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Prepare Your Supply Chain for Uncertain Times Ahead

Prepare Your Supply Chain for Uncertain Times Ahead. October 2009 PESA Conference Houston, Texas Paul Lord, Research Director, AMR Research. Independent Research & Advisory Firm exclusively focused on supply chain improvement, enabling technology, and sustainability

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Prepare Your Supply Chain for Uncertain Times Ahead

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  1. Prepare Your Supply Chain for Uncertain Times Ahead October 2009 PESA Conference Houston, Texas Paul Lord, Research Director, AMR Research

  2. Independent Research & Advisory Firm exclusively focused on supply chain improvement, enabling technology, and sustainability We help our clients broaden strategic perspective, accelerate due diligence, and mitigate risk We are not a consultancy and are viewed by our clients as a trusted advisor AMR Research

  3. Traditional Definition of Supply Chain Management Supply Demand Supply Demand Traditional Supply Chains supplier customer Product design partner

  4. One- number forecasting is gone forever

  5. Oil and Gas Industry Value Chain Demand Translation Residential, Commercial, Industrial, Transportation Factory or Power Plant Storage & Distribution Refining & Processing Drilling & Production Service and Equipment Days of Inventory 20 5 5 20 Demand Latency Manufacturing Cycle Time Sourcing Lead Time Inventory Data Source: CFO Magazine Inventory data source: CFO Magazine September 2008

  6. Comparing Cycle Times Across Industries Time to Sense: What is Sold in the Channel (Translation of Sales Demand to an Order) Manufacturing Cycle Time: The Time to Move through a Manufacturing Cycle or Campaign Sourcing Lead Time: Time to Source Service & Materials (from Requisition to Receipt)

  7. External collaboration partnerships Supply Demand External collaboration partnerships Product External collaboration partnerships From “Supply Chains” to “Integrated Supply Networks” Integrated Supply Network A system of technologies, processes, and organization that senses & responds to demand signals across a value- driven network of customers, suppliers, & employees.

  8. 90% Deliver 20% More Perfect Orders… Leaders 68% Laggards Leaders 54 Days …Hold a third less inventory… Laggards 72 Days 21% Leaders …and have lower costs equal to 5% of revenue Laggards 26% Our Benchmarking Finds That Leaders:

  9. Leaders focus on Five Moments of Truth

  10. Strategies to Achieve those Five Moments of Truth

  11. Successful supply chain strategies Demand driven vs agility Flexible platforms S&OP leadership of America Local sourcing Supplier collaboration & development Platform reuse Orchestrate the Demand Driven Response Become Market Driven Design and Deliver the Customer Experience Build Value into Supply Networks Customer segmentation Channel management Cost-to-serve Lean programs Network Design Sustainability Drive Innovation into Products and Services Inventory visibility Global procurement Global logistics Supply chain talent

  12. Summary • Broaden thinking to “Integrated Supply Networks” • From volume balancing to optimizing profit and managing risk • Design capabilities to optimize the Five Moments of Truth • Building supply chain talent has never been more important.

  13. Paul Lord Research Director plord@AMRResearch.com AMR Research 125 Summer Street Boston, MA 02110 USA 617-350-1790

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