Learning from Leaders: Gartner’s Top 25 Global Supply Chains

1. Learning from Leaders: Gartner’s Top 25 Global Supply Chains Kevin Sterneckert Janet Suleski January 15, 2013 0

2. Gartner delivers the technology-related insight necessary for our clients to make the right decisions, every day.

3. How Today's Shoppers Shape Demand-Driven Requirements Economic Uncertainty Volatility Empowered Consumers Evolving Supply Chains

4. Key Issues for Becoming a Demand-Driven Retailer • How do you create a demand-driven foundation? • What types of initiatives enable demand-driven retailing? • What's the business value of creating a demand-driven retail supply chain?

5. Demand-Driven Value Network (DDVN) and Demand-Driven Retailing Strategies Fulfill Cross-Channel Demand Demand Supply Understand and Respond to Demand Signals Build Value Networks Deliver Consumer-Centric Retailing Product Use the Supply Chain to Support Products and Services Innovation

6. Tomorrow's Profitability and Innovation Are Built On the Right Foundation Predictive Analysis Resiliency Segmentation Cost to Serve Talent Management End-to-End Visibility Downstream Data Management Integrated PLM Align toCustomer Value Profitable Trade-Offs Sustainability Services Risk Management Demand Management Global Network Management Cost Optimized AlignedX-Functional Objectives Outside-In View End-to-EndSC Process Technology

7. Supply Chain Excellence: Value Through Operations and Innovation Balance Leader Higher Cash Flow, Profits and P/E How does the supply chain enable my business strategy? What role does the supply chain play in creating differentiation? What is my technology adoption preference? OperationalExcellence (On-Shelf Availability,Total Supply Chain Cost) Supply Demand Product D S P Innovation Excellence (Time to Value, Return on R&D) Laggard Leader

8. Span of Control for Retail Supply Chains High DC Transportation Procurement Forecasting/Replenishment NPDI Sourcing Store Operations Maturity DC Transportation Procurement Forecasting/Replenishment NPDI Sourcing DC Transportation Procurement Forecasting/Replenishment DC Transportation Procurement Low Medium High Span of Control

9. Hierarchy of Retail Supply Chain Metrics What It Tells You Forecast Accuracy Customer FulfillmentEffectiveness Customer Performance Trade-Offs ProductAvailability SCMCost Inventory Customer vs. Supplier Balance Financial Effectiveness AccountsPayable Write-Offs DOS Revenue DC Perfect Order Supplier Perfect Order SupplierOn Time On-Time toStore DC ServiceLevel Stability of Processes Driving Value OperationalEffectiveness Supplier Quality Store Effectiveness Product AvailabilityDetail SCM Cost Detail Backroom/Sales Floor Efficiency

10. Think of the Different Layers Your Organization Needs … New Ideas Systems of Innovation BetterIdeas Systems of Differentiation CommonIdeas Systems of Record

11. Retail Supply Chain Top 15 10

12. Key Issues for Becoming a Demand-Driven Retailer • How do you create a demand-driven foundation? • What types of initiatives enable demand-driven retailing? • What's the business value of creating a demand-driven retail supply chain?

13. Demand-Driven Retailing Strategies

14. Demand-Driven Retailing Initiatives

15. Demand-Driven Retailing Priorities Note: Priorities — Low, Medium, High

16. Demand-Driven Initiatives Priorities

17. Geographic Demand-Driven Maturity Comparison

18. Retail Segment and Geography Maturity Comparison

19. Key Issues for Becoming a Demand-Driven Retailer • How do you create a demand-driven foundation? • What types of initiatives enable demand-driven retailing? • What's the business value of creating a demand-driven retail supply chain?

20. Why Becoming Demand-Driven Matters Based on Supply Chain Top 25 Metrics: • Return on Assets (ROA) • Inventory Turns • Revenue Growth

21. Demand-Driven Maturity Value Proposition Reacting Anticipating Collaborating Orchestrating Stage 1 to Stage 2 Stage 2 to Stage 3 Stage 3 to Stage 4 Source: Gartner Supply Chain Top 25 retail candidates (n=43)

22. Demand-Driven Business Value • End-to-End Oriented Metrics Growth Service Cost Agility • Demand Management Gross MarginImprovement3%-5% Reduction in Out-of-Stocks20%-30% ProductivityIncrease5%-10% Inventory ▼15%-30%Obsolescence 10%-15% less RevenueImprovement2%-5% Inventory ▼15%Cash-2-Cash ▼35%Working Capital ▲15% Time-to-MarketLead Time Reduction BetterCustomer Choice • MIOE • Supply Chain Segmentation Value to CustomersCost/Service Choices Cost of ComplexityUnneeded Variability Unique Valueand Agility per Segment GrowthPotentialIdentification • Network Design Gross MarginImprovement3%-5% Improved Productivity3%-5% BetterService Asset Utilization▲5%-10% • Inventory Optimization Profit Growth2x Asset Utilization3x Faster Runs2x No Negative Service Impact • Proactive supply chain talent strategy • Supply chain organization design (span of control)

23. Monday Morning Take the DDR self-assessment to gauge current maturity levels. Next 90 Days Determine the role of your supply chain and how it should enable your business strategy. Create and administer a supply chain skill set assessment. Next 12 Months Compare your DDR initiatives to the recommended list. Create your DDR process and technology road map. Demand-Driven Supply Chain Action Plan

24. Recommended Gartner Research • The 2012 Retail Handbook for Becoming Demand-DrivenMike Griswold, and others (G00229233) • Toolkit: Assess Your Retail Value Chain Maturity Against the Five Demand-Driven StrategiesKevin Sterneckert, and others (G00211566) • Key Issues for Retail Supply Chain Leaders, 2011: Aligning Planning and ExecutionMike Griswold, Janet Suleski (G00210875) • Demand-Driven Retailers Align Planning and Execution Across Their Supply Chains by Answering Three Key QuestionsMike Griswold (G00209003) • Demand-Driven Retail Supply Chains Use Three Critical Skill Sets to Balance Operational and Innovation ExcellenceMike Griswold, Allen Johnson (G00207240) For more information, stop by Gartner Solution Central or email us at solutioncentral@gartner.com.

25. Questions? Kevin Sterneckert – kevin.sterneckert@gartner.com Janet Suleski – janet.suleski@gartner.com