supply chain segmentation_copenhagen business school

www.abcsoftwork.comABC Softwork Aps © 2015

Supply Chain Segmentation &

AnalyticsCopenhagen Business School

September 2015

Troels Kyhn JakobsenSenior Consultant

ABC Softwork


Today it is not possible in an easy way to generate a simple overview of what is in stock across the value chain. The existing reports are cumbersome and lacking a lot of important and relevant information.


”Many supply chain executives are too technical when they talk about how the supply chain contributes to cash flow, working capital, sales and products. The way they communicate is not understood by sales, product development, finance etc. and that affects the supply chain performance.”


At a time when, generally speaking, information is abundant and connectivity is more feasible than ever, supply chain executives still rank visibility as their greatest management challenge. Although more information is available, proportionally less is being effectively captured, managed, analyzed and made available to people who need it.


When Ron Williams became the head of operations at Aetna, in 2001 (he became president in 2002 and CEO in 2006), he found that all the divisional heads could show him a spreadsheet with performance data indicating that their divisions had been profitable the previous year—even though Aetna as a whole had recorded a loss of almost $300 million!”


Technology & Advisory


The core product


From data to insights

BC

AA

CC

BB

CB

AB AC

BA

CALow

High

LowHigh

”Analytics simplify data to amplify its value.”


Each item with an ABC code


Business case

”ABC has been implemented in the whole organization and is now being used by procurement, production and inventory management. Today, ABC is part of our corporate language – but also part of our communication with suppliers and wholesalers.”

Jan Erik SørensenProject ManagerNKT Cables Denmark


Companies

http://www.johannesfog.dk/index.php

http://www.isover.dk/forside

http://www.nassau.dk/en.aspx

http://www.nktcables.dk/


Those able to create a common stream of information, a common language and a common view of the business will see more than just incremental increases in business efficiency – they will also enjoy massive competitive advantages

ABC Analyzer grundlægger ”et fælles sprog” mellem leverandør og kunde og hjælper parterne med at italesætte deres forventninger fra indkøbspriser til leveringsvilkår og returrettigheder:

• De bedste kunder får den bedste service

• Tilpassede kundeservices• Tilpasning af produkt-mix• Adfærd afspejles i priser og

rabatter• Fakta-baseret dialog & forhandling

af kerneydelser, services & cost-drivers

• Konstruktiv udvikling af kunde-leverandørrelationen

ABC Analyzer angiver den enkelte vares ABC kode (prioritet) og hjælper leverandør og kunde med at tydeliggøre prioriteter og behov over for hinanden per ABC kategori:

• Specifikation af aftalevilkår• Fokus på de mest

værdiskabende kunde-/leverandørrelationer

• Leveringsvilkår• Leveringssikkerhed• Servicegrad per kategori• MOQ per kategori• Returrettigheder per kategori• ABC segmentering af

leverandører

PROCUREMENTSUPPLIERSABC Analyzer er et styrings- og kategoriseringsværktøj som hjælper indkøbs- og økonomifunktionen med at balancere 3 nøglefaktorer i værdikæden: omkostninger, service og profit:

• Dobbelt ABC analyse• Alle varer i 9 strategiske

kategorier• Differentieret indkøbsstyring• Kapitalbinding ”de rigtige

steder”• Øget leveringsevne• Kommunikation fremad og

bagud i værdikæden • Udvikling af eksterne og interne

kunde- og leverandørrelationer

ABC Analyzer er et strategisk og kommercielt styringsværktøj som hjælper salgsledelsen med at segmentere kundeporteføljen, udvikle salgsstrategien og sikre den rette adfærd i salgsstyrken:

• Kundesegmentering• Individuelle kunderegnskaber• Gennemsigtig kundelønsomhed• Differentieret kundeservice• Analytisk grundlag til

strategiudvikling• Udvikling af salgs- og

servicekanaler• Prioriteret salgs- og

marketingindsats• Ledelsesværktøj til salgsstyrken

CUSTOMERSSALES

Communication across organizational boundaries

ABC accumulates data to build a model that facilitates understanding and decision-making on complex trade-offs across

the supply chain.


THE ABC THEORY


”The vital few and the trival many”

Products Value

20 %

80 %

Too much time spent on peripheral business, too little time spent on core business.

80 %

20 %


Value vs Consumption

SameABC label?

Stock value

Stock value

Product XYValue1 mio.

Value1 mio.

Product AB Frequent

Rare & Infrequen

t


A

B

C

Value 12 months

Items counting 80% of total value



A

B

C

Consumption 12 months

Items counting 80% of consumption



Categorization based on value & consumption past 12 months


Tid

Building stock

Back order

Balance

Product lifecycle

C

C

Scrap

A

A

Product lifecycle

Phase in

Growth &Maturity

Phase outB

B


High consumption Low consumptionHi

gh v

alue

Low

valu

e

Segmentation

”Dead stock” Spareparts

Product scope


ABC TECHNOLOGY


Items per category


Items per category (graph)


Stock value per category


Revenue per category


Dashboard

”The power of analytics is to turn huge volumes of data into a much smaller amount of information and insight.”


98

90

95

100

Service level…Stock turn-over…

Forecast accuracy…Working capital/stock…

Safety stock…Etc.

…per category

95

KPI per category


Many picks Few picks

Backorder risk

Excessive stock

Execution

• High inventory• Buy-to-stock• Make-to-stock• Safety stock• Customer promises• Reliable suppliers

• Low inventory• Buy-to-order• Make-to-order• Sales forecast• Return policies• Pricing• Product scope?


CFO

Sales

Production Procurement

Logistics

COO

CCO

Stability & big batches

Volume & discounts

Effectiveness!

Working capital!

Flow

Products & high service

Revenue & profits

Alignment

STEP1: SILO MINDSET Reactive leadership, no standard processes, uprofitable growth.

STEP2: INFORMATION SHARING.Few shared metrics, excel management, ad hoc procedures, limited visibility.

STEP3: TRANSPARENCYLess gut feeling, shared metrics, organizational and strategic alignment,

STEP4: STRATEGIC PARTNERSHIPSOutside-in, VMI, relationship building.

STEP5: ASPIRATIONAL END-TO-END Customer & supply chain segmentation, full transparency, profitable growth

Supply Chain Maturity


BC

AA

CC

BB

CB

AB AC

BA

CA

Høj profit Lav profit

Høj

omsæ

tnin

gLa

vom

sætn

ing

Omsætning Dækningsbidrag 1 Dækningsbidrag 2 Share-of-wallet Size-of-wallet Kundebesøg Salgsordre

Kundesegmenteringsmodel


9 segments

4 strategicsegments

Revenue per segments

supply chain segmentation_copenhagen business school

Data & Analytics