WEBINARLeading Through Disruption with Supply Chain Visibility

Pressure on supply chains

Re-emergence of high-cost areasNew business models, means of production, and ways of organizing supply chains have made higher-cost areas attractive again.

Globalization and the decline of outsourcingOutsourcing to lower cost, remote locations is becoming less attractive as low-cost countries become increasingly globalized.

M&A, sprawling production facilities and labor arbitrage have resulted in incredibly complex, and often expensive, supply chains.

Increasingly complex and costly supply chains

COVID-19

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CDC.GovMarch, 17 2020, 4 pm eastern

Managing COVID-19 Shocks to the Supply Chain- MAPI Survey & MSFT COVID-19 Round Table Executive Insights

• Supply chain shocks to continue – While nearly two-thirds of purchasing, logistics and operations executives report that their company experienced some disruption in Q1, nearly all expect at least some impact in the current quarter (Q2), with 1 in 5 rating this impact “high.”

• Two-thirds of companies report supply chain disruption is directly affecting both their productivity and logistics while over half report increased delays and cost.

• Reliance on a single-source supplier of a key commodity or component is the most common challenge, followed by identification of stressed suppliers.

• Preparations focus on visibility and agility in Q2 – The vast majority are contingency planning for closures, tracking suppliers, evaluating alternatives, and shifting some production locations where needed.

• Cash flow concerns – 64% of companies are anticipating increases in the number of suppliers requesting shorter payment terms in Q2, and 60% expect increases in requests for longer customer payment terms.

• Mixed outlook for medium-term – Companies are almost evenly split on whether they will “need at least 6 months to return to normal operating capacity” as a result of supply chain challenges owed to COVID-19.

• Respondents are more likely to say now that their company will consider tactics to increase supply chain visibility and risk monitoring in the future.

• What are Manufacturing Execs saying – Majority of Company Execs reporting after Employee Safety, Data Security, Remote Worker, Remote Assist, Supply Chain Visibility & Insights Visibility (Supply Chain Visibility & Insights are the first step to this) is the next Top Priority

Long lead times, low schedule compliance and lost productivity

High service levels, cost optimized anddynamically responsive

Supply Chain Visibility Today’s supply chain Future supply chain

Layeredplanning

Reactiveexecution

ExcessInventory

Disconnected processes

Orchestrated processes

Predictive operations

Closed loop end-to-end

Insight driven

Manufacturing

Service

Logistics & Distribution

Customer

Engineering

DigitalPlatform

Assembly packaging

Plan

Design SupportDeliverAssembleMake

Spec

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tions

Dim

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Conf

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Logi

stics

Cond

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Some Example Supply Chain Predictive Analytics2. Retrain Supply Models

Update the model with new purchase data and recalibrate supply constraints

3. Predict DemandCalculate demand with baseline, seasonality, trend, promotions, media events, price elasticity and cross-product effects

5. Optimize Optimize for margins, revenues and

supply constraints at every dimension and every network node

1. Retrain Demand ModelsUpdate the model with new sales data

and derived technical KPIs

4. Predict SupplyGenerate order proposals for every level of every dimension and for every network node

6. AutomateBy exception planning processSupply Chain Control Tower

Planning Sourcing Logistics & distribution

Supply chain visibility & orchestration

Supply Chain Visibility & Insights

ConnectedLeverage the cloud to connect, automate,visualize E2E view of your business

PredictiveMove from reactive to predictive with big data, machine learning, and IoT

CognitiveAmplify with algorithmic decision makingand automated execution

Manufacturing

Service

Logistics & Distribution

Customer

Engineering

Assembly packaging

DigitalPlatform

Digital platform components

Leverage next-gen cloud native supply chain partner solution offerings to drive predictability, accuracy, reliability and stability in supply chain

IoT and Edge | Data | AI | Blockchain Finance & Operations | Mixed Reality | Power BI | PowerApps | Flow | Talent Microsoft 365 | Teams | Graph | Security & Compliance

ntro

122Countries Served

>390Number of Suppliers(includes component suppliers)

~$8B Total Amount of Annual Spend

30KShip To Locations

1TBTotal Daily SC Data Generation

1.7M+ Est. FY17 Number of Retail and Commercial Sales Orders

33Number of Mfg & Distribution Operations

>42,000Number of Active SKU’s

2.0M+Annual Deliveries

>200M Units Manufactured & Shipped

Surface Studio Surface Hub Surface Software

Strategic SourcingCare

Manufacturing

Supply Chain Mgmt./New Product Introduction

Global Supply Chain

Transformation, Technology and Analytics

Integrated Business Planning

Safety,Compliance & Sustainability

Xbox HoloLens PC Hardware

Microsoft Supply Chain challenges

Aging processes and systems were no longer sufficient.A Digital Transformation of Microsoft’s Supply Chain was required

Pricing and Margin Pressure

Increasing Customer Service Expectations

Virtualized and Distributed Supply Network

Shortening Product Lifecycles

1 DigitizedSupply Chain

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Microsoft Azure enabled Digital Supply Chain platform

11

Warehouse Management

Shop Floor Control System

Transportation Management

BOM Management

CommerceDevice Telemetry CRM

SubscriptionsProduct Catalog Sales

Corporate systems

Point of Sales Freight Management

Enterprise Services

Supplier ERP

HD Insight Event HubsAzure Data Lake

Azure Data Factory

Supply Chain Cloud

Supply Chain Services

Azure API Management Microservices Azure Application

Insights

CareDev/NPI FinanceSource Make(MDS)

Deliver

Supply Chain Partner Systems

Data & Advanced Analytics Platform

Microsoft Supply Chain Core Transactional Systems

Plan

Our Supply Chain transformation journey

Data in Silos; Minimal automation

FY17

All data on a single platform

FY18

Stable, Consistent, Quality Data

FY19

Actionable Insights using Data

FY20

Intelligent Analytics Predictive Supply Chain

FY21

“We have some data, let me pull that Excel/Ppt”

“All our data is in MAX, but we can’t trust it”

Sense & Respond Anticipate & Act

“BI is stable. KPIs, Reports, Dashboards in place”

“Move from Descriptive toPrescriptive”

“Move from Prescriptive to Cognitive”

Getting to a Connected, Predictive, Cognitive Supply Chain

The power of connected data – driving decisions

Personalized Dashboards

Surface Pro 4

Application: Dynamic Network Management

An integrated Global Platform to visualize our Global Network.

Millions of supply chain data points, both internally and externally, are being processed in real time through a data science model and displayed.

The foundation for machine learning and predictive analytics delivery performance.

35+ ELD AGGREGATORS/ GLOBAL GPS PROVIDER

ALL VESSEL VOYAGES GLOBALLY

CELL PHONE TRIANGULATION4.5 million/month

ELECTRONIC DATA INTERCHANGE11K customers3.5K Carriers

ALL FLIGHTSGLOBALLY

Machine Learning and Predictive Analytics As the supply chain industry moves forward and the Internet of Things continues its expansion, the ability to consume, combine, and analyze data from growing number of integrations is essential

Machine Learning and Artificial Intelligence methodologies need to be incorporated to create predictive capabilities that evolve and improve over time

Live Route Calculation

Predictive ETA using Data Science Model

Push Notifications to Customers/Stakeholder

Digital Transformation OutcomeDelivering Measurable Business Results

• Moved from 40% orders committing within 5 days to 95% committed within 48 hours

• $300M reduction in working capital YoY by having the right inventory at the right time

• $50M reduction in Excess & Obsolescence (E&O) YoY

• 40% to 70% mix accuracy within 90 days

• $10M savings in 1 year due to scrap reduction, yield improvements, process optimizations

• Eliminated 850 man hours of data preparation time

• Reduced new product ramp time

E2E Visibility from Incoming to Customer

Incoming PartQuality & Availability

CTF/CTQ IoT Process Monitoring

Product Yield

Outgoing Quality

Field Quality

Returns Repair & Refurb

T2 Quality

Output & Shipment Progress

Incoming Manufacturing Customer

• Creating Clarity via Personalized Dashboards• Increasing Collaboration, Connected Data Streams

enable Teamwork• Improving Factory Productivity/Optimization

Demo

http://aka.ms/scvisibility

Digital Commerce Platform

AI InfusedPlatform

Ecosystem Ready &Aware

PrescriptiveIndustrySolutions

Predict, pivot, and resolve supply chain disruptions with prescriptive, machine learning based applications.

Control Tower - Autonomous Digital Twin

AI/ML Forecasting Supply ResolutionPredictive Time of Arrival Warehouse Tasking

What Can We Do? • Safeguard people

o Remote operationso Crisis response Team

• Manage working capital & business planso Financial and operational scenarios o Balancing supply and demand

• Asses supplier & logistics Riskso Material criticalityo Contingency plan - Alternate supply o Transportation modeo Production optimization o Supplier financial health

Tactical play (Short-term support)

• Supply Chain Visibility• Scenario planning• Real Time monitoring

• Embrace micro supply chains into the TOM• Near-shore options• Building supply chain agility

• Supply Chain Risk Management • More collaborative relationships with critical suppliers • Supplier diversification (domestic vs. internal.)• Make vs. buy• Risk evaluation and monitoring tools • Further Integration to Tier 1 and Tier 2 suppliers

Strategic play (Mid to long term support)

Example of Where to START: VISIBILITY!Financial Return on Investment

Week 1Rework Inventory Recovered

Month 1Yield Improvements

Half 1Ops Improvement

Year 1Excess & Obsolesce Elimination

Agree up-front that data is a corporate asset shared across your entire organization

Determine data governance in advance – decisions impact design & data set-upUse Azure capabilities for security measures and access controlsExpect to invest time in data cleansing – advanced usage will highlight flaws

Adopt a centralized management strategy & include in your governance model

Don’t ‘lift & shift’ from your current platform – creates more clean-up laterEliminate data copies & movementUsed a phased approach to roll-out to manage retirement of legacy systems

Some Guiding Principles & Learnings!Organization

Governance

Master Data

ReconsiderLift & Shift

Plan for Workforce Role Changes

Primary activities will shift, we saw 80% manual operations reduce to 5%Plan for role adjustments and trainingPut change controls in place to avoid workforce introducing bias into process