Bringing The Network to You UNT Digitizing your Supply Chain Bernard Goor, One Network 1 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
Business Dilemma Companies are facing tough challenges … They will need to digitize both their front-end Disruptors Consumer Experience and their back-end Supply Chain in order to win – or even survive Consumers Channels Companies Digitize Your Consumer Experience Digitize Your Supply Chain Market Conditions … which will force them to reduce cost and accelerate innovation – at the same time Costs Innovation AND 2 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
What Does Digitization Mean? = The ability to share high fidelity information with all actors in a process in order to – Allow them to make optimized decisions based on real time recommendations, or – Automate the decisions on their behalf Key components – Real time information flowing seamlessly across the process – Autonomous agents making recommendations or decisions Digitization means transparency, velocity, simplification and automation 3 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
Companies Can Digitize their Supply Chain by Deploying a Consumer-Driven Supply Network to … 4 Gain end-to-end visibility across the entire network Inventory Production and Production and Optimization Logistics Planning Logistics Planning Logistics Planning Inventory Inventory Inventory and Execution and Execution Optimization and Execution Optimization Optimization Stores Order Forecast DCs Order Forecast Factories Order Forecast Suppliers Order Order Order • Demand Sensing • Demand Forecasting • Order Mgmt • Order Mgmt • Demand Forecasting • Order Mgmt • Inventory Mgmt • Inventory Mgmt • Inventory Mgmt • Inventory Mgmt • MRP • MRP • Replenishment Planning • Replenishment Planning • BOM Disaggregation • Suggested Ordering Seamlessly propagate the demand signal back through the supply network 1 2 Balance demand and supply at every node in the supply network in near real time 3 Respond to demand signal in near real time to fulfill consumer demand at the lowest cost 4 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
Deploying a Consumer-Driven Supply Network Delivers Significant Benefits Improved logistics performance Increased sales Increased service levels and fill rates Stores DCs Factories Suppliers Lower landed costs Reduced spoilage , returns and markdowns Optimized inventory levels at every node in the network Increased visibility and transparency across the entire network Increased agility and velocity across the entire network 5 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
Deloitte Agrees with the Value of Digital Supply Networks From traditional supply chains to digital supply networks (DSNs) By connecting all the stages to one Companies would be poised to another via advanced technologies, achieve new levels of performance, DSNs can minimize the latency, risk, improve operational efficiency and and waste found in linear supply effectiveness, and create new chains. revenue opportunities. Deloitte, “The rise of the digital supply network”, 2016 6 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
KPMG Validates the Value Proposition for Demand- Driven Supply Chains Companies adopting demand-driven supply chains typically enjoy increased sales, reduced operating expenses and improved working capital Improved fill rates and reduced out-of- 1-4% Improvement 5-10 % Reduction in in Sales Operating Expense 20-30% stocks drive increased revenue and Reduction in Inventory Transportation recoverable sales Buffer Transportation With greater certainty over demand, Planning Buffer Planning organizations can carry less stock Promotional Demand Better visibility of supply and demand Promotional Sales Sales Demand should lead to fewer disruptions to supplies COGS COGS Actual Process automation reduces operating Actual Demand Demand expenses, allowing buyer/ planners to Traditional Demand- Traditional Demand- Traditional Demand- manage by exception Model Driven Model Driven Model Driven Sales Levels Expenses Levels Inventory Levels KPMG, “Demand-driven supply chain 2.0”, 2016 7 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
What Could the Financial Impact Be? Example of a CG Food Manufacturing Company 5% reduction in COGS 20% reduction in Inventories For a $1 Billion company Before After Difference Revenue $ 1,000,000 100% $ 1,000,000 Cost of Revenue $ 650,000 65% $ 600,000 60% $ (50,000) -5% Inventory $ 172,603 63 $ 136,986 50 $ (35,616) -13 Average COGS% - $50 Million of COGS reduction Average Days in Inventory - $36 Million of inventory reduction 8 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
Why is a Consumer-Driven Supply Network Better? The Traditional Approach The Consumer-Driven Supply Network Approach Every company on the network uses its own systems The companies on the network use common processes, and data data and metrics (single version of the truth) Companies on the network are connected via EDI, All companies are connected to one single network – spreadsheets and emails – maintained by each company maintained by One Network Planning and execution are disconnected Planning and execution are integrated in real time via machine learning agents Network Platform Agility Frictions Network Platform Velocity Delays Transparency Inefficiencies Reduced inventories High inventories Lower COGS High COGS Improved on-shelf Out of stocks availability 9 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
Traditional Supply Chain Create a Bullwhip Effect The further back in the chain, the more variable the demand signal becomes Demand Variability Consumer Store DC DC MFG Tier1 Tier 2 10 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
Why is that Happening? Intercompany and cross-functional silos Disconnected planning and execution processes Redundant and repetitive processes across companies in the network 11 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
Silos Inter-company silos Finance Sales Cross-functional silos Supply Marketing Chain Operations Finance Sales Supply Marketing Chain Operations 12 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
Disconnected Planning and Execution Processes Batch planning systems disconnected from continuous execution layer Planning Execution Planning Planning Execution Execution Planning Planning Execution Execution 13 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
Redundant and Repetitive Processes Sense and shape demand Sense and Shape Synchronize Supply and Demand Respond to Demand Demand Synchronize supply and demand Respond to demand Sense and Shape Synchronize Supply and Demand Respond to Demand Demand Sense and Shape Synchronize Supply and Demand Respond to Demand Demand Sense and Shape Synchronize Supply and Demand Respond to Demand Demand Sense and Shape Synchronize Supply and Demand Respond to Demand Demand 14 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
The Solution? Adopt a Consumer-Driven Supply Network Logistics Providers A Consumer-Driven Supply Network is a multi-party solution that connects your entire eco-system Consumer- (you + your customers, distributors, Driven Supply Distributors Sellers Network suppliers and logistics providers) in a real-time decision-making, consumer-driven network Buyers 15 (c) One Network Enterprises. This document is proprietary and confidential and may not be disclosed without the prior written consent of One Network.
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