SCC R D Strategy Update SCW NA 2002 GWB

SCC R&D Strategy Update SCW NA 2002 GWB 4/21/02

Agenda • • • R&D Strategy Committee Goals and Objectives Environmental Scan for SC Development Current view on using SCOR Framework for Research Process focus Best use of our current budget 2

Research Strategies Committee Major tasks • To identify and prioritize the major research issues and opportunities, the investigation of which will bring value to Council members and Technical Committees. • In pursuit of this task, RSC members will consult with the SCORboard, Technical Committee members, and other knowledgeable sources • To recommend to the SCORboard areas of potential research that the Council should research. • To match SCORboard approved research requirements with individuals or organizations who will perform the research • To administer research projects supported by the Council. 3

Supply Chains are Dynamic Networks Internet speed is driving change which implies need for rapid translation of business ideas into supply chain changes and rapidly flow supply chain changes into transactional systems. This requires that we integrate tools to deliver on optimization and facilitate consistent and timely implementation of changes in information systems supporting the supply chain. 4

ROI lies in End-to-End Synchronization • Automating existing business processes in the extended Supply Network has limited ROI – Interaction - Extend applications to partners in internet channel – Internal Integration - Automate and connect internal systems through to the internet channel – Business-to-Business Integration – Integrate trading partner business systems/processes • Business-to-business integration requires drastic reduction in business cycle time to take advantage of real-time data Event Management Content/ Collaboration Management Supply Chain Operations Management End-to-End Integration Event Management Internal Integration Content/ Collaboration Management Supply External Chain Operations Collaboration Management 5

Four-Step Supply Chain Strategy Development Framework 3. Determine Road Map Strategic Impact on Business 2. Determine To-Be State 1. Determine As-Is State 4. Get Organization Ready Today Time Future 6 From, Developing An E-Supply Chain Strategy Leveraging E-Business, Larry Lapide

1. As-Is State: e-Supply Chain Stages Supply Chain Impact 4. e-Business Optimization 3. Leveraging e-Commerce 2. Advanced SCM 1. Supply Chain Optimization • • TMS/WMS Inv. Mgmt. APS S&OP Get House In Order • Supplier Synchronization • VMI/CRP • Collaborative planning • CPFR/CTM • ATP/CTP Enhance Partner Relationships • Supply Chain Outsourcing • Internet Procurement • Support Web Stores Start Levering e -Commerce • Supply Chain Visibility • SC Event Management • SC Keiretsu • Virtual Manufacturing/ Distribution Build Advantage Time 7 From, Developing An E-Supply Chain Strategy Leveraging E-Business, Larry Lapide

1. As-Is State: Baseline Map Current Processes Plan Source Make Deliver Supply Chain Council SCOR Model • • + Assess e-Business Stage n n • Current Use of SCM Best Practices SCM Initiatives Current electronic connectivity (e. g. EDI) Major e-Business Initiatives – e-Business views/readiness – Current trading partner, exchange, and e-Commerce initiatives – Virtual e-Business models • Supply Chain Optimization? Advanced SCM? Leveraging e-Commerce? e-Business Optimization? e-Business Interview Guide * *Another assessment guide: R. R. Lummus, et. al. , Supply Chain Management Review, July/August 2000 8 From, Developing An E-Supply Chain Strategy Leveraging E-Business, Larry Lapide

View from the R&D Workshop Input on Business Drivers • Support for dynamic relationships • Support virtual SC; address issues of fragmentation in extended SC • Enable trust and partnership • Make SC stronger through process representations for relationship/interfaces • • • e-Business collaboration; impact on out-sourcing; relationships • • Framework to identify choices available for partnerships/ collaborations: best practices/ starter kits/templates • • Align SC applications/systems with consistent process representations; map SCOR to transactional processes • • • Define global planning and planning information needed Address effect of time compression on business process change Protect information assets for use and access Protect SC infrastructure; plan for SC business recovery Enable high velocity SC by delivering information with integrity and certainty Clarify and minimize information flow in virtual SC Responsiveness to customers Cost; Control; Efficiency; Alignment Use model to plan business expansion 9

Functional Roles Supply to End User Distributes the Product Takes order from End User Manages EU Credit, Satisfaction Warehouses and Ships the Product Manufactures the Product Builds the Product from piece parts Final stop of product Actual user of product Adds Value to the Product Receives partly Finished Goods and integrates or adds additional parts or software. Provides special services to the EU 10

Traditional Models OEM buys Direct From the “Enterprise”: End User “Enterprise” OEM “Enterprise” Sells through Distribution: Order Flow Direct Ship Drop Ship Reseller “Enterprise” Order Flow Direct Ship Drop Ship End User Distributor OEM 11

OEM/Subcon Model “Enterprise” OEM End User Distributor Sub. Con Order Flow Direct Ship Drop Ship 12

OEM/End Customer Model “Enterprise” OEM End User Order Flow Direct Ship Drop Ship Sub. Con 13

“Enterprise”/Sub. Con Model “Enterprise” OEM End User Sub. Con Distributor 14

Disti/Reseller Channel Distributor End User Reseller “Enterprise” Order Flow Direct Ship Drop Ship 15

Reseller Model End User Distributor Reseller “Enterprise” Order Flow Direct Ship Drop Ship 16

Customer Landscape Increasing use of BTO Competitive environment Increasing global view Increasing use of Subcons to build core products • Later decision on where to receive product • Increased flexibility for push-outs & pull-ins • T’s and C’s concessions • Progressively integrate subcon • Product specificity decreases out in time Desire to keep level playing field will extend implication to other accounts 17

Build Models Build to Plan Build according to plan designed to meet strategic objectives Used when manufacturer has high market segment power Build to Backlog Build to aggregated orders Production lead-time must be < backlog visibility Maximizes revenue, simplifies planning Drives factory responsiveness & delivery performance, reduces inventory risk Can expose manufacturer to inventory risk Need guidelines to manage execution to backlog • • • Build to Replenishment Builds are triggered by depletion of downstream inventory Used as a tool to help secure & maintain business Responsive delivery, low inventory risk to customer Can reduce planning & execution costs, but systems are complex Larger customers are pushing to characteristics of Build to Backlog/Build to Replenishment No one model satisfies all business conditions Flexibility is required 18

Framework for Research Process Scenarios in Community of Business Associated Business Objectives Clarify Information Flow/Events Patterns* Applicable Metrics Process Models involved in Process Scenario with Details Of Information Flow/Events/Timing Open Delivery of Process Models and All Variances Business (Best) Practice Analysis Processes at levels of Maturity Link to Other Standards Identify New Model Elements 19

Practical Next Steps: Stage 1 (Supply Chain Optimization) Processes • • TMS / WMS Inventory Management APS Sales and Operations Planning e-Business Tools • • Logistics Exchanges Internet Auctions SCM apps Collaborative Planning Applications 20 From, Developing An E-Supply Chain Strategy Leveraging E-Business, Larry Lapide

Practical Next Steps: Stage 2 (Advanced Supply Chain) Processes • • • CPFR/CTM Supplier Synch. VMI/CRP Collaborative planning ATP/CTP e-Business Tools • • • Web-based apps EDI ASPs/BSPs Private trading exchanges Web-enabled SCP apps 21 From, Developing An E-Supply Chain Strategy Leveraging E-Business, Larry Lapide

Practical Next Steps: Stage 3 (Leveraging e-Commerce) Processes • Supply Chain Outsourcing • Internet Procurement • Support Web stores e-Business Tools • Logistics Exchanges • Buy-side apps • Sell-side apps 22 From, Developing An E-Supply Chain Strategy Leveraging E-Business, Larry Lapide

Practical Next Steps: Stage 4 (e-Business Optimization) Processes • Supply Chain Visibility • SC Event Management • SC Keiretsu • Virtual manufacturing/ distribution e-Business Tools • Order Visibility Exchanges(OVEs) • Real-time alerting • Inter-enterprise real-time messaging and collaboration • BSPs 23 From, Developing An E-Supply Chain Strategy Leveraging E-Business, Larry Lapide

Tasks for each Process Area 1. 2. 3. 4. 5. 6. 7. Identify process scenarios within communities of business that can be reused within supply chain configurations Define business objectives applicable to selected process scenarios Document information flow within SCOR process model at level III and show process synchronization patterns within the scope of the process scenario Define and model process scenarios to form model patterns with descriptions and related metrics/benchmarks Use best practice analysis to refine each model pattern representing a process scenario thereby identifying versions that represent different levels of supply chain maturity Map process elements within scenario model patterns to other model standards representing the underlying process interaction protocols Deliver SCOR information in semantic model format through standard protocol that can be supported by commercial tools. 24

Added to Ensure Reuse 1. Develop and deliver a training package on how to apply and reuse process scenario patterns within an extended supply chain 2. Extend SCOR methodology to incorporate additional strategic planning methodologies which effectively drive analysis and selection reusable process scenarios 3. Pilot process scenario patterns within an extended supply chain 25

Follow up After Workshop • Take action plan to SCORboard for support ØDraft/Review/Complete RFQ after the workshop • Promote within Practitioner companies • Set SCORboard supports face-to-face engagement • The final scope scenarios on which to focus. to flesh out process • Distributetwo SCC RSC Workshops dedicated to • We will hold at large the research agenda • Commit and planand completion of RFQ ØOne in Europe, one in US – timing: ASAP • Coordinate with Technical Dev. and Academic groups 26