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Transformational Steps on the Journey to Demand Driven Supply Network
John Hanna, The Clorox CompanyPadman Ramankutty, Intrigo Systems Inc.
July 20th, 2010
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The Clorox Company
1913 - America's first commercial-scale liquid bleach factory – Oakland, CA
1914 - Product named Clorox® bleach.
Owned by Procter & Gamble 1957–1968
Growth through diversification
Worldwide manufacturer and marketer of consumer products- trusted & recognized brands
8300 Employees worldwide
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The Clorox Company - TodayPrimary Products:
Laundry Cleaning ProductsHome Cleaning ProductsSpecialty ProductsOther Businesses
House Hold & Professional Brands:
FY’10 Revenues of $5.2 Billion Global
North America
South America
Central America
Africa
Europe
Middle East
Asia
Pacific
About IntrigoPremier Enterprise Consultancy, focused on orchestrating Customer Value Networks at
the confluence of Demand, Supply and Innovation using SAP Technologies.
Provide solutions for our clients :• Insights about Customers and Channels ( Sense: TPM/Channel…)• Risk/Response modeling on Supply Side ( Risk Reduction: CTM/CTP/SC Risk..)• Accelerate the innovation cycle that impacts the Demand and Supply equations
Supply Respond Sense
Innovate
Source: AMR
Create
Demand
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5
Intrigo Approach & Offerings
Offerings: Authorized SAP reseller/VAR for High-techiSemi®: A solution for growing semiconductor companiesImplementation & Support
SCM, S&OP, Collaboration, SCRM, SCPMERP, Channel, PLMSRM BI & AnalyticsTPM
IT Strategy/Architecture Roadmaps
CPG, Semiconductor, Hi-Tech, AFS
Approach: Implement an integrated base line capability, reduce riskHelp clients with the ability to ramp up new users and increase its business
operational capabilities, eliminate prolonged change management and technological challenges including redundant interfaces
Leverage common practice templates to reduce the design cycle timeIterative realization methodology to reduce time/cost and risk
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Advanced:Demand Shaping
Incremental:Demand Sensing
Clorox DDSN Vision & iPlan Foundation SU
PPLI
ER
Planning & Execution Processes
Physical Network Strategy
Planning & Execution Systems
Foundational:Order SourcingInventory OptimizationDemand PlanningSupply PlanningDeploymentVMILoad-buildingRetire Legacy Applications
CU
STO
MER
Challenges:Planning capabilities were limited
by system complexity and outdated functionality
Planning process/system landscape created long information flow cycle times resulting in supply chain losses
Objectives & Scope
Deliver foundational capabilities required to enhance product supply planning and execution processes
Tools to deliver supplier-to-consumer integration
Supported by one SAP suite of tools and one set of master data
Real time and visible
Demand driven
Synchronized end to end
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iPlan
StrategyDesigned to improve efficiency and reduce cost by:
Implementation of new supply chain planning system and process transformationSimplification of global supply chain network
Improve quality and reduce variability in supplier, carrier, and production signals
Increase agility/ability to react to changes in demand and/or supply faster and more efficiently
Reduce 3 systems down to 1 (SAP SCM – APO module replaces Logman, i2, and Logility)
Provide best-in-class total response time*: < 10 days* Response is the time it takes for a change in demand to be
translated into an actual response at a first tier supplier
Planning supported by a single suite of tools (SAP APO) using one set of master data, reducing maintenance costs of 3 highly customized systems
Eliminates existing non-SAP systems (Logman, Logility, i2) and implements leading-class inventory management tools including:
SAP APO
SmartOps Inventory Optimization
LEO (Ortec) Load Building
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Business Units – Complexity & Requirements
Business Unit
Attributes
Laundry Multi Plant Sourcing, Multi Work Center Sourcing , Complex Network, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories
Homecare Multi Plant Sourcing, Multi Work Center Sourcing , Complex Network, Intermodal Shipments, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories
Kingsford Multi Plant Sourcing, Multi Work Center Sourcing, Complex Network, Upstream Process Constraints, Storage Constraints, Seasonal Pre-Builds, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories
Glad Multi Plant Sourcing, Multi Work Center Sourcing , Complex Network, Upstream Process Constraints, Global Sourcing, Intermodal Shipments, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories
Foods Multi Plant Sourcing, Inter Plant sourcing, Complex Network, Shelf Life, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories
Brita Multi Plant Sourcing, Inter Plant sourcing, Complex Supply Network, Long Lead Times, Global Sourcing, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories
Litter Single Plant, Global Sourcing, Multi Work Center Sourcing , Intermodal, Production & Storage Capacity, Mutli-Echelon Inventory, Demand Categories
Auto Multi Plant Sourcing, Multi Work Center Sourcing , Complex Network, Intermodal Shipments, Production & Storage Capacity, Mutli-Echelon Inventory
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iPlan Guiding PrinciplesFocus on servicing the business at 99.5% fill rate, while minimizing inventory levels, spoilage, logistics and manufacturing costs
Function as an integrated planning organization where there is a strong linkage between Sales & Operation planning, Demand Planning, Supply Planning, CRP, Deployment, and Load building
Collaborate and communicate effectively with the commercial side of the business as well as with Manufacturing
Fully leverage available tools and technology and adopt an exception based planning approach
Reduce need for near term fire-fighting by focusing on the medium to long term
Provide visibility to long-term (24 months) Production, Sales and Inventory plans to drive strategic decision making
Drive to standardized processes across both supply and demand planning
Ensure that the team is trained on supply chain planning tools and technologies
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Manufacturing Locations:
Multi-Echelon Supply Chain Model
MFG Plant
Co-located
DC
Co-Pack Plant
Co-Pack DC
Suppliers RDCPost-pone DC
VMIOrdersWIP
Finished Goods Finished Goods
Postponement DCs:
CustomerOrders
RDC Network:
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Integrated Process Overview
= iPlan Process Area (APO)
= Execution Steps
Supply Planning
(SCM-APO)
VMI(SCM-APO)
STRATEGICPLANNING
TACTICALPLANNING
EXECUTIONPLANNING
EXECUTION
SOURCEDISTRIBUTE
CU
STO
MER
Deployment (SCM-APO)
Demand Planning
(SCM-APO)
DELIVER
SUPP
LIER
MAKE
REPORTING MEASURE ANALYZE
Load Building (ORTEC)
ORDER
Inventory Planning
(SmartOps-MIPO)
= iPlan Process Area (SmartOps)
= iPlan Process Area (ORTEC)
S&OP, Budget Planning
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High Level Process Areas
Demand PlanningInventory
Optimization /Supply Planning /
Load Building
Produce a forecast of customer shipments to be used for supply planning, sales planning, financial analysis, and external financial reporting
Objectives:
Key Outputs:
MetricsForecast AccuracyForecast bias (over time)Forecast Volatility
Base statistical forecastUnconstrained consensus forecastMetrics and Exceptions
Specify Inventory Levels at different nodesProduce a constrained supply plan to be used for production planning, plant budgeting tactical planning, long range planning and distribution planning that complies with approved strategies and policies``
Inventory TurnsInventory Days on HandCapacity Utilization
Constrained supply planInventory projectionLane velocity and projected storage
Deployment Planning
Generate a deployment plan that complies with approved strategies and policies, incorporating the supply plan
TL UtilizationIM UtilizationRedeployment
Replenishment plan
CRP / VMI
Produce a forecast of VMI / CRP customer shipments, generate and execute replenishment plan that complies with approved strategies and policies
Service LevelsInventory TurnsCustomer Days of SupplyTL Utilization
VMI forecastReplenishment Plan
Generate an executable load plan that complies with approved strategies and policies, incorporating customer specific requirements
TL Utilization
Executable load
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APO DP ForecastTranslation
UPC/Ship To
APO SNPFERT/Ship From Deployment
Optimizer
ECC
ORTEC LEO
A Nuanced Approach – Forecast Translation
Keeps the demand signal clean and provides for a more accurate picture of the demand signal from the customer, aligns with Demand Driven Supply Network (DDSN) vision1 UPC : n Products (SKU). The mapping is a function of demand source Prevents opportunistic shipments from becoming repeated as an ongoing forecastRole clarity & accountability
Demand Planners – Customer DemandSupply Planners - Sourcing decision and Supply Efficiencies
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A Nuanced Approach – Segmentation
Sup
ply
Pre
dict
abili
ty
Demand PredictabilityLowHigh
Low
High
Promotion-driven
Bread & Butter
Distribution-driven
Outlier
Cluster Analysis to Identify SegmentsDemand predictabilitySupply predictability
Assuming that the higher the volume, the more secure and predictable the capacity is
Promotion-driven
Bread & Butter
Distribution-driven
Promotion-driven
Bread & Butter
Outlier
Distribution-driven
Promotion-driven
Bread & Butter
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A Nuanced Approach – Planning Parameter Definitions
Segmentation:Identifies SKUs that behave similarly
Structured approach to support differentiated supply chain
Development of business rules to drive results
Mass updates of parameter maintenance
Outlier
Bread & Butter
Promotion Driven
Distribution
Demand Predictability(Coefficient of Variation)
% of Total Volum
e
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iPlan Enabled Process Changes
DemandPlanning
SupplyPlanning
Deployment
CRP/VMI
LoadBuilding
Time
Granularity
Where we plan today
Course
Fine
Near Far
Most time and energy is
here
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Value Drivers
Cross Functional Value Drivers:Single integrated system across planningException based planning that is supported by customized alerts and reporting
Demand Planning CRP / VMISupply Planning /
Inventory Optimization
Load BuildingDeployment Planning
Enhanced statistical forecastingcapabilitiesAutomated updates of sales and marketing intelligence into demand forecasting solutionAbility to plan VMI and non-VMI demandImproved planning capabilities across planning life-cycle
Value Drivers:
Providing a capacity constrained plan to finite scheduling and deploymentImproved master plan stability and reduced “fire fighting” Incorporation of supply planning intelligence into forecast disaggregationImproved management of product transitions
Value Drivers:
Deployment plans generated based on constrained supplyplansImproved management of product transitionsImproved intermodal and truckload utilization
Value Drivers:
Synchronization ofdemand planning and CRP/ VMI forecastsImproved management of product transitionsImproved truckload utilization
Value Drivers:
Build executable loads based on deployment plan (includes CRP)
Value Drivers:
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Benefits
Area Benefit Supporting Modules
Transportation
Increase Inter-Modal Utilization Deployment, Load Building (ORTEC)
Increase Truckload Utilization Load Building (ORTEC)
Reduce Redeployments Supply Planning, Deployment
WarehousingReduce Outside Warehousing Supply Planning
Reduce RDC Variable Operating Expenses Supply Planning
Manufacturing Reduce Unplanned Overtime Spend Supply Planning
Obsolescence Reduce Liquidations Demand Planning, Supply Planning
Inventory Optimize inventory levels across the network MIPO (SmartOps), Supply Planning
IS Operations Retire Obsolete Application Platforms MIPO (SmartOps), APO-SCM, ORTEC (Load Building)
Thank You
For additional information, please contact us at [email protected] or visit www.intrigosys.com.