A General Model of Supply Chain Visibility

1. A General Model of Supply Chain Visibility By: Jonah McIntire www.supply-chain-visibility.com

2. Business Leaders Expect Visibility to be Impactful • The 2009 Supply Chain Officer’s study by IBM shows that Supply Chain Visibility is the top concern, but not the top priority, for SCOs… • Gartner identified six major competencies to focus on within supply chain execution, of which four (Global Trade Management, Inbound Logistics, Flow Management, and Labor Management) require decision making supported by SC visibility… • An AMR study in 2008 showed visibility as the most strategically important technology investment for supply chains with revenue over $1 Billion USD • A 2008 academic study in Sweden showed an empirical improvement of ~3% in ROA for 14 companies completing a visibility initiative By: Jonah McIntire www.supply-chain-visibility.com

3. Let’s spend 30 minutes on the following… Defining visibility as a process A general supply chain visibility model A visibility effectiveness Model By: Jonah McIntire www.supply-chain-visibility.com

4. Technology… • Is purchasable… • Is subject to technology cycles • Concerned with upgrade paths and interoperability, etc… • Business Goal… • Defines a final, desirable state • Has inherent value • Can be achieved and lost What is supply chain visibility?? • Strategy… • Provides guiding principles for how to use resources • Is difficult to evaluate independent of its implementation • Process… • Renders inputs into outputs by doing work • Can be measured both as a black-box, and by sub-processes By: Jonah McIntire www.supply-chain-visibility.com

5. The Need for a Visibility Effectiveness Framework The Black Box of Visibility Processes By: Jonah McIntire www.supply-chain-visibility.com

6. Supply Chain Visibility Processes Information The Black Box of Visibility Processes Materials Capital By: Jonah McIntire www.supply-chain-visibility.com

7. Supply Chain Visibility Processes • Materials… • Cases, Items, Pallets, etc • Aggregates of weight, counts • Capital… • Accounts payable / receivable • Past payments • Cost of capital • Information… • Summary data • Sales levels • Sustained markup • Conceptual objects • Forecasts • Purchasing Agreements • Maximum Capacity Information The Black Box of Visibility Processes Materials Capital By: Jonah McIntire www.supply-chain-visibility.com

8. Why Use a General Visibility Model? • Scoping… • Who is the stakeholder list? Departments, locations, staff? • Where does visibility end and begin, what systems or tasks are involved? • Performance… • Enables decoupling successful from unsuccessful processes • Enables measuring the visibility initiative below total impact • Enable cross-organization benchmarking and best-practices By: Jonah McIntire www.supply-chain-visibility.com

9. Tier 1 Supply Chain Visibility Processes Tier 1 Supply Chain Visibility Effectiveness Sensitivity Accessibility Intelligence Decision Interruption The capacity to capture data as it appears in the supply chain The capacity to relevantly interconnect data and prepare for its later usage The capacity to extract data in ways which identify high-value data and relationships The capacity to interrupt decisions so that different, and better, outcomes emerge By: Jonah McIntire www.supply-chain-visibility.com

10. A General Model of Visibility Effectiveness Tier 1 Visibility Effectiveness Metrics The Cost-Benefit Space for Visibility Metrics Tier 2 ROA Metrics By: Jonah McIntire www.supply-chain-visibility.com

11. Visibility Effectiveness: Draft Tier 2 Metrics • Qualitative Examples: • DC Manager “-We don’t see inbound deliveries except from specific suppliers…” • Buyer “My POs don’t show as “in-transit” until a week after they ship…” • Accountant “Every quarter get’s closed improperly because we don’t know about goods delivered FOB on the last few days” • Stores Staff “The shipment has an ETA, but it is always 2-3 days earlier than actual delivery” • Draft Tier 2 Metrics: • Sensory Completeness • Sensory Redundancy • Sensory Accuracy / Bias • Sensory Depth of Detail • Sensory Timeliness By: Jonah McIntire www.supply-chain-visibility.com

12. Visibility Effectiveness: Draft Tier 2 Metrics • Qualitative Examples: • DC Manager “We only have one super-user who can track & trace well” • Buyer “I can track WIP by PO#, but after the factory I have to use container #s, BOL #s, case #s, etc” • Accountant “Shipments from 2008 have actual freight cost, but 2009 records only show the assumed PO freight factor… cross-year comparisons are impossible” • Stores Staff “I can’t lookup all shipments to my store at once, I have to look for Warehouse shipments first and then store-to-store transfers next” • Draft Tier 2 Metrics: • Ease of Access / Use • Universality of Object Definitions • Longevity By: Jonah McIntire www.supply-chain-visibility.com

13. Visibility Effectiveness: Draft Tier 2 Metrics • Qualitative Examples: • DC Manager “Inbound volume forecasts are sent, but only once per month. The system should create a new forecast whenever something changes” • Buyer “I think landed cost is rising, but I have to push large data sets to Excel to calculate rolling-window metrics” • Accountant “Landed-Cost is on a weekly Executive Dashboard, but the calculation ignores DC bypass shipments” • Stores Staff “I have to run four separate reports to calculate when out-of-stock items will be available again” • Draft Tier 2 Metrics: • Ease of Use • Analytical Accuracy • Analytical Re-Usability • Automation of Analysis • Analytical Relevance By: Jonah McIntire www.supply-chain-visibility.com

14. Visibility Effectiveness: Draft Tier 2 Metrics • Qualitative Examples: • DC Manager “I am sent an automated report when a store receives a carton as damaged in the inventory system; what am I supposed to do with this alert?” • Buyer “It would take a lot of time and effort to always consider chargeback trends when issuing new POs, so I only review them before seasonal POs” • Accountant “I run a report on all charge-backs that are pending, and then have to email each supplier-buyer pair individually. It would be better if the alerts were system-generated directly to the relevant parties” • Draft Tier 2 Metrics: • Depth of procedural integration • User satisfaction with the decision-procedure, including the point of interruption… • Transparency to how the visibility intelligence is affecting or should effect the decision making process By: Jonah McIntire www.supply-chain-visibility.com

15. Visibility Effectiveness: Draft Tier 2 Metrics Net Sales - Net Profit ÷ Total Cost Net Margin Net Sales X Return on Assets Net Sales Total Asset Turnover Ave Current Assets ÷ + Total Assets Ave Fixed Assets By: Jonah McIntire www.supply-chain-visibility.com

16. General Model of Visibility General Model of Visibility Effectiveness Sensitivity Accessibility Intelligence Decision Interruption Information The Black Box of Visibility Processes The capacity to capture data as it appears in the supply chain The capacity to relevantly interconnect data and prepare for its later usage The capacity to extract data in ways which identify high-value data and relationships The capacity to interrupt decisions so that different, and better, outcomes emerge Materials Capital By: Jonah McIntire www.supply-chain-visibility.com

17. Example Visibility Effectiveness Scorecard As-Is Option A Option B ROA Revenue Assets Costs Sensitivity Completeness Consistency Timeliness Accessibility Ease of Use Ease of Access Intelligence Accuracy Relevancy Re-Usability Decision Interruption Depth of Process Integration User Trust User Satisfaction By: Jonah McIntire www.supply-chain-visibility.com

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