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Some great questions from members this week and some illuminating answers too. Our picks this week include: How to make the case for SC investments at board level? What are the pros and cons of investing in in-house data science capability vs. analytics platforms as a service? How to frame and speed up decision-making in S&OP/IBP processes How are companies developing autonomous & contactless delivery methods to improve resilience? Please sign in or sign up for full access to Q&A forums. SupplyChainINTENT is a secure community and all members are verified.
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untilContinuous enterprise planning / IBP (for current practitioners only) In an era of unprecedented volatility, effective planning is not just more difficult but also more necessary and strategic to optimise working capital through coordinated action. Traditional approaches have not always delivered on the promised outcomes and modern business process approaches are required more than ever. Cloud and emerging technologies connect functions and data in real-time, making the process more agile and responsive to changing circumstances. This discussion will explore: inherently designing internal processes for continuous enterprise planning / IBP building trust in the process and the numbers calculating the business impact & benefit of continuous planning Hosted by Intent Expert guest: Vikram Singla, Strategy Director, Oracle Max. 90-minute, interactive discussion with 6-8 participants who shape the discussion agenda. The confirmed participant list will be shared in advance. REQUEST TO JOIN* *we may adjust participation for an optimal discussion group
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This week's top questions
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untilLogistics resilience & agility (for current practitioners only) The global pandemic has highlighted the impact of interruptions on service and critical supply levels, in addition to impacts from climate change, social unrest, cyber and physical attacks on assets. To manage these risks and retain customers' trust, logistics planners need greater visibility and traceability to promptly detect and proactively manage incidents. This discussion will explore: incorporating external data for greater visibility & traceability near real-time response for shipment & transport planning retaining customers' trust with proactive advice on possible interruptions Hosted by Intent Expert guest: Vikram Singla, Strategy Director, Oracle Max. 90-minute, interactive discussion with 6-8 participants who shape the discussion agenda. The confirmed participant list will be shared in advance. REQUEST TO JOIN* *we may adjust participation for an optimal discussion group
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untilHow ML & AI drive KPIs (for current practitioners only) There's an emerging consensus that ML/AI will be a major feature of future supply chains but, at the same time, there is a lack of clarity about how and where to deploy them holistically to deliver tangible outcomes and improvements. Taking the '5 Cs" strategic business drivers (Customer, Cost, Compliance, Carbon footprint and human Capital), this discussion will explore: why holistic performance metrics (5Cs) are central to drive supply chains strategically using machine learning & artificial intelligence to drive process improvements data & process maturity prerequisites for machine learning to deliver immediate return Hosted by Intent Expert guest: Vikram Singla, Strategy Director, Oracle Max. 90-minute, interactive discussion with 6-8 participants who shape the discussion agenda. The confirmed participant list will be shared in advance. REQUEST TO JOIN* *we may adjust participation for an optimal discussion group
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untilContinuous enterprise planning / IBP (for current practitioners only) In an era of unprecedented volatility, effective planning is not just more difficult but also more necessary and strategic to optimise working capital through coordinated action. Traditional approaches have not always delivered on the promised outcomes and modern business process approaches are required more than ever. Cloud and emerging technologies connect functions and data in real-time, making the process more agile and responsive to changing circumstances. This discussion will explore: inherently designing internal processes for continuous enterprise planning / IBP building trust in the process and the numbers calculating the business impact & benefit of continuous planning Hosted by Intent Expert guest: Vikram Singla, Strategy Director, Oracle Max. 90-minute, interactive discussion with 6-8 participants who shape the discussion agenda. The confirmed participant list will be shared in advance. REQUEST TO JOIN* *we may adjust participation for an optimal discussion group
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untilDirect to Consumer - future-proofing and making profitable decisions This is a discussion particularly targeted towards companies seeing an increase in B2C, or even introduce a new ecom offering. In such unprecedented times, ecom adoption has become a much more significant part of the mix, and has accelerated already existing trends. This means that many businesses will have scrambled to switch, rebalance, and cope. And much of that change will be permanent. Now is the time to reevaluate and make plans that ensure your mix caters to your customers, is profitable, and flexible enough to cope with possible future uncertainty. Nobody can say for sure what's around the corner, but it is possible to take steps now to safeguard your offering, to ensure you delight customers, and to build in the capabilities you will need to defend and win market share. 1. Going direct to consumer? Creating the business case and strategy 2. Channel mix: how does your proposition change in a multichannel environment? 3. Flexible distribution? How can you build in agility? 4. Making profitable decisions - ensuring ecom remains profitable Co-hosted by Louisa Hosegood, Digital & Strategy Director, Bis Henderson Consulting REGISTER TO ATTEND
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Hi all, I did notice this article posted by a contact I have in Llamasoft. Whilst recognising there are plenty of other solutions out there, it reminded me of the discussion we had in the call, so thought I would share. https://www.forbes.com/sites/stevebanker/2020/06/19/medtronics-digital-twin-supports-their-ability-to-respond-in-the-pandemic/?_lrsc=5b43807d-e6ec-498a-b210-ebf705b1f9c4#214d90896857 We didn't get as sophisticated as this in the examples we worked!
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Reacting to changing customer behaviours
David Lechleiter replied to Ed Lawson's topic in Highlights
You're right. And it's not the first time a Supply Chain professional could turn to the CEO and say "I told you". But then again, a company that would achieve 100% supply chain security would also run out of business very fast. COVID is exacerbating the tensions in the organisation that supply chain needs to face and manage. Management always had to choose between cheaper and safer, and will continue to face the tension. The role of Supply Chain to analyse and explain the pros and cons will be even greater. It will not be easy for companies to choose to pay more for safer supply chains, but there already is a lot that can be done to make supply chains better at the same cost. -
IBP: zero latency for availability & working capital
David Lechleiter replied to JP Doggett's topic in Highlights
I enjoyed the session, hopefully participants found it useful. Great IBP tools are available today and are required for greater agility. Ability to simplify and to provide clarity is also becoming more important in a faster and more volatile environment. Supply chain will never be the same again -
Good challenge for all of us to think about network design at this special time. Design of the future is to have inbuilt mechanisms to target such circumstances, but continue to maximise efficiency and minimise costs. The more difficult this is, like for heavy Capex / long leadtime industries, the more important it also is. Let's not avoid the challenge just because it's difficult.
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Agreed, David. But what is your thought on the point that cost reduction/leaning the SC has resulted in less flexibility - so businesses have been less agile to respond in unprecedented circumstances such as these?
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Reacting to changing customer behaviours
David Lechleiter replied to Ed Lawson's topic in Highlights
No doubt that some good will also come out of COVID crisis. We all have a responsibility to consider what changes can be implemented that will help companies perform better, and society to progress. Less costs, less inefficiencies, less CO2, better customer service, ... B2C will continue to grow, including for Pharma, and we need to shape that future. -
On topic of ‘making good/best value choices’. This requires assigning economic value to objective like resilience (new or higher weight in new normal). For example using FMEA type of analysis ( possible failure modes, impact, probability it happens) to determine value at risk and associated ‘allowable insurance premium’. A new-normal use case for analytics/AI?
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Dynamic Network Design An online, virtual boardroom discussion with SC Leaders, run under the Chatham House Rule by Intent Group on 17/06/20. With thanks to Martin Gouda of BCI Global, Frank Moonen of Boston Scientific and Erik Kremer of Balt Extrusions for their expert input into the discussion. Chaired by JP Doggett, Intent Group. Key points made / questions raised Risks of single source suppliers are here to stay: the cost of ‘insurance’ is too great, and the risks of a single supplier are more easily mitigated with inventory holding Need to make good/ best value choices: balance of risk and cost of inventory Look at all drivers to diversify suppliers: weigh up risks and resilience More inventory can mean mistakes are more easily smoothed in long lead time businesses! Effects of Brexit on network planning Global Operating Context Hard to map out complete global supply chain and create visibility Need for unprecedented rigour in procurement as we face tighter margins and demands on delivery & customer service Major benefits to reduced SKU range - is it tenable? Logistics & Warehousing The attraction of using a single 3PL opens up significant risks. Ocean freight can be used as an inventory buffer! Greater end to end visibility is a major driver, control towers are a step towards enabling improvement Data, Tools, Analytics Using digital twins to accelerate the network design process Greatest challenge is usually assembling the data Llamasoft is the largest digital twin offering - BCI are one of the largest users If you are doing your own network modelling - there is often a gap to cover of translating analysis into practise Data lakes are a key step towards digitalisation: these must be lakes of comparable data. Important to aim for this, and to ensure data is complete. Make a BLUEPRINT for data cleansing so that the exercise can be repeated People, Skills, Org Design Is there a trend of ‘Strategy by Declaration’ rather than by analysis? Move to servitisation: this can lead to loss of visibility or control of upstream supply chain IDEAS FOR FUTURE DISCUSSIONS 1. Network design review combines with Brexit review? 2. Data lakes (Digitalisation steps). Comparable data, data availability 3. E2E vis and benefits to CS 4. Servitization impacts Further reading (attached) BCI Global State of SC Digitization Covid-19 Risk Resilience Manufacturing Footprint Optimization BCIGlobal_State of SC digitization_draft.pdf Covid 19_Risk ResilienceMay2020.pdf Manufacturing Footprint Optimization.pdf
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untilDemand forecasting: navigating to consensus A Huddle Discussion hosted by Intent Group, open to supply chain practitioners. A group of 6-8 practitioners will share thinking views, ideas and their own experiences. This discussion picks up on key themes discussed in other similar sessions, zoning in on the most challenging and interesting points! Our agenda: Who should own the forecast? How to get buy in for a consensus output How can we build more trust in the forecast? What is the speed vs. accuracy playoff? How much scenario planning is productive? The discussion lasts 60-90 minutes. Please register here if you'd like to join us! Huddles are meetings of minds - they are a chance to join others and share your own findings, as well as hear what's working for others. Huddles tackle challenges, or explore opportunities that have arisen from our previous discussions, or that cater to an area of identified interest. SIGN UP
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Intent Group Virtual Boardroom: Modelling with a Digital Twin Hosted by Don Brenchley, Director of Industry Strategy, LLamasoft Executive Summary What is a digital twin & how does it help with supply chain design modelling? Supply chain design involves creating a high definition digital replica of the physical supply chain which can be used to optimise performance, evaluate alternatives and determine the impact of changes in a safe, risk-free environment. This supports fast, evidence-based decision making and allows organisations to embark on strategic supply chain transformation programmes with confidence that the changes they make will deliver the expected outcomes. Should I invest in supply chain design modelling? Potential benefits: Clarity: supply chains evolve over time and accumulate features that inhibit optimal performance due to acquisitions / mergers / divestments, changing strategies, customers and product portfolios, successive technologies, legacy systems etc. Supply chain design modelling introduces a discipline to step back from execution and planning mode into a design mode where default assumptions are challenged and potential new efficiencies are revealed. Granular visibility: by necessity, management teams focus on KPIs which tend to be high level and paint a certain picture of the business. However, they potentially over-simplify the real picture and so obscure issues and opportunities that are revealed at a more granular level. Risk mitigation: enables anticipation and preparation for potential shocks and disruption, opening the doors for greater agility. Higher quality decisions: the discipline of design forces critical evaluation and, once a model is in place, compels decisions to be evidence-based, rationalised and quantified, thereby reducing or eliminating bias. The digital twin / model also helps to democratise sophisticated modelling across business units and functions so reducing potential blind spots and leading to better, more sustainable decisions. Agility / faster decisions: near real-time decision-making becomes possible as the potential impacts of any proposed course of action are modelled and so don’t need to be calculated from zero. Enable further digitalisation: an effective model may enable use of other digital technologies such as RPA, machine learning and artificial intelligence which offer further efficiencies. Potential challenges: Implementation cost: as ever, it requires significant investment in terms of time, money and effort which also implies opportunity costs. Theory vs. actualisation: can be a disconnect between what is possible and desirable in the model versus what is actionable in reality. Continual investment: supply chain design modelling should not be a one-off or occasional exercise; it must be continually updated to incorporate changes and new data. How is supply chain design modelling being used today? 6 months ago: reflexively, as an urgent response to potential threats to plan for continuity of business operations. Today: now used for optimisation: inventory levels, product portfolios, lead time impacts. What can / should you do with supply chain design modelling? Risk & resiliency strategy Blank page modelling - new products, geo expansion/new customers Find inefficiencies CTS for existing customers Model changing landscape - eg Brexit Collaboratively plan costs and profit of new business Plan new channels/shifting channels Support major business decisions Model efficiencies when companies are acquired or merged Transportation route analysis and optimisation Sourcing optimisation Product lifecycle management CO2 analysis & optimisation Greenfield analysis Omni-channel distribution analysis Tax & duties analysis Inventory strategy & optimisation Supply / capacity planning Network design How should you do supply chain design modelling? Start small / iterative Often easier to gain support for a limited project where the need and potential benefits are broadly understood. Helps build the business case for further investment in modelling and gain support from senior leaders / project sponsors. Can mean that the model is fragmented / skewed by the narrower focus that may take more effort to amend later. Start with comprehensive design This usually involves starting by compiling and harmonising data from multiple sources to build the “digital decision layer”. This approach encourages a more comprehensive, “root and branch” analysis and understanding of the supply chain which, once complete, allows the model to be applied to a much wider range of areas and challenges and so can pay bigger dividends sooner in terms of competitiveness. Can still do projects sequentially but begin with the end in mind. Can be a trade-off between thoroughness and agility: some decisions need to be made faster than comprehensive analysis may allow Make dynamic, not static The more up-to-date the model is - for example, with live material prices, currencies etc. - the more effective the analysis and decisions that emerge from it This requires a more fundamental shift in mindsets and requires more stakeholder buy-in. Winning hearts and minds: decisions from models can sometimes challenge the intuition of experienced team members so effective representation of decisions is vital. What use cases did members report? Footprint optimisation project which reduced spend by 20% Cost-to-serve analysis & improved customer segmentation Modelling and optimisation of distribution network Contingency / continuity planning, including related to Brexit impact Also done for tier 2 & 3 suppliers Shifted from make-to-order to make-to-stock Advanced analytics to improve data-driven planning & decision-making Predictive maintenance at plants Participant companies: E-llis, Givaudan, Graze, Heineken, IMI Critical Engineering, LLamasoft, Shell, Solvay, Toyota Material Handling, Westcoast, To find out more about modelling an aspect of your supply chain operations, you can contact Don Brenchley of LLamasoft at don.brenchley@llamasoft.com For further information on LLamasoft, please visit www.llamasoft.com
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What factors are shaping the future operating context for logistics strategy? Pandemic impact: lockdowns, border closures demand skews, channel & format switching volatility / unpredictability - reminder that it took 8 years for consumption levels to recover after the financial crisis review of supplier & manufacturing footprints constainted supply SKU rationalisation has highlighted which LSPs are agile or not greater pressure on margins prompting greater focus on cashflow and cost-to-serve likely to be more channels to serve which may require significant investments in logistics capabilities Brexit Transport cost outlook uncertain but likely to change We hosted a discussion with Great Bear around Future-Proof Logistics in May 2020. The discussion centred around the fact that flexibility will be a greater requirement than it has been, that changes will be accelerated, and this should promote digitalisation, automation, and innovation! What will be needed to future-proof logistics strategy? data: reliable and fast flexibility of suppliers and manufacturing managing workforce availability and safeguarding conditions automation & semi-automation: full automation remains a high risk investment for many operations but cobots which make workers more efficient have been effective mindsets: in some cases, Covid had triggered more progress on digitalisation in the last two months than in the previous two years because continuing the same way was simply no longer an option Could Uberization be part of the strategy? one global consumer goods company has successfully used Uber drivers for deliveries during the pandemic increased interest in platforms like Uber Freight Are supply chains more likely to share capacity & collaborate? Covid has helped to overcome some resistance to the idea so it may be a watershed for future logistics collaboration, as long as regulations allow (How) can you be agile and lean? in some respects, being lean may inhibit agility if efficiencies derive from highly specialised processes that are hard to adapt. On the other hand, being lean can mean there is less inertia to overcome and less complexity which can help flexibility and agility more innovative KPIs that embed operating margin optimisation as a key goal across functions could create more headroom for agility automation can help logistics be both more agile and more lean but it’s questionable whether businesses will have the resources to invest in the foreseeable future
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Notes of Intent Group Virtual Boardroom discussion with Alastair Isbister and Richard Parkins of Great Bear, 30.04.20 Our thanks to everyone involved in the discussion. SKU rationalization & channel shift SKUs have been rationalised to cope with peak pressures but there’s a sense that not all of them should return even when things are ‘normal’ Easy to draw conclusion ‘you’re selling less’. But actually a lot of demand - e.g. from convenience outlets - has now switched to grocery channel or online. Now trying to service these reduced channels. Logistics bottlenecks Taking extra time to unload, need to change frequency of deliveries Harder to optimise loads Packaging often not able to keep up with production Big shifts in production demand Difficulty in securing raw materials - bigger safety stocks needed Need to get more flexibility into manufacturing capacity ERPs have not been flexible enough and have de facto become systems of record with multiple cloud point solutions in combination with a data lake being more effective E-commerce & Amazon Some huge increases in e-commerce but it’s up to three times as expensive to deliver Amazon best platform but high cost and hard to get enough volume Issue with returns: Amazon seem to order to create availability but then return unused stock. Returns make heavy items unfeasible. Network / DC / warehouse configuration Covid has highlighted risk of losing a DC on wider network design Anticipated shortage of space didn’t materialize Difficulties around utilisation of minimum floorspace and throughput as per warehouse Ts & Cs but legal obligation to meet these. Even if warehouse staff furloughed, still high fixed costs incurred Shift to cross-docking: less w/h space for more container space Looking to reduce space and share facilities Shared warehousing can help unlock transport consolidation Production flexibility Agile vs lean – businesses which have taken a lean approach potentially reviewing Supply of raw materials a major factor as less control over this part of the supply chain / suppliers sometimes not able to respond fast enough Businesses re-considering UK manufacture vs off-shoring SKU differentiation a challenge e.g. for Aldi but, important for some retailers even in current climate Longer term implications Warehousing and manufacturing will need to be more agile and flexible Digitalisation: visibility is crucial and enabled by intricate ERP interfacing (in many cases with SAP). Flipside – cost and speed of change Remote working has generally been successful so unlikely to go back to pre-Covid working arrangements Visibility & digitalisation has been a game changer: simply having screens and dashboards prominent for all staff has prompted faster action
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We held a discussion, co-chaired by Louisa Hosegood, Digital & Strategy Director at Bis HendersonIntent on 13/5/20. Top takeaways Covid has accelerated some shifts that were already underway - eg the shift to Ecomm. Many changes are expected to ‘stick’. But it’s possible that governments may stall a bigger swing to ecomm by supporting the recovery of the high street. Some wholesalers have had to open up B2C channels - this may need to continue. B2B customers expecting a service more akin to to B2C! Context Q: How are customer behaviours changing? A: for B2C: changing product mix, accelerating pre-Covid trends towards e-commerce, changing order structure A: for B2B: mostly seeing wholesalers being squeezed on all fronts (service, capacity etc.); change in attitudes from people not wanting to hold much stock to now demanding more which presents challenges for being able to keep up with production Q: How sticky will these changes be in the new normal? A: very hard to say but unlikely to snap back to pre-Covid...some changes will stick to a large degree A: a key factor will be government & regulatory policy. There are a lot of jobs and vested interests with the status quo so authorities may be reluctant to encourage wholesale, rapid change. For example, might they be likely to support the high street and so slow down the shift to online? Q: What contextual factors are affecting the ability to respond? A: particularly in pharma but for other sectors too, country-specific regulations around packaging, labelling etc. make it very difficult to to have regional production and distribution strategies that would allow more flexibility A: a heightened consumer awareness of resilience, sustainability and localisation of supply chains A: country-specific regulatory differences in terms of what can be sold, where and how Strategy Q: How are supply chains responding to changing customer behaviours? A: rationalising SKUs, favouring global brands over local, reducing customisation for more general and flexible production, more mass production early in the SC and personalising / customising at later stages to make it easier to shift production as factory availability & capacity varies, change of pack sizes e.g. kegs to cans in the drinks sector Q: What lessons are being learned? What will be done differently in future? How can the inventiveness borne of necessity be harnessed for lasting improvements? A: expect there to be a greater role for scenario modelling across functions A: especially in developing markets where people tend to only have mobile phones and internet access may be restricted, ordering has shifted to online but using common public platforms like WhatsApp and Facebook. If the simple approach works under Covid, why complicate it in future? A: Currently seeing more flexibility of regulations, in pharma in particular, they are hoping some of this will stick and allow them more flexibility for example to be able to trade online Q: Has Covid accelerated a rethink of siloed online vs. in-store stocks towards a more flexible, hybrid approach A: a major UK retailer has supplemented capacity in the one dedicated online fulfilment centre by using 25 hybrid stores to fulfil some online orders, which has enabled improved customer promise and experience compared to the early stages of lockdown. And they are seeing this as a cost effective permanent move to increase online capacity, utilising store space and staff Q: Should wholesalers be looking to B2C models or just focus on B2B efficiency? A: both, some are already having to do it now anyway, and depending on how slow some customer sectors recover they may need to do more B2C. B2B expectations are changing as well, with more expecting B2C-like service
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Dynamic network design - agility & resilience for 'new normal', 17 June
JP Doggett posted a topic in Highlights
Until a vaccine is widely available or herd immunity is achieved, we are likely to encounter much more volatility of supply conditions as they are impacted by localised or rolling lockdowns to deal with outbreaks and ongoing mitigating efforts like spatial distancing. Therefore, the idea that your network is something you review every two or three years won't work in this scenario and, instead, a more frequent and dynamic network design planning process will be required. In this practitioner discussion, approx. 6-10 participants will address key questions including: Up-stream sourcing strategy: China + 1? How to diversify? How to adapt network design processes? Data lakes, dashboards & scenario analyses 'Supply sensing'?: tools & techniques for early warning of supply shocks The discussion leaders will be: Martin Gouda, Partner, BCI Global: Martin is Partner Supply Chain Strategies at BCI Global and has over 25 years of experience in international supply chain optimization. He has been working in various roles in the on strategic and tactical level in management and consultancy. Martin worked for a global 3PL for almost 10 years in various roles in business development. The last three years Martin was leading the Healthcare sector on global level. Martin carried out strategic projects with fortune 500 companies in various industries in the areas of warehousing, distribution, transport management and end-2-end. In his previous job Martin was involved in the strategic study and implementation of 4 MMWs for GSK. As a consultant he as part of BCI Global for companies like Medtronic, Stryker, Pfizer, Acist, Baxter, Invacare, Wartsila, J&J, Unilever, Loreal, UPS, DHL, Fedex and many others. Martin chairs the Health Care Logistics forum (HLF) and was its founding father. Erik Kramer, Supply Chain Manager, Balt Extrusions SAS: After finishing his logistics studies, Erik started to work for a 3PL in the Netherlands and Germany in supporting roles in warehousing, distribution and customer integrations. As of ’91 Erik started to work for Medical Companies such as Medtronic, ev3, Covidien, St. Jude Medical, CardinalHealth and Interlock. Erik focusses on CS, Supply Chain, Warehousing and Transportation, looking after Integrations, new transportation network, New DC design, 3PL integration / alignment and reorganization mainly in operational execution, but recent more in project management in NL, DE, BE and FR. Frank Moonen, Global Supply Chain Director, Boston Scientific SIGN UP -
What would you like to discuss with your fellow SC practitioners?
JP Doggett posted a topic in Highlights
The global operating context for supply chains has changed more than almost anyone could have foreseen. As we emerge from crisis management mode towards navigating this new reality for the longer term, what would you like to discuss with your counterparts or whose views would you like to hear? We'll look to schedule online discussion (and, eventually, live roundtables) on the most popular suggestions. -
Top takeaways Maintaining the business as going concern and hence cash flow / working capital management are the most important issues for supply chains leaders. As the businesses get through the immediate asks during the unprecedented circumstances, a more fundamental review of operating models, eco-systems, technology landscape and business processes would be required to ensure resilience. IBP/S&OP takes a strategic central stage as the key business process to drive tough decisions balancing customer confidence and cost. Closer collaboration with customer and suppliers is essential to understand where supply chain risks exist and to deal with them holistically so that the capacity to respond to demand as conditions ease is not compromised. Although good data and processes are essential, senior management focus and clear authority is integral to make tough decisions especially where many assumptions need to be made and there is no time for various teams (commercial, finance, operations etc.) to reach consensus. Context Q: what is the current operating context for working capital & cash management? A: Maintaining the business as a going concern and re-balancing the focus to be ready for revival are the two overarching drivers. A: The finance departments and BU heads are increasingly involved and setting the performance drivers for the supply chains. Strategy Q: How to maximise cash in-flows in the short-run? A: Many businesses are seeing changes in consumer behaviour in response to pandemic lockdown conditions such as channel and product switches and unusual peak patterns. The key here is to ensure that cross-functional team come together rapidly to capture this demand and hence revenue/cash. This may involve rapidly setting up capacity for new lines or promotions to help manage stock levels. Q: How to balance managing cash in the short run and ensure that the supply chain is still intact to ramp up and restock for when demand returns? A: Securing supply for next few months especially for single source items A: Making tough choices around closing production/DCs. A: Safeguard smaller, more vulnerable suppliers e.g. reviewing credit risks in the supply chain and adjusting terms constructively to support supplier and minimise risks Q: how should OPEX / CAPEX decisions be made in light of the current situation? A: frequent and strategic scenario modelling with a clear set of assumptions, even if changing, to reprioritise investments as the situation evolves Process Q: What is the most critical business process and what are some of the good practices. A: IBP/S&OP came out as the most critical business process. The key aspects were cross-functional nature (with commercial/finance/operations) on board and strategic leadership from the top. Some businesses are running them more often and going into a more granular analysis be it customer or product hierarchies. In one member’s case, a mature IBP process which included a matrix reporting structure to both geographical and functional line managers had performed well at making decisions under uncertainty. A: Escalation mechanism - when routine processes hit the buffers, there needs to be a clear escalation of authority so that decisions can be made quickly A: Identifying operational efficiencies - use available staff to help identify operational efficiency improvements, in this case, in the e-commerce operation to free up cash on the cost side. Q: how can you predict demand under uncertainty and volatility (and so optimise working capital)? A: getting input from teams at the “coal face” e.g. delivery to gauge demand conditions as a complement to other data points People Q: What management attributes are helping? A: The business leadership (board level or BU heads) driving decisions (especially with many unknowns) have been critical to align various teams rapidly. Q: What other skills have been most useful? A: Collaboration has been critical to align teams and not just within the enterprise but also within the broader ecosystem, A: Resilience in terms of teams picking up the task at hand and navigating through the challenges. Q: how can you support and transfer knowledge to non-furloughed staff who are having to deal with a level of granularity and issues that they are not familiar with? A: Very clear guideline from the management around the objective A: Collaborative and resilient culture A: Data/Business systems in place Data/Technology Q: What were the key barriers from data/technology systems perspective? A: Many struggles with the speed/accuracy and granularity of the data available to make the decisions. Governance & optimisation Q: What are some of the good practices? A: Active participation of senior management and key stake holders from each function. Session slides available here More about Oracle SCM & Manufacturing here
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Transport cost benchmarking Top takeaways At a time when cashflow management is essential and the market so volatile, benchmarking transport costs can identify substantial potential efficiencies Although the unique characteristics of individual supply chains make it inherently difficult to make direct comparisons, an activity-based comparative analysis can highlight the areas of greatest potential to reduce costs Whilst targeting the lowest cost transport rates is important, choosing and collaborating with the right partners can realise a much wider scope of operational efficiencies - understanding your activity profile and cost drivers is therefore just as important. Context Q: what is the current operating context? A: transport networks are facing challenges from upstream lags, channel switches, unbalanced flows and variations in demand but not staff shortages, as was previously anticipated Q: what impact will the pandemic / new normal have on logistics strategy (as it affects transport availability, resilience, preferred modes and relative pricing etc.)? A: very hard to say but general trend seems to be rising transport costs, as vehicle utilisation and empty running are harder to manage in the short-term and the availability of small hauliers could be severely impacted by cashflow issues Strategy Q: how to strike the right balance between choosing LSPs on coverage / efficiency and local capabilities around service levels, especially for last mile? A: International and regional provide scale and good coverage, but are often limited by their size and lack of flexibility. Local providers can often provide additional knowledge, flexibility and responsiveness that can deliver a better service to your customers for the last mile Q: what’s the best strategy to optimise total lifetime costs of LSP partnerships? A: entering longer term agreements and incentivising greater efficiencies through collaboration, not just shaving cents off the rate A: looking beyond the rate card to consider the scope for operational efficiencies by working collaboratively with the right partner Process Q: how to make a fair comparison, taking the unique aspects of individual supply chains into account? A: analysing rates by activity profile across the range of typical loads and, if and when possible, selecting LSPs so that relevant parts of the activity profile fits with their capabilities Q: how best to optimise LTL? A: Understand your activity profile and how it matches your providers’ flows and capabilities. Critical mass of smaller loads and network reach are critical to providing good load consolidation, something that the large providers are typically less good at. A: as UK government has relaxed some rules on retailer collaboration, more load consolidation opportunities may become more feasible for both retailers and suppliers, as a mean of mitigating transport cost rises People Q: What are the biggest risks to transport costs A: Drivers are in short supply, but in the shortest-term, are available from sectors which are still shut-down. The biggest challenge is having them in the right place to match flows and finding cost-effective routes for their return, especially on cross-border long haul lanes. Technology Q: What technologies exist to aid benchmarking? A: A number of services exist to tender Full Load traffic, but benchmarking Less-than-Load and e-comm are much more challenging. Also comparing surcharges (which can skew the cost base) is difficult. Identify a service that can analyse your activity profile in detail and provide a like-for-like comparison for each segment, for you to select the right partner at the correct rate. RoI & change Q: How often and how much time should be spent to undertake a benchmarking exercise, especially given the higher than usual demands on time and attention? A: Benchmarking should be a pre-requisite ahead of contract renewals or network changes, and can be delivered within a few weeks, given typically available data. The costs are modest and the output should provide the comparative basis for measuring the benefit of any network or provider change. Savings vary according to the specifics of each situation but data from recent projects suggests an average of 10-15% saving on transport costs. 65% of companies who benchmarked for the first time identified and delivered savings in excess of this. The ROI also varies but is typically between 10 - 25 x savings. More information about GSI benchmarking available here
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Natalie Berg, Founder of NBK Retail shared her analysis of the ecommerce and retail landscape and offered some ideas about how retailers and their supply chain partners can respond to the dominating presence of Amazon. Key points included: Amazon takes the ‘joy’ out of shopping: there is no browsing experience. “Even when customers don’t know it yet, they want something better” (Jeff Bezos 2017) Amazon can’t do curation. This is where specialist shops and experiential shopping will win customers. Physical shops are required to get close to the consumer - hence previous pure plays are creating shop networks Amazon is taking the friction out of shopping (automatic re-ordering, stores with no checkouts). Invest in frictionless experience to win customers! Look to collaborate with other retailers - eg click and collect, returns. Repurpose stores as collection points, have better inventory visibility. Ecommerce will not kill physical stores. Amazon has won customers by creating trust. The retail apocalypse is hyped by the media. The truth is that there are too many shops, too many mediocre shops, and specialists that have ‘forgotten to specialise’. Department stores have too much space, and are likely to continue to die out. Amazon kills mediocre stores. But other major brands are pushing out weaker retailers too - eg Primark in clothing, Aldi in grocery. C&C is likely to see further development. We will spend less time buying essentials going forwards. Eg smart tech will know we are low on bleach and will order it. Slides available here.
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Holistic ML/AI strategy for resilient supply chains Summary of virtual discussion held on 4/6/20 Chaired by JP Doggett, Intent Group, with the expertise and input of Vikram Singla, Oracle. Key takeaways Covid has focused the minds in terms of looking at supply chain holistically and view each technology investment with tangible business outcome lens. It has increased the recognition of the need for agility, requiring transparency, visibility and reliability of processes. Successful AI adoption will need appropriate skills development e.g. need of proficiency in data analytics and understanding the data within business context to make robust decisions. AI is not a tool to reduce headcount. Cross functional alignment is key: focus on the right questions. SC knows the questions - Digital knows how to find the answers. AI pilots should fall into an overarching business strategy, rather than being conducted autonomously / as isolated projects. Prerequisites should not focus on volume of data, rather quality/relevance of data. Getting master data right is another key element. What are the main uses for machine learning, artificial intelligence and predictive analytics? Trend detection: statistical patterns for business KPIs Anomaly detection: deviation from normal behaviour Predictions: learning from machine data and business context Recommendations: prescriptive actions based on root cause analysis What are the most common use cases for ML/AI in supply chain? Source: Oracle research 2020 What use cases are we accustomed to? Visibility - both inventory and shipment ETA, including event management RPA - speeding reporting and laborious processes. Forecasting, scenario planning Inventory optimisation What challenges to adoption did participating members experience? Lack of cross-functional alignment/fit within business strategy Fear/misconceptions Understanding the interfaces of different systems and platforms Lack of understanding, lack of data science skills in the team A joined-up approach rather than disconnected and limited pilot projects scattered across different silos What are the common myths (and reality) around ML/AI adoption? Needs a build-it-yourself approach. The reality participating members reported was: AI tech generally not mature enough yet for plug & play Mixed experience: some default options have been a good fit whereas some big-name products needed lots of rework Using in-house experts for self-build can make it less accessible / user friendly Will deliver magical results. The reality participating members reported was: Nothing happened overnight; need to get over fear factor; sometimes needs a leap of faith & trust in the algorithm before trying to unpack it Certainly, required time & effort AI kills jobs. The reality participating members reported was: Vital to work with HR to clarify the intended use and impact of ML/AI It’s about augmenting, not replacing More data is better. The reality participating members reported was: Better quality the better Only needs data and models to succeed. The reality participating members reported was: Needs human input to guide & define What challenges did participating members foresee for future / further ML/AI adoption? Cost - business case needs to be in line with company goals in a time where working capital is a key focus Expect the uncovering insights / trend detection type of use case to be creeping up the agenda More than ever, demonstrating business cases and ROI at a time when investment capital will be at a premium, especially when around 80% of current IT budgets go on maintenance of current infrastructure Planning, managing & leveraging ML/AI implementation at an industrial scale across a global business with many moving parts What does a holistic / enterprise approach to ML/AI adoption look like? Question the fundamentals of the business before making large, difficult to reverse ML/AI investments. For example, if you’re a consumer goods business, the Covid-19 experience may prompt you to consider if you may need to develop a D2C biz model? That would change the SC model from from make-to-stock to make-to-order in real time, smaller lot sizes which would require an online presence and tech enablement for an agile SC. All of that would shape the data strategy that ML/AI would be applied to. Decide on your investment pipeline, how much can you afford to do? Continue to explore or pare back and revisit existing use cases to see if it’s possible leverage / scale up what’s already been done? Strategic business partnering: implanting data scientists in other functions to help build algorithms which understand and respond to the right context Platform approach: look for use cases that could be deployed across business units and subsidiaries
