1. Global
Supply
Chain
Management
Trends
&
Best
Prac.ces
FAPICS
Annual
Conference
Paris,
May
2011
Mondher
Ben-­‐Hamida,
CPIM,
CSCP
APICS
Board
Member
Vice
President
Strategy,
E2open
mondher@e2open.com
/
mondher@mondher.com
+1.415.425.7184
©
2011
E2open,
Inc.
All
rights
reserved.

2. Agenda
1
Our
Point
of
View
on
Global
Supply
Chain
IntegraAon
What
Works
&
What
Doesn’t
Work
2
Case
Studies
in
Global
Supply
Chain
IntegraAon
&
Co-­‐opeAAon
Lessons
Learned
3
An
Overview
of
Some
Macro
Economic
Trends
…
and
their
impact
on
the
micro
economic
drivers
of
SCM
4
IT
and
the
Future
of
Supply
Chain
Management
On
the
structure
and
merits
of
an
IT-­‐enabled
business
network
5
Conclusion
Final
Thoughts
E2open
ConfidenNal
/
2

3. Supply
Chains
are
More
Complex
than
Ever
• Supply
chains
becoming
‘virtual
enterprises’
• Complex,
mulN-­‐Ner
business
and
service
level
relaNonships
• GlobalizaNon,
de-­‐centralizaNon
and
management
of
shared
processes
E2open
ConfidenNal
/
3

4. …
and
Supply
Chain
CollaboraNon
is
Tough!
The
Uncanny
Resemblance
with
Chaos
Theory
1. Complex
systems
consist
of
a
large
number
of
elements.
2. The
elements
have
to
interact
and
this
interacNon
must
be
dynamic.
3. The
InteracNon
is
fairly
rich,
i.e.
any
element
in
the
system
influences,
and
is
influenced
by,
quite
a
few
other
ones.
4. Firstly,
the
interacNons
are
non-­‐linear.
5. The
interacNons
usually
have
a
fairly
short
range,
i.e.
informaNon
is
received
primarily
from
immediate
neighbours.
6. There
are
loops
in
the
interacNon.
7. Complex
systems
are
usually
open
systems,
i.e.
they
interact
with
their
environment.
8. Complex
system
operate
under
condiNons
far
from
equilibrium.
9. Complex
systems
have
a
history.
Not
only
do
they
evolve
through
Nme,
but
their
past
is
co-­‐responsible
for
their
present
behaviour.
10. Each
element
in
the
system
is
ignorant
of
the
behaviour
of
the
system
as
a
whole.
E2open
ConfidenNal
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4

5. Business
EvoluNon
over
the
years
……
Asset
Light
TransformaAons
Short
Product
Lifecycles
• Loss
of
control
&
increased
risk
• Need
for
dynamic
supply
chains
• Planning
focus
replaced
by
execuNon
• Lower
Inventory
levels
focus
• Lower
liability
Complex
Customer
Channels
AcAve
Demand
Management
• End
customer
value
NOT
immediate
• Real
Nme
visibility
and
dynamic
customer
focus
execuNon
to
counter
volaNlity
• Visibility
and
replenishment
• Demand
shaping,
promoNons
Value
Networks
RegulaAons
&
Compliance
• Non-­‐linear,
Global,
MulN-­‐Ner,
Regional
• Global
networks
drive
huge
• Direct
links
between
points
of
supply
compliance
requirements
and
demand
• Cross-­‐country
goods
movements
• No
touch
or
low
touch
operaNons
require
detailed
documentaNon
E2open
ConfidenNal
/
5

6. Brand
vs.
Delivery
…..
Tangible
Assets/Net
Value
• Major
Brand
Owners
conNnue
to
70%
outsource
based
on
their
core
60%
competencies
and
the
capabiliNes
of
their
partners
50%
• Strategic
move
–
own
the
Brand/
40%
Design
and
outsource
the
actual
30%
value
creaNon
20%
• Requires
managing
the
value
10%
network
outside
the
four
walls
0%
1975
1985
1995
2005
2015
E2open
ConfidenNal
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6

7. Mismatch
between
Needs
and
Current
Setups
• Our
experience
shows
that
most
global
Phase 1 Phase 2 Phase 3 companies
are
in
Phase
3
of
their
evoluNon
Reputation Matters Growth Matters Execution Matters • Global
operaNonal
models
(process,
tools
High Suitability of Supply Chain Models and Tools Low and
infrastructure)
have
not
evolved
in
sync
with
the
growing
complexity
of
global
business
models
• The
growing
compeNNon
between
new
and
Slower growth and emerging
technology
Ntans
adds
a
sense
of
fiercer competition
urgency
to
the
need
for
key
players
to
Business creation
upgrade
their
operaNonal
model
with
and local market greater
emphasis
on
superior
planning
and
establishment
execuNon
• Transforming
the
supply
chain
to
address
Aggressive Global
Growth
the
requirements
of
this
new
phase
is
the
new
compeNNve
fronNer
Low Elapsed Time / Supply Chain Planning Complexity High
The
Evolving
Needs
of
Global
Supply
Chains
E2open
ConfidenNal
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7

8. Example:
Complex
Supply
Network
Boeing
787:
External
CollaboraNon
is
absolutely
criNcal
as
more
design,
manufacturing,
and
supply
network
execuNon
is
entrusted
to
key
trading
partners
E2open
ConfidenNal
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8

9. Valida.ng
Our
Observa.ons
Findings
from
a
Recent
E2open
Supply
Chain
Summit
1
Number
of
Planning
Tiers
2
Lead
Time
in
an
Extended
SC
3
Performance
Mgt
in
a
MulN-­‐Tier
System
4
SCM
&
Financial
Management
E2open
ConfidenNal
/
9

10. Supply
Chain
MulN-­‐Tier
Performance
Using
the
E2open
Maturity
Model
The
Orchestrators
Quadrant
Companies
in
this
zone
clearly
understand
the
need
to
reach
across
their
supply
chain
spectrum
to
opNmize
their
operaNons
leveraging
advanced
opNmizaNon
and
business
intelligence
for
superior
performance
The
Overachievers
Quadrant
Companies
in
this
zone
have
managed
to
leverage
their
size
or
anchor
posiNon
to
build
a
mulN-­‐Ner
planning
model
that
sNll
lack
advanced
analyNcs
to
handle
complexity
and
improve
visibility
and
responsiveness
The
Underachievers
Quadrant
Companies
in
this
zone
have
heavily
invested
in
enterprise
automaNon
and
planning
soluNons
but
are
yet
to
reap
any
significant
benefits
because
of
either
lack
of
leverage
or
reluctance
to
embrace
the
required
mind-­‐set
shim
The
Basic
Quadrant
Companies
in
this
zone
have
neither
the
supply
chain
reach
nor
the
advanced
planning
capabiliNes
to
turn
SCM
into
a
compeNNve
differenNator.
Many
companies
from
emerging
markets
fall
in
this
category
E2open
ConfidenNal
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10

11. The
Challenge
of
MulN-­‐Tier
Planning
Component
Suppliers
EMS
Partners
OEM
/
Brand
Owner
Channel
Partners
Customers
Variability
Time
Vola-lity
Dependency
E2open
ConfidenNal
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11

12. Performance
Management
in
a
MulA-­‐Tier
Value
Chain
The
Dubious
Usefulness
of
the
Inventory
Turnover
Ra.o
(as
an
example)
Your
Key
Supplier/CM
Brand
Owner
Your
Key
Customer
QuanNty
QuanNty
QuanNty
1
2
3
4
5
6
7
8
9
10
11
12
1
2
3
4
5
6
7
8
9
10
11
12
1
2
3
4
5
6
7
8
9
10
11
12
Time
Time
Time
COGS
COGS
COGS
I
I
I
Key
Findings
• Is
this
metric
(and
other
tradiNonal
ones)
more
suited
for
a
verNcally
integrated
company?
• What’s
the
true
value
of
pursuing
high
inventory
turns
at
the
Brand
Owner
level
when
the
Supplier
is
(contractually
/
in
theory)
forced
to
maintain
high
inventory
levels
― Does
this
drive
some
of
the
hedging
games
that
we
see
in
various
industries?
• Does
a
MulN-­‐Tier
environment
warrant
re-­‐defining
this
metric
to
cover
2+
Tiers?
• Do
we
need
new
‘financial
products’
to
provide
joint
inventory
hedging
mechanisms?
• Please
share
any
experiences
implemenNng
any
cross-­‐Ner
metrics?
E2open
ConfidenNal
/
12

13. What
Is
Your
Lead
Time
in
An
Extended
Value
Chain?
The
Need
to
Constantly
Monitor
3
Cri.cal
Variables
I
Inventory
L
Lead-­‐Time
T
Throughput
John
D.C.
Li]le
InsNtute
Professor
Your Company
Customers
Suppliers
OEM’s
/
Brand
T
Component
EMS
Partners
Warehouse(s)
Raw
Materials
Owners
Suppliers
Retailers
Lead
Time
Key
Findings
• How
comfortable
is
a
company
(with
an
extended
supply
chain)
quoNng
a
delivery
leadNme?
• Is
expediNng
/
firefighNng
a
reflecNon
of
poor
visibility
to
inventory?
How
to
fix
that?
E2open
ConfidenNal
/
13

14. Agenda
1
Our
Point
of
View
on
Global
Supply
Chain
IntegraAon
What
Works
&
What
Doesn’t
Work
2
Case
Studies
in
Global
Supply
Chain
IntegraAon
&
Co-­‐opeAAon
Lessons
Learned
3
An
Overview
of
Some
Macro
Economic
Trends
…
and
their
impact
on
the
micro
economic
drivers
of
SCM
4
IT
and
the
Future
of
Supply
Chain
Management
On
the
structure
and
merits
of
an
IT-­‐enabled
business
network
5
Conclusion
Final
Thoughts
E2open
ConfidenNal
/
14

15. Co-­‐opeNNon
is
Fast
Becoming
the
Norm
Customers
SaNsfacNon
Supply
Chain
Visibility
Cost
ReducNon
Inventory
ReducNon
Lead
Time
ReducNon
Supply
Chain
Velocity
Metrics
Alignment
Source
–
E2open
Research
E2open
ConfidenNal
/
15

16. A
Mockup
of
a
Supply
Chain
Command
Center
Co-­‐ope..on
and
‘Real
Time’
S&OP
at
Work….
E2open
ConfidenNal
/
16

17. Agenda
1
Our
Point
of
View
on
Global
Supply
Chain
IntegraAon
What
Works
&
What
Doesn’t
Work
2
Case
Studies
in
Global
Supply
Chain
IntegraAon
&
Co-­‐opeAAon
Lessons
Learned
3
An
Overview
of
Some
Macro
Economic
Trends
…
and
their
impact
on
the
micro
economic
drivers
of
SCM
4
It
and
the
Future
of
Supply
Chain
Management
On
the
structure
and
merits
of
an
IT-­‐enabled
business
network
5
Conclusion
Final
Thoughts
E2open
ConfidenNal
/
17

18. Observa.on
#
1
China
and
the
Lewis
Turning
Point
Lewis
argued
in
a
1954
paper
that
a
developing
country
with
“surplus”
agricultural
labor
could
grow
its
industrial
sector
for
years
without
wage
infla.on
as
it
absorbs
that
surplus.
Share
of
enNre
industry
Sir
W.
Arthur
Lewis
Nobel
Economics
1979
(1915
—1991)
TexNle
Consumer
Steel
Automobile
Electronics
Low
value-­‐added
products
High
value-­‐added
products
E2open
ConfidenNal
/
18

19. Observa.on
#
2
FluctuaAng
Oil
Prices
Make
LogisAcs
Planning
Challenging
+$100/bbl
(from
$17
to
$117)
causes
an
increment
of
transportaNon
cost
of
0.22€/km
(from
1.28€
to
1.50€)
at
full
capacity
uNlizaNon
LogisNcs
Costs
Cost
of
Warehouses,
Stock
and
Loading
Devices,
etc.
TransportaNon
Costs
#
of
Warehouses
E2open
ConfidenNal
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19

20. Observa.on/Ques.on
#
3
Is
Labor
Cost
SAll
Relevant?
And
How
Should
It
Be
Analyzed?
• Vietnam
Worker
–
400-­‐500
RMBs/Month
– Lower
than
Bangladesh
• China
Worker
–
800
RMBs/Month
– Higher
than
India
and
Malaysia
– Industrial
Transfer
is
inevitable
• Survey
by
the
FederaNon
of
HK
Industries
– 37%
of
80,000
HK
companies
planning
to
transfer
part
or
all
of
their
producNon
capaciNes
out
of
the
region
– 63%
planning
to
move
out
of
the
Guangdong
region
E2open
ConfidenNal
/
20

21. Observa.on/Ques.on
#
4
What
is
the
True
Supply
Chain
Cost
Breakdown
(1
of
2)
‘It
is
the
maxim
of
every
prudent
master
of
a
family,
never
to
axempt
to
make
at
home
what
it
will
cost
him
more
to
make
than
to
buy.
If
a
foreign
country
can
supply
us
with
a
commodity
cheaper
than
we
ourselves
can
make
it,
bexer
buy
it
of
them
with
some
part
of
the
produce
of
our
own
industry,
employed
in
a
way
in
which
we
have
some
advantage.’
“An
Inquiry
into
the
Nature
and
Causes
of
the
Wealth
of
Na.ons”
Adam
Smith
–
1776
StaAc
Costs
Dynamic
Costs
Hidden
Costs
• Purchase
price
ex-­‐factory
gate
• Increased
pipeline
and
safety
stock
due,
• Labor
cost
inflaNon
due
to
rising
• TransportaNon
cost
per
unit,
assuming
which
is
amplified
by
demand
volaNlity
standards
of
living
and
compeNNon
of
no
unexpected
delays
or
quality
and
product
variety
the
labor
market
problems
• Inventory
obsolescence
due
to
long
• Currency
fluctuaNons,
in
parNcular
for
• Customs
and
duty
to
clear
a
shipment
logisNcs
lead-­‐Nmes,
e.g.
in
case
of
cases
of
arNficially
pegged
currencies
for
export
quality
problems
• Rise
in
transportaNon
cost,
e.g.
due
to
• Insurance
and
transacNon
cost
• Cost
of
lost
sales
and
stock-­‐outs,
as
the
higher
oil
price
and
carbon
offset
costs
• Cost
of
quality
control
and
compliance
supply
chain
is
unresponsive
to
shims
in
• Overhead
for
managing
the
with
safety
and
environmental
demand
internaNonal
supply
base,
including
standards
• Expedited
shipments,
e.g.
air-­‐freight,
to
travel
cost
or
cost
for
local
personnel
in
• Search
cost
and
agency
fees
to
idenNfy
ensure
uninterrupted
supply
the
supplying
markets
and
interact
with
local
suppliers
• The
loss
of
intellectual
property
to
contract
manufacturers
• The
risk
of
poliNcal
and
economic
instability
or
change
21
E2open
ConfidenNal
/
21

22. Observa.on/Ques.on
#
4
What
is
the
True
Supply
Chain
Cost
Breakdown
(2
of
2)
To
Outsource
or
Not
To
Outsource?
An
EvaluaNon
Framework
Source
–
“On
the
risk
and
cost
of
global
sourcing”
–
Holweg
et
al
InternaNonal
Journal
of
ProducNon
Economics
–
2011
22
E2open
ConfidenNal
/
22