supply chain control towers: concept and impact · · 2014-01-21supply chain control towers:...

© AberdeenGroup 2011

Supply Chain

Control Towers:

Concept and Impact

October 31, 2012

© AberdeenGroup 2012 2

Webcast Panel

Bryan Ball Aberdeen Group

VP and Principal

Analyst

SCM Research

Practice

Kirk Munroe Kinaxis

VP of Marketing

© AberdeenGroup 2011

Supply Chain

Control Towers:

Concept and Impact

Bryan Ball

Vice President and

Principal Analyst

Supply Chain Practice

OCT 2012


About Aberdeen and SCM Practice

Our Methodology

The Control Tower Business Case

Pressures

Actions

Capabilities

Power of the Tower

Enablers

Summary

Agenda


Aberdeen’s SCM research coverage addresses the problems of today’s complex supply chains


Aberdeen Supply Chain Research At a Glance

•Over 4100 of Supply Chain

Executives Surveyed over the past

year

•In-depth Online Supply Chain

Research – over 450 published

reports

•Over 27,000 Report Downloads

Yearly

•Over 79,000 Subscribers

•Annual Supply Chain

Management leadership

Summits

•Library of Research Topics

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Our Methodology


Pressures

Actions

Capabilities

Power of the Tower

Enablers

Summary

Agenda

© AberdeenGroup 2011 8 Twitter: #scm #supplychain

The Maturity Class Framework

Selected Performance

Criteria (KPI)

Revenue Metrics

Cost Metrics

Campaign Metrics

Total

Respondents:

Top

20%

Middle

50%

Bottom

30% Respondents are scored

individually across KPI

Best-in-Class

Industry

Average

Laggard

8

Aberd

een

’s M

eth

od

olo

gy

© AberdeenGroup 2011 9 Twitter: #scm #supplychain

Aberdeen Maturity Class Framework

What are Best-in-Class

companies doing differently?

What pitfalls are they

avoiding?

Why are they achieving

greater success?

What technologies and

services are enabling them

to succeed?

Aberd

een

’s M

eth

od

olo

gy

C

E

Pressures:External and internal forces that impact an organization’s

market position, competitiveness, or business operations.

Actions:The strategic approaches that an organization takes in

response to industry pressures.Actions:The strategic approaches that an organization takes in

response to industry pressures.

Capabilities:The business competencies (organization, process, etc…)

required to execute corporate strategy.Capabilities:The business competencies (organization, process, etc…)

required to execute corporate strategy.

Enablers:The key technology solutions required to support the

organization’s business practices.



Our Methodology


Pressures

Actions

Capabilities

Power of the Tower

Enablers

Summary

Agenda


The Business Challenge

“What if” we could remove all information delay and

operate in real time for decision making?

Responses to customer inquiries on the spot.

What if questions answered in minutes, not hours/days

Is this notion of real time visibility and actionable insight

even feasible?

The "Holy Grail" for supply chain leaders has always been

to remove as much latency as possible in every aspect of

the supply chain

Control Towers have the potential to make this possibility

come alive!


Concept and Definition

Control Towers as a concept A solution spanning the supply chain creating an end-to-end

seamless and holistic view

Alerts are provided in real time and the problem can be solved from

that view from anywhere in supply chain

Latency in process and data delay is reduced substantially

Control Towers - Definition through capabilities Centralized supply chain function

Ability to drill down to root cause and solve problem from that

perspective.

Data by companies with these capabilities compared to those without

Value of the Tower Time to problem resolution!

Across the board performance metrics from superior processes.



Our Methodology


Pressures

Actions

Capabilities

Power of the Tower

Enablers

Summary

Agenda


Pressure to Grow

While Managing Cost/Complexity

34%

34%

37%

51%

0% 10% 20% 30% 40% 50% 60%

Diminishing control over supply

chain operating costs

Escalating demand for service

from customers

Growing complexity of

global operations

Need to improve top line revenue

Percentage of Respondents, n = 59


Behind the Pressures

Growth – how to manage profitably

Capacity, capital, systems, controls

Complexity

Additions of suppliers, partners, networks and geos

Lead time increases with extension of supply chain

Maintain current position and service level a challenge

Demand for service

Value added services, design, marketing, advertising

Installation or field support

Potential added cost in some form

Diminishing control over supply chain costs

Sum of challenges related to first three pressures

Speed of decision amplifies the cost challenge



Our Methodology


Pressures

Actions

Capabilities

Power of the Tower

Enablers

Summary

Agenda


Control Tower Actions

To Address Pressures

48%44%

36%

50%

24%

35%

0%

10%

20%

30%

40%

50%

60%

Streamline processes

for easier monitoring

Create multiple

scenarios to

analyze S&OP

Create collaboration

initiatives with suppliers

Pe

rce

nta

ge

of

Re

sp

on

de

nts

, n

= 6

1

Control Tower Non Control Tower


Control Tower Actions

Similar actions between control tower vs. non–control tower

Streamlining processes to enable profitable growth.

End-to-end view

Getting the most out of processes and capacity

Multiple scenarios to support S&OP

Enabled by CT capabilities

View the challenge by testing the limits

All options considered, tradeoffs vetted

Breeds commitment at all levels, confidence before execution

End-to-end view considered at planning level



Our Methodology


Pressures

Actions

Capabilities

Power of the Tower

Enablers

Summary

Agenda


Process & Organization Capabilities

50%

41% 40%

30%

8%

3%

12%15%

0%

10%

20%

30%

40%

50%

60%

Manage critical

relationships end to endCreate and manage

multiple operational scenarios

View the supply

chain holistically

Profit optimized supply

demand matching

Pe

rce

nta

ge

of

Re

sp

on

de

nts

, n

=6

2



Control Tower Advantages

Understanding the Impact

Managing relationships end-to-end – making it happen with

confidence, 50% to 8%.

Multiple scenarios, 41% to 3%.

Command of the data, options and the timing.

Solution from end-to-end perspective.

Understanding the cross functional tradeoffs quickly.

Not guessing and hoping. Confidence in plan prior to execution.

View the supply chain holistically, 40% to 12%.

More than three times as likely – the basic premise behind CT’s.

Profit optimized supply demand match, 30% to 15%.

Twice as likely

Improved financials as a result



Our Methodology

Maturity Class Index

Pressures

Actions

Capabilities

Benefits

Enablers

Summary

Agenda


Power of the Tower - Benefits

Control Towers Cut Problem Resolution Time!

6

10

0

2

4

6

8

10

12

Avg

. D

ays N

ee

de

d,

n=

62



Power of the Tower – Benefits

Reduced Latency = Cash-to-Cash Cycle Gain!

49

56

44

46

48

50

52

54

56

58

Avg

. n

um

ber

of

da

ys,

n=

62



“Control Towers” Perform and Deliver


Power of the Tower

Control Towers Perform and Deliver

40% less time to problem resolution -

Primary benefit of Control Towers

Huge process latency reduction.

Minimizes error throughout supply

Reduced Latency lowers Cash-to-Cash cycle by 13%

Control Towers have better metrics across the board.

Better forecast accuracy at SKU level, 68% to 48%.

Better forecast accuracy at product group level, 71% to 53%.

Better customer service, 94% to 89%.



Our Methodology


Pressures

Actions

Capabilities

Enablers

Summary

Agenda


Technology Enablers


Technology Enablers for Control Towers

Must assume that at least some of all are used.

Emphasis on greater technology adoption

across the board by CT companies

Critical point – the closer to ONE solution

delivering all the capabilities the fewer the

handoffs, integration points, data models and

process delays.



Our Methodology


Pressures

Actions

Capabilities

Enablers

Summary

Agenda


Key Takeaways

The definition of Control Towers will continue to evolve.

Regardless of the ultimate definition, key capabilities are:

The ability to determine the impact of an event.

Who needs to know.

What team needs to be brought together to resolve the issue.

From our definition, we do know that CT companies

Have a centralized view with root cause drill down capability.

Are three times more likely to have personnel that view their supply

chains holistically as linked processes.

Are over 13 times more likely than their peers to have the ability to

create and manage multiple supply chain operational scenarios.

Have a substantial savings in time to problem resolution of 40% .

Cash-to-Cash cycle improvement of 7 days, equating to a 12.7%

reduction in deployed cash.


LCP ASPC

INVENTORY

OPTIMIZATION

DEMANTRA

S&OP SUPPLIER

COLLABORATION

APO-DM

SCP

D&F

APO-PS

• Limited to Functional Excellence

• Decision Latency

• Incomplete Global Representation


… ENABLED BY A SINGLE CODE BASE CLOUD OFFERING …

A NEW PARADIGM:

Global Control Tower

for Operations

Customers

(CRM)

Outsourced Manufacturers

(ERP)

Channel Partners (various)

Enterprise

History (EDW) Brand Owner

(ERP)

Suppliers (EDI, portal)


… ENABLED BY A SINGLE CODE BASE CLOUD OFFERING …

A NEW PARADIGM:

Global Control Tower

for Operations

• End-to-End Process Enablement

• Global Visibility and Alignment

• Fast and Accurate Decisions

Customers

(CRM)

Outsourced Manufacturers

(ERP)

Channel Partners (various)

Enterprise

History (EDW) Brand Owner

(ERP)

Suppliers (EDI, portal)


HOURS

Disaster

Management

Total

Planning Cycle

New Order

Assessment

& Commit 0 300 700

Collapsing Planning Cycles

Kinaxis

Legacy

What if… You could reduce your planning cycle by 43%


HOURS

Change to

Build Plan

Clear to

Build

New Demand

0 10

Fast and Accurate Decisions

20 30 40 50

What if… You needed an answer

within 2 hours?

Kinaxis

Legacy


Questions and Discussion

Kirk Munroe Vice President of Marketing

Kinaxis

[email protected]

@KirkMunroe

Bryan Ball

Vice President/Principal Analyst

Supply Chain Management

Aberdeen Group

[email protected]

@BryanballSCM

mailto:[email protected]

mailto:[email protected]


Thank You


Conclu

sio

n

supply chain control towers: concept and impact · · 2014-01-21supply chain control towers:...

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