As we plan for the world of eCommerce and the customer expectation of quick, free shipping, our ability to forecast is turned on its head. How many distribution centers do we even need, and is that number feasible? Can we use historical data to plan for demand and design our networks, or is there a better way?
If we're going to offer the speed of shipping and variety of inventory that today's customers have come to expect, there are a lot of different questions that need to be asked. Join Irina Rosca, Director of Supply Chain Operations at Helix and an experienced global supply chain strategist, as she walks through the key questions to a successful and efficient distribution network. You'll leave knowing what data you can start collecting today to answer these questions.
Analytics in Action: How to Build Data-Informed Products
Supply Chain Network Design: Key Questions for a Successful Distribution Network
1. Key Questions for a Successful Distribution
Network
Irina Rosca Hannah Flynn
With: Moderated by:
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Supply Chain
Network Design
2. AIMMS is a forward-thinking software platform provider democratizing the use of
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Digital supply chains require modern, agile software. Tackling supply chain
complexity without advanced analytics is becoming a disadvantage. With AIMMS SC
Navigator, you can now tap into the power and performance of prescriptive analytics
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Irina Rosca| www.sustainSCM.com 2
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Click on the Questions panel to
interact with the presenters
https://www.supplychainbrief.com/webinar-series/supply-chain-network-design/
4. About Irina Rosca
Irina is the Director of Supply Chain Operations at Helix, a company whose mission is to empower every person to improve their
life through DNA. Irina results-oriented leader with a proven history of successful operational stewardship and improving global
supply chain strategies in various sectors including wine and spirits, food, CPG and biomed. Irina is a strategic and data-driven
problem solver with proven track record of leading global teams to implement novel worldwide supply chain strategies with the
goal to improve customer service and bottom line gains. Her approach and decision-making process are driven by her strong
financial and analytical skills complemented by a deep understanding of international markets and ability to see the long-term
organizational strategy.
About Hannah Flynn
Hannah went to The University of Chicago, where she majored in Environmental Studies with a concentration in Economics and
Policy. She now works with Aggregage on social media strategy and webinar production on sites such as Product Management
Today, B2B Marketing Zone, and Supply Chain Brief.
Supply Chain
Network Design
Irina Rosca| www.sustainSCM.com 4
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Supply Chain 2019 Trends
• Digitization
• Globalization and Global Risk
• Automation
• E-commerce Growth/ BOPIS
• 3D Printing
• Consolidation Service Providers
• Regional Demand: Near-Shoring & On-Shoring
• Demand Driven Forecasting/ Supply Planning
• Labor Shortages and Increasing Wages
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Driving Change
Consumer expectation of continuous improvement in shopping
convenience, free/ fast shipping, wider product availability, immediate
returns and refunds.
Frequently Asked Supply Chain Questions
How many distribution centers should there be, is that feasible?
Should companies use historical data to plan for demand and design
networks; is there a better way?
Key Actions for a Successful Distribution Network
1. Build an Agile Network Design and Optimal Inventory Distribution
2. Create End-to-End Visibility Connectivity
3. Pivot to Demand Driven Forecasting and Planning
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Who- Who is the customer- Retail, Wholesaler, Consumer- who are you solving a
problem for?
Why- What is the end result expected to be and how will this be quantified?
What- what product are you selling and what distribution limitations does it
create?
Where- where is the supply chain center of gravity?
To Optimize the Logistics Network and On Hand Inventory at Each Location You Must
Answer these Questions Clearly!
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Who is the customer driving the
change?
• Diagnose customer behavior to prescribe the
right market segmentation and set up your
supply chain to support this.
• Is e-commerce important?
• Do you have an omni-channel supply chain?
• What is the expected ROI for the customer?
• What type of shipping cost and time in transit
commitment does the company make?
**Is same day shipping important? If YES, pick a
warehouse open on weekends!
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Why- What is the end result expected to be and
how will this be quantified?
• Improved service?
• Flexibility/ Or more control?
• Faster time to market?
• Proximity to the customer?
• Lower supply chain costs?
• Who will your partners be in this change? Do they
understand your goals?
**Be specific with how you plan to measure results!
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What- are you selling and what are the product
distribution limitations?
• What is your total supply chain footprint?
• What is the order frequency?
• What are the total logistics and transportations costs until it reaches
the designated customer?
• What is the risk of damage?
• What are the number of touches and varying labor costs across the
supply chain?
• What are your customer service costs?
• How flexible are your suppliers?
** Be sure to align and coordinate your efforts with all supply chain
partners!
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Where- where is the supply chain
center of gravity?
• Where does the finished product ship from?
• Is assembly required- how many touches occur across the supply chain?
• Where are the focus customers located?
• What is the rate of consumer return?
** Supply your product to the customer with the least number of touches at the lowest cost. If returns occur they should be
seamless, immediately refunded with product ready to reenter the supply chain.
The National Retail Federation expects 58% of holiday shoppers to return or exchange holiday gifts in January.
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Irina Rosca| www.sustainSCM.com 15
There will be more disruption ahead and standing still is not
an option.
Supply chain must continuously adapt, develop fine-tuned
abilities to sense, respond to, and anticipate evolving
consumer and market demands.
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Demand Planning
Rolling Forecast
Shared with
Suppliers
Supply Planning Data
and S&OP
ERP- PO Issuance
PO Management
System
Logistics and
Shipping Data
System and Physical
Goods Receiving
Point of Sale
Transactions/
Marketplace
Demand Tracking
What You
Do Know
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Demand Planning- Focus on Demand Driven Forecast
• What is more important: how much product you can offer for sale OR how much your customers are likely to buy?
• Demand data should focus on the “true customer” using consumption-based modeling.
• Incorporate point of sale (POS) data from all marketplaces in forecast and demand planning.
• Data collaboration and storytelling:
• What data does supply chain receive from downstream partners and teams?
• Cross-functional collaboration- does supply chain have ready access to e-commerce sales data?
• Is this information interpreted the same across different marketplaces and business units?
• Shift focus from how supply drives demand to how demand drives supply!
**Being able to better predict demand and its effect on the supply chain can help increase revenues by at least 3% to 7%.
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Rolling Forecast Shared with Suppliers- Do You Know Who Your Suppliers Suppliers
Are?
• Keep your finger on the pulse!
• Changes to forecast, marketplace adjustments, large swings should be shared immediately with Tier 1 suppliers
and beyond.
• Your end-to-end supply chain does not begin with your immediate suppliers but further upstream.
• Focus on raw materials and sometimes services to your suppliers.
• Implement a supplier relationship management process, shared goals, mutual KPI review and forecast alignment
strategy.
**When negotiating prices with your direct suppliers, you should be able to negotiate year-over-year price
reductions—in the order of 3%-5%—that are built into your supply agreement.
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Supply Planning and Sales & Operations Planning
• Determine drivers of demand for your products.
• Design process around information related to these drivers and to
company goals.
• Integrate demand forecasts, demand plans and supply plans for a
holistic outcome.
• Focus on business issues and key assumptions.
• Ensure timely and regular meetings- Monthly!
• Ensure effective meeting agendas, pre-meeting preparation, and
post-meeting follow-up.
• Develop and apply metrics for process measurement.
**Safety Stock: Everybody Wants to Use, Nobody Wants to Own- S&OP can
help!
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PO Issuance- Based on consensus from Sales and Operations Planning Meeting
• Purchase orders should not be a surprise to the supplier or the internal team during the S&OP review- unless at once
programs are accepted.
• Purchasing cycles should be aligned with forecast previously shared with suppliers and within total supply chain lead time.
PO Management System- Visibility in Production
• Supply chain team should have visibility into all stages of production- including on hand raw materials, scrap and WIP.
• Clear risk KPIs for product delivery should be shared within the supply chain and with other business units.
**Build a comprehensive process to respond to disruptions- share with partners.
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Real Time Visibility Into Logistics and Shipping Data
• Most focus on Where was the product last seen- NOT where it is right now.
• Shippers left in the dark for 30 days on ocean shipments.
• Overlooking numerous disruptions along the way.
• Data needs to be exchanged much faster- real time and seamlessly.
• Light up the dark areas!
• What is real time today and what will be in the future?
• GPS real time vs. end of day, end of week or after the container/ product has unloaded.
• Improve performance through real time visibility-
• Act as quickly as possible- eliminate risk OR communicate internally in case of potential service disruptions!
• Built in audit trail!
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System and Physical Goods Receiving
• Create a clear quality check and assurance at product
receiving warehouses.
• SOPs and KPIs must be shared with the suppliers and
vendors.
• Construct a feedback loop to suppliers in case of damages
and receiving inaccuracies.
• How long does it take the sales team to find out about a
possible delivery delay?
• Empower your sales team with real time access to product
status data to help assess potential commitment misses.
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Point of Sale Data- Includes Retail and E-
Commerce Stores
• Use frontline data for demand planning- stay ahead of the curve.
• Identify changes in demand before these become visible in the
order flow to the central warehouse and suppliers.
• Avoid the bullwhip effect by proactively interpreting consumer
driven marketplace shifts.
• Utilizing POS data can help improve:
• New product launches- improved demand feel.
• Retail overstock or stock-outs.
• Overall supply chain days of supply metrics.
**Who is your customer- 99% the end consumer not the wholesaler,
distributor or retailer!
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Enterprise Change Management
1. Building a demand driven supply chain requires an enterprise wide adjustment.
2. Decisions are based on data and predictive analytics rather than subjective judgment.
3. Take advantage of innovations:
• Retail automation yields more data than ever- are you analyzing this?
• Search engine optimization data is readily available for consumer sentiment towards brand- access it!
• All data can be turned into supply chain intelligence- is the organization ready for this shift?
**People and their behaviors inside and outside the enterprise are at the hearts of supply chains- John Gattorna, Recipient of
the CSCMP’s 2018 Distinguished Service Award .
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Supply Chain Change Management
Companies are used to forecasting supply not demand. |Supply chain processes are rigid and resistant to change.
CHANGE IS NECESSARY!
• Measure the impact of marketing programs and business strategies that influence downstream consumer demand
(demand sensing).
• Analyze various scenarios to shape and predict future demand (demand shaping) using POS data.
• Use consumer demand history and the future-shaped consumer demand forecast as a leading indicator in a supply
model to optimize supply volumes.
• Be proactive instead of reactive. Implement strong horizontal alignment processes, stronger collaboration with key
suppliers and customers, and predictive analytics supported by scalable technology.
• Companies have to diagnose their customer’s behaviors and segment them according to those behaviors-> then
change internal culture of their supply chains to better match those customer behaviors.
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Supply Chain
Network Design Key Actions for a Successful Distribution Network
1. Build an Agile Network Design and Optimal Inventory Distribution
• Know Your Customer
• Plan With the Customer in Mind
• Share Data With Suppliers- Optimize Partnerships!
2. Create End-to-End Visibility Connectivity
• Implement Best of Breed Systems
• Don’t Be Resistant to Change
• Tell the Data Story- Gain a Seat at the Table!
3. Pivot to Demand Driven Forecasting and Planning
• Focus on Consumption Not Supply
• Use Data to Predict Market Trends
• Become a Solutions Driven Business Unit!