supply chain transformation: avaya’s journey

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  • CASE-IN-POINT: AVAYA'S SUPPLY

    CHAIN TRANSFORMATION -

    ENABLED BY A VISION FOR PEOPLE,

    PROCESS, AND TECHNOLOGY April, 2015

    Bryan Ball, Vice President and Group Director,

    Supply Chain, Retail and Operations Practices

    Benji Green, Director Global Ops, Sales, Supply, & Inventory

    Planning, Avaya

  • 2BRYAN

    BALL

    Vice President

    and Group

    Director,

    Supply Chain,

    Retail and

    Operations

    Practices

    Over 30 years experience in supply

    chain, operations, and materials

    management.

    Industry Experience:

    VP of Supply Chain for FuelCell Energy, Inc VP of Global Supply Chain for Fluidmaster, Inc Director of Supply Chain for Dover Industries Unified Brands Leadership roles at Stanley Mechanics Tools, i2 Technologies

    and Dover Corp. Unified Brands

    Education and Certifications:

    Bachelors in Industrial Engineering and Masters in Industrial Engineering from Auburn University

    American Production and Inventory Control Society Certified (APICS)

  • 3BENJI

    GREEN

    Director,

    Global Ops,

    Sales, Supply,

    & Inventory

    Planning,

    Avaya

    15 years Supply Chain & Operations

    experience in Integrated Business

    Planning; Demand, Supply, Inventory,

    Product, & Financial Risk

    Industry Experience:

    Director of Global Supply Chain Operations; Avaya Sr. Manager of Americas Supply Planning; Lenovo Manager of Global Peripherals Demand Planning; IBM Supply Chain Strategy Analysts; Accenture

    Education and Certifications:

    Masters in Industrial Engineering; Georgia Tech Bachelors Degree; University of North Carolina Certified Supply Chain Professional, APICS

  • ABERDEEN RESEARCH

    METHODOLOGY

  • 5ABERDEEN MATURITY CLASS FRAMEWORK

    DEFINING THE BEST-IN-CLASS

    Selected Performance

    Criteria (KPI)

    Organizational Goals

    Employee Performance

    Bench Strength

    Total

    Respondents

    - Top 20%

    - Middle 50%

    - Bottom 30%Respondents are scored

    individually across KPI

    Best-in-Class

    Industry

    Average

    Laggard

  • 6ABERDEENS RESEARCH METHODOLOGYPACE: END-USER INVESTIGATION

    PRESSURES ACTIONS CAPABILITIES ENABLERS

    External and internal

    forces that impact an

    organizations market position,

    competitiveness, or

    business operations.

    The strategic

    approaches that an

    organization takes in

    response to industry

    pressures.

    The business capabilities

    (organizational, process,

    knowledge management

    etc.) required to execute

    corporate strategy.

    The key technology

    solutions required to

    support the

    organizations business practices.

    What is causing

    organizations to think

    differently?

    What strategies are

    they using to respond

    to pressures?

    Why are they achieving

    greater success?

    What technologies and

    services are enabling

    them to succeed?

    !

  • CASE-IN-POINT: AVAYA'S SUPPLY

    CHAIN TRANSFORMATION - ENABLED

    BY A VISION FOR PEOPLE, PROCESS,

    AND TECHNOLOGY

  • 8INTRODUCTION

    THE AVAYA CASE STUDY

    Welcome

    Why this case study? Seldom does a case study involve a complete transformation

    For our community -a real world story - a picture is worth 1000 words!

    The Avaya story could be described as the critical intersection of basic needs and a vision, into a complete transformation. All the elements.

    The Webinar will cover: The circumstances and challenges that Avaya faced on their journey

    The catalysts for transformational change, their approach and evolution

    The dramatic results that they were able to achieve

  • 9BUSINESS PRESSURES

    DIFFERENT FOCUS FOR BEST-IN-CLASS VS. OTHERS

    50%

    36%

    35%

    36%

    26%

    32%

    42%

    61%

    0% 10% 20% 30% 40% 50% 60% 70%

    Improve top line revenue

    Need for better integration between supply chainplanning and supply chain execution

    Customer mandates for faster, more accurate, andmore unique fulfillment

    Reduce supply chain operating costs

    Percentage of Respondents n=167

    Best-in-Class

    All Other

    Source: Aberdeen Group, December 2014

    - Where is your organization? Reacting to events that shape your schedule?

    - More proactive - pulling together the story to make critical decisions?

    - Or - Top of the value pyramid ability to monitor and make decisions predictively- Questions Avaya asked themselves Where are we? Where do we want to be?

  • 10

    THE START: AVAYAS SITUATION ABOUT AVAYA

    A leading global provider of business collaboration and communication with over $4B Annual Revenue

    Headquarters in Santa Clara, Singapore, Basking Ridge, Galway, & RTP

    Unified communications . . . Voice & Telephony Infrastructure Real-time Video Collaboration Contact Center Solutions Data Networking Implementation and Integration Services

    Long legacy of Open-Source innovation from AT&T to Lucent to Avaya

    Over 15 corporate acquisitions & strategic partnerships since 2001 Nortel Enterprise Solutions Purchase Radvision Acquisition Strategic Partnership Hewlett Packard

  • 11

    THE START: AVAYAS SITUATION

    Recent Nortel acquisition; More than doubled MRP's

    New Organization

    New People

    Disparate processes

    Primary issue after the Nortel acquisition was the lack of visibility across multiple instances of the existing ERP system for the Nortel side of the

    business.

    Supply Chain Headquarters moved from Colorado to North Carolina

    New Leadership

    New Organization

    New People

    No consolidated planning tool

    Everything was hard work and low value

    We had a tool, but was it the right one and how do we leverage it?

  • 12

    TRANSFORMATION

    PLAN AND APPROACH

    Approach

    Technology decision

    Key organizational changes provided a catalyst for the transformation

    Hired domain experts for key positions including Logistics, Procurement, Planning, Maintenance, and

    Strategy

    Leadership not only had a vision of what needed to happen, but what it would look like when successful.

    Firefighting mode at first by design to drive hands on and high accountability

    Divided into 5 phases

  • 13

    AVAYAS PLANNING STRATEGY SOLUTION DECISION

    Requirements One common view for the business

    Issues - processdecision Blending process of the two cultures, the dilemma of which tool as the enabler Prior where some success had already occurred or new for all Chose Kinaxis good partner criteria

    Criteria Flexibility user controlled versus solutions that were not configurable. They were able

    to create a new workbook in an hour with the established Avaya approach.

    Price important, but not the sole criteria. Avaya was already invested, which made it an easier choice.

    Connectivity across multiple boxes and speed of connectivity. This was a must have criteria to create visibility in order to get their arms around the business.

    Real-time adaptability which created flexibility in the analysis to plan and foresee. Configurable and user friendly allowing for user design.

  • 14

    PLANNING STRATEGY

    MAPPING MULTIPLE ERPS TO 1 PLANNING TOOL

    69%

    31%

    39%

    61%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    All or partially - more than onetransaction planning system

    (ERP/MRP etc.) mapped to a singlesupply chain planning system

    None - planning is strictly drivenfrom within each transactionplanning system (ERP/MRP)

    Per

    cen

    tage

    of

    Res

    po

    nd

    ents

    n=1

    67

    Best-in-Class

    All Other

    Source: Aberdeen Group, December 2014

  • 15

    BEST-IN-CLASS METRICSAHEAD IN EVERY CATEGORY BUSINESS AND PROCESS

    Performance Metric Best-in-Class All Others

    Average customer service level % 93.7% 85.3%

    Average cash conversion cycle - Days 44 65

    Average forecast accuracy at the

    Product Family level81.5% 63.0%

    Gross Margin Improvement 2.70% 1.43%

    Additional Metric

    Average forecast accuracy at SKU level 73.5% 54.7%

    Best-in-Class Performance demands attention to the capabilities and

    technologies they are using to achieve their superior results.

    Source: Aberdeen Group, December 2014

  • 16

    VALUE PYRAMID

    THE TRANSFORMATION VISION

  • 17

    VALUE PYRAMID

    DISCUSSION POINTS CRITICAL TO VISION

    What is Value External Value = Customer Value Internal Value = Revenue & Profit, Employee Satisfaction

    Why is the Value Pyramid so important

    Employees and Management need a realistic view of where they are within the Pyramid

    Spectrum, a Journey, consistently from Low Value to High Value

    What is the result of Value Pyramid Foresight Predictability Balance Action

  • THE 5 PHASES

  • 19

    HOW WE GOT THERE: PHASE I

    Basic Rapid Response Implementation: Connected Outsourced Contract Manufacturers

    Response to Change in Sourcing Strategy

    Not accompanied by comprehensive Strategy

    No Business or Process Integration

    Minimal Benefits

  • 20

    HOW WE GOT THERE: PHASE II

    3 years after initial implementation

    New leadership ha

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