Supply Chain Value Networks: Taking Advantage of Big Data, Connectivity and Analytics• Driving Supply Chain Transformations• Lora Cecere, Founder of Supply Chain Insights 9/24/2015

Disclaimer: I am a Skeptic

A Curmudgeon…

A Fortune-teller of Sorts….

I Write for the Supply Chain Leader

Current State

9 out of 10 Supply Chains are Stuck

Progress: All IndustriesIndustry Snapshots (2006-2013)

IndustryYear –over-

Year Revenue Growth

Operating Margin

Inventory Turns

Cash-to-Cash Cycle

Revenue per Employee

(K$)SG&A Ratio

Retail Apparel Industry

18%39%

0.3927%

0505%

6826%

32518%

27%05%

Apparel Manufacturing Industry

14%82%

0.1232%

0568%

15008%

400355%

27%63%

Mass Retail Industry

09%50%

0.0620%

0606%

03148%

35048%

23%6%

Beverage Industry

09%61%

0.1916%

0204%

5346%

512 NC

24% 16%

Pharmaceutical Industry

08%47%

0.2329%

0316%

15547%

57232%

27%08%

Chemical Industry

08%45%

0.1010%

0604%

8723%

55723%

14%27%

Medical Device Industry

06%38%

0.1432%

0213%

20616%

35112%

34%04%

Grocery Retail Industry

06%31%

0.0337%

1701%

1050%

40554%

14%06%

Consumer Packaged Goods

05%25%

0.1473%

08482%

7217%

33314%

26% 09%

Food Industry

05%55%

0.1019%

07 17%

4004%

53455%

20% 18%

Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2013Industry Average comprised of public companies (combined food & beverage industry: NAICS 3112% where % is any number from 0-9, 311320, 311520, 311821,

311941 & 312111), (chemical: NAICS 325188 & 325998), (consumer packaged goods: NAICS 3256% where % is any number from 0-9), (medical device industry: NAICS 339112), (pharmaceutical industry: NAICS 325412) reporting in One Source with 20123annual sales greater than $1billion

NC=no change

Descriptors Used by Leaders

Fallacy: Functional Excellence

Today’s Functional Organizational

Growing Demand Volatility

A Project-based Focus

What We Expected

A Supply Chain is a Complex System

with Complex Processes

with Increasing Complexity

What We Learned….

The Supply Chain Effective Frontier

Correlations to Market Capitalization

Orbit Chart: Wal-Mart(Inventory Turns and Operating Margin)

Orbit Chart: Apple (Inventory Turns and Operating Margin)

Orbit Charts: Dow Chemical Company

Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014

-0.10 0.00 0.10 0.20 0.30 0.40 0.50 0.604.0

5.0

6.0

7.0

8.0

9.0

10.0

2006

Eli Lilly and CompanyOperating Margin

2014

NVO0.31, 6.48

2014

2006

Best Scenario

LLY0.24, 8.30

Average (Operating Margin, Inventory Turns)

Inve

ntor

y Tu

rns

Novo Nordisk Making Progress

Measuring Supply Chain Improvement

Overall Ranking per Company• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory (30%)

• Strength: Inventory Turns & Operating Margin Vector Trajectory (30% of score)

• Resiliency: Inventory Turns & Operating Margin Mean Distance (30%)

𝑺𝒖𝒑𝒑𝒍𝒚 𝑪𝒉𝒂𝒊𝒏 𝑰𝒏𝒅𝒆𝒙=𝟏𝟑𝑩𝒂𝒍𝒂𝒏𝒄𝒆 𝑭𝒂𝒄𝒕𝒐𝒓+

𝟏𝟑 𝑺𝒕𝒓𝒆𝒏𝒈𝒕𝒉 𝑭𝒂𝒄𝒕𝒐𝒓+

𝟏𝟑 𝑹𝒆𝒔𝒊𝒍𝒊𝒆𝒏𝒄𝒚 𝑭𝒂𝒄𝒕𝒐𝒓

Supply Chains to Admire Methodology

PerformanceBeats the industry

average for operating margin, inventory turns

and ROIC for 2006-2014 and 2009-2014

ImprovementRanks above peer group average on The Supply Chain

Index for 2006-2014 or 2009-2014

+

• Continuity of leadership

• Supply chain talent development

• Focus on a multi-year supply chain strategy

• Clear governance to guide cross-functional decision-making

• Strength in horizontal processes

• Excellence in supply chain planning, network design and inventory management

What Drives Top Performance?

Building the End-to-End Supply Chain

• Almost all End-to-end Transformation Projects Started with Failure

• Each is Culturally Unique: No one Right Answer

• Characteristics:- Continuity of Leadership- Alignment to the Business- Business Sponsorship- Slow and Deliberate

Characteristics

The End-to-End Journey

What is Visibility?

Risk Management: Top Disruptions

Counterfeit Goods

SHARED VISION + SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = CHANGE

SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION

SHARED VISION + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY

SHARED VISION + SKILLS + INCENTIVE + RESOURCES + LEADERSHIP = FALSE

STARTS

SHARED VISION + SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATIO

N

SHARED VISION + SKILLS + RESOURCES + PLAN + LEADERSHIP = GRADUAL

CHANGE

Source: J.P. Kotter

Collaboration: The Right Stuff

Bar codes were first used at Marsh Supermarket in 1968

VMI Performance

Retail Scorecards

SHARED VISION + SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = CHANGE

SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION

SHARED VISION + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY

SHARED VISION + SKILLS + INCENTIVE + RESOURCES + LEADERSHIP = FALSE

STARTS

SHARED VISION + SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATIO

N

SHARED VISION + SKILLS + RESOURCES + PLAN + LEADERSHIP = GRADUAL

CHANGE

Source: J.P. Kotter

Collaboration: The Right Stuff

Why Big Data and Digital Process Evolution Matters

Evolution of Digital Processes

Shift in First Order Processes

Could the Answer Lie in….

Clouds?

Streams?

Lakes?

Confluence of Technologies

Maturity on the Internet of Things

3D Printing

Ultimate Ear Case Study

Supply Chains Don’t Play by the Rules

46

But, what if they

could?

Analytics Maturity

48

Challenges:• Transactional• Time phased data

Structured Data

• Social• Channel• Customer Service• Warranty

• Temperature• RFID• QR codes• GPS

• Mapping and GPS• Video• Voice• Digital Images

Unstructured Data

SensorData

NewData

Types

Volume

Velocity

Variability

Big Data Supply Chains

Big Data

Cognitive Learning Adoption

Data Types

• Today 9 out of 10 supply chains are stuck.

• We must learn from the past to adopt new approaches for the future.

• Making the digital pivot and embracing big data techniques offers the promise for innovation/improvement.

Summary

Questions?

Books to Educate Your Team

WileyDecember 2012

Wiley December 2014

Self-publishedSeptember 2014

Self-publishedSeptember 2015

Launches Oct. 1, 2015

Founder: Lora Cecere

• Founder of Supply Chain Insights• “LinkedIn Influencer”• Guest blogger for Forbes• Author of 4 books: Bricks Matter (2012), Shaman’s Journal (2014)

and Supply Chain Metrics That Matter (December 2014), Shaman’s Journal (2014)

• Partner at Altimeter Group (leader in open research)• 7 years of Management Experience leading Analyst Teams at Gartner

and AMR Research• 8 years Experience in Marketing and Selling Supply Chain Software at Descartes

Systems Group and Manugistics (now JDA)• 15 Years Leading teams in Manufacturing and Distribution operations for Clorox,

Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble.

Contact Information: • Email: lora.cecere@supplychaininsights.com• Blog: www.supplychainshaman.com (10,000 pageviews/month)• Forbes: http://www.forbes.com/search/?q=lora+cecere• Twitter: lcecere (6500 followers)• LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (50,000 followers)