Presentation Given at the CHPA (Consumer Healthcare Products Association on November 2nd in Philadelphia) event by Lora Cecere, Founder of Supply Chain Insights

2. About Me: I Am A Social Scientist

3. I Write for the Supply Chain Leader

4. Today’s Reality

5. Industrial Revolution Productivity: Impact
Stopped in 2004

6. Risk Drivers

7. Today’s Supply Chain

8. Tomorrow’s Supply Chain Requirements

9. The Manifesto for
Change

11. What I Believed

12. Only 12% Of Companies Are Driving Improvement and Performance
Better Than Their Peer Group at the Intersection of Operating Margin
and Inventory Turns.

13. The Supply Chain Is a Complex System with
Increasing Complexity

14. • Improvement
• Performance better than Peer Group
• Resiliency
• Balance
• Strategy to Action
What Defines Supply Chain Excellence?

15. 2006
2016
6.6
6.8
7.0
7.2
7.4
7.6
7.8
8.0
0.08 0.09 0.10 0.11 0.12 0.13 0.14 0.15
InventoryTurns
Operating Margin
Food
Best
Scenario
Food
0.11, 7.38
Average (Operating Margin, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2016 from YCharts
Shifts in the Food Manufacturing Market
Operating Margin vs. Inventory Turns (2006 - 2016)

16. Personal Products

17. The Importance of a Balanced Scorecard

18. Comparison

19. Growing Inventory Levels

20. Why? Commodity Pressures

21. Gaps in Alignment

22. Rise in Complexity

23. Correct
Diagnose
Assess
Supplier
Quality
Supplier
On-Time
Purchas
e Costs
Dir Mtl
Costs
RM
Inv
Cost
Detai
l
Production
Schedule
Variance
Plant
Utilization
WIP +
FG
Inventory
Order
Cycle
Time
Perfect
Order
Detail
AP AR
Inventory
Total
Cash-to-Cash
Demand
Forecast
SCM
Cost
Perfect
Order
Lack of Understanding of Demand
Source: AMR Research 2004

24. Normal
Distribution
SKU/L
SalesVolume
Anything But Normal
The “Long Tail” is Growing

25. Normal
Distribution
SKU/L
SalesVolume
Anything But Normal
Consistent and Forecastable: 874 items
representing 77% of the volume and
74% net sales. 64% of the volume is
forecastable with a 55% error.
Inconsistent demand: 1723 items
representing 23% of the volume and 26%
net sales.
Traditional
Optimization
Techniques
Need for Machine Learning/Pattern Recognition:
Inventory Strategy
Not Forecastable by
Conventional Means
Client Case Study

26. • A pattern caused by order frequency, order quantity or
batch size.
• A type of demand: price/promotion, new product launch,
seasonal consumption, special orders.
• A product build to execute a supply chain strategy.
Life for a supply chain planner is not as easy as it used to be.
Demand Flows require aligned Inventory Strategies.
What Is a Demand Flow?

27. Example: Navigating Demand As A River

28. Holistic Thinking

29. Planning System Effectiveness

30. Embrace the Form & Function of Inventory

31. Form & Function of Inventory

32. The Building of Excel Ghettos
Isolated, Disconnected
Decision-making

33. Need for Holistic Thinking

34. What Makes a Difference?

35. Functional Management of Costs: Manage Costs Like a
Decathlete

36. Efficient Is Usually Not Effective

37. Driving a Digital
Transformation

38. Today’s Reality

39. Digital Path to Purchase: Automation of the four
moments of truth in the purchase cycle through the use
of social, mobile, digital, and analytics technologies.
Demand Driven: Senses, translates and uses demand
data at the Speed of Business. Translation from Sales-
driven or Marketing-driven to be Market-driven through
Outside-in Processes.
Digital Path to Purchase and Demand Driven

40. Four Moments of Truth
The List:
• Digital Recipe
• Digital Coupons
• Online Rating
and Reviews
The Basket:
• Shelf-sensing
• QR Codes
• In-store coupons
• IP Address Sensing
• Localized
assortment
The Check-out
• Downstream
Data
• Loyalty Data
Usage
• Sentiment Data
• Ratings and
Reviews

41. What Is Next-Generational Thinking?

42. Current Supply Chain Process Thinking
Rows and Columns:
Transactional Data
Fixed Hierarchies with
Structured Data
One-to-One Enterprise Linear Flows
Descriptive and Predictive Analytics

43. Becoming Digital
Digital
Transformation
Digitalization
Digitization
VALUE

44. Digital Supply Chain:
Transforming the Atoms
and Electrons of the Supply
Chain through the
Confluence of Technologies
What Does Digital Transformation Mean
for You? There Is No One Definition

45. Bar codes were first used at Marsh Supermarket in 1968

46. Impact of Localized Assortment

47. Sentiment: The Need to Listen

48. New Forms of Analytics

49. Data Needs to Move Securely Through Value Networks In…
Clouds Streams Pools

50. Need for New Forms of Analytics

51. Evolution of Insights

52. Evolution of Cognitive Computing

53. Redefining
Time

54. 1.5M sku locations
~ 95% slow or intermittent
Seasonal demand (at the item level) is identified down to a specific
location.
Simplified for clarity In reality, looks more like this
•365 days
•150+ local climates
•Avg 3,000 items / location (165M)
•15 year lifecycle changing amplitude
Lennox International

55. •Replace
•Compressor
•Engines
• Dealer gets service event
• We get parts sales
• Customer has non-event
• Customer - Dealer & Brand loyalty
Your compressor shows that it will fail within
the next 30 days. What day would be good for
us to come replace it?
Redefining Service

56. Internet of Things

58. Rich user interface in full HD
Evocative sound track with
burring grinder and tinkling
of spoons
Memorable flavours and
fragrances
Cutting edge reliable /
ultra efficient computer
processing hardware
Stunning curved design by
Italian automotive designers
Irresistible aromas of Costa’s coffee
shops
Innovative coffee-making
system providers
Redefining Replenishment

59. Transforming Inbound Logistics
Mobile Device Apps
AIS Vessel Location
Sensors

60. Improved On-Time Delivery

61. L’Oreal: Direct Communication
Use Cases
Product
Information
Dialogue with
smartphonesAutomated cash-out

62. Digital Manufacturing

63. What Is Digital Manufacturing?
Additive Manufacturing Paperless Processes Robotics

64. AGCO Manufacturing Redefinition

65. L’Oreal: ROBOTS
 COLLABORATIVE ROBOT
(COBOT)
 MUTIPLE TASKS  ARTIFICIAL
INTELLIGENCE
 NATURAL LANGUAGES
 EMOTIONS

66. L’Oreal: 3D PRINTING - PROTOTYPING
66
3D printed mold for simple pack
S/T 3D printing :
15 days - 4 000 €
100 pieces
S/T traditional machining :
60 days - 20 000 €
1000 pieces
Mold proto standard
simple & complex pack
CCZ – 3D Lab

67. L’Oreal 3D PRINTING
67
New design opportunities for our brands

68. Network of Networks

69. The adoption of distributed and open technology by the
ecosystem of technology providers and business users to drive
inter-operability in value networks to improve business outcomes.
What Is the Network of Networks?

70. What Does Not Work

71. Future View

72. Write once and use company and contact information many times.Community Directory
• Reduce onboarding through once source of data.
Blockchain redefines visibility and track and trace.Traceability
• Confluence of Blockchain and Spark/Internet of Things Redefine Lineage.
Bitcoin and Blockchain disintermediate traditional banking.Supply Chain Finance
• Emergence of the supply chain digital wallet.
• An alternative to EDI.
Cognitive computing eliminates the need for master data
management and standards.Interoperability
• Data is mined through patterns and translated for context through cognitive computing. Shift
from standards to process canonicals.
What Could Change?

73. Talent

74. Job Satisfaction

76. Today’s Challenges

77. Moving Forward

79. Where Are You Willing to Invest?
Early Adopter Late Adopter
Cognitive, Machine Learning, Blockchain,
Internet of Things, Wearables, Drones,
Autonomous Vehicles
Cloud, Concurrent Planning, Descriptive
Analytics, Production Planning, Inventory
Management, Transportation Planning
2 Options:
Little
Choice in
Between

80. • Remove the handcuffs. Eliminate the expectation of well-defined ROIs.
• Develop a stage-gate process for process innovation.
• Embrace small scrappy teams.
• Partner with technology innovators.
• Manage the hype cycles.
Have the Talk with Your CFO

81. Wrap-up
• Embrace New Technologies at the
Right Time.
• Focus on Capabilities. Build with
the Goal in Mind.
• Manage the Supply Chain as a
Complex System.

82. Time to Take a Different Path?

84. About Lora Cecere
• Founder of Supply Chain Insights
• “LinkedIn Influencer”
• Guest blog for Forbes
• Author of 5 books: Bricks Matter (2012), Shaman’s Journal (2014),
Supply Chain Metrics That Matter (2014), Shaman’s Journal (2015),
Shaman’s Journal (2016), Shaman’s Journal (2017)
• Partner at Altimeter Group (leader in open research)
• 7 years of Management Experience leading Analyst Teams at Gartner
and AMR Research
• 8 years Experience in Marketing and Selling Supply Chain Software at Descartes
Systems Group and Manugistics (now JDA)
• 15 Years Leading teams in Manufacturing and Distribution operations for Clorox,
Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble.
Contact Information:
• Email: lora.cecere@supplychaininsights.com
• Blog: www.supplychainshaman.com (18,000 pageviews/month)
• Forbes: www.forbes.com/sites/loracecere
• Twitter: twitter.com/lcecere (9,500 followers)
• LinkedIn: www.linkedin.com/in/loracecere (285,000 followers)
• LinkedIn Influencer: www.linkedin.com/today/author/446631