Supply Chain Movement » Trends

Integrated Business Planning Innovation

Kim — Thu, 26 Jan 2012 14:54:21 +0000

Integrated Business Planning Innovation
Successful Planning Through Integrated Processes
Date: 22nd and 23nd March 2012
Location: Maritim proArte Hotel Berlin
Organization: IE group
Website: http://operations.theiegroup.com/ibp-berlin

The Integrated Business Planning Summit brings the leadership and innovators from the industry together for a summit acclaimed for its insight into the integrated planning process. Eﬀective business planning is central to success.

In the modern business environment technological developments and the advances of globalization have created unparalleled opportunities for businesses to expand their markets. But new opportunity has opened the door to new challenges.

Be Part of It:

•25+ industry expert keynote presentations
•150+ IBP professionals attending
•Interactive workshops with industry leaders
•Over 20 hours of networking opportunities included
•Access to online presentations on-demand post-summit
•20+ case studies presented from Fortune 500 companies

Global SCALE Risk Initiative

Martijn Lofvers — Fri, 21 Oct 2011 09:08:43 +0000

How can a company quickly and efficiently identify and visually display the weakest links in the supply chain? This is the main question of the project to automate supply chain risk displays by MIT Center for Transportation & Logistics in Boston.

The MIT Global SCALE Risk Initiative studies the impact of supply chain risks on uniquely global supply chains. To launch this initiative, MIT conducted a global survey of supply chain risks and risk management. This survey was targeted at supply chain, finance, and general business managers in manufacturing, distribution, and retail companies. Study teams were established in 11 countries. The survey was translated into 9 languages and dialects.

The survey findings have been written up in three white papers, each of which is accompanied by a 5-minute video presentation of the same results.

Key members of the team at MIT:
• Overall Project and North America Coordination: Dr. Bruce Arntzen, barntzen@mit.edu
• European Coordination: Prof. María Jesus Saenz, mjsaenz@mit.edu
• Latin American Coordination: Ms. Isabel Agudelo, iagudelo@logyca.org

http://ctl.mit.edu/research/global_scale_risk_initiative

Segmentation proves crucial for the supply chain

Martijn Lofvers — Fri, 21 Oct 2011 09:04:11 +0000

“Supply chain is a central part of our business,” commented Pier Luigi Sigismondi, Chief Supply Chain Officer at Unilever, during the Supply Chain Executive Conference in London in the middle of September 2011.

“One size supply chain doesn’t fit all.” These were the words used by Matt Davis from research bureau Gartner to summarise one of the Supply Chain Executive Conference’s most important messages in London this September. Pier Luigi Sigismondi, Chief Supply Chain Officer at Unilever, also emphasised the importance of segmented supply chains as the best way to serve clients’ needs. He presented Unilever´s product pyramid with exclusive products per unit with high service at the top, and the low cost products per pallet at the bottom.

Formula 1
According to Tim Payne from Gartner, the ultimate goal of supply chain management is orchestration. He compared this to Formula 1 racing. “Flawless performance should be second nature. The Ferrari team knows how different components work together on different race circuits, each with its own strategy. The race is the implementation phase in which Ferrari carries out multiple simulations. The championship, with its 21 races, represents the strategic level.”

Payne commended Unilever as a shining example of progressive supply chain management. “Unilever is one of the first companies to have created the position of Chief Supply Chain Officer in the board of directors. This company has actually gone from financial reorganisation to creating value in the supply chain. In eighteen months, this company has improved its performance.”

Added value
Pier Luigi Sigismondi, Chief Supply Chain Officer at Unilever, underlined the strategic role the supply chain plays at Unilever during a very convincing presentation. “We don’t always want to focus on costs. This year, we are trying to create value in our supply chains. In the next two years, we want to become the best whilst heading towards demand-driven value chains.”

Increasing pressure from retailers like Walmart, Ahold, Carrefour and Tesco has led Unilever to set up complete test shops for consumers, so-called Customer Integration & Innovation Centers, in order to improve packaging. “We will use retail data to help us grow,” Sigismondi explained. “Forecasting based on point of sale (POS) data reduces the chance of false predictions. The consequences of forecasts that are too high are wastage and too much stock. We have already managed to halve our stocks at Walmart using POS data.”

One crucial element to having the best supply chains is talent development, according to Sigismondi. “The current technology puts us in a position to set up global, virtual teams. We need each other and, at the end of the week, each and every member of staff needs to ask themselves what their added value has been. Make sure you have found the answer by the following week at the latest, otherwise someone else will find it for you – and that may just be too late.”

European Gartner Supply Chain Top 25
Gartner compiles a global Supply Chain Top 25 every year. In the top 5 this year, apart from Apple, are Dell, Procter & Gamble and two newcomers: Research In Motion (the maker of the BlackBerry) and Amazon. For the fourth time in a row, Apple has taken first place in this global Top 25, initiated by AMR Research which has recently been acquired by Gartner.

Recurring criticism of the annual Supply Chain Top 25 has been how American businesses seem to dominate it. In response to this criticism, Gartner will be organising an Asian Top 25 and an EMEA Top 25 in 2012. Brazilian companies will be included in the American Top 25.

Big negative impact of Tsunami

Martijn Lofvers — Wed, 28 Sep 2011 09:16:02 +0000

The earthquake and tsunami in Japan on March 11 of this year had a big negative impact of on manufacturing industries worldwide. The Global Trade Flow Index by Capgemini Consulting shows that levels of global trade continued to fall in Q2 2011, by a further one percent quarter-on-quarter (q-o-q), leading to an eight percent decline in global trade volumes overall in the first six months of 2011.

The report also highlights the impact of the recent E. coli outbreak in Europe on global trade levels. The analysis reveals that while heavily impacted by Japan’s reduction in industrial production and a rise in commodity prices, the US retains its position as global leader in overall trade volumes, despite a reduction in total trade of two percent in Q2 2011 q-o-q.

Capgemini Consulting’s Global Trade Flow Index tracks the trade of goods and services by quarter based on an analysis of a number of trade and market-related parameters from the latest available official data (related to the import and export of goods and services) from national agencies of the 23 top countries in terms of global trade.

The best Movies and TV Series about supply chains

Martijn Lofvers — Wed, 03 Aug 2011 12:24:46 +0000

What are the best Movies and TV Series about supply chains? And why? What is the connection with supply chains? And in which Movies and TV Series is the development of logistics into supply chain management perfectly reflected?

According to the editors of the Dutch Supply Chain Magazine the following Movies and TV Series should be in this ranking:

• Lord of War (2005) with the best opening scene about the supply chain of a bullet, from manufacturing to the end customer: http://www.youtube.com/watch?v=9d0d6qgsvTw

• Traffic (2000) about the supply chains of drugs from Pakistan via Mexico to the United States

• Breaking Bad (TV Series 2008– ), especially the episode about setting up a distribution network in several American states in Season 2, Episode 12

• WALL.E (2008) about an unsustainable world

• Monsters, Inc. (2001) with an incredible scene in an automated warehouse for hanging doors

Any suggestions are welcome can be added in the featured discussions in the LinkedIn group Supply Chain Movement. Thank you for your contribution.

PS Great movies about company life, not specifically supply chains:
• Swimming with Sharks (1994), www.youtube.com/watch?v=UH9OLQh46FY
• Office Space (1999), www.youtube.com/watch?v=fPP2jz4jyxk
• Horrible Bosses (2011), www.youtube.com/watch?v=mh9cG5dzs-U
• Up in the Air (2009), about outsourcing firing people, www.youtube.com/watch?v=hnrDgLs8fQo
• Suitemates (TV Series 2010) about a ERP software company, www.suitemates.com

Benchmark study compares forecasting performance results

Martijn Lofvers — Fri, 01 Jul 2011 13:24:09 +0000

In 2010, the volume of promotions was 77 per cent greater than in 2009 – that is just one of the findings from the extensive forecasting benchmark study conducted by Terra Technology amongst manufacturers and suppliers in the consumer goods sector. Rather than wait for the supply-chain solutions provider to officially present its findings in late June 2011, Supply Chain Movement met up with Terra Technology’s CEO, Robert Byrne, on 14 June 2011 during the Supply Chain Logistics Europe event in Berlin (Germany).

The study, which included input from the likes of Procter & Gamble, Unilever, Kraft Foods, Kimberly Clark and Campbell Soup, provides insights into the forecasting performance of organisations within the consumer products industry. According to Byrne, it is the only study where the results are truly comparable across all companies. A forecast error of between 45 and 50 per cent is often meaningless because it depends on how it has been measured. “We, on the other hand, have gained a huge amount of information from our customers that is comparable.”

Terra Technology collated raw data from consumer packaged goods companies for the years 2009 and 2010 including, for example, information about new items and promotions. Participating companies receive an interactive version that allows them to compare their own performance with the aggregate results. Terra Technology itself only publishes the data at strategic level and identifies broader industry trends, ensuring that all sensitive customer data remains confidential.

What surprised Byrne most was that the highest volume item of a small company equalled the highest volume item of a large company. “You would expect that the highest volume for a small company would equate to merely a mid-level volume for a large company,” says Byrne.

Casual runner or serious athlete
Benchmark studies appear to be very much in vogue at the moment. Management consultancies Oliver Wight and LHC Consulting have also both recently announced benchmark studies. LHC is offering a benchmark study of transport costs which enables a comparison of transport rates. Meanwhile, the Oliver Wight benchmark study offers companies the opportunity to discover ways to improve their customer service while simultaneously reducing their supply chain costs.

According to Les Brookes, CEO of Oliver Wight, quantifying supply chain performance and comparing it against the best-in-class can indicate where a company currently stands and where, and how great, the opportunities for improvement are. “Are you a serious athlete or a casual runner?” asks Brookes to underline his point. “The better-equipped a company is to manage its supply chain, the harder it is to see where possible improvements could be made. Hence, for those companies who already have their supply chains well under control, this is a very useful method for exposing potential areas for further improvement. You can liken it to an athlete who records the entire race, from start to finish, in order to play it back and see how he could better his performance.”

Supply Chain and Finance share the same vision

Martijn Lofvers — Fri, 01 Jul 2011 13:04:57 +0000

In most Dutch enterprises’ supply chains, there is some kind of relationship between corporate strategy and inventory level targets. The supply chain and finance departments generally tend to agree on who should be determining optimum stock levels. Yet while these two departments consult regularly on this matter within most companies, only forty percent of them have formalised this in a Sales & Operations Planning (S&OP) process. Such are the most significant conclusions from a study of S&OP implementation among a total of 82 supply-chain and finance professionals in The Netherlands, which was initiated by S&V Management Consultants and ConQuaestor in collaboration with Supply Chain Movement magazine. The research has provided valuable insights into how both finance and supply chain departments view working capital management in relation to S&OP.

Financial performance
The study has shown that Key Performance Indicators for supply chain and financial performance are to some extent interlinked. With scores of 65 and 61 percent respectively, stock levels and delivery reliability (On Time In Full) score the highest as KPIs on which supply chain managers’ bonuses are based; 50 percent of the respondents said their bonus was based on achieving logistics costs targets.
Factors such as the reliability of sales forecasts or stock levels are not usually included in bonus targets for the sales department. Since many companies assign the specific supply chain costs either incorrectly or not at all, there is insufficient motivation for the sales department to become involved in the S&OP process.
According to this research, it is often unclear which management information is considered essential, and that its reliability cannot always be guaranteed. Twelve percent of the respondents said that the information requirements had not been defined and 36 percent indicated that this topic resulted in frequent discussions which were usually resolved by consensus. Only 11 percent of the companies has a formalised department that safeguards the quality of management information.

Determining optimal stock levels

Jointly, but led by the Supply Chain department  62%
Jointly, but led by the Finance department  17%
Supply Chain department has carte blanche  15%
Finance department determines maximum levels  6%

Source: S&V, ConQuaestor & Supply Chain Movement (2011)

CO2 calculations at supply level

Martijn Lofvers — Fri, 01 Jul 2011 12:40:24 +0000

Shippers are increasingly keen to gain measurable insights into their performance in terms of sustainable transport. IDS, a company specialised in freight & carrier management, has introduced a new tool to help its customers compare different carriers’ average carbon outputs at shipment level.

4PL-provider IDS always chooses the most efficient transport solution. Its Transport Management System (TMS) automatically selects the best qualified and cheapest carrier for its clients (shippers), depending on the nature of the shipment and the required speed of delivery (normal or express). This enables the TMS to financially consolidate grouped and partial shipments as much as possible and IDS to select intermodal transportation, as far as the agreements with its clients permit.

The TMS can now also calculate the average CO2 emissions per tonne/kilometre as soon as the transport order is entered. “This is a new functionality. Since the emission levels are monitored at shipment level, the shipper can now analyse its carbon output based on different factors – such as mode of transport, carrier, manufacturing plant or customer – and use this data to determine how to reduce its carbon footprint,” explains Doeke Rolf, sales manager Road, Sea & Air freight at IDS. “This not only results in cheaper tariffs, but also lower CO2 emissions per shipment.”

To make it easier to analyse the data, IDS can supply its customers with the results on a tailor-made KPI dashboard, or help customers with interpreting the results if desired. Essentially, IDS serves as a ‘control tower’ for freight management, which, as Rolf puts it, “helps our customers to truly optimise their transportation and logistics.”

www.idsnl.com

Extra online sales channel for chemical companies

Martijn Lofvers — Fri, 01 Jul 2011 12:35:21 +0000

In response to recent market changes in the chemical industry, logistics service provider TWO Chemical Logistics (TWO) has developed a new web portal. This e-commerce solution has been designed as a platform to facilitate contact between chemical producers, trading companies and logistics providers.

Producers and traders can use the ‘Chemical Web Shop’ as an extra online sales channel, with, should they wish, a direct link from their corporate websites. “There is now no need for chemical companies to invest in their own web shops,” comments Gerd Geurtz, E-commerce Team Leader at TWO, “because we’ve already done it for them.” So far, the most difficult thing TWO has had to deal with, has been incorporating customer-specific pricing. “We soon found a way around that,” adds Geurtz, “and the web shop is also an ideal place for selling surplus stock anonymously.” Other benefits include the web shop being accessible 24 hours a day and customers being able to see whether or not items are in stock somewhere, even if they are not physically in stock in TWO’s own warehouse.

“We have kept the initial investment to a minimum,” adds Operations Director Paul Aerts. “Companies are required to pay a small registration charge and a monthly subscription fee, but these are nominal amounts. Any other costs are variable and depend on the size of the transaction,” he explains. By integrating the web shop’s content management system into its warehouse management and transport system, which in turn controls the distribution process, TWO has also managed to drastically reduce the cost of entering orders into the system manually.

The web shop offers customers a number of payment options but TWO recommends initially using iDeal, credit card, or paying by invoice if the vendor offers that option. The web shop also checks automatically whether or not customers have the necessary permits. “Customers have to provide us with a copy of their permits,” says Geurtz. Affiliated vendors don’t have to worry about anything: TWO takes care of the promotion of the web shop portal, and can even manage the content on a vendor’s behalf, if required.

www.chemicalwebshop.com
www.two.nl

Sales & Operations Planning remains a talking point

Martijn Lofvers — Tue, 03 May 2011 12:30:31 +0000

Whilst the hype surrounding Sales & Operations Planning (S&OP) seems to have subsided, there are still many companies actively implementing the process. And as the first day – which focussed on Demand Planning – of the three-day Logicon congress at Schiphol (1st – 3rd February 2011) illustrated, there is plenty of room for improvement.

“The key to a successful S&OP process is a collective understanding of what this term actually means,” states Philippe Meouchy, Supply Chain Director Europe at Campbell. One important decision is the practical scope of the planning process. “The reason why the Titanic sunk is not so much the hitting of the iceberg, but the fact that the crew hadn’t spotted it in time.”

The S&OP process that Campbell was already working with was far from perfect. “It’s difficult to draw up a business plan for an existing S&OP process,” Meouchy admits. Once the finance department had been convinced that they had been good at forecasting there in the past, Campbell decided to train all of the planners in Europe. According to Meouchy, the reduction in lead times has had an enormous knock-on effect on stock. In the end, the whole project generated a saving of twenty per cent on stock.

Campbell’s finance department is responsible for the S&OP process throughout the whole company and synchronises the financial and sales data. Meouchy: “We have a financial buffer when reporting to head office in the US but we don’t have two different sets of figures. The sales are always unambiguous.”

Successful S&OP depends greatly on what is discussed during meetings. “Don’t discuss the numbers. Only discuss the assumptions they are based on,” he warns. “S&OP needs to take place in the same place as the discussions are held.”

Differentiated customer approach
According to Henning Reihe, Supply Chain Planning Manager Europe for Mars, the key to successful forecasting is a differentiated approach to product and customer classification. “You cannot take a ‘one size fits all’ approach for all your product lines – so there’s no need to give all of your products the same amount of attention. Focus on a particular number of customers and serve the rest with safety stock. Then take over the forecasting from one of your retailers, especially if you’re working with weak products.”

Reihe likes to fine-tune according to customer preferences: “The customers are the ones who pay our salaries. It’s important to look at the standard deviation versus the Sales Forecasting Accuracy for every customer. Focus on ten to twenty per cent of your items/customer combinations.”

One essential way of getting your forecasting within your S&OP process on track, is to use user-friendly software. “To eliminate the chance of human errors, have your supply chain planners use software for statistical forecasting,” recommends Reihe. Erik Brouwer, Director Supply Chain Management North-West Europe for sweet manufacturer Perfetti Van Melle agrees with this advice: “Give your staff their own responsibilities and empower them to achieve results. This is what we have done by implementing software from Every Angle in addition to our SAP Enterprise Resource Planning. A few years ago, we were using this user-friendly tool to generate weekly analyses. Now, the planners can track their results and achievements on a daily basis.”

5 tips for forecasting
Henning Reihe, Supply Chain Planning Manager Europe for Mars, has five practical tips for improving forecasting:
1. Only use hands when they will add value.
2. Automate parts of your forecasting to reduce the workload.
3. Differentiate to improve the planner’s efficiency.
4. Communicate: improve collaboration between internal and external accounts
5. Focus on forecast bias in order to lower stock and free up cash.