IBM Global Business Services

Supply Chain Visibility

Bill Gilmour

IBM Confidential

Copyright IBM Corporation 2009

 IBM Global Business Services

Todays key message: Visibility too good to have, but its not
as easy as you may think!
The collective insights from 400 Supply Chain Executives identified
five major challenges and Visibility was No.1
Source: IBM Chief Supply Chain Office Survey

70%

55% 60%
56%
43%

COST SUPPLY RISK INCREASING GLOBALIZATION

CONTAINMENT CHAIN MANAGEMENT CUSTOMER
VISIBILITY DEMANDS Lead times,
Fighting integral Process, data, & delivery, and quality
costs as such as Supply chain technology are Customers have are top challenges,
might be futile, visibility is identified as the increased demand but overall
but being flexible inhibited by a lack roadblocks to good for more precise globalization has
can identify cost of capabilities and risk management, synchronization of been a positive
savings an unwillingness yet they are the key supply and demand. boon for all.
elsewhere to collaborate. enablers.

Based on responses of to a very great extent and to a significant extent

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Implementation is patchy, but is distinctive in top performing

supply chains. It is worth it!

Percentage of organisations that have implemented Visibility solutions

Driving integration and visibility of
information inside our recipients
organisations ranks fourth on their
priority list, and external visibility
falls even lower in seventh place.
Though it may seem logical to
blame poor visibility and
collaboration on inadequate IT,
supply chain executives point
elsewhere.
Not surprisingly, organisational
silos are the biggest barrier. But we
were shocked at how many
executives reported that their
organisations are too busy to share
information or simply do not believe
collaborative decision making is
that important.

* Top supply chains determined based on respondents ranking in AMR Research Supply Chain Top 25 for 2008

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The need for progress is already clear..

70% 300 million

Pounds of meat and poultry recalled
The percentage of the worlds fresh
water supply used by agriculture. in the US in the last 15 years

1600 miles $50+ billion

How far a typical carrot travels before
it is purchased by the consumer. annually
Or 3-5% of sales lost due to supply
chain inefficiencies

30%
Of the food purchased in the developed
nations is going to waste

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Albrecht Durer's -
The Four Horsemen of the Apocalypse

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So, the key questions for the presentation are:

What do we mean by Supply Chain Visibility, and do we all mean the same
thing?

What are the issues and barriers?

Case studies, why is visibility such a hot topic? What benefits does it provide?

What do you have to get right? Its not all about technology

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What do we mean by Supply Chain Visibility, and do we all

mean the same thing?

Visibility of;
- Products whereabouts / status

- Real time demand and demand plans

- Supply plans
- Inventory levels by location
- Orders

And visibility of assets e.g;

- Vehicles, condition and capacity

- People and capabilities

If you cant measure it, you cant manage it!

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The Supply Chain of the Future must be SMARTER...It will be

Instrumented, Interconnected & Intelligent
Automated Transactions & Smart Devices
Use of sensors, actuators, RFID, & smart devices to automate
transactions: inventory location, shelf-level replenishment detection,
Instrumented transportation locations & bottlenecks
Supports real-time data collection & transparency from POS to
manufacturing to raw material
Sense-and-respond demand/supply signals allow predict and act

Optimized Flows
Multi-Tier system integration across the network. Standardized
data and processes.
Interconnected Collaborative decision making through decision support and
business intelligence starting with the customer
Networked risk management programs for integrated financial
controls with operational performance monitored and measured

Networked Planning, Execution & Decision Analysis

Simulation models to evaluate trade-offs of cost, time, quality,
service and carbon and other criteria
Intelligent
Probability-based risk assessment & predictive analysis
Networked planning/execution with optimized forecasts &
decision support

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How can it be so very difficult when we have the ability to use

all these assets: Our Point of View on the Progression of
Smart Supply Chain
Supply Chain Management to a Smarter Future
Future
External Collaboration & Networked
Integration Planning, Flexibility &
Execution & stability
Decision Analysis
Intelligent Effectively driving
Horizontal Process Optimized profitable growth
Integration Flows

Balancing risk

Functional Interconnected CSCO and

performance
Excellence
Integrated
Static Supply Transactions
Chain (ERP to ERP)
Instrumented Managing
Automated complexity
Transactions
(Sensors & Actuators)

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To step forward a business needs to align each dimension

Processes

Supply Chain Optimisation

Ad
People Integrate with Customers & Suppliers Systems

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Reliability &
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Simplification

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Da rac

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sc lls
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Performance Leadership & Program

+ +
Measures Vision Management

Establishing the starting point focuses the action plans

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Case study 1. IBM: An electronics manufacturer needing to

control its supply to assure availability

Lack of timely information on

Lack of visibility into supplier
forecast, supply, or customer orders
inventory leads to stock outs,
results in additional costs such as
late/expedited shipments, quality
premium routing or redistribution
issues, etc.

S&O P
P S&O

Source: Line56 2003

Lack of visibility into changing Inability to receive timely, accurate

supplier commits can lead to
inaccurate customer
commitments or financial
projections
demand signals leads to stock outs,
Sales & Operations Planning
Process excess/obsolete inventory, higher
Lack of visibility and timely cost, lost revenue, and poor
information lengthens the cash- customer satisfaction.
to-cash cycle, reducing
profitability

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Case study 1. IBM: Our response is a Virtual Command Centre,

providing access to our customers and suppliers planning data

Demand Driven Reseller

Replenishment Consumer Supplier Shipment

Demand Forecasting Distributor Forecast Distributor Shipment

POS
Recomm
Inventory Optimization Inv
Logistics
Proactive Buy-Sales Inv Hub
Decision Volume Demand Customer Shipment

Purchase Hub
Event Management Order

S&OP Support
Track and Trace
Route
Forecast
Optimisation
Commit
KPI Visibility
Inventory
Optimisation Supply
Recomm Inv
Supplier Hub Virtual
Collaboration
Command
KPI Visibility Inv Volume
Centre
Purchase
Dynamic Supply Order

Demand Balancing

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Case study 2. GS1 Data Crunch project focussed on data quality

between UK Retailers and Consumer Product companies
The project is supported by four top UK grocery retailers and three top suppliers

Each had provided a snapshot of their supply chain master data for analysis which is over one million
records

IBM is providing software and related services to assist GS1 UK

Source: British Retail Consortium

Issue 14 July- August 2009

The objective is address a knowledge gap in the grocery industry as retailers and suppliers often have
incomplete data, leading lead to costs within the supply chain.

Benefits are anticipated in the following three main areas;

- Reductions of cost in manual workarounds to source missing data and correct errors
- Reduced shrinkage administrative costs
- Reduction in lost consumer sales through shelf stock- outs
- Our data will be used to quantify the UK retailers and suppliers profit erosion and lost sales. A resulting
white paper which assesses the impact and opportunities is scheduled for issue later in the year
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Case study 3 Improved Distributor Management in Growth Markets

Factory Wholesaler

C&FA/Depot Distributor Retailer Consumer

The Scope
30+ Factories
45 Carrying & Forwarding Agents (C&FAs)
5,000+ Distributors spread across the country
1 million Retailers
Distributors are remotely located and not able to remain online all time
Huge amount of data needs to be handled
High transaction monthly cycle

Need for a distributor collaboration system

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Case study 3 Improved Distributor Management in Growth Markets

Objectives
Capture Secondary Sales
Accurately, In Detail and Without
Phase Lag
Ensuring price and TPM benefits
reach the last link in the Chain the High Level Architecture
Retailer
External Data Integration & Harmonization Internal Data
Paperless office Do away with
cumbersome claim process
Standardize Data structures RS Unify Push Pull Central Unify Legacy Systems

Solution
Central
RS Unify Sync Unify Products
Data is moved to Push pull Database Database Database
Prices
Scheme

synchronization engine from Messaging

central database and the Users define

Publish
Trade
RS Unify

Distributor can sync and get Marketing

Sync profiles BIW
Schemes

updated schemes, price & SKU info Workflow

APIs
Workflow

User Interface

The system is able to extract data User Interface

from all Distributors and put it in a

central system User Analytics

This data is then put into an extract

and sent to SAP BIW system

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Case study 4 A common data strategy to enable multiple analytical

solutions

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 Case study IBM Global Business Services
4. Using analytics to create demand through consumer
insights fulfilled by a demand driven repository

Analytics
Providers Analytics
-IRI Results
-Nielsen

Demand Data Enterprise Reporting Consumers

Syndicated Data KPIs, Alerts Insights and Collaboration
Aggregate Data Platform
Shopper Insights Analysis Demand/Supply Planning
Dynamic Pricing Category Management
POS Data Promotion Planning

Insights Master Data

Business Rules

Retailers Bottlers

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Case study 5 End to end visibility allows optimisation of Supply

Chain, Costs and Carbon Footprint
2 RDCs Regional Distribution Centers Vendors Solution Objectives
29 FDCs Forward Distribution Centers Link operational decisions to
Board Room view (P&L
26,000 customer locations impact estimation)
>2000 suppliers S-RDC
(Denver)
Model sustainability in broader
>25,000 products sense (operational, financial,
environmental)
B$ 106 Sales
RDC Integrate key supply chain
B$ 8.5 inventory (Memphis) planning areas in one model
Executive Policy (inventory, network, routing)
P&L Impact Create an inventory of all
energy using equipment and
Energy & CO2 optimization quantify energy use in relation
to supply chain decisions
Network optimization
Provide extensive what-if
National analysis to help establish cost
Whole Sale Inventory Vehicle effective sustainability policies
Warehouses FDC optimization routing
FDC
optimization
Provide a user friendly web-
Operational based integrated dashboard
Metrics

Operational actions
National
Hospitals Independent Clinics &
Whole Sale
Retailer Doctors
Stores
Customer
clusters

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Several very different case studies, so theres no single right

solution. Enabling technology falls into a number of groups
Tools and sensors for real-time data capture

Portals for the capture of suppliers data

Integration hubs for the creation of end-to-end visibility

Optimisation tools that allow you to do something useful with the information

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Summary: Supply Chain Visibility is on everyones list of

challenges, but no one has solved all the issues
Visibility can be equally applicable to products, assets and people

Three Keys to success

Rule 1: Form the right collaborative relationships with your customers and
suppliers.
Rule 2: Visibility must be actionable.
Rule 3: Work on those areas of your business that will give the greatest
benefit

It is not all about technology but you need that too.

There are many solutions out there. They should be selected and scaled to
address the specific needs of your supply chain.

Questions

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Thank You

IBM Confidential

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Kennedy Information ranks IBM as a leader in supply chain

consulting

2009 2008 2007

Apple Apple Nokia
Dell Nokia Apple
Procter & Gamble Dell Procter & Gamble
IBM Procter & Gamble IBM
Cisco Systems IBM Toyota Motor
Nokia Wal-Mart Stores Wal-Mart Stores
Wal-Mart Stores Toyota Motor Anheuser-Busch
Samsung Electronics Cisco Systems Tesco
PepsiCo Samsung Electronics Best Buy
Toyota Motor Anheuser-Busch Samsung Electronics
Schlumberger PepsiCo Cisco Systems
Johnson & Johnson Tesco Motorola
The Coca-Cola Company The Coca-Cola Company The Coca-Cola Company
Nike Best Buy Johnson & Johnson
Tesco Nike PepsiCo
Walt Disney Sony Ericsson Johnson Controls
Hewlett-Packard Walt Disney Texas Instruments
Texas Instruments Hewlett-Packard Nike
Lockheed Martin Johnson & Johnson Lowe's
Colgate Palmolive Schlumberger GlaxoSmithKline
Best Buy Texas Instruments Hewlett-Packard
Unilever Lockheed Martin Lockheed Martin
Publix Super Markets Johnson Controls Publix Super Markets
Sony Ericsson Royal Ahold Paccar
Intel Publix Super Markets AstraZeneca

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Operating Efficiently Collaboration & Supplier Integration

Typical Exam How can I better integrate with my Next gen EDI platform that analyses
suppliers to reduce time to order and communications in real time, adds intelligent
Question improve every day interactions ? analysis and alerts to issues

PORTAL
OUR PROPOSITION

Supplier Compliance

EDI

Order Lifecycle Management

Inventory utilisation
E.G
BENEFIT

6 month implementation
PO to delivery EDI costs Open2
OTIF ATP SaaS, hosted & financed
Buy
43% 40% 20-40%
Flexible Commercial models
Process productivity
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Operating Efficiently Supply Chain Transformation

Exam How can I optimise my supply chain Use of intelligent algorithms proven in retail
Question without making substantial supply chains to improve utilisation of resources
infrastructure change & stock holding
OUR PROPOSITION

Labour Resource Utilisation

Safety Stock Optimisation
Planning
Network
Design Stock
Optimisation

Transport
Planning
Stock Utilisation

Transform to
Store
E.G

pull replen
inc safety Forecasting
stock setting & Replen
BENEFIT

Stock holding 6 month implementation

Working capital 2-3% Proof of concept
30%
Scheduling time Business case based on
mathematical evaluation

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Delivering Change Intelligent Cost Reduction

Exam Question I want to find a partner who can look Financial review to identify areas of
at my complete business and identify consolidation, improved process and
large cost reduction opportunities outsourcing based on best practice
Offer & Assets
Our Proposition
12 month payback
Take 20-40% out of the targeted cost base Commit to commercial outcomes
Reduce costs in operations expenditure, Flexible commercial models
both now and in the future
Improve cash flow Our Approach
Reduce working capital
Disposals of underperforming or non
strategic assets
Use alternative sources of funding
Improve control over spending
Improve quality & predictability in decisions
Support globalisation of capabilities
Manage or improve service levels
Strategic business alignment and service
value focus
Create or sustain capability to support new
business ventures and products/services
AND re-align organisation and workforce

$500m supply
cost reduction
50% performance incr in
app development

$40m savings from cross

business cost reduction

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Case study 4. A Global Oil Major wanting to track its tankers

and improve control of delivery schedules

If petrol station managers are allowed to order when they want to, the supply chain will never be
optimal for the supplier
- Peaks and troughs through the week caused by consumer demand and pricing fluctuations
- Order volumes causing tankers to go out half full
Integration between scheduling centres, terminals, trucks and customers assured robust planning
and collaboration
- petrol station managers know when deliveries will arrive, and can be ready
- Schedulers can maximise the deliveries in a shift
- Drivers can know whether tank space is going to be available to receive their loads

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Case study 4. Solution technology includes sensors,

communications infrastructure and optimisation systems
At customer site At scheduling centre

Tank gauging Modem Service to poll data Optimising /

into central Scheduling system
database

Interface to
ERP / other
systems

On
delivery
vehicle
Communicatio
GPRS modem
n between
truck and
customer
In-Cab Touch
PC
In-Cab
Software

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