske Logistik Konference, October 28th 20143. www.apics.org, www.supplychaindigital.com, www.supplychainbrain.com, www.globalchange.com, www.logiticsviewpoint.com,

Supply Chain Excellence

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Do you recognise the challenge?

Too often the forecasts are inaccurate. In many cases, this is caused by poor IT systems, complicated processes and lack of competences. The consequences are stock-outs and lost sales, excess Supply Chain costs and capital tied up in inventories.

How can you address the problem?

By establishing an effective collaborative forecasting process with clearly defined roles, horizons, aggregation level and segmentation. Apply simple tools to monitor accuracy and bias, and provide early warnings for exceptions to focus the effort.

Having a reliable forecast to base your plans on, is crucial to satisfy customer demand at lowest possible cost.

Various tools can support the process:

• APO Demand Planning

• SOPHub© – Cloud computing

• Other

Concept What are the key design decisions?

A. Clear governance structure and process segmentation of your product portfolio according to characteristics

B. Promotional planningC. Phase in, phase out planningD. Reporting on accuracy and the value of

manual correctionE. Focus the effort where it matters

Where have we done it?

• Food & Beverage: Brewery - 11% FA impr.• Biotech: Enzymes – 20% FA impr.• Healthcare: Pharma – 18% FA impr.

What business benefits can you expect?

Demand Planning & Forecasting

Cleaning of sales history

ProductSegmentation

Statisticalforecast

Evaluate Alerts

AddCampaigns/promotions

Review unconstrained Demand Plan

Add market intelligence

Sign-off

Release for Supply

Planning

Monitor accuracy and bias

Revenue

Operating Cost

WorkingCapital

IncreaseService Level

Reduce Lost sales

Reduce Scrap

ReduceInventory

ImproveForecast Accuracy

Increase ProcessEfficiency

ImproveProductivity &

UtilizationCAPEX

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Do you recognise the challenge?

Sales and the Supply Chain (SC) are blaming each other that the customer demands are not met, at the same time Finance don’t understand why all links in the SC work with numbers different from the budget. As a consequence you have poor service levels, lack of transparency and alignment, and high inventory related costs.

How can you address the problem?

By establishing a collaborative, cross-functional process designed to reach consensus on a single operating plan, that allocates critical resources to balance Demand and Supply in the most profitable way.

This widespread concept is called Sales & Operations Planning, S&OP.You might already employ it – but unless you get the design decisions right – it won’t work!The most important component for success is the mindset and people, then comes process and systems/tools.

Concept What are the key design decisions?

A. Process with clearly defined roles, responsibilities, results and frequency

B. One language across sales, marketing, supply chain & finance

C. Adequate decision level at right detailD. Consistent model & system that

aggregates across level & functionE. Integration with other planning processes

Where have we done it?

• Industrial: Global Packaging Co.• Consumer Goods: Global Toy Co.• Biotech: Global Enzymes Co.

What business benefits can you expect?

Sales & Operations Planning

Sources: 1. Wallace, T F & Stahl, R A (2008). Sales and Operations Planning: The How-to handbook 3rd ed.

Revenue

Operating Cost

Working Capital

IncreaseService Level

Reduce Lost sales

Reduce Scrap

ReduceInventory

Increase utilization& efficiency

Sales & Marketing

$ / brand

Finance

$ / business unit

Supply Chain

Volume / capacity

Conversion of brand plans to capacity and business unit plans, combining value and volume

”Let our advance worrying become advance thinking and

planning” Winston Churchill

Operational

plan (aligned)

Validation of

business and

financial plans

Deman

dResourcesPre-S&OP

/ Financial

review

Supply

Planning

Demand

PlanningKPI’s

S&OP

Meeting

Strategies

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Do you recognise the challenge?

Your products change every season, hence you have no ”history” to base any of your regular planning activities on, and the master data handling is a chaos. As a result your planners gets exhausted by manual work, you have frequent stock-outs, a large pile of obsolete stock – and unhappy customers

How can you address the problem?

By establishing a concept that identifies products with similar characteristics, which can be used as a template for your future planning activities, while ensuring that products to be replaced are phased out simultaneously.

In larger organizations with many products, system support is critical to identify products with similar demand characteristics and reuse their history to generate forecasts for new products.

Concept What are the key design decisions?

A. Segmentation characteristics: Too many adds complexity – too few will kill planning accuracy

B. Template selection application: Often you need special programming

C. Integration to main planning process: Inventory and sourcing parameters optimized by segmentation

Where have we done it?

• Consumer goods: Global Toy Co., promotion intensive, high seasonality

• Biotech: Global Enzymes Co.

What business benefits can you expect?

Product Lifecycle Planning

Revenue

Operating Cost

Working Capital

IncreaseService Level

Reduce Lost sales

Reduce Scrap

ReduceInventory

Increase utilization& efficiency

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Do you recognise the challenge?

The overall goals are contradicting; how can we reduce supply chain costs while improving the service level? Which products should we produce to stock, and for which products should we wait for the customer order before involving sourcing and production?

How can you address the problem?

By analysing your supply chain characteristics and objectives, and designing your supply chain setup and principles in alignment with the business objectives.

Make sure that your planning principles are supported by the organisational structure, business processes and planning systems.

Concept What are the key design decisions?

A. Planning methods/principalsB. Planning horizons/time fencesC. Planning levels and hierarchyD. Push/pull strategyE. Lot sizing procedureF. Make or buyG. Inventory policyH. Sourcing strategy

Where have we done it?

• Biotech: Global Enzymes Co.• Industrials: Global Tool Co.• Telecom: Software & Hardware

What business benefits can you expect?

Supply Chain Planning Concepts

Revenue

Operating Cost

Working Capital

IncreaseService Level

Reduce Lost sales

Reduce Scrap

ReduceInventory

Increase utilization& efficiency

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Do you recognise the challenge?

Several entities in your organization are performing similar activities. There is a lack of understanding between the different functions leading to sub-optimization, inefficient processes, long response times and slow decision making, resulting in frustration, low productivity and waste of resources.

How can you address the problem?

By applying a systematic approach to identify the root causes of the inefficient processes.

To be successful in your process improvement efforts, it is vital to start with an open mind and the right people to identify the real “Disconnects”. “Disconnects” are everything that inhibits the efficiency and effectiveness of the process.

One of the biggest challenges is often to break down the silos and align processes across organizational borders, in the white space between organizational units.

Concept What are the key design decisions?

A. Support from executive managementB. Processes designed with a clear purposeC. Strategy to handle change managementD. Resources and time horizonsE. Performance management, i.e. KPIS F. Motivation and reward systemG. Alignment between strategy and process

Where have we done it?

• Consumer goods: Global Toy Co.• Healthcare: Global Pharma Co.• Consumer goods: Fashion Company • Consumer goods: Food & Beverage Co

What business benefits can you expect?

Process Optimization

Design future state processes

Proof of concept, workflow prototype

Identify opportunities and

prioritize

Analyze current state processesand pain points

Implement changes

Build future stateroadmap

Build change management strategy

and plan

Monitor

Process Optimization is a “never ending story”

Design

Modeling

ExecutionMonitoring

Optimization

Revenue

Operating Cost

Working Capital

IncreaseService Level

Reduce Lost sales

Reduce Scrap

ReduceInventory

Increase utilization& efficiency

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Do you recognise the challenge?

The inventory is too high, but no clear rules nor threshold values have been defined to trigger actions. Stock-outs happen regularly due to inaccurate forecasts. Products are expiring or becoming obsolete, and have to be scrapped or sold at reduced prices.

How can you address the problem?

By utilizing the data, characteristics and information available, and segment your products.

Establish a clear target and inventory policy per segment, and use a scientific approach to automatically calculate safety stock levels.

The safety stock levels should take desired service level and volatility in demand and lead-time into account.

Multi-echelon inventory optimization is an effective method to optimize inventory across the end-to-end supply chain.

Concept What are the key design decisions?

A. Clear governance structure and processB. Definition of the desired service levelsC. Level of process automation to analyse

data and calculate safety stock levelsD. Frequency of reassessing segmentation

and inventory targets to ensure alignment with demand

E. Reporting of inventory level, value and turns compared with targets

Where have we done it?

• Industrials: Global Packaging Co.• Industrials/Consumer: Cleaning Equip. Co.

What business benefits can you expect?

Inventory Optimization

Revenue

Operating Cost

Working Capital

IncreaseService Level

Reduce Lost sales

Reduce Scrap

ReduceInventory

Increase utilization& efficiency

Define inventorytargets and policy

Update planningparameters

Performsegmentation

Analyze data and product

characteristics

Monitor inventorylevel, value and

turns

Calculate safety stock levels

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Do you recognise the challenge?

As demand volatility increases, fierce competition adds pressure on production cost, triggers reduction programs and even raw materials become scarce with fluctuating prices – the need to strengthen the ties in the supply chain intensifies.

How can you address the problem?

Engaging in collaborative processes with customers and/or suppliers is a natural way of managing variations in your business environment, hence keeping service levels up and costs down.

Depending on where your position in the physical supply chain, your focus might be customer collaboration around forecasting and campaigns in a CPFR set-up or it might be a VMI setup, where your key suppliers own and manage your inventory, and ensure that you never run out of packaging materials for instance.

Concept What are the key design decisions?

A. Who do we want to collaborate with? And what kind of integration do we pursue?

B. What do we want to achieve from our relationships?

C. Process rules and governance structuresD. Alignment to related Sales and Supply

Chain processes

Where have we done it?

• CPG: Food & beverage Co. (CPFR)• Industrials: Global packaging Co. (VMI)

What business benefits can you expect?

Collaboration with Customers & Suppliers – CPFR & VMI

Revenue

Operating Cost

WorkingCapital

IncreaseService Level

Reduce Lost sales

Reduce Scrap

ReduceInventory

ImproveForecast Accuracy

Increase ProcessEfficiency

ImproveProductivity &

UtilizationCAPEX

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Do you recognise the challenge?

Uncertainty about whether or not you can meet the demand in 5-10 years from now. Is your CAPEX plan and capacity aligned with the business and marketing plans? How will the environment and marketplace change, and what will the impact be in your company and its chain?

How can you address the problem?

By designing a collaborative process to align strategic business plans, new product introductions and business development with product supply, and thereby combining the long term financial outlook with production capabilities.

It requires a well-defined way of translating value to volume. Scenarios can be build to model the uncertain future, and evaluate solutions.

In most cases a highly flexible calculation engine is required to simulate what-if scenarios whenever the conditions change.

Concept What are the key design decisions?

A. Level of detail – avoid the suicide quadrant

B. Prioritize and select critical areasC. Build a close link between medium term

and long term planningD. Combine Value and Volume to allow for

recalculation when conditions changeE. Communicate results to Executive

Management and relevant stakeholders

Where have we done it?

• Healthcare: Global Pharma Company• Consumer goods: Food & Beverage Co.

What business benefits can you expect?

Strategic Demand & Capacity Management

Strategic Marketing

Forecast (value or volume)

High-level Supply Plan (volume)

Strategic Capacity Modelling

(volume or hours)

Align with CAPEX plan

Identification of potential Issues

Create scenarios to balance Demand and

Capacity

Reporting and decision-making

Demand vs Capacity Capacity Scalability

Revenue

Operating Cost

Working Capital

IncreaseService Level

Reduce Lost sales

Reduce Scrap

ReduceInventory

Increase utilization& efficiency

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Do you recognise the challenge?

You know you need to change your organisational setup, processes and/or physical network but struggle to clearly identify the alternatives and their impact. Change is needed as you can’t fulfil the targets for product costs, asset utilization, working capital, speed to market and service level.

How can you address the problem?

The foundation for choosing the right strategic setup for your Supply Chain is to acknowledge the importance of the various strategic drivers of your business model.

A “Fit Gap analysis” can point out areas of misalignment and help identify relevant remodelling alternatives.

In many cases; changes are interlinked e.g. closing a distribution centre also impacts organisational structure.

Assess impact of alternatives regarding strategic alignment, finance, org, process & IT.

Concept What are the key design decisions?

A. Which Supply Chain model to use for which segments

B. Physical network structure of locations and capacities

C. Organisational structure supporting your business model

D. Outsourcing or partnerships with key suppliers

Where have we done it?

• Consumer goods: Food & Beverage Company

• Healthcare: Pharma Company

What business benefits can you expect?

• Clarity of your strategic alternatives and their impact will enable you to make the right decisions, which in time, will deliver better performance towards business targets.

• Typical performance improvements are:• Headcount reduction -> Operating cost• Asset utilization -> Operating cost & CAPEX• Inventory reduction -> Working Capital• Shipping cost reduction -> Operating cost

Supply Chain Strategic remodelling

Sources: 1. Perez, H D (2013) Supply Chain Strategies: Which one hits the mark?

Supply Chain Models oriented towards efficiency• Efficient model• Fast model• Continuous flow model

Supply Chain Models oriented towards responsiveness• Agile• Custom configured• Flexible

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Do you recognise the challenge?

You are not certain whether or not you can deliver a customer order enquiry in terms of requested quantity and delivery date. You don’t have the full overview of product availability at all levels in your supply chain, as the balance between supply and demand is not transparent.

How can you address the problem?

By introducing a well-defined and structured process supported by efficient tools.

The execution of the ATP check is straight-forward, but the concept requires careful considerations in order to be efficient and aligned with the Supply Chain, by consideringforecast, inventory and production capacity in the order confirmation process.

Close collaboration between Sales and Production is essential.

Concept What are the key design decisions?

A. Service concept; service level, customer priority, order profitability…

B. Rules for alternative products, locations, procurement methods

C. How to allocate products and report inventory levels

D. Process for handling exceptions/ emergency orders

Where have we done it?

• Industrials: Global Packaging Company• Industrials/Consumer: Cleaning

Equipment Company

What business benefits can you expect?

Available to Promise

Revenue

Operating Cost

Working Capital

IncreaseService Level

Reduce Lost sales

Reduce Scrap

ReduceInventory

Increase utilization& efficiency

24

Do you recognise the challenge?

You spend valuable time and effort on calculating KPIs and attending supply chain coordination meetings, but still lacks a good overview of performance. Improving seems difficult and all the stakeholders in the supply chain work differently, which weakens planning and increases the distance between the links in the chain.

How can you address the problem?

Firstly, you must establish a set of KPI’s that are directly linked to your business strategy and objectives. Use the SCOR model for definition in order to allow benchmarks, and use the SMART model to ensure that your KPI’s are Specific, Measurable, Achievable, Relevant and Time phased.Secondly, you need to synchronize your meetings in order to have a logical flow between your planning decisions, efforts and KPI review. Thirdly, you must link KPI’s to individual performance targets and a review processes.

Concept What are the key design decisions?

A. Link between KPI’s & business objectivesB. Simplicity & Diagnostics: easy to understand and react upon/improveC. Link between KPI’s and meetingsD. Meeting governance structure

• Purpose• Input• Output• Participants• Position in overall SC concept

E. KPI’s linked to individual performance

Where have we done it?

• Consumer goods: Food & beverage Co.• Healthcare: Global Pharma Company

What business benefits can you expect?

Ability to monitor and improve SC Performance across all KPIs and Value drivers. Time saved for all involved stakeholders in meetings, and for calculating KPIs. The time saved can lead to FTE reductions or be reallocated to KPI improvements. Furthermore, employee motivation will increase as their tasks seem more value-adding.

Supply Chain KPI & Meeting alignment “You can’t manage what you don’t measure”

Business Objective

Supply Chain KPI’s

Department

Individual

Mon Tue Wed Thu Fri

Daily huddle (15m)

Daily huddle (15m)

Daily huddle (15m)

Daily huddle (15m)

Daily huddle (15m)

S&OP Productionscheduling

Mgmt. & KPI review

Logistics Packaging

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Do you recognise the challenge?

Despite having a great KPI scorecard, your KPIs don’t really improve unless you make fundamental changes in structural projects.

How can you address the problem?

By establishing a simple concept for how to capitalize on everyday ideas and empower your employees to drive small changes within their respective area.

Promote a continuous improvement culture by tracking, recognising and rewarding “Continuous Improvement performance”. Celebrate Success.

Allocate a “special” workspace where sub-teams can work on improvements.Train employees in a continuous improvement method.

Concept What are the key design decisions?

A. Break down KPI scorecard to individual level and assign personal targets

B. Performance Management & Reward system

C. Target setting: ambitious, but realisticD. Selection of Continuous improvement

tool and toolboxE. Training of all employees

Where have we done it?

• Consumer goods: Food & Beverage Co.• Healthcare: Global Pharma Co.

What business benefits can you expect?

• Employee satisfaction as a result of competence lift, empowerment and possibility to “make a difference”.

• All related KPIs will improve step by step.

Continuous Improvement

70

60

50

40

30

20

Train everyone in a tool,

i.e. DMAIC; in a very

simple manor DMAIC

leads you to the root

cause of problems

1-page tool

Dedicate a space in the

office where employees

can work on their

DMAICs

Assign targets to each individual

and track number of DMAIC’s

Select DMAIC of the month and

let employees present their

DMAICs to each other

Top management should

participate in monthly DMAIC

review

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Do you recognise the challenge?

Your current Supply Chain performance might not be bad as it you think; but as the world changes around you, and competition intensifies, you need to be on the edge and amongst the best in class with your Supply Chain.

How can you address the problem?

Make a 360 degree review of your current performance and benchmark with best in class.

Seek inspiration from other companies and perhaps industries.

Define targets and align with company strategy.

Define your Supply Chain Excellence project and implement it!

Concept

Supply Chain Excellence

1 Analysing through the value driver trees

Using Syncronic’s Business Consulting Method

2

Deploying process expertise3

Doing more with less4

CLARIFY

ANALYZE

DESIGN

IMPROVE

CONTROL

Supply Chain Excellence - Process Framework

SOURCE MAKE DELIVER SELL

Execution

Planning

Strategy

SupplierRelationshipManagement

WarehouseManagement

ProductionShop floor

Business &Network

CustomerRelationshipManagement

Demand planning

InventoryPlanning

Productionplanning

Procurementplanning

Distributionplanning

CustomerSales &

MarketingProduct

mixSuppliers, plants, DCs,

customers etc.Make or

BuySourcing

S&OP

Machines, labour, space

Raw materials, components

Finance

Promotionplanning

Networkplanning

Retail/Customer

DistributionStorageManufacturingPurchasing Inventory

Material flowCash & Information

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Supply Chain Excellence - How to improve Revenue

Revenue

Increase sales of existing products to existing customers

Sales of new Products

Sales in new Markets or channels

Customer integration

Promotions

Customer satisfaction

InnovationSourcing

ExpansionM&A

% Customer sales /∑sales

Promotion effectivenessGM increase / promo cost

Forecast Accuracy…Out of Stock / Lost SalesService levelClaimsReturnsOn time deliveryError free invoice…

New Product Performance% sales/∑sales%GM/∑GM

Customer collaboration

Promotion planning

Supply Chain StrategyAvailable To PromiseDemand PlanningS&OPNetwork PlanningProduction PlanningCapacity PlanningInventory PlanningPurchase PlanningDistribution Planning

Innovation ProcessPhase in/out planning

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Key PerformanceIndicator

Supply Chain Process

ManagementLever

Business Strategy Value driver

Supply Chain Excellence – How to improve Operating Margin

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Operating Margin

Reduce cost

Increase price

Cost to serveComplexity mgmt.

Resource utilization

Productivity

Price, volume, mix, brand, equity trends

Total Supply Chain cost

Price indexMarket share

Labour & Assetutilization

Available to PromiseForecast AccuracyOut of StockLost SalesService levelClaimsReturnsOn time deliveryError free invoice…

Labour & Asset productivity

Product & Customer portfolio management

Annual Business Planning

Supply Chain Strategy

Available To PromiseDemand PlanningS&OPNetwork PlanningProduction PlanningCapacity PlanningInventory PlanningPurchase PlanningDistribution Planning

Key PerformanceIndicator

Supply Chain Process

ManagementLever

Business Strategy Value driver

Supply Chain Excellence – How to improve Working Capital

Working Capital

Reduce inventories

Expedite receivables

Inventory policiesSafety stockService model

Supplier integration and negotiation

Customer integration Terms & Techn.

Days of coverWIPService level

Forecast Accuracy

Days sales outstanding

Average days to pay

Customer collaborationDemand PlanningS&OPMulti-site PlanningProduction PlanningInventory PlanningPurchase PlanningSupplier Collaboration

Sourcing StrategyPurchasing PlanningSupplier Collaboration

Extendpayables

Sales StrategySales PlanningCustomer Collaboration

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Key PerformanceIndicator

Supply Chain Process

ManagementLever

Business Strategy Value driver

Supply Chain Excellence – How to improve Capital Investment

Capital Investment(CAPEX)

Reduce investmentImprove investment productivity

Investment alternativesReturn realizationInvestment categories:PP&ETechnologyOutsourcingR&DProduct Development

ProductivityUtilizationNet Present ValueReturn On InvestmentLong Term Strategic Value

Annual Business Planning

SC Strategy• Suppliers• Materials• Capacity• Locations• Make or buy• Product Portfolio

Capacity Planning

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Key PerformanceIndicator

Supply Chain Process

ManagementLever

Business Strategy Value driver

Business Case Calculator

Our Business Case Calculator establishes the link between effort and value creation.We use our Business Case Calculator to: assess the value opportunity (before) estimate the business case (during) control the results (after)

Having KPIs and Value Drivers as an integral part of the project ensures that value creation is in focus throughout project delivery.Furthermore, you will have full transparency to P&L and Cash flow impact of the project.

Profit & Loss

Net Sales- COGSGross Profit- SG&A CostEBITDA- DepreciationEBIT- Financing CostEarnings before Tax-TaxNet Income

KPI’s

Lost SalesProcess efficiency

ScrapDistribution costWarehouse costExpedite orders

InventoryDays outstanding supplier

Days outstanding customerProductivity

UtilizationOther

Value Drivers

Revenue

Total Cost

Working Capital

CAPEX Cash flow

Y1 Y2 Y3

Y1 Y2 Y3

RevenueTotal costWorking CapitalCAPEXNet Cash flow

Fore

cast

Acc

ura

cy, S

ervi

ce L

evel

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When all you got is a hammer, every problem looks like a nail

Hello,

My name is Mr. Fix It!

For small problems, I use the small hammer

For big problems, I use the big hammer

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From: Richard Scary: Alle mine venner

Syncronic’s Business Consulting Methodology

Clarifying project purpose and boundaries

Collecting high level data

Preparing approach & project proposal

Detailed process mapping

Data collection Segmentation Data analysis Identify Root Causes

Review Best practise Brainstorm solutions System req./Design Assess solution impact Plan implementation Align stakeholders Decide next step

Kick-off implementation

Implement solution Manage implement Close implement

Collect feed-back & learnings from key stakeholders

Collect actualperformance

Review project Sign-off project

Presentation: Problem & Goal

statement High level Supply

Chain, Process & Systems sketch

Scope & Facts Organisational impact Value Opportunity

Project proposal

Presentation: Detailed process

map Problem segments

and areas Problem magnitude Root Causes

Updated Project Charter

Presentation: Solution alt. & impact Design documents Recommendation Implement. plan Business case

Updated Project Charter Go/No-Go decision

Solution dependent documentation i.e.: Org. charts Process descript. System specs Other

Bi-weekly status reports

Improvement delivered

Presentation: Project learnings Business case

realization Case description/

Article Project Sign-off

Deliverab

lesA

ctivities

Break 12 weeks

What is the problem? Why is it wrong? How can we fix it? Let’s implement it! Did it work?

3-5 weeks 4-12+ weeks 1 week

CLARIFY ANALYZE DESIGN IMPROVE CONTROL

Go/No-Go Decision

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CLARIFY: What is the problem?

2 hour meeting with key stakeholders using our Clarification Road Map of 6 simple steps to clarify and structure your business issue in a simple and engaging manor.

The outcome is alignment between involved stakeholders on your business issue, and afterwards a proposed approach on how to find a solution.

CLARIFICATION ROAD MAP: Example - Improve Supply Chain performance for packaging products

Start

Value Opportunity of your problem

Scope & Facts of your problem

What is your problem?

What is your goal?

High level map of process, people &

systems

Risk of current business situation

Organisational impact

35

1

2

3

4

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Solution Remarks

Key themes:What are the problem areas?What is the magnitude of the problems?What are the root causes?

ANALYSE: Why is it wrong?

A-products B-Products C-Products

What tools do we use?• Segmentation• Data Charts:

• Waterfall chart• Pie charts• Pareto

• SOPHub analyser• 4M Fishbone: Cause & effect• Why? Why?: Root cause Analysis• Value Chain map• Interview guides

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Problem: We have too much in stock

Why? We bought more than needed

Why? Because of incorrect replenishment parameters

Why? We don’t have any concept for different product

groups

Why? We don’t use segmentation

Why? Because nobody knows how to do it

How?

Run a segmentation analysis and define planning

parameters according to demand and supply pattern.

Train planners in segmentation and planning concepts.

SOLUTION BRAINSTORMINGBEST PRACTISE CONCEPT

DESIGN: How can we fix it?

BUSINESS IMPACT ANALYSIS

Organisation

Business

BenefitsSystem

Process

BUSINESS CASE CALCULATOR MILESTONE PLAN

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Key themes:How can we fix it?What is the impact of the solution?

What tools do we use?• Best Practise Concepts• Solution Brainstorming • Business Impact analysis• Business Case Calculator• Milestone planning• Various design documents

IMPROVE: Let’s implement it!

Key themes:Project management to meet targets for time, resources and quality.

PROJECT STATUS DASHBOARDMILESTONE PLAN

TEMPLATESCHANGE MANAGEMENT TOOL BOX

IMPROVE WORK PACKAGES

Open In process Complete

ChangeImpact

assessm. tool

ChangeStrategy &

Plan

Training PlanCommunic.

PlanFAQ’s

DesignSpecification

ChangeQuestion-

naire

Workshop tools

(Ice breakers)

Business Process

Description

Steering group status

Action Log

WORK

TIME

TEAM

BUDGET

SCOPE

RISK

STAKEHOLDERS

BUSINESS BENEFITS

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Key themes:Project management to meet targets for time, resources and quality.

What tools do we use?• Project Status Dashboard• Milestone Plan• Change management tool box• Change Impact Assessment• Change strategy & plan• Training plan• …• Action Log• Relevant project templates

CONTROL: Did it work?

BUSINESS CASE CALCULATOR

REVIEW QUESTIONNAIRE CASE DESCRIPTION

1. How satisfied are you with the outcome of the project?1 2 3 4 5

2. How satisfied are you with the project execution?1 2 3 4 5

3. What would you do differently next time?

4. What could we do differently next time

5. ….

COMPANYCHALLENGE

SOLUTION CONCEPTIMPLEMENTATION APPROACH

RESULTSLEARNINGS

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Key themes:Did we achieve targets?What can we learn for next time?

What tools do we use?• Review questionnaire• Business Case Calculator• Case description

Case 1: Demand Planning & Forecasting

Industry & company characteristics

Global manufacturer of toys with production facilities on all continents and with a retailernetwork covering more than 130 marketsworldwide.

Business Challenge

The client wanted to revitalize the forecasting process as input to S&OP, as well as improve execution on Executive S&OP decisions regarding capacity constraints.

Recognised Business Benefits

• Improved forecast Accuracy on SKU level• Improved process efficiency• Improved communication of S&OP

decisions• Increased focus on SKU profitability in the

event of capacity constraints

How we delivered

• Identified pain points• Recommended improvement initiatives

and roadmap, including forecast quality improvements

• Designed process for centralized statistical forecasting

• Developed a prototype process and tool for a single business unit

• Workshop were held to define and align constraint definitions, execution guidelines and process governance

Solution Concept – Central forecasting process & integration of capacity constraints

• New process and concept for central statistical forecasting

• Implemented advanced statistical forecast tool (SOPHub)

• Application makes statistical forecast possible for new products

• Segmentation of products where trivials are forecasted centrally

• Capacity constraints defined and implemented in the demand plan

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Case 2: Sales & Operations Planning

Industry & company characteristics

Manufacturer of tools with global production facilities and sales activities in more than 100 countries.

Business Challenge

The client had no global Sales & Operations Planning process resulting in lack of integration between the planning processes and the manufacturing execution and procurement.

Recognised Business Benefits

Enabled the client to control, analyse and align its S&OP, distribution and production on global level with the following results:

• Increased service level for the customers• Reduced inventory levels• Increased assets utilization

How we delivered

• Role as trusted advisor for the program management

• Business architects & functional experts• Introduced the principles of Sales &

Operations Planning and established a new integrated planning concept

• Business analysis and design of the to-be processes and organization

• Mapping of system requirements• Selected new system platform in

accordance with best practice

Solution Concept – New Global S&OP integrated with central forecast process

• A global Sales & Operations Planning Process

• One centralised forecast process with automated statistical baseline forecast

• Improved process efficiency and aligned organisational responsibilities

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Case 3: Product Lifecycle Planning

Industry & company characteristics

World leading industrial biotech company, selling more than 700 different products in 130 countries. The company has more than 6000 employees, and production facilities in Denmark, North America and China.

Business Challenge

• Manage product introductions in general• Handling of products being gradually

phased out for specific customers or countries

• Manage change of production sites -> Item number change -> Phase in/out of material numbers

• Missing process to gather rules and expectations for phase in/out

• No formal governance structure

Recognised Business Benefits

• Improved forecast accuracy• Reduced amount of obsolete and expired

stock, finished goods and raw materials• Increased service level during product

phasein/out• Timely collection of relevant information

for modelling• Improved quality of information and data

for relevant stakeholders

How we delivered

• Design of process to handle all types of product introductions and retirements

• Governance structure clearly stating who does what and when

• Statistical profiles to model introductions and retirements

• Integration of process and model in SAP• Define and build link to production

planning and order fulfilment

Solution Concepts

Integrated lifecycle planningModelling of introductions/retirements

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Case 4: Supply Chain Planning Concepts

Industry & company characteristics

World leading industrial biotech company, selling more than 700 different products in 130 countries. The company has more than 6000 employees, and production facilities in Denmark, North America and China.

Business Challenge

The client was facing significant challenges in meeting target service levels while keeping costs down.

As products were assigned to different planning categories, there was no clear guideline on how planning parameters were set for the particular category, leading to many non-optimal plans and mistakes in master data.

Recognised Business Benefits

• Clarity of which product groups the business had and how to plan these groups while optimizing service level and costs

• Improved Service Level• Reduced Scrap• Reduced Inventory

How we delivered

Syncronic performed an in depth segmentation analysis on all products, considering demand pattern, volume, supply situation, service levels & costs.Subsequently defined optimal setup parameters per group for Forecast method, MRP profile, Safety stock & Lot size.Training of client team and supported the update of all master data in ERP system.

Solution Concept

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Case 5: Inventory Optimization

Industry & company characteristics

World leading manufacturer of food processing and packaging solutions. The client has sales companies in more than 150 countries and manufacturing facilities in more than 30.

Business Challenge

No clearly defined concept nor process for planning and monitoring inventory levels resulted in uncontrolled inventory levels in the global supply chain. Sporadic local efforts to improve planning led to a inhomogeneous way of planning. The target of the project was to maintain the service availability with segmented and systematically controlled inventory levels.

Recognised Business Benefits

• Visibility of inventory levels across the global supply chain, split into safety stock, cycle stock and stock in transit as days of coverage and value

• Standardized global inventory planning process with automated system support to re-calibrate target inventory levels based on changes in demand- and lead-time variability

• Key performance indicators comparing the actual tracked inventory levels against target inventory levels

How we delivered

Introduced the principles of segmentation and inventory planning. Inventory models based on sophisticated safety stock models driven by service levels, forecast quality and lead-time deviation were applied for selected product segments, and simplified models for other segments. Leading the business analysis and design of the to-be processes as well as the functional design of the IT tool.

Solution Concepts

44

Case 6: Process Optimization

Global Pharmaceutical Company

The client had inefficient business processes and undefined tasks within its central master data. The result was a big backlog, that was affecting the whole supply chain.

Redesign of business processes and implementation of these.Restructuring the work responsibilities.Customized tools delivered.

Efficient processes affecting the whole supply chain.Well defined and transparent work flows.Enabled the client to manage ongoing cases.

Identified root causes of operational inefficiency.Developed customized tools to handle business processes efficiently.Training of stakeholders.

International Fashion Company

Deliver standardized process mapping tool incl. training.Documentation of current processes in the warehouses, and identified potential areas of improvements.

Processes documented via Brown paper process. Mapping in all warehouses, and improvements identified in close collaboration with warehouse employees.

Standardized approach to describe and understand processes. Collaborative mapping and open mind-set provided a shared view on current practices and future opportunities for improvements.

Train-the-trainer approach to establish internal ownership of process maps. Facilitation of workshops, asking the right questions, ensuring standardization and a common level of detail.

Food & Beverage Company The planning process of certain product groups with short shelf life were not optimized leading to a high scrap level on these products.

Stocks were centralised to national DCs and “pulled” to regional DCs according to reorder points, based on demand patterns of each individual product.

Scrap levels were reduced by 20% on these product categories.

Using the LEAN method of DMAIC to clearly describe the problem, analyse the root causes and define a new planning concept.

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Industry Challenge Solution Benefits How we delivered

Case 7: Collaboration with Customers & Suppliers – CPFR & VMI

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Industrial: Global Packaging Company delivering packaging materials to the food and beverage industry.

To keep service levels high while optimizing inventories on some of the high volume SKUs, where demand varied much more than justified by sales at customer end.

Taking over the responsibility of stock replenishment for certain SKU’s based on agreed service levels, and access to their consumption data.Joint process concept defined with key customers and solution developed in SAP APO.

• Increased forecast accuracy

• Reduced stock levels• Reduced stock outs• Reduced scrap• Improved process

efficiency

• Strategic review of potential customers to enter into VMI setup

• Defining the potential of a VMI concept and system options

• Engagement workshop with customers

• Piloting and implementing

Consumer goods: Food & Beverage Company delivering to the large retailers on the markets, 250 SKUs.

Sales was highly impacted by promotions, seasonality and competitor activity causing huge demand variations from week to week. No delivery equalled lost sales, thus, to manage stock levels the demand input from customers was key input for planning.

For top 3 customer, a CPFR process was agreed and implemented.Forecast submitted weekly for 12 weeks ahead. Forecast was reviewed and incorporated into supply chain plans. In case of short supply; Supply Chain, Sales and Customer worked together on finding a workable solution.Monthly review meetings.

• Demand visibility and shaping

• Increased forecast accuracy

• Increased service level• Reduced lost sales

• Designing the CPFR solution and estimating business impact per customer

• Approval by account directors

• Piloting with one customer before rolling out to other customers

• Continuously monitor performance of process and work to minimize errors

Industry Challenge Solution Benefits How we delivered

Case 8: Strategic Demand and Capacity Management

Industry & company characteristics

Pharmaceutical company with sales in more than 100 countries worldwide. The company has almost 5000 employees, and 6 production facilities globally.

Business Challenge

Identify potential long term capacity constraints, by comparing the strategic marketing forecast against the capabilities in Product Supply. Analyze strategic options for capacity increase, and align with CAPEX.

Recognised Business Benefits

• Early identification of potential capacity constraints

• Alignment between strategic marketing plans, production capacity and CAPEX planning

• Clarification of uncertainties in the marketing plans, and how this could impact Product Supply

• Postponement of large Capital Investments (capacity)

How we delivered

• Designed and built a standardized process model to be executed twice per year

• Facilitate workshops with production sites to describe and challenge capacity model

• Facilitate workshops with Marketing and Finance to build a model in Excel to align long term forecast in quantity and value, and perform simple simulations

Solution Concepts

Fixed process involving all manufacturing sites in identifying, discussing and challenging long term capacity.

In parallel the long term forecast (strategic marketing plan) were “translated” into a long term master plan for Product Supply, by designing a MRP-model on product family level to calculate dependent requirements.

Capacity and Demand were analysed, and potential bottlenecks identified. Solutions to capacity constraints were defined and pre-tested in scenarios.

47

Case 9: Supply Chain Strategic remodelling

Industry & company characteristics

Company in the food & beverage industry delivering to the two market segments; large retailers and small independent retailers. The supply chain consisted of 2 factory locations, 2 national DC’s, 16 regional DC’s and 2700 SKU’s.Planning organisation of 40 FTE’s.

Business Challenge

The Supply Chain planning function could not meet targets for service and cost, communication lines along the physical supply chain from customer to production was blurry and even more the organisation struggled to dedicate resources to improve the situation.

Recognised Business Benefits

• Supply Chain setup aligned with strategic drivers

• Improved service perception for both internal and external customer

• Head count savings as FTE’s reduced from 40 to 33

• Dedicated resources for Supply Chain development enabling further performance improvement

How we delivered

• Assessed the overall strategic drivers of the business and aligned with stakeholders

• Identified alternatives and scored according to strategic drivers

• Planned and executed a re-organisation program including communications, FAQ’s, job descriptions, redundancies, selection of candidates

• Kick-starting the new organisation

Solution Concept - Organizing according to Value Chain

Large retail

Small retail

Develop-ment

SCPlanning

Customer

ServiceDemand Planning

& ForecastingInventory/

DistributionPlanning

ProductionPlanning

MaterialsPlanning

End-to-end responsibility

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Case 10: Available to Promise

Manufacturer of professional cleaning equipment for the industrial & consumer market. The company sell products world wide in more than 70 countries, and they have manufacturing facilities in 10 countries.

The client needed to integrate the Sales and Operations Planning (S&OP) process with the order fulfillment process and thereby consider supply restrictions in the order handling process in an automated way.

Global ATP was chosen as the tool, involving the following key functionalities:• Location substitution

with Rules-Based-ATP• Product Allocation to

ensure fair distribution of the availability

• Parameter-dependent solution for handling spike orders

• Increased customer satisfaction through better availability of products

• Reduction of lost sales• Reduction of stock

levels in the supply network

• Higher forecast accuracy

• Availability less affected by spike orders

• To ensure the right process and tool combination Syncronic conducted a proof of concept phase including a system and process prototype

• Design and implement SAP GATP with integration to master data management, supply network rules, demand forecast, as well as supply constraints

World leading manufacturer of food processing and packaging solutions. The client has sales companies in more than 150 countries and manufacturing facilities in more than 30.

The main objective was to achieve collaborative planning between sales companies and production factories and to ensure a quick and reliable order confirmation response towards customers when entering orders.

The solution was designed based on existing SAP SCM platform (GATP). • Product Allocation was

used as the key method• Developments were

made to optimize collaboration across the supply chain

• KPI report for the ATP checks in GATP

• Increased customer satisfaction through quicker and more reliable order confirmation process

• Increased transparency in the supply chain

• Better utilization of production capacity

• Designing and implementing SAP GATP

• Successfully enabling more than 200 users globally

• Knowledge on how to integrate order fulfillment with the planning processes

• Project management• Go-live support

Industry Challenge Solution Benefits How we delivered

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Case 11: Supply Chain KPI & Meeting alignment

Global Pharmaceutical Company

Increased management attention on Forecast Accuracy and Inventory levels, to improve service level and reduce supply chain costs. The customer did not have targets and supporting measurements to identify root causes and potential improvement areas.

Simple KPI’s were defined, documented and communicated to monitor forecast accuracy, bias and inventory development. Easy-to-use tools were built in Excel and SAP Business Objects, with the ability to drill up/down through the product hierarchy.

• Active usage of KPI’s to identify issues and improvement potential

• Ability to communicate status and progress at all levels

• Forecast accuracy improved by 18%

• Clear picture of inventory projections based on planning results

• Facilitation of target definition and setting

• Definition and communication of simple diagnostic KPI’s

• Build tools to automatically calculate KPI and identify exceptions

• Establish platform to analyse and communicate KPI’s

Food & Beverage Company KPI were measured in various ways and files. They were not used consistently and weren’t synchronized properly with the planning meetings taking place throughout the monthly, weekly and daily cycle.

A total Supply Chain KPI Scorecard with actual versus target was developed and assigned to the responsibility of one person.Meetings with clear purpose, input, output, participants and sequence were inserted into a fixed monthly cycle.KPI’s assigned individually.

• Hours spend on KPI reporting reduced from 20 to 3 hours per month

• Time spend in meetings reduced 50% from approx. 138 to 74 hours per month across all participants and including preparation

• Clear KPI concept enabled systematic improvement on all KPI’s

• Redesigning KPI’s according to business objective, and combine in one common report

• Workshop mapping all existing meetings, identifying conflicts

• Design of new meeting schedule

• Break down of KPI’s to individual and add to performance evaluation

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Industry Challenge Solution Benefits How we delivered

Case 12: Continuous Improvement

Industry & company characteristics

Company in the food & beverage industry with a Supply Chain Planning organisation of 40 FTE’s looking after Forecasting, S&OP, Customer Service, Capacity Planning, Detailed scheduling and Materials Packaging Planning.

Business Challenge

The organisation did not have a process or culture of continuous improvement at the individual or team level.

Improvement were left to management process or culture, hence most Supply Chain KPI’s were poor and employee motivation even so.

Recognised Business Benefits

• ALL Supply Chain KPI’s improved step by step

• 16 individual DMAIC’s performed the first quarter and 66 in the first year

• Employee satisfaction in company survey improved by 23%

How we delivered

• Management team trained in LEAN thinking and continuous improvement tools

• DMAIC workshop wit management team analysing root causes

• Solution concept piloted in sub-team• Solution concept approved by board and

implemented• Project review

Continuous Improvement Concept

1-Page DMAIC Tool

+ + =

DMAIC’Ometer

70

60

50

40

30

20

CI Work Area

KPI’sServiceInventoryScrap---

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Case 13: Supply Chain Excellence

Industry & company characteristics

Company in the food & beverage industry with 2 national production facilities, 2 national DC’s, 16 regional DC’s and 2700 SKU’s. Very tough competitive marketplace with low margins.

Business Challenge

The company needed to save 10mio DKK across the Supply Chain within a 2 year timeframe as part of an overall restructure, and hence a supply chain excellence program was established and assigned to the Planning & Improvement organisation.Some vast ideas of improvement areas was the starting point.

Recognised Business Benefits

Saved 10 mio. DKK across the Supply Chain P&L1. Consignment stock: 3 mio. DKK2. Pallet optimization: 2 mio. DKK3. Warehouse cost: 2 mio. DKK4. Production consolidation: 2 mio. DKK5. Distribution cost: 1 mio. DKK

How we delivered

• Detailed Analysis of the Supply Chain P&L with identification of “big bugs”

• Advanced off site brainstorming workshops to generate and refine ideas with participation from different departments and competence areas

• Prioritisation and planning of ideas• Assignment of ideas to managers• Monthly follow up and reporting to

board of progress and P&L Impact

Supply Chain Improvement - “Big bugs/bucks”

10 mio. DKK

+ + =Consignment

+ +Pallet

optimizationWarehouse

costsProduction

consolidationDistribution

cost

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Notes

53

CLARIFY your business issue:

54

What is your problem?

What is your goal?

High level map of process, people & systems

Scope of your problem

Facts about your problem

Organisational impact of your problem Risk of current situation Value opportunity of your problem

Business Benefits

Current KPI performance

Target KPI performance

1 2 3

6 5 4

About Syncronic

Syncronic Management Consulting is a Danish / Swedish management consultancy company, focusing on delivering innovative, simple and value adding solutions within Supply Chain Management.

Since 2006 Syncronic has established its reputation in the market; as the company where the consultant understands your business, and design and implements, business processes that actually works. This has lead to a significant growth in improvement projects.

We have therefore strengthened our competences with new people, and established a dedicated Business Consulting practice focused on creating value through business improvement projects.

For further information, please contact:

Camilla Thuge LundHead of Business ConsultingM: +45 21 15 56 29E: [email protected]

Lars KissowCEOM: +45 29 24 74 47E: [email protected]

Søren RaunPrincipal Business ConsultantM: +45 23 45 38 01 E: [email protected]

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SYNCRONIC

Kirkebjerg Allé 84, 2.th.

DK-2605 Brøndby

www.syncronic.com


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