Global Supply Chain Systems UCSC Management of Technology Course February 11, 2010 by Kai Hypko - Plantronics Secret
Agenda Items • Who Am I? • Plantronics • Global Supply Chain Challenges • Plantronics Supply Chain Challenges • SCORE Project • Project Methodology • The Economy and its impact • Now what? • Time permitting: Value-Driven Replenishment Plantronics Secret
My Story • German • Came to US in 1988 • BS Degree in MIS & BUAD • 17 years in Supply Chain • Hi-Tech, OEM, Retail experience • Professional Associations APICS, the Association for Operations Management Board of Directors of Nor. Cal OAUG Aberdeen Research Advisory Council member Speak frequently at Supply Chain events such as CES, ESCA and Oracle Open World. • Personal Motto: “You get what you tolerate” • Joined Plantronics in Fall 2006 Plantronics Secret
What do I do? • Act as enterprise wide process improvement evangelist and change agent. • Ensure that all business transformation programs align with the strategic direction of the company’s initiatives. • Manage project budgets and timelines. • Interface and communicate broadly across the company to lead change management and implementation efforts. Inform and influence key stakeholders to gain buy in. • Collaborate with internal organizations to establish priorities, make business trade-offs, and sequence initiatives necessary to achieve long term process goals. • Work closely with internal business process owners and support functions to scope program deliverables. Develop and implement a plan (roadmap) to achieve objectives for each of these processes. • Partner with functions owners, third party system integration partners and consultants to plan and implement process improvements. Plantronics Secret
Plantronics Profile • Founded by two pilots in 1961 • Over 40 years experience in voice • Mission Critical Applications • A Worldwide Corporation • 5, 500 employees • Offices in 20 countries • FY 2009 Revenue of $766 M • Publicly traded on NYSE • PLT • Family of brands • Plantronics® • Clarity® Plantronics Secret
• Leading worldwide designer, manufacturer, marketer and seller of lightweight communications headsets, telephone headset systems, and accessories for the business and consumer markets under the Plantronics brand. Title of Presentation Here Sub-Title Here • Manufacture and sell, under our Clarity brand, specialty telephone products, such as telephones for the hearing impaired, and other related products for people with special communication needs. Plantronics Secret
Competitive Business Environment Customers are demanding: Increasing business risks of : Accurate and timely commitments Shorter lead times Flexibility Product differentiation Dedicated inventory Visibility into the supply chain High quality Automation Lowest costs Too much inventory Inventory in the wrong place Ordering the wrong inventory Missing delivery dates Losing orders Shipping the wrong products Increased expediting costs Losing customers Increased obsolescence Forcing businesses to better manage: Inventories Ability to promise Global suppliers Supply/Demand Forecasts Cycle time Plantronics Secret Stocking policies VMI/SMI processes Replenishment
Global Supply Chain Observations • Supply chain management (SCM) efforts deliver the greatest results when SCM is part of an overall business strategy –not a stand alone effort • SCM is most likely to under deliver when there is poor connection between functions across a total business – often noted by poor supply chain visiblity and lack of best practice sharing internally Source: Computer Sciences Corporation (CSC) and Supply Chain Management Review (SCMR) 2006 Survey Plantronics Secret
Global Supply Chain Observations • Despite potential economies from global supply chain efforts, most companies optimize locally • In spite of the rhetoric around the importance of customers, few firms are collaborating closely with key customers • Companies continue to install software before rethinking their underlying processes and expect root cause problems to be eliminated Source: Computer Sciences Corporation (CSC) and Supply Chain Management Review (SCMR) 2006 Survey Plantronics Secret
World Class Supply Chain • World Class Supply Chain Companies collaborate effectively internally to optimize processing work closely with key suppliers and customers effectively apply technology as an enabler Source: Computer Sciences Corporation (CSC) and Supply Chain Management Review (SCMR) 2006 Survey Plantronics Secret
“Recent” Key Changes at PLT • Acquisition of Altec Lansing • Entering of Consumer Retail Market • New factory in China • 4 additional Distribution Centers Plantronics Secret
Plantronics Challenges R Customer service issues R Multiple source systems R Constant reschedules R Competitive issues R Too much of the wrong inventory R Inflexible planning tools R Manual disconnected planning R Fragmented planning data processes (Excel) R Poor forecasting capability R Too much obsolete inventory R Global supply chain requirements R No formal S&OP Process R Changing business conditions R Disparate Planning Systems Plantronics Secret
PLT Supply Chain Where is it? UK Netherlands Japan United States China Mexico Brazil Australia Flow of Goods Manufacturing w/o Oracle Distribution Warehouse Plantronics Secret
PLT Supply Chain 2006 • We manufacture 75% of our own products • 2 factories (Mexico, China) • 8 global distribution centers • Buy raw material to forecast • Pack to order • Assemble to min-max settings • Fulfill orders through our DC’s • Decentralized purchasing & planning • ~3000 Finished Goods items Plantronics Secret
PLT Supply Chain Status 2006 • Inventories have increased dramatically • Customer OTD has dropped • Supplier OTD is unknown • Ability to make accurate commits has dropped • Lead time has increased • Forecast accuracy is low • Lack of ability to analyze potential opportunities quickly • Global environment; localized system utilization Plantronics Secret
SCORE Project • Launched the SCORE Project – Supply Chain Optimization and Re-Engineering • Establish a world-class Supply Chain by: Creating a global, integrated, collaborative system and processes which are scaleable, without legacy knowledge and added manpower • Single Source of Truth Plantronics Secret
Project Objectives • Improve Forecasting Process & Accuracy • Increase Inventory Turns • Reduce Excess & Obsolete (E&O) Inventory • Provide More Accurate Ship Dates to Customers at point of Order Entry • Enable a faster, more effective Sales & Operations Planning process • Accurate, Global Inventory Visibility • Issue correct PO prices and receive acknowledgements and commits from suppliers • Automate Manual Transactions Plantronics Secret
SCORE Project “ Supply Chain Superiority is not achieved with a single project, but is an evolution of relentless focus and continuous improvement ” Author unknown Plantronics Secret
Overall PLT Project Plan 2007 Jan-08 Demand Forecasting & Demand Management (Demantra) Jan-10 Jan-09 S&OP (Demantra) Promotions Management (Demantra) Mar-10 Customer Collaboration (Portal / CMI) Promotion Optimization (Demantra) Trade Management & POS Supplier Collaboration (i-Supplier) Inv Optimization (Proof of Concept) Supplier Collaboration (Consignment/VMI) Warehouse Optimization & Mobile / Sensing Services (WHMS) Global Order Promising (GOP) Altec i. Supplier ASCP roll out Stop Ox Advanced Planning Product Life Cycle Mgt Advanced Planning (Constrained Plan) Data Clean-up Transportation Planning (G Log) (Review / Proof of concept) Supply Chain “Quick Wins” Supply Chain Business Intelligence (DBI) Plantronics Secret R 12. X? ? Upgrade Strategic Network Optimization (SNO) Production Scheduling
Overall PLT Project Plan July 2008 Jan-07 Jan-08 Demantra Demand Planning Jan-10 Jan-09 Demantra 7. 2 upgrade Demantra S&OP Demantra Promotions Management & Optimization Customer Collaboration (Portal / CMI) Inventory Optimization Supplier Collaboration (i-Supplier) Supplier Collaboration (Consignment/VMI) Warehouse Optimization & Mobile / Sensing Services (WHMS) Global Order Promising, ROW Global Order Promising, EMEA Agile Advanced Planning & Scheduling Strategic Network Optimization (SNO) Advanced Planning, Phase II Data Clean-up Altec i. Supplier ASCP GOP Transportation Planning (G Log) Supply Chain Business Intelligence (DBI) Plantronics Secret Production Scheduling
Overall PLT Project Plan Jan 2009 Jan-07 Jan-08 Demantra Demand Planning Jan-10 Jan-09 Demantra 7. 2 upgrade Demantra S&OP Jan-11 Demantra Promotions Management & Optimizati Customer Collaboration (Portal / CMI) Inventory Optimization Supplier Collaboration (i-Supplier) Supplier Collaboration (Consignment/VMI) Global Order Promising, ROW Global Order Promising, EMEA Warehouse Optimization Mobile / Sensing Services (WHMS) Agile APS & Demantra enhancements Advanced Planning & Scheduling Strategic Network Optimization (SNO) Advanced Planning, Phase II Transportation Planning Data Clean-up Altec i. Supplier ASCP GOP Supply Chain Business Intelligence (DBI) Production Schedulin Plantronics Secret
World Class SCM • Supply Chain transformation Old Model: Push (Linear Supply Chain) • Supply-Centric • Internally Focused • Vertically Integrated • Physical Asset Based • Mass Momentum New Model: Pull (Integrated Networks) ü Demand-Driven Automation Information ü Global ü Virtual Supply Chains ü Decision Based ü Lean Practices Plantronics Secret
Oracle Advanced Planning Model • E-Business planning solution: zero latency, real-time collaboration Customers Suppliers • Enable closed loop collaborative planning processes across your value chain Tier 2 Tier 1 • Have complete supply chain Portal visibility Portal Internet • Make better decisions • React immediately to Automated Exceptions disruptions in supply chain Marketing Manufacturing Sales Mfg. Demand Hub & Multidimensional analysis Consensus forecast and prod. plan S&OP Process Single holistic plan Supply Planning Business Intelligence Plantronics Secret Build a responsive Supply Chain on INFORMATION not inventory
Planned APS Systems Architecture Forecast Demantra Forecast Consumption Max New Distrib Inv. Org Distrib Inv. Org Min BTO / PTO Below Min Distrib Inv. Org Asia Mfg Inv. Org EMEA Mfg / Dist. Inv. Org ur ci ng Supplier Plantronics Secret Supplier Sourcing urc ing Sourcing Supplier So Sourcing ng ci ur So urc Supplier So Sourcing • ASL • Quotations • VMI/CVMI • Supplier Portal North America Mfg / Dist. Inv. Org So Distrib Inv. Org Internal Sourcing Rules / SO/PO Supplier • Pricing • Promise Date • Quantity • Forecast • Receipts • Invoices • QOH • Min/Max
Planned APS Systems Architecture Customer Forecast Demantra Customer Forecast Consumption Max New Distrib Inv. Org Distrib Inv. Org Min BTO / PTO Below Min Distrib Inv. Org Asia Mfg Inv. Org EMEA Mfg / Dist. Inv. Org ur ci ng Supplier Plantronics Secret Supplier Sourcing urc ing Sourcing Supplier So Sourcing ng ci ur So urc Supplier So Sourcing • ASL • Quotations • VMI/CVMI • Supplier Portal North America Mfg / Dist. Inv. Org So Distrib Inv. Org Internal Sourcing Rules / SO/PO Supplier • Pricing • Promise Date • Quantity • Forecast • Receipts • Invoices • QOH • Min/Max
Key Methodologies & Assumptions • Design Globally – Implement Locally • 80/20 rule; Implement quickly, evolve quickly • No Customizations – Work within the software • Software based re-engineering • Get to decisions quickly; avoid decision paralysis • PLT Resources available per required allocation to drive and participate in project • Project participants have real ownership to make decisions • “Self Service” project information warehousing • Team environment – Win as a team, Lose as a team Plantronics Secret
Keys to Success People Technology Process Super users are critical Core team involvement and support is paramount Executive support is critical Change Mgt, Communication & Training are always underestimated Process is the glue A bad process is even worse with the right technology. Software Based Process Re-engineering Technology Plantronics Secret
Example of a detailed Milestone plan Plantronics Secret
Typical Project Members • Core Team Sponsor Director Supply & Demand • Project Leads Keys: Sr Manager Supply & Demand • Site Leads Director Materials Planning Manager Sr. Supply Chain Manager Director Sales Director Materials Mexico Plant AEG Division EMEA North America Clarity Division • Cross functional inputs • Cross Geo participation • Super Users Planning Manager Supply/Demand Analyst Sales Manager Forecast Analyst • Executive sponsorship EMEA • Super Users are key drivers to success (advocates) Clarity • Team Members Finance • Oracle PMO for ongoing support • IT Business Analyst Applications Data Base (Technical) • Consulting Lead: Supply Chain Fusion • Oracle PMO Office Plantronics Secret
Project Risks to Manage • Resistance to Change (not embracing new business processes/System) • • • “Jump Ship” mentality at the first sign of struggle Competing Departmental Interests (projects, etc. ) Scope Creep Discipline to new processes Availability of resources Plantronics Secret
Key to Success – Knowing What's Ahead “Weathering the Storm” Go-Live Growth & Competitive Advantage Efficiency Minimize adoption curve Time We must “weather the storm” and make it through the adoption phase. Plantronics Secret
Implementation Lessons Learned • • Selection of the right “Project Owner” Pick the right Partner Eight quarters are less than 2! Change Management Communicate, Educate, Communicate • Go-live IS the beginning…. resolve, stabilize, EVOLVE. Set expectations appropriately • Give yourself some buffer for the unexpected Plantronics Secret
Know Your Corporate Culture “Solution Buy In” Infusion into the culture & Education “Analysis Paralysis” Complete Consensus driven without trust & leadership Change Management Business Process “When it comes to change management…if you get to the finish line first but you’re alone, you lose. ” John P. Kotter Harvard Business School Professor Plantronics Secret Systems
Where are we? • By late 2008 / early 2009 we had fully deployed Multi Org ASCP Demantra Demand Planning GOP i. Supplier Collaborative Planning Inventory Optimization DBI • Began to see promising supply chain changes OTD improvements Less excess & obsolete Fewer air freight Inventory stabilized Plantronics Secret
The RECESSION • Global economic downturn • Worldwide recession • Goal is to maintain profitability • Plantronics taking action 18% layoff worldwide Executive pay cuts Suspension of travel Hiring freeze Close China factory Sell Altec Lansing Project cut backs Plantronics Secret
Overall PLT Project Plan Jan 2009 Jan-07 Jan-08 Demantra Demand Planning Jan-10 Jan-09 Demantra 7. 2 upgrade Demantra S&OP Jan-11 Demantra Promotions Management & Optimizati Customer Collaboration (Portal / CMI) Inventory Optimization Supplier Collaboration (i-Supplier) Supplier Collaboration (Consignment/VMI) Global Order Promising, ROW Global Order Promising, EMEA Warehouse Optimization Mobile / Sensing Services (WHMS) Agile APS & Demantra enhancements Advanced Planning & Scheduling Strategic Network Optimization (SNO) Advanced Planning, Phase II Transportation Planning Data Clean-up Altec i. Supplier ASCP GOP Supply Chain Business Intelligence (DBI) Production Schedulin Plantronics Secret
Overall PLT Project Plan Jan 2010 Jan-07 Jan-08 Demantra Demand Planning Jan-10 Jan-09 Jan-11 Demantra S&OP Demantra 7. 2 upgrade Customer Collaboration (Portal / CMI) Inventory Optimization Demantra Promotions Management & Optimizati Supplier Collaboration (i-Supplier) Supplier Collaboration (Consignment/VMI) Warehouse Optimization Mobile / Sensing Services (WHMS) Global Order Promising, ROW Global Order Promising, EMEA Agile APS & Demantra enhancements Advanced Planning & Scheduling Strategic Network Optimization (SNO) Advanced Planning, Phase II Transportation Planning (G Log) Data Clean-up Altec i. Supplier ASCP GOP Supply Chain Business Intelligence (DBI) Production Schedulin Plantronics Secret
Supply Chain Actions • Recession impacted the positive results we were expecting at this time of the project • The installed Oracle applications allowed us to react to the changes quicker and better • Better information – better decisions – better results • What did we do? Plantronics Secret
Utilizing Oracle to Forge Actions • • • Orders dropped 40% Orders got cancelled Some suppliers went bankrupt Inventories of certain items increased Some regions more troubled than others Fewer people to do the work Plantronics Secret
Demand Planning (Demantra) • Ability to review globally forecast vs. actual • Ability to drill down into problem products • Ability to drill down into problem regions • Quickly re-forecast and push back into Oracle • Single global view for all to see and understand • Single source of Truth Plantronics Secret
High Level S&OP Plantronics Secret
Demantra Forecast Entry Plantronics Secret
Demantra Sales Analysis Plantronics Secret
Demantra Drill Down into Exceptions Plantronics Secret
Global Supply Planning (ASCP) • Ability to understand global supply/demand picture • Ability to predict potential quarter ending inventory • Ability to monitor inventory daily • Ability to quickly shift from make vs. buy • Take action on oversupply situations • Identify future shortages and prepare • Understand factory utilization make vs. buy Plantronics Secret
Planning Messages Plantronics Secret
Horizontal Plantronics Secret
Portals (i. Supplier/Collaborative Planning) • Ability to communicate with suppliers in near real time • Ability to re-forecast new requirements • Ability to make changes quickly on existing PO’s • Pushed VMI to reduce buyer work load • Expanded CVMI to reduce our inventory Plantronics Secret
Collaborative Planning Order Forecast Supplier can view the published order forecast details in the Vertical or Horizontal View Order forecast VMI Replenishment Plantronics Secret
Collaborative Planning Supply Commit Is the response given by the CM against the order forecast Supply Commit Plantronics Secret
Order Management (GOP) • Ability to quote actual deliveries based on near real time planned supply information • Ability to view global finished goods supply for maximum utilization at time of order • More efficiency in our commit process Plantronics Secret
Results • In spite of revenues dropping 40%, we are on track to remain profitable by reducing our cost structure 30% • In spite of an 18% lay off we are able to maintain customer service levels AND reduce inventories because we have the right tools • In spite of supplier turmoil we are able to ensure supply by quickly identifying trouble spots in our system Plantronics Secret
What to Do In Tough Economic Times? • Focus on what you can influence Demand sensing Inventory levels Material cost • Build speed & flexibility into your Supply Chain Near real time planning; scenario planning Sourcing adjustments Make vs Buy Send the right signals quickly • Utilize the information and make decisions…. Quickly Plan, execute, measure, adapt Prepare NOW for the future You get what you tolerate Plantronics Secret
Conclusion • Supply Chain Management is a very exciting profession • Ever changing • Essential to a companies success • Everybody needs it • Innovation & Leadership • Those that do it best are among the most successful and profitable companies in the world Apple, Nokia, Wal-Mart, Procter & Gamble, Toyota, Cisco, Samsung, Best Buy, Coca Cola, Nike, HP, IBM Plantronics Secret
Questions? Plantronics Secret
What would happen if we sell Milk? • Things you can’t do: Stockpile Build ahead Min-Max Wait for the order “Milk” to forecast • Force a paradigm shift in supply & demand Plantronics Secret
Current approach Forecast Wait for Customer Order PLT Right Inventory? Shipment Sales Order Buy RM to Forecast Build to min/max based on history US Retail Customer No visibility into Customer Plantronics Secret
Current approach - detail PLT Customer Forecast based on bookings Buy RM to Forecast Build FG to min/max based on history Stores Customer Disti Center Sequential, Non-Synchronized Events Customer Disti Center Suppliers Sales Order Buy RM to Fcst Stores Customer ERP System Customer Disti Center Stores Suppliers Stores Buy RM to Fcst Suppliers Stores Build per SO/PO China Right Plamex Inventory? Shipment Customer Disti Center Stores Suppliers Customer Disti Center Suppliers Build to Min/Max and Sales Orders Stores Time time Plantronics Secret Stores
Real Time Consumption Driven Model PLT Collaborate & synchronize activities with our customer Customer Stores Customer Disti Center Stores Customer Disti Center Suppliers Sales Order Buy RM to Fcst Customer ERP System Customer Disti Center Stores Suppliers Stores Buy RM to Fcst Suppliers Stores Shipment Build per SO/PO China Plamex Customer Disti Center Stores Suppliers Stores Customer Disti Center Suppliers Stores Build to Min/Max and Sales Orders Stores time Plantronics Secret
Real Time Consumption Driven Model Collaborate & synchronize activities with our customer using Point of Sale (POS) Forecast based on customer consumption Buy RM to consumption Forecast Build based on actual consumption Stores Customer Disti Center Stores Suppliers Customer Disti Center Stores Suppliers Stores Customer ERP System Customer Disti Center Stores China Plamex Customer Disti Center Stores Suppliers Stores Customer Disti Center Suppliers Stores Suppliers time Plantronics Secret
Replenishment Progression: A Journey • “Rule of Thumb” Pull: More advanced Channel “pulls” as needed. Weeks of supply or simple statistics used to choose stock levels. Demand is an “order” • CPFR: Collaborative forecast & replenishment. Channel continues to pull But retailer shares POS data to help vendor improve forecast • VMI Vendor places reverse PO on behalf of channel Vendor owns inventory risk in return for share of efficiency gain. • Value-Driven Replenishment Like VMI, but inventory risk depends on network profitability, leverage Vendor conducts demand sensing, shaping Network re-design to optimize inbound supply chain for flexibility Plantronics Secret
Winning at the Store Shelf: Distinct Projects At Each Stage I II IV Reactionary Stabilize the Core Demand-Driven Value-Driven $ V Partner relationship Metrics Compliance Improve replenishment. Reduce costs. Improve service. Synchronize supply chains for risk mitigation/profit Redesign network for joint value creation Organization Functional silos; replenishment entirely short-term sales driven Target WOS Shift risk to Based supplier without On EDI regard for system History + economics; Orders channel plans Joint demand response Track DC-level Sell. Supplier plans through and manages + based on store Co-Plan DC-level sell. Promos through Joint business planning, market POS outreach sensing + attribute forecast Planned at store shelf + level based on Demand optimal balance Shaping between customer + experience and cash Network flow Flex Predictive demand shaping programs based on supply network capability • Joint value VMI Order Trigger Channel places orders based on historic pull with a 5 -10 day latency Cross-functional involvement, but still Tune order vs. Buffer profit driven Stock Based on Channel managed; Monthly vendor plans based Statistical on sell-in; channel Forecast shares forecast + Svc. Level Goal Channel places PO based on warehouse withdrawal with a 2 -5 day latency Culture • What ever the Pull Partner to improve CPFR Secret Plantronics Inventory Plan Supplier sends reverse PO based on store DC behavior and promotions Aggressively partner VDR
Major Changes • Collect POS regularly (daily/weekly) at the store level • Collect OH information from customer distribution centers daily • Build FG based on consumption • Use POS information to drive builds • Either anticipate replenishment or auto replenish Plantronics Secret
Benefits • Build to consumption, not history based min/max • Carry little to no FG • Higher fill rate • Higher on-time delivery • React to consumption changes in real time • Less E&O Plantronics Secret
Q&A Plantronics Secret
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