© 2008 Eventure Events. All rights reserved.

Supply Chain AnalyticsUsing Business Intelligence

Elaina Ball – Director, Supply Chain

Ralph Shay - Enterprise Application DeliveryCPS Energy

• Business perspective– CPS Energy

– Supply Chain at CPS Energy

• IT perspective– SAP solutions at CPS Energy

– Supply Chain Analytics project

• Results and lessons learned

• Q & A

Presentation Outline

• Nation’s largest municipally owned energy company (electric & gas)

• Assets approaching $9 billion• 680,000 electric customers• 319,000 gas customers• Highest financial ratings of any U.S.

electric system• Customers’ combined energy bills

rank among the lowest of the nation’s 20 largest cities

Company Profile

• #1 in Customer Satisfaction– Provide reliable, low cost,

environmentally responsible energy to our customers

• Great place to work– Customer Commitment

– Performance

– Safety

– Respect

– Teamwork

– Trust

Vision

• Business Objectives - support corporate objectives by striving for– Demand forecast accuracy– Perfect order fulfillment– Minimized costs

• Organizational Alignment– Organization based on customer fulfillment streams

(Materials, Contracts, Fleet)

• Performance Metrics– Transform supply chain operational transaction data

into performance metrics to identify improvement opportunities and track performance trends.

Supply Chain Strategy

Business Objective: Reliability

Supply Chain enablement through:– Perfect order fulfillment through demand

forecast accuracy

– Services and materials available when needed, as specified

Seeking perfection in delivery is how we support reliability.

Business Perspective,Supply Chain alignment

Business Objective: Low cost energy

Supply Chain Enablement through:– Reduced cost of supply

– Lower internal operating costs

– Strategic sourcing and spend management

Seeking lower cost of supply is how we support low cost energy for customers.

Business Perspective,Supply Chain Alignment

Business Objective: Environmental responsibility

Supply Chain Enablement through:– Elimination of waste in business processes– Reduction of excess inventory– Reduction of errors

Seeking waste reduction is how we support environmental responsibility.

Business Perspective,Supply Chain Alignment

Business Perspective,Supply Chain Context

How accurate is the plan compared to actual?How long does it take to process purchasing

documents?

What is the fill rate?

What opportunity exists for reducing inventory valuation while improving availability?

1. Purchasing document cycle time

2. Inventory replenishment cycle time

3. Supply chain cycle time

4. Line count fill rate

5. Inventory accuracy

6. Inventory transfers between storage locations

7. Inventory usage

8. Inventory rationalization

Business Perspective,Supply Chain Scorecard

9. Inventory consumption forecast vs. actual inventory consumption

10.Schedule forecast vs. actual start/complete

11.Volume of supply chain transactions

Business Perspective,Supply Chain Scorecard (cont’d)

• SAP R/3 4.6c implemented late 2001

• Supply Chain use of SAP ERP primarily transactional with limited use of LIS

• SRM, SCM not implemented at this time

• BW 3.5 in place when Supply Chain presented need for analytics

• Commitment to upgrade to ECC 6.0 and BI 7.0 made after Supply Chain analytics project was launched

IT Perspective,Information Technology Context

• Establish formal software development project

• Follow disciplines of PMO and SDLC

• During planning phase, prototype scorecard reports using data extracted from SAP R/3 tables

• Use prototypes to engage stakeholders and improve design through active use

• Prototyped reports serve as BI frontend design targets

IT Perspective,Project approach

IT Perspective,Prototype example

IT Perspective,Prototype example

• Sapient Consulting engaged to provide professional services for BI 7.0 upgrade and Supply Chain Analytics development

• Consultants assigned to the engagement had extensive experience with:– Project management

– Utilities clients

– Supply Chain clients

– SAP BW and BI 7.0

IT Perspective,Professional services

• Organize project execution phase into iterations to deliver “quick wins”

• Iteration 1 scoped to deliver scorecard reporting related to cycle time– Purchase Order Cycle Time

– Inventory Replenishment cycle time

– Supply Chain Cycle time

IT Perspective,Consultant’s recommendations

IT Perspective,Consultant’s recommendations

IT Perspective,Consultant’s recommendations

IT Perspective,Consultant’s recommendations

Multiprovider for summary information

IT Perspective,Consultant’s recommendations

Multiprovider from DSOs for jump queries

IT Perspective,Sample results

IT Perspective,Sample results

IT Perspective,Sample results

• Iteration 1 delivered January 2008– Purchasing document cycle time reporting

• Iteration 2 delivered July 2008– Demand forecast accuracy reporting

• Information delivered used to support continuous process improvement and operational efficiencies in the supply chain

Results,Project deliverables

Example-Material Lead Time

Business Explorer Sample Output. ..

• Prototypes used to drive early business results– Identified excess inventory to drive decisions for

inventory reduction in excess of $5MM

– Identified opportunities for improved contract management to drive down inventory replenishment cycle time and reduce stock outs

– Prototypes of demand accuracy results supported cross-functional dialogue seeking improvement

• Process and transaction system “anomalies” exposed during data analysis and reconciliation

Results,Project “side benefits”

• Knowledge transfer from consultants strengthened in-house BI team skills

• Supply Chain Information Team participation created foundational skills and knowledge for future extension of supply chain analytics in BI environment

• Experience with iteration 1 and iteration 2 project plans, budgets and results will serve to improve future BI project plans and cost estimates

Results,Project “side benefits”

• Prototyping reports using data extracted from SAP tables helped stakeholders define reporting data sources and uses

• Professional services from an experienced consulting firm benefited both business and IT stakeholders

• Combining technical upgrades with a development project added complexities requiring a “program” approach to project management

Lessons Learned

• BI projects are not simply about reporting– Security model

– Process chain reliability

– Information distribution choices

– End user training needs and considerations

• Development iterations deliver value earlier and allow the application of lessons learned to improve subsequent iterations

Lessons Learned

Recap,Q & A

• Business perspective– CPS Energy

– Supply Chain at CPS Energy

• IT perspective– SAP solutions at CPS Energy

– Supply Chain Analytics project

• Results and lessons learned

• Q & A

© 2008 Eventure Events. All rights reserved.

Elaina Ball

Ralph ShayCPS Energy

eball@cpsenergy.com

rrshay@cpsenergy.com