supply chain transformation - from first to the last mile

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Supply Chain TransformationFrom First to the Last MileKris GorrepatiSolution Management, Extended Supply Chain, SAP

mailto:[email protected]

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 2

Agenda

Source: The Henry Ford

• Supply Chain Trends• Elements of Supply Chain Transformation• Roadmap for Supply Chain Transformation• Q&A


Supply Chain (A Century Ago)

16Coal mines controlled by Ford Motor Company

700,000Acres of timberland

28 Hours for the iron ore to turn into finished automobile

33 Countries in which Ford operated. From Brazilian forests to Northern Michigan mines

Source: The Henry Ford


Supply Chain Today - By the Numbers

1 Billion

Possible Configurations

34.4 MillionItems ordered on Prime Day in 2015

630 MillionEstimated packages delivered by

UPS during holiday season in 2015

2 WeeksFrom an idea to store shelf

500,000 MilesSupply chain journey of an iPhone

2 HoursOrder-to-delivery time for

groceries


Scope of Supply ChainFrom First to the Last Mile

Retail location

Distribution Center

Factory Supplier Supplier’s Supplier

Customers


Trends Driving Supply Chains Today

Omni-channel E-commerce

Right level of vertical and horizontal integration

Right combination of global and local

supply chain


Demands on Supply Chain

Agile

Responsive

Resilient

Personalized

Cost-effective


The Demands on Supply Chain Can Make or Break an OrganizationE-commerce generates a lower operating profit for us than four-wall brick-and-mortar.

When the consumer requires free delivery, free return, wonderful packaging, plus there's a new trend that people are buying multiple sizes of things to try them out at home and then return them, that all is a negative headwind for us.

- John Idol, CEO of Michael Kors

Only 19 percent of the top 250 retailers(and only 16 percent of all respondents) say they can fulfill omni-channel demand profitability

- The Omni-channel Fulfillment Imperative


Elements of Supply Chain Transformation

Social networks Connected Retail

Last mile delivery

Warehouse Automation

Autonomous Driving

Supply Chain CollaborationRobotics

Internet of Things (IoT)

Internet Search

Smart Products

Demand Sensing

Factory Automation

Collaboration

Agile Planning

Scheduling and optimization


Demand Planning is Getting More GranularCategory, Product, Geography, Customer Segment

Demand Factors• Simultaneous external demand

from multiple customers

• Seasonal, time-varying demand

• Intermittent demand

• Promotions, Outliers

• Over- and under- forecasting

• Consideration of recent process changes

Location

Attribute(s)

Brand

Category

Channel

Region

Company


More Sources of Data


Demand Forecasts have Large Impacts on Deep Supply Chains


Responsive and Intelligent Order Fulfillment

Agile

Responsive

Resilient

Personalized

Cost-effective


Inventory Management

Real world is

Stochastic

Made of multi-stage networks

Dynamic

Integrated

Requires appropriate inventory positioning and agility


Warehouse Management and Operations

Warehouses are often under utilized or overflowingSource: Flexe

• Automation

• Robotics

• Internet of Things

• On-demand Warehousing

• Retail outlet as mini-warehouse


Retail Locations in Omni-channel

• Buy online and pick up in store

• Returns processing for online purchases

• Shipment from store for local deliveries

• Try before you buy

Source: Hointer


Transportation Management

• Between 15-25% of the trucks on US roads are empty

• Non-empty trailers - 36% under utilization

• Shortage of driversSource: IPIC 2016

• Pooling

• Collaborative storage and distribution

• On-demand logistics integration

• Dynamic scheduling and optimization


Last Mile Delivery

• Same-day delivery

• On-demand logistics integration

• Local commerce


Supply Chain to Shop Floor SynchronizationProduction Leveling, Sequencing, Customization

Courtesy Assembly Mag

• Heijunka, JIT systems require supply chain to be in sync with factory systems

• Increasing proportion of custom orders


Supply Chain Visibility

• Full to segmented supply chain visibility

• Upstream and downstream supply chain visibility

• Intelligently handle unexpected events

Jabil Supply Chain Control Tower

Tesco’s tag reading robot


Supply Chain Collaboration

• Supply chain collaboration through the whole lifecycle

• Early information sharing

• Collaborative issue resolution


Supply Chain Management is Driving Digital Transformation

Many digital transformation initiatives are related to supply chain management• Omni-channel• Connected retail• Real-time supply chain planning• Data science• Robotics• Internet of Things (IoT)• Mobile• Autonomous driving• ….


How and Where to Get Started

Single Channel Multiple Channels Omni-channel

Unified inventory

Omni-channel order management

Inventory optimization

Last mile logistics

360 customer view

Warehouse strategy

Connected retail / Buy online pick up at store

Channel specific order fulfillment


Logistics design and optimization

Multi-channel CRM

Responsive order fulfillment


Logistics optimization


Finally

Ask, what would do


Contact Info

Kris [email protected]

mailto:[email protected]


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supply chain transformation - from first to the last mile

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