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Supply chain collaboration across multiple tiers 1/17/2008

Supply chain collaboration across multiple tiers 1/17/2008. Supplying Your Business Advantage. Introducing Inspirage. Consulting firm founded by former Oracle APS Development & Consulting managers.

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Supply chain collaboration across multiple tiers 1/17/2008

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  1. Supply chain collaboration across multiple tiers 1/17/2008 Supplying Your Business Advantage

  2. Introducing Inspirage • Consulting firm founded by former Oracle APS Development & Consulting managers. • Consultants have tremendous business process / domain knowledge and have provided support, advice, and consulting services to over 75+ Oracle APS implementations Oracle APS & Demantra Specialists Supplying Your Business Advantage

  3. Agenda • Outsourced business environment • Business challenges in collaboration • Introduction to Collaborative Planning • Modeling the supply chain • Leveraging Collaborative Planning • Conclusions Supplying Your Business Advantage

  4. Outsourced business environment Supplying Your Business Advantage

  5. OEM Assembly & Test Customer Customer Distribution Contract Manufacturer Customer Foundry Outsourced manufacturing and distribution • Completely outsourced business environment • Globally dispersed operations • Common to see materials go through several continents before it reaches customers • Growing number of products are manufactured and distributed in an outsourced environment Supplying Your Business Advantage

  6. OEM Multi tiered supply chain • Some suppliers interact with OEMs directly - Tier 1 suppliers • Other suppliers are removed at least one level away from OEMs - Tier 2 suppliers TIER 1 Contract Manufacturers Sub assembly suppliers Subsidiaries TIER 2 Component Manufacturers Supplying Your Business Advantage

  7. OEM OEM Contract Manufacturer Component Manufacturer Operational challenges • Work is outsourced but execution across the companies should be seamless • Companies operate in different tiers but are part of the same supply chain • Service levels achieved depends on performance of all companies in all tiers • Monitoring demand across the extended supply chain is crucial • Timely exchange of information on supplies are very important • Value of inventory forces OEMs to track inventories across all tiers • Need systemsthat operate across enterprises Supplying Your Business Advantage

  8. Business issues Supplying Your Business Advantage

  9. Collaboration process • OEM provides forecast to Tier 1 suppliers • Tier 1 supplier provides forecast to Tier 2 suppliers • Tier 2 supplier provides commits back to Tier 1 supplier • Tier 1 supplier provides commits back to OEM • Tier 2 provides commits to both Tier 1 and OEM OEM Austin OEM Order forecast Supply commit Contract manufacturer China TIER 1 SUPPLIER Order forecast Supply commit TIER 2 SUPPLIER Component manufacturer Dallas Supplying Your Business Advantage

  10. Operational control • Both Tier 1 suppliers order the same part from Tier 2 supplier • OEM does not want individual Tier 1s to place orders for the part • OEM would like to collect the demand across all suppliers for the same part for better prices and delivery • In addition inventory of these parts need to be carefully managed as it could be very expensive OEM Los Angeles Order forecast Order forecast Contract manufacturer 1 China Contract manufacturer 2 Taiwan TIER 1 Order forecast Order forecast TIER 2 Component manufacturer Dallas Component manufacturer Dallas Demand for 1000 chips Demand for 2000 chips Total demand is 3000 chips Supplying Your Business Advantage

  11. OEM Authorized order forecasts • Not all Tier1 suppliers can provide forecast for Tier 2 suppliers • Only specific Tier 2 suppliers are authorized to receive order forecasts from Tier 1 suppliers Order forecast authorized Order forecast not authorized Contract Manufacturers Sub assembly suppliers Subsidiaries Component Manufacturers Supplying Your Business Advantage

  12. OEM Authorized supply commits • Tier2 suppliers cannot provide supply commits to all Tier 1 suppliers • Only specific Tier 1 suppliers are authorized to receive supply commits from Tier 2 suppliers Supply commit authorized Supply commit not authorized Contract Manufacturers Sub assembly suppliers Subsidiaries Component Manufacturers Supplying Your Business Advantage

  13. Permissions • OEMs authorize specific Tier 1 suppliers to provide order forecast to specific Tier2 suppliers • Tier 2 suppliers provide permission to Tier 1 suppliers to view supply commits based on OEMs instructions Contract Manufacturers Sub assembly suppliers Subsidiaries Component Manufacturers Supplying Your Business Advantage

  14. Business issues - Users in the system • Privileges provided at very granular level i.e. specific item, order type, site, user etc. • Ex: User 1 at Contract Mfr. SITE1 is provided privileges to provide Order forecast for part ‘X’ to procure from Component Mfr. SITE1 • Once users are provided access to the system, the access should be restricted to relevant data to the users Contract manufacturer-SITE1 Order forecast Component Manufacturer –SITE1 Component Manufacturer –SITE 2 Supplying Your Business Advantage

  15. Business issues – OEMs operational control • OEM should be able to monitor all forecasts published by Tier 1 suppliers • OEM should be able to override Tier 1 forecasts and provide overrides as necessary • OEM should be able to monitor all supply commits from all tiers Supplying Your Business Advantage

  16. Introduction to Collaborative Planning Supplying Your Business Advantage

  17. Traditional collaboration CUSTOMERS SUPPLIERS Tier 2 • Response 1:Maintain Excess Inventory • Response 2:Reserve Production Capacity • Response 3:Expedite Everything! Tier 1 Fax Paper Paper Distribution plans Production plans Manufacturing plans Marketing ? Supply Chains built on INVENTORY Sales Manual reconciliation Mfg. Long planning cycles Demand Planning Supply Planning Supplying Your Business Advantage

  18. Tier 2 Tier 1 Portal Portal Automated Exceptions Marketing Manufacturing Sales Demand Hub & Multi-dimensional analysis Consensus forecast and production plan Single holistic plan Mfg. S&OP Process Supply Planning Business Intelligence Oracle collaboration process E-Business planning solution: zero latency, real-time collaboration CUSTOMERS SUPPLIERS • Enable closed loop collaborative planning processes across your value chain • Have complete supply chain visibility • Make better decisions • React immediately to disruptions in supply chain Supply Chains built on INFORMATION instead of Inventory Supplying Your Business Advantage

  19. Collaborate with suppliers • Reduce shortages and improve supplier delivery performance • Provide order forecasts to your suppliers • Identify supply-demand mismatches • Respond better to supplier exceptions • Get visibility to your supplier’s constraints • Review constraints in your S&OP process • Reduce non-value added costs and exception overload • User-configurable exceptions • Automated exception handling via workflow OEM Supplier Forecast Sales Forecast Consensus forecast Plan, Spreadsheet Plan Order Forecast Constraint capacity Supply commit (capacity) Supplying Your Business Advantage

  20. CUSTOMER OEM CONTRACT MANUFACTURER SUPPLIER Consensus forecast Demand ‘systems’ Supply forecast Demand ‘boards’ Run plan Run plan Supply commit ‘boards’ Supply commit ‘memory’ Forecast ‘memory’ Multi-tier collaboration Full visibility and synchronization across the extended supply chain Supplying Your Business Advantage

  21. Modeling & set up Supplying Your Business Advantage

  22. Modeling – trading partners Modeled as Inventory Organization OEM Los Angeles OEM Employees Order forecast Supply commit Modeled as ‘Supplier’ Organizations Contract manufacturer San Jose Supplier users Order forecast Supply commit Modeled as suppliers Component manufacturer Dallas Supplier users Supplying Your Business Advantage

  23. Modeling – trading partners • OEM is set up as User company as OEMs own and administer ‘Collaborative Planning’ application • OEM facilities need to be modeled as regular inventory organizations • Tier 1 suppliers need to be modeled as ‘supplier organizations’ • Tier 2 suppliers can be modeled as regular suppliers with multiple sites as necessary Supplying Your Business Advantage

  24. Modeling – OEM (inventory Org) Supplying Your Business Advantage

  25. Modeling – Contract Manufacturer - supplier organization Supplying Your Business Advantage

  26. Modeling – Component manufacturer - Supplier Supplying Your Business Advantage

  27. Users Supplying Your Business Advantage

  28. Modeling – Users • OEM users are modeled as employees • Users from Tier 1 modeled as ‘supplier’ users • Users from Tier 2 are also modeled as ‘supplier’ users • Supplier users from Tier 1 are associated with corresponding supplier contacts in procurement • Tier 1 supplier is on OEM’s Approved Supplier List • Tier 2 supplier is on Tier 1’s Approved Supplier List Supplying Your Business Advantage

  29. Modeling – OEM users Supplying Your Business Advantage

  30. Modeling – Supplier users (both contract and component manufacturer users) Supplying Your Business Advantage

  31. ASL Supplying Your Business Advantage

  32. Approved Supplier Lists Inventory Org Supplier Org OEM Los Angeles Contract manufacturer San Jose Approved Supplier List and Sourcing rules Approved Supplier List Contract manufacturer San Jose Component manufacturer Dallas Supplying Your Business Advantage

  33. Modeling – ASL Supplying Your Business Advantage

  34. Security rules Supplying Your Business Advantage

  35. Security rules • Security rules in CP specify specific data that can be shared by trading partners • Do not need rule to view your own data • Need to specify rules to enable data from other trading partners • Examples • OEM specifies a rule for a Tier 1 supplier to share order forecast with specific Tier 2 supplier • Tier 2 provides a rule that enables Tier1 to view supply commits from Tier2 Supplying Your Business Advantage

  36. Security rules Supplying Your Business Advantage

  37. Security rules Supplying Your Business Advantage

  38. Process Supplying Your Business Advantage

  39. Process OEM to Tier 1 • OEM prepares and publishes order forecast for contract manufacturers (Tier 1) based on over all end demand • Order forecast is available for Contract manufacturer • Contract manufacturer logs into the system, reviews demand (order forecast from OEM) Tier 1 to Tier 2 • Contract manufacturer provides order forecast for Component manufacturer (Tier 2) • Component manufacturer logs into the system, reviews demand (order forecast from Contract manufacturer – Tier 2) • Component manufacturer (Tier 2) provides commits to Contract manufacturer (Tier 1) Tier 1 to OEM • Contract manufacturer provides commits to OEM • OEM logs in and reviews commits provided by Contract manufacturer Over all control by OEM • OEM monitors Order Forecast provided by Contract Manufacturers (Tier 1) to Component manufacturers (Tier 2) • OEM monitors commits provided by Component manufacturers (Tier 2) to Contract manufacturers (Tier1) Supplying Your Business Advantage

  40. Publish order forecasts by OEM Supplying Your Business Advantage

  41. Review order forecasts by Tier 1 Supplying Your Business Advantage

  42. Tier 1 loads publishes order forecast to Tier 2 Supplying Your Business Advantage

  43. Tier 2 and Tier 1 load commits Supplying Your Business Advantage

  44. OEM and Tier1 review commits Supplying Your Business Advantage

  45. Summary • Outsourced business environment poses significant operational challenges • Key challenges involve collaborating with trading partners in several tiers • Oracle collaborative planning offers comprehensive capabilities to address collaboration requirements in an outsourced environment • Attention to modeling, set ups, data security, and processes are required • Seamless collaboration can be achieved across tiers with careful system planning Supplying Your Business Advantage

  46. Supplying Your Business Advantage Contact Information Sridhar Hoskote – Sridhar.hoskote@inspirage.com

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