Supply chain collaboration across multiple tiers 1/17/2008 Supplying Your Business Advantage.

Supply chain collaboration

across multiple tiers

1/17/2008

Supplying Your Business Advantage


Oracle APS & Demantra Specialists

• Consulting firm founded by former Oracle APS Development & Consulting managers.

• Consultants have tremendous business process / domain knowledge and have provided support, advice, and consulting services to over 75+ Oracle APS implementations

Introducing Inspirage

Agenda

• Outsourced business environment • Business challenges in collaboration• Introduction to Collaborative Planning • Modeling the supply chain• Leveraging Collaborative Planning • Conclusions


Outsourced business environment



Outsourced manufacturing and distribution

FoundryContractManufacturer

OEM

Distribution

Assembly & Test

Customer

Customer

Customer

•Completely outsourced business environment

•Globally dispersed operations

•Common to see materials go through several continents before it reaches customers

•Growing number of products are manufactured and distributed in an outsourced environment


OEM

Contract Manufacturers

Component Manufacturers

Multi tiered supply chain

•Some suppliers interact with OEMs directly - Tier 1 suppliers

•Other suppliers are removed at least one level away from OEMs - Tier 2 suppliers

Sub assembly suppliers

Subsidiaries

TIER 1

TIER 2


OEM OEM

Contract Manufacturer

Component Manufacturer

Operational challenges •Work is outsourced but execution across the companies should be seamless

•Companies operate in different tiers but are part of the same supply chain

•Service levels achieved depends on performance of all companies in all tiers

•Monitoring demand across the extended supply chain is crucial

•Timely exchange of information on supplies are very important

•Value of inventory forces OEMs to track inventories across all tiers

•Need systems that operate across enterprises

Business issues



OEMAustin

Contract manufacturerChina

Component manufacturerDallas

Order forecast

Order forecast

Supply commit

Supply commit

TIER 1 SUPPLIER

TIER 2 SUPPLIER

OEM

• OEM provides forecast to Tier 1 suppliers

• Tier 1 supplier provides forecast to Tier 2 suppliers

• Tier 2 supplier provides commits back to Tier 1 supplier

• Tier 1 supplier provides commits back to OEM

• Tier 2 provides commits to both Tier 1 and OEM

Collaboration process


OEMLos Angeles

Contract manufacturer 2Taiwan

Order forecast


Order forecast

Contract manufacturer 1China

Order forecast


Order forecast

•Both Tier 1 suppliers order the same part from Tier 2 supplier

•OEM does not want individual Tier 1s to place orders for the part

•OEM would like to collect the demand across all suppliers for the same part for better prices and delivery

•In addition inventory of these parts need to be carefully managed as it could be very expensiveDemand for 1000 chips Demand for 2000 chips

Total demand is 3000 chips

TIER 1

TIER 2

Operational control




Authorized order forecasts


Subsidiaries

OEM

•Not all Tier1 suppliers can provide forecast for Tier 2 suppliers

•Only specific Tier 2 suppliers are authorized to receive order forecasts from Tier 1 suppliers

Order forecast

authorizedOrder

forecast not

authorized




Authorized supply commits


Subsidiaries

OEM

•Tier2 suppliers cannot provide supply commits to all Tier 1 suppliers

•Only specific Tier 1 suppliers are authorized to receive supply commits from Tier 2 suppliers

Supply commit

authorizedSupply commit

notauthorized




Permissions


Subsidiaries

•OEMs authorize specific Tier 1 suppliers to provide order forecast to specific Tier2 suppliers

•Tier 2 suppliers provide permission to Tier 1 suppliers to view supply commits based on OEMs instructions

Business issues - Users in the system


Contract manufacturer-SITE1

Component Manufacturer –SITE1

Component Manufacturer –SITE 2

Order forecast

•Privileges provided at very granular level i.e. specific item, order type, site, user etc.

•Ex: User 1 at Contract Mfr. SITE1 is provided privileges to provide Order forecast for part ‘X’ to procure from Component Mfr. SITE1

•Once users are provided access to the system, the access should be restricted to relevant data to the users

• OEM should be able to monitor all forecasts published by Tier 1 suppliers

• OEM should be able to override Tier 1 forecasts and provide overrides as necessary

• OEM should be able to monitor all supply commits from all tiers

Business issues – OEMs operational control


Introduction to Collaborative

Planning



Traditional collaboration

Response 1: Maintain Excess Inventory

Response 2: Reserve Production Capacity

Response 3: Expedite Everything!

Long planning cycles

Supply PlanningDemand Planning

Distribution plans

Sales

Marketing

Mfg.

Fax

Tier 2

Tier 1

CUSTOMERS SUPPLIERS

Production plans

Manufacturing plans

Paper Paper

?Manual

reconciliation

Supply Chains built on INVENTORY


Oracle collaboration process

Enable closed loop collaborative planning processes across your value chain

• Have complete supply chain visibility

• Make better decisions

• React immediately to disruptions in supply chain

Supply Chains built on INFORMATION instead of

Inventory

CUSTOMERS SUPPLIERS

Consensus forecast and production plan

Supply Planning

Demand Hub & Multi-dimensional analysis

Automated Exceptions

S&OP Process

Singleholistic plan

Business Intelligence

Sales

Marketing

Mfg.

Manufacturing

PortalPortal

Tier 2

Tier 1

E-Business planning solution: zero latency, real-time collaboration


Collaborate with suppliers

• Reduce shortages and improve supplier delivery performance

– Provide order forecasts to your suppliers– Identify supply-demand mismatches

• Respond better to supplier exceptions

– Get visibility to your supplier’s constraints– Review constraints in your S&OP process

• Reduce non-value added costs and exception overload

– User-configurable exceptions– Automated exception handling via workflow

Forecast

Supplier

Constraintcapacity

Plan, Spreadsheet

Supply commit(capacity)

Consensus forecast

OEM

Plan

SalesForecast

OrderForecast


Multi-tier collaboration

Run plan

Forecast ‘memory’

Supply commit

‘boards’

Supply commit ‘memory’

Demand ‘boards’Run plan

Demand‘systems’

Supplyforecast

Consensusforecast

SUPPLIERCUSTOMER OEMCONTRACT

MANUFACTURER

Full visibility and synchronization across the extended supply chain

Modeling & set up



OEMLos Angeles

Contract manufacturerSan Jose


Order forecast

Order forecast

Supply commit

Supply commit

Modeled as Inventory

Organization

Modeled as ‘Supplier’

Organizations

Modeled as suppliers

OEM Employees

Supplier users

Supplier users

Modeling – trading partners

Modeling – trading partners


• OEM is set up as User company as OEMs own and administer ‘Collaborative Planning’ application

• OEM facilities need to be modeled as regular inventory organizations

• Tier 1 suppliers need to be modeled as ‘supplier organizations’

• Tier 2 suppliers can be modeled as regular suppliers with multiple sites as necessary


Modeling – OEM (inventory Org)


Modeling – Contract Manufacturer - supplier organization


Modeling – Component manufacturer - Supplier

Users


Modeling – Users


• OEM users are modeled as employees• Users from Tier 1 modeled as ‘supplier’ users • Users from Tier 2 are also modeled as ‘supplier’ users • Supplier users from Tier 1 are associated with

corresponding supplier contacts in procurement• Tier 1 supplier is on OEM’s Approved Supplier List• Tier 2 supplier is on Tier 1’s Approved Supplier List


Modeling – OEM users


Modeling – Supplier users (both contract and component manufacturer users)

ASL


Approved Supplier Lists


OEMLos Angeles

Contract manufacturerSan Jose Component manufacturer

Dallas

Contract manufacturerSan Jose

Approved Supplier List and Sourcing rules Approved

Supplier List

Inventory Org Supplier Org


Modeling – ASL

Security rules


Security rules


• Security rules in CP specify specific data that can be shared by trading partners

• Do not need rule to view your own data• Need to specify rules to enable data from other trading

partners• Examples

– OEM specifies a rule for a Tier 1 supplier to share order forecast with specific Tier 2 supplier

– Tier 2 provides a rule that enables Tier1 to view supply commits from Tier2


Security rulesAccess given by COMP MFR OEM

Order Type Supply Commits Order forecast

Order number

Item

Org

Customer

Customer Site

Supplier COMP MFR COMP MFR

Supplier Site XXXX XXXX

Privilege view update

Access given to company company

Assigned to CONTRACT MFR CONTRACT MFR

Effective from Date

20-Nov-2006 20-Nov-2006

Effective to Date


Security rules

Process


Process


OEM to Tier 1

• OEM prepares and publishes order forecast for contract manufacturers (Tier 1) based on over all end demand

• Order forecast is available for Contract manufacturer

• Contract manufacturer logs into the system, reviews demand (order forecast from OEM)

Tier 1 to Tier 2

• Contract manufacturer provides order forecast for Component manufacturer (Tier 2)

• Component manufacturer logs into the system, reviews demand (order forecast from Contract manufacturer – Tier 2)

• Component manufacturer (Tier 2) provides commits to Contract manufacturer (Tier 1)

Tier 1 to OEM

• Contract manufacturer provides commits to OEM

• OEM logs in and reviews commits provided by Contract manufacturer

Over all control by OEM

• OEM monitors Order Forecast provided by Contract Manufacturers (Tier 1) to Component manufacturers (Tier 2)

• OEM monitors commits provided by Component manufacturers (Tier 2) to Contract manufacturers (Tier1)


Publish order forecasts by OEM


Review order forecasts by Tier 1


Tier 1 loads publishes order forecast to Tier 2


Tier 2 and Tier 1 load commits


OEM and Tier1 review commits

Summary


• Outsourced business environment poses significant operational challenges

• Key challenges involve collaborating with trading partners in several tiers

• Oracle collaborative planning offers comprehensive capabilities to address collaboration requirements in an outsourced environment

• Attention to modeling, set ups, data security, and processes are required

• Seamless collaboration can be achieved across tiers with careful system planning

Contact Information


Sridhar Hoskote – [email protected]

Supply chain collaboration across multiple tiers 1/17/2008 Supplying Your Business Advantage.

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Transcript of Supply chain collaboration across multiple tiers 1/17/2008 Supplying Your Business Advantage.