Outside in from the Inside Out: The Real Work of Becoming Demand Driven

Spinnaker Proprietary & Confidential 2015
All Rights Reserved 1
Outside In
from the
The Real Work Of Becoming ‘Demand Driven’
A Conversation With:

We will try to keep it real as we:
– Look at the demand driven journey that is typical for many companies
– Observe the built-in obstacles that usually exist in organizational and
personal misalignment
– Most importantly, we will look at essential, practical steps you can take
to expose and knock down the barriers
Join us—as we sort through the “skeletons in the closets”
Introduction
Why is it that even the
companies that
understand it still
encounter slow progress
& frustration?

Spinnaker is a leader in supply
chain solutions and services.We
helps clients grow, manage risk,
reduce costs, and improve
customer service by developing
world-class supply chain
capabilities.
SanDisk Corporation designs,
develops, markets and
manufactures data storage
solutions for the Data Center,
Computing, Mobile, and
Consumer Electronics markets.
Supply Chain Insights is a
research firm focused on
delivering independent, actionable
and objective advice for supply
chain leaders.
John La Bouff is theVice
President of Spinnaker’s Supply
Chain Management Consulting
practice and an avid fan of
Demand Driven.
Shiva Esturi is the Director of
Supply Chain Optimization and
experienced Demand Driven
enabler.
Lora Cecere is a supply chain
visionary who brings the rare
combination of hands-on-
experience in running operations
and building software. Lora is
author of the book Metrics that
Matter (2014) and the recently
published paperback series the
Shaman's Journal. She is also the
co-author of Bricks Matter.
Spinnaker, SanDisk, &
Supply Chain Insights

What is Demand?
Demand
Signal
Accurate Weekly
Forecasting is ...
Delay from
Purchase to
Signal
* Represents emerging markets

• Consumer-driven Supply Networks: Defined by P&G in the 1990s
as a shelf-driven, outside-in process defined by successful execution of the two
moments of truth.
• Demand-driven Supply Networks:As defined by AMR Research in
2004: a supply chain that senses and translates market signals in real time.
• Demand-drivenValue Networks:As defined by AMR Research in
2007:A network that senses demand with minimal latency to drive a near-real
time response to shape and translate demand.
• Market-drivenValue Networks:As defined by Supply Chain Insights
in 2010: an adaptive network focused on a value-based outcomes that senses,
translates, and orchestrates market changes (buy and sell-side markets) bi-
directionally with near-real time data to align sell, deliver, make and sourcing
organizations outside-in.
Evolution of Demand Driven Concepts

What are the implications for a company on this
demand driven journey?
What’s really different about demand driven for
most companies?
What Does It Really Mean?

Trying To Get “There” From “Here”…
Individual & Organizational
Capability
Change may be unwelcome to those who
prefer the familiarity of the present
Demand Driven needs new talents and
skills that may be out of reach for some
Readiness & Buy-in
Rewards and recognition tend to
remain linked to legacy metrics
Departmental prerogatives often
conflict with the new emphasis on
orchestration—”You’re in MY kitchen!”
Vision
Executives can’t always paint a clear
picture of what’s truly going to change
For some, the Demand Driven mantra
seems like surrender or capitulation to
forces they think they control
…The Journey Is
The Challenge

About SanDisk
Mobile and
Connected
Devices
Enterprise and
Hyperscale
Data Centers
Client
Computing
Laptop & Desktop SSDs Embedded & Removable Storage
Consumer
Enterprise Flash Solutions
• Global leader in flash memory cards
• We enable innovation in four mega markets

• Scalable and vertical integrated manufacturing
• We ship ~2 million units daily
• Key Considerations:
– Wafer Fabrication must occur to forecast – fab lead time is several months
– Small number of wafer types become thousands of finished goods
– Retail and OEM customers need short order fulfillment times
– Inventory that sits around loses value quickly
– Revenue not recognized until sell-through in retail/OEM channel
SanDisk’s Adaptive Supply Chain:
Supply Chain Structure & Key Dynamics
SanDisk
joint
venture
w/Toshiba
External
Silicon
Suppliers
SanDisk Storage Shanghai Factory
SanDisk Storage Malaysia Factory
Vertically Integrated Contract Manufacturers
CM CM
SanDisk
Retail
Fulfillment
Regional
Retail
Fulfillment
VMI Hubs
300,000+
Store
Fronts
OEMs /
System
Integrators
Wafer
Fabrication
Memory Packaging &
Test
Card and Solid State Drive
Assembly &Test
Packaging&
Fulfillment
Channel
CM CM
Key SanDisk & JV’s
Supply Chain Partners

SanDisk Adaptive Supply Chain Journey
Shipments in PB
Postponement
Strategy
Customer and
Product
Segmentation
Allocation to
maximize $/GB
S
S D
S D
S D
Multi Echelon
Inventory
Optimization
Delay product
differentiation
S D
P
• Achieve right balance
between inv and service level
• BU, Ops, Sales interlock
• Customer Ops Mgmnt team
• Structured process for
managing supply chain policy
• Analytics COE
• Phase 0 of PLCT review
• CPFR team
• Value chain integration
• Sell through based
forecasting
• Reduce Mfg frozen fence
• Multi stage inventory
• Push – pull process
• Break to supply replenishment
• Separate demand signal for
supply planning
• Supply Chain COE
• Cost Optimization
Advanced
Planning
Systems - 2006
S – Supply D – Demand P -Product

SanDisk’s Adaptive Supply Chain:
Change Management
Topic Retail / OEM
Partners
BU, Sales &
Marketing
Supply Chain,
Manufacturing
Engineering
Leadership
SharedVision
Incentives
Skilled
Resources
Mandate,Active Participation, and Governance
by President/COO + Functional VPs
Shared
Scorecards, Gain
Sharing
Cross-Functional Communication Meetings and Workshops
Roadshow with
Leadership
Support to Sell
Vision & Benefits
Sell-Through &
Inventory Metrics
Cycle Time Reduction Goals
Small Core Team including IT & consultant
ExtendedTeam including Key Functional Advisors
Added Support
for Collab
Process
Focus on
Responsiveness
Listen to and Address Concerns

Balancing Act:The Supply Chain Effective
Frontier

Fallacy #1: Functional Excellence

Fallacy #2: A Project-based Focus

So,What Kinds Of Things Go Wrong?
• Some Of The Important Differences Are Hard To Dislodge
– Metrics & IncentivesTo Do It “The OldWay”
• Top-to-Bottom Understanding Of TheVision
– Who Is Providing Adult SupervisionWhenWorkingThe Details?
• Tools Will Save Us From Ourselves
– …Or Not
• There’s No Home Run
– The Dismal In-Between

Channels & Customers Inside the Enterprise Suppliers & Service Providers
• ReluctanceTo Share Data
• Immature & Inadequate Systems
• Slow Internal Processes
• Many Battlefronts
• Win-Lose Mentality
• Lack OfTrust
• Metrics Split, Conflicting
• Rewards Based On Legacy Drivers
• Petty Kingdoms & Perks
• Slow/No Information Sharing
• Attitudes Stuck In The Past
• Silos Of Optimization
• Stale & Obsolete Skill Sets
• ReluctanceTo Share Data
• Immature & Inadequate Systems
• Slow Internal Processes
• Many Battlefronts
• Win-Lose Mentality
• Lack OfTrust
Many Barriers To Adoption
In The EndTo End Supply Chain
Channels &
Customers
Product
Marketing
Supply Chain
Planning
Finance
Sales
R&D
Logistics
Manufacturing
& Operations
Suppliers &
Service Providers
Sourcing &
Procurement

What Can Be Done To Tackle
Challenges:Top-Down & Bottoms-Up?
People
“Heat Map”The
Key Players And
Plan Individual
Opt-In
Strategies
Process
All Key DD Sub
Processes
Mapped In
Enterprise RACI
Technology
LitmusTest DD
Requirements
For All Systems
Policies
DocumentThe
Rules Of
Engagement
Metrics
Local Metrics
TieTo ALL Of
The Enterprise
Set
Mantra Not
Mission
Impose DD
Process
Architecture
EndTo End
Application
“Floor Plan”
Revamp Reward
Systems
KPIs As A Set
Shared By All
Top Down (Macro Organization)
Bottoms Up (Person At ATime)

Collaboration:The Right Stuff
SHARED
VISION
+ SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP =
CHANGE
SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION
SHARED
VISION
+ INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY
SHARED
VISION
+ SKILLS + INCENTIVE + RESOURCES + LEADERSHIP = FALSE
STARTS
SHARED
VISION
+ SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATION
SHARED
VISION
+ SKILLS + RESOURCES + PLAN + LEADERSHIP = GRADUAL
CHANGE

What Ends Up Being Different?

Contact Information
Lora Cecere
Founder & CEO
617.816.9137
lora.cecere@supplychaininsights.com
John La Bouff
Vice President
650.450.6056
jlabouff@spinnakermgmt.com
Shiva Esturi
Director, Supply Chain Optimization
408.801.1558
Sesturi@sandisk.com

Outside in from the Inside Out: The Real Work of Becoming Demand Driven

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