vijay kusurkar value chain stratagem

12th ECR Asia Pacific ConferenceValue Chain Stratagem – Going beyond traditional boundaries

Vijaykumar Kusurkar

Senior Director, SCM Applications, Asia Pacific

© 2006 Oracle Corporation – Proprietary and Confidential

The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

Safe Harbor Statement

� Set priorities based on VALUE

creation

• Focus: strategic cost management

AND value creation

� Leveraged TECHNOLOGY

• Invested in systems to gain &

manage insight on value drivers

� Collaborated with customers to

develop NEW products

• Developed new products, services

uniquely suited to downturn

� SHAPED demand through pricing for

profitability

• Shaped demand to gain market

share and profits

Note: Winners outperformed others in industry 6 years following 1990-91 recession. Losers are those that underperformed others in the industry. -- Source: Accenture

Lessons Learned From The Last DownturnWhat Winners in Last Recession Did Right

Business Environment & Supply Chain Management

A Time of Change and Innovation.

Changing Information Needs

• Retailers’ information advantage

• Consumer buying behaviors and interactions

• Global expansion and emerging markets

• Synchronization across value chain participants

• Need for agile IT response

Pressures Shaping

Consumer Products IT

Paradigm Shift in Information Flow

Future StateFuture State

Product

Management

Transaction

Processing

Marketing Planning/

Analytics

Human

Resources

Finance

Innovation

SuppliersDistributors

RetailersConsumers

Information

Platform

Current StateCurrent State

Product

Management

Planning

Marketing Information

Analytics

Human

Resources

Finance

Innovation

Transactional

Processing

Platform

SuppliersDistributors

Retailers

Consumers

- Customer Self Service

- Network Centric Product Innovation

- Collaborative Supply Execution

- Employee Self Service

- EDI / VMI

- Sales & Operations Planning

- Demand Sensing & Shaping

- Forecasting

- Order Entry

- Basic Accounting

- Distributed Order Management

- AP

- AR - E-Commerce

- Account Management (SFA) - Channel Management

- Employee Tracking

- Supplier Development

- New Product Development & Launch

- Personalized Customer Service

From Automation To Differentiation

Automation

Based,

Transactional

Knowledge

Based,

Collaborative

Internal External,

Universal

Process Complexity

Process Reach

- Customer Self Service

- Network Centric Product Innovation

- Collaborative Supply Execution

- Employee Self Service

- EDI / VMI

- Sales & Operations Planning

- Demand Sensing & Shaping

- Forecasting

- Order Entry

- Basic Accounting

- Distributed Order Management

- AP

- AR - E-Commerce

- Account Management (SFA) - Channel Management

- Employee Tracking

- Supplier Development

- New Product Development & Launch

- Personalized Customer Service

Commodity Business Processes

(80% of IT Budget)

From Automation To Differentiation

Automation

Based,

Transactional

Knowledge

Based,

Collaborative

Internal External,

Universal

Differentiated Business Processes

(20% of IT Budget)

Process Complexity

Process Reach

Copyright © 2010, Oracle and/or its affiliates. All rights reserved.

“We are experiencing significant swings in demand--complicating demand and supply planning and visibility across the value chain”

TODAY’S REALITYDemand Volatility and Uncertainty

TODAY’S REALITY

“We are always very

slow to react to

change, instead of

being able to

anticipate and

respond quickly.”

Supply Chain Complexity


“How can I innovate faster than my

competition with my products and supply

chains getting more and more complex?”

TODAY’S REALITYAccelerating Cost-effective Innovation


TODAY’S REALITYAlignment between Demand, Supply, Product

“We constantly struggle with multiple disparate,

departmental data sources and a lack of a holistic

planning process. This is negatively affecting our

competiveness and profitability.”


Today’s Value Chains need new Planning ApproachesPlanning strategies that you should focus on today

LACK OF RESPONSIVENESS

TO SUDDEN PROBLEMS

LACK OF RESPONSIVENESS

TO SUDDEN PROBLEMS

BUSINESS INSIGHT and

CONTINUOUS IMPROVEMENT

BUSINESS INSIGHT and

CONTINUOUS IMPROVEMENT

SUPPLY CHAIN

COMPLEXITY and RISK

SUPPLY CHAIN

COMPLEXITY and RISK

IMPROVE AGILITY and QUICKLY

RESPOND TO EVENTS

IMPROVE AGILITY and QUICKLY

RESPOND TO EVENTS

CONTINOUSLY MONITOR

VALUE CHAIN PERFORMANCE

CONTINOUSLY MONITOR

VALUE CHAIN PERFORMANCE

DEVELOP RISK MITIGATION

and POSTPONEMENT STRATEGIES

DEVELOP RISK MITIGATION

and POSTPONEMENT STRATEGIES

DEMAND VOLATILITY

and UNCERTAINTY

DEMAND VOLATILITY

and UNCERTAINTY

SENSE DEMAND MORE QUICKLY

and SHAPE FOR REV GROWTH

SENSE DEMAND MORE QUICKLY

and SHAPE FOR REV GROWTH


Value Chain PlanningModular – Craw, walk, run: start with your most important problem first

Demand

Signal

Management

TradeManagement

Demand

Management

Sales and

Operations

Planning

RiskManagement

and Network

Design

Inventory

Postponement

Supply and

Distribution

Planning

Collaboration

and VMI

Production

Scheduling

Global Order

Promising

Service

Parts

Planning

Planning

Analytics

FORECAST TO PLAN

RDBMS COLL SOA SECURITYMIDDLEWARE

MIOBIEEOBIEE WFL

Common

Planning

Server


Value Chain PlanningComplete – Best in class products support best in class processes

SALES AND OPERATIONS PLANNING

STRATEGIC PLANNING and RISK MGMT

COMPREHENSIVE TRADE MANAGEMENT

INTEGRATED PLANNING and EXECUTION


Value Chain PlanningIntegrated with Oracle – Open to non-Oracle systems

AIA

AIAAIA

Legacy

Systems

AIA

AIA

AIA


17

Oracle Value Chain Planning

Enables leading edge and transformational business processes …

� Predict

� Shape

� Align

Monitor and Manage


18

Predict market requirements and manage risk

• Sense demand closer to the point of consumption with real-time visibility to demand events

• Improve forecast accuracy

through advanced analytics and consensus forecasting

• Predict impact of supply chain risk to your network

• Account for variability in your

inventory positioning and postponement strategy

Demand SignalManagement

DemandManagement

RiskManagement

Translate real-time demand visibility to profitable market strategies


19

Sense demand closer to point of consumption

• More timely data to better sense, shape and respond to demand

• Reduced manual effort and cost

• Consistent data more easily leveraged across teams and applications

• POS sales

• Price

• Store inventory

• Promotional plans

• Store replen. rules

• Store forecasts

Retail Store Data DEMAND SIGNAL REPOSITORY

• Data sources centrally cleansed, harmonized and aggregated

• Pre-built dashboards and reports

• Powerful BI capabilities

• “Sense & Respond” event mgmtC

AP

TU

RE

MA

NA

GE

AN

AL

YZ

E

RE

SP

ON

D

INT

EG

RA

TE

Retail DC/ Distributor Data

• DC shipments

• DC inventory

• DC replen. rules

OtherExternal Data

• Retail loyalty

• IRI/AC Nielsen

• 3rd party demographic

• Causal (weather,etc.)

• RFID/EPC

• IMS, NDC, EDI (867, 852), Scripts, Pedigree

• Unstructured text

SO

A-B

as

ed

In

teg

rati

on

SALES & OPERATIONS PLANNING

SUPPLY & DISTRIBUTION PLANNING

PRODUCT LIFECYCLE MANAGEMENT

TRADE PROMOTION PLANNING & OPT

Non-Oracle Applications

DEMANTRA DEMAND MANAGEMENTDEMANTRA SALES & OPERATIONS PLN

ORACLE SUPPLY & DISTRIBUTION PLN

ORACLE PRODUCT LIFECYCLE MGT

DEMANTRA TRADE PLANNINGPre-Built Integration

ORACLE RETAIL


20

Drive to consensus demand more effectively

• Move from a regimented periodic to a continuous demand planning process

– Continuous collaboration across sales, marketing, finance, supply

chain and customers

– Each participant gets tailored view – configurable work sheets

– Comprehensive audit trail of changes

– Consensus based on inputs and weightings from groups

• Leverage advanced analytics to more accurately predict demand

– High precision statistical forecasting, no statistical background

required – Superior Bayesian-Markov analytics

– Use any combination of quantitative or qualitative data to establish your base line forecast

– Forecast based on attributes and characteristics

• Get quickly to an improved and realistic consensus number

– Collaborate with internal and external constituents

– Use multi-dimensional analysis to adjust, allocate, and rollup

– Workflow driven forecasting exceptions ensures responsiveness

Improve forecast accuracy through advanced analytics and collaboration


21



� Predict

� Shape

� Align

Monitor and Manage


22

Balance demand and supply fluctuations

Shape demand for profitability

• Shape demand via promotions planning

• Manage new product introductions and marketing to maximize revenue

• Maximize sales and improve execution by balancing demand and supply in a continuous S&OP process

Trade Promotion

Management

Supply and Distribution

Planning

S&OP


23

Shape with integrated promotion planning

• Synchronizes sales, marketing, and supply

chain – Develop integrated strategies to adjust demand to

available supply

– Implement profitable sales and marketing strategies that

are feasible for supply chain to execute and check

availability of material and capacity to satisfy promotion

demand

– Leverage excess capacity to influence demand

• Predict the impact of marketing programs– Decompose lift to understand halo effects,

cannibalization, and consumer stock piling

• Simulate volume and profitability of future

promotions– Optimize promotional events based on goals and

constraints - profit, revenue, units, budget, timing, margin

– Perform what-if analysis to understand the impact of

varying promotional tactics

Understand the financial and operational impacts of sales incentives

Demantra Predictive Trade Planning and Optimization


24



� Predict

� Shape

� Align

Monitor and Manage


25

Align operational plans with corporate goalsExecute to plan

MAKE BUYDISTRIBUTE SERVICE

Collaborate

Plan and Monitor – Tactical and Operational Plans

OperationPlan and Monitor – Sales and s Plan

• Plan your extended value chain with holistic supply and distribution planning

• Improve demand fulfillment through real-time order promising

• Improve production throughput through plant-level scheduling and monitoring

• Improve supply chain visibility and align trading partners via collaboration

• Transform your service operations to profit centers

METRIC PERFORMANCE

Best In ClassIndustry Average

Performance Summary:

• Best-in-class companies have greater focus on S&OP

• Key S&OP metrics tracked by companies on a regular basis are:

–Return on net assets

–Customer service levels

–Cash conversion cycle

–Gross margin

–Demand forecast accuracy

Note: Best-in-Class = top 20% of performers; Industry Average = middle 50%, and Laggards = bottom 30% of performers.Source: Aberdeen Research, Sales & Operations Planning: Aligning Business Goals with Supply Chain Tactics; June, 2008. Results based on survey responses from over 300 companies across four manufacturing industries: process, consumer, discrete, high tech /electronics.

81% 91% 97%50% 100%

Customer service levels (on-time and complete to the

customer’s request date)

120 60 15180 0

Average cash conversion

cycle (days)

The Best-In-Class Companies Outperform Other Players Through Higher Focus on S&OP

Laggards

60% 74% 86%50% 100%

Average forecast accuracy at the product family level

15%5%-5% 20%

Return on Net Assets

(RONA)-10%

KEY:

Gross Margin60%20% 55%40%30%

Today’s Integrated Planning Systems Email and Excel

Functional Operational PlanningFunctional Operational Planning

Demand

Management

Demand

Management

Customer

Management

Customer

Management

Human Resources Planning

Human Resources Planning

Supply

Planning

Supply

Planning

Product

Performance

Management

Product

Performance

Management

Logistics

Planning

Logistics

Planning

Financial PlanningFinancial Planning

Long-Term

Financial Planning

Long-Term

Financial Planning

Treasury

Management

Treasury

Management

Financial

Planning & Budgeting

Financial

Planning & Budgeting

WorkingCapital

Planning

WorkingCapital

Planning

Profitability

Management

Profitability

Management

Performance

Scorecards

Performance

Scorecards

Financials SCMHuman Resources CRM Manufacturing

FinanceSupplyProduct Demand

Better Approach

• Replace disconnected processes– Move off of standalone Excel

– Stop manual “integration” by email

• Minimally, start with traditional S&OP process implementation

– Demand and supply balancing

– Data integration

• Better: move to continuous, event-driven S&OP

– Manage by exception, proactive alerts

– Optimized what-if scenarios

– Forward looking analytics

– Unified platform: integrated data and process

Real time, continuous and collaborative Sales and Operations Planning process

Event-driven Sales and Operations Planning

FinanceSupplyProduct Demand

S&OP

Demand

SupplyTrade

Finance

Design

Risk

Start quickly – Progress at your own pace

Eliminatespreadsheets

Single consensus demand number

Pre-defined S&OP analysis worksheets

Demand and supply review

Financial review

Personal dashboards

Demand shaping

Demand and supply balancing

Workflow driven exceptions

Promotion planning

Financial planning

Network optimization and design

Promotion optimization

Risk Management

Inventory Optimization

Product life cycle management

Evolve to a best-practice Sales and Operations Planning process

Key takeaways

• It is time for change and just ERP based IT infrastructure that merely automates process is not enough

• Demand driven value chains that

– Sense and Predict Demand Closer to point of Consumption

– Shape Demand for Profitability

– Align Operational Plans and Corporate Goals

– Have built in forward-looking analytics so executives can quickly understand and make informed decisions

– Provide integrated system that enforces executive S&OP decisions at operational planning level

vijay kusurkar value chain stratagem

Business

value chain copyright

supply planning

demand volatility sense

value chain participants

complicating demand

oracle andor

new products

todays value chains