Oct 19, 2015 - 3. Quintiq solution map for Integrated Business Planning. Business Planning. Supply planning. Master Prod
Scenario planning for more effective supply chain decisions Supply Chain Network London 19th October 2015 Cathy Humphreys
© 2014 Quintiq. All rights reserved. Quintiq is a registered mark of Quintiq Holding B.V.
Quintiq founding vision
Develop a single application capable of solving any type of planning puzzle
2
Quintiq solution map for Integrated Business Planning Source
Make
Distribute
Sell
Employ
Business Planning
Strategic
Product Lifecycle Management Sales & Operations Planning
S&OP
Supply planning
Demand planning
Inventory Optimization Workforce planning
MRP
Master Production & Distribution Scheduling
S&OE
Production scheduling
Transport scheduling
3
Order promising
Quintiq market position
#1 Market Share All Software Markets Worldwide, 2014 Supply Chain Planning
1,120
#2
Oracle
#3
JDA Software
#4
Quintiq + Dassault Systèmes
580.4
326.0
70.5 Quintiq-Dassault Systèmes is the 4th largest SCP vendor by revenue
Source: Gartner. All Software Markets, Worldwide, 2014, Granetto, Bianca Francesca et al, March 31, 2015. Note: Values include license software revenue ONLY. Quintiq’s revenue numbers are derived from the combined revenue listed in for Quintiq as a private company ($53.4M) with revenue listed for Quintiq after joining Dassault Systèmes ($17.1M).
SAP
#5
PTC 55.7
Disclaimer: Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. 4
Planning future performance – Quintiq’s DNA Your business KPIs drive planning decisions that achieve the results you want Past Performance
Future Performance NOW
FUTURE
Best
Results
ERP
MES/TMS SUPPLY CHAIN PLANNING & OPTIMIZATION
Systems of record 5
Research shows very limited use of scenario planning in practice How much and in what areas companies are using scenario planning as part of the S&OP process New product pricing
13%
Competitive actions
16%
Supplier risks
20%
Supply side changes
28%
New product volumes
37%
Change in demand versus forecast
56%
We do little scenario analysis
46%
0%
10%
20%
Source: Chief Supply Chain Officer Insights, 2013 6
30%
40%
50%
60%
How, why and where to apply?
*Only use one image per slide • Use this cube pattern for large-sized images only • The cube pattern should only be placed at the bottom right corner of the image
Scenarios are often talked about, but underleveraged. What’s a scenario and how is it converted into something actionable?
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Scenarios are required to support decision making under uncertainty
Demand uncertainty
Supply uncertainty
What-if scenarios:
What-if scenarios:
•
New product success (timing, quantities)
•
Quality issues arise
•
Competitor behavior
•
Resource uptime / availability
•
Sales funnel success / likelihood
•
Supplier risks
•
Sales price fluctuations
•
Yields are not improving
•
Political environment
•
Political environment
•
Consumer behavior
•
Scarcity of key components
•
Promotions
•
Purchase price fluctuations
•
….
•
….
The future is not that deterministic!
8
Which scenarios to apply?
Supply uncertainty
Demand uncertainty
Low
High
Low
High
Ad-hoc in case of large Ad hoc financial decisions (CASE SENSUS)
Demandscenario’s scenariosto Demand likelihood close the gap
Emphasis on resource planning (allocation, Supply disruption scenarios, ‘sales push’) impact analysis
9
Continuous integrated Continuous demand /integrated supply demandalignment / supply scenario
Assumption-based scenario modeling
Status quo
Targets, focus Scenario C
Generating, selecting and discarding scenarios
Scenario B
Scenario A Analysis and presentation of results Trade-offs between competing goals, evaluation of options and alternatives
KPIs
GAPs
Dashboards
Capacity plan
Inventory plan
Fulfillment plan
Supply plan
Product mix plan
Supply chain design
Priorities, targets
Demand plan Events
Availability
Assumptions
Contingencies, risks Costs
Market share Growth
Prices
Performance
Signposts, directions 10
Key lessons
Prepare o
Only use scenarios where relevant o
o
identify – impact – respond
Prepare agreed scenarios by relevant function
Present and decide o
Use a limited number of scenarios (2 – 4)
o
Supported by right tools for faster, more efficient analysis
11
Managing risk through scenarios Model risk
What variations to assumptions actually have a significant impact?
Assess impact Action! Or can the decision be postponed?
The thing with uncertainty is that it is much bigger in the distant future than in the near future.
12
Integrated scenario planning to meet business goals Are our critical supplies secured?
Where do we locate our warehouses?
How can we differentiate in our value proposition to different customers?
What demand do we satisfy and what revenue will we make?
Which products do we need to spend our R&D budget on?
What people with what skills do we need?
integrated scenario planning What sustainable profit will we generate?
How do we position our inventories? What is our cash conversion cycle?
Will our production capacity be sufficient?
13
How the Supply Chain sees the business?
14
How the CEO sees the business?
15
KPI driven scenarios link operations to the business strategy What is the assumption driving this spike?
Historic performance
Gap
Gap
What is the range? What is the probability? What are we doing to close the gap?
Actual
-3 mo
Today
+3 mo
+6 mo
Operational horizon
16
+12 mo
+18 mo
Generating, measuring and selecting alternative scenarios Close gaps
What scenarios make a difference?
What scenarios do you focus on
Identify trade-offs Select scenarios
Manage risks
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It’s not the number of scenarios
• “How many” is the wrong question, “which scenarios” is the right one • Key question: What is the decision? • Discarding scenarios is easy if you have the right visibility: o
Discard scenarios that do not score significantly better on any KPI
o
Discard scenarios that do not make a difference
o
Know what decisions need to be addressed in pre-S&OP meetings, the exec. S&OP meeting is about tie-breaking and significant investments
• How can you be more efficient in discussing multiple scenarios? • Do you have the right KPI’s to know which scenario outcome is best for the business ?
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What is the most important goal of future performance ?
Boost Profitability 15%
Demand & Supply Balancing 48%
Improve Forecast Accuracy 17%
Better Visibility 20% Demand & Supply Balancing
Better Visibility
19
Improve Forecast Accuracy
Boost Profitability
Key lessons
Relevant scenarios only o
Not all business objectives can be met
o
Significant risks
Not all uncertainties are risks o
Use main KPIs to quickly asses impact
o
Immediate action required?
Ensure bottom-up and top-down involvement o
Build actionable scenarios collaboratively; cross-functional alignment on preferred scenarios
o
Use views to present scenarios aimed at decision making 20
Planning future performance – Quintiq’s DNA Your business KPIs drive planning decisions that achieve the results you want Past Performance
Future Performance NOW
FUTURE
Best
Results
ERP
MES/TMS SUPPLY CHAIN PLANNING & OPTIMIZATION
Systems of record 21
Questions Supply Chain Network London 19th October 2015 Cathy Humphreys www.linkedin.com/in/cathyhumphreys www.quintiq.com www.youtube.com/quintiq © 2014 Quintiq. All rights reserved. Quintiq is a registered mark of Quintiq Holding B.V.