RightChain Planning

Animated publication

RightChain ™ Planning

Internal and External Collaborative Optimization & Planning

Edward H. Frazelle, Ph.D. Founder, President and CEO RightChain ™ Incorporated

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Disintegrated Planning

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

From the Wrong Chain to the RightChain ™

Cost per Unit

Cost per Unit

Cost per Unit

Cost per Unit

Transport

Transport

Warehouse

Customer

Factory Vendor

Maximize Vehicle Utilization

Maximize Vehicle Utilization

Maximize Line Yield Minimize Unit Cost

Max Labor Utilization Max Space Utilization

Maximize Sales

Factory Vendor Wrong Chain RightChain ™

Transport

Transport

Warehouse

Meet forecast pickup & delivery schedule

Customer

Meet forecast pickup & delivery schedule

at lowest possible cost while meeting quality goals.

at lowest possible cost while meeting quality goals.

Meet forecasted schedule

Meet forecast throughput & storage requirements lowest possible cost while meeting quality goals.

at lowest possible cost while meeting quality goals.

Minimize total supply chain costs. Meet pre-determined customer service targets. Max imize forecast accuracy.

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Integrated Business Planning Requires Multiple 3D Perspectives with Supporting Systems, Processes, and Organization

Market Share

Revenue

Employees

VALUE

STRATEGY

CONSTITUENTS

Share Holders

Expense

Capital

Customers

Growth

Profit

Long Term

Demand

Sales

HORIZONS

SUPPLY CHAIN

BUSINESS

Logistics

Supply

Short Term

Middle Term

Finance

Operations

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Supply Chains in Perspective Complexity Number of Products Mix of Products Demand Variability Geography Number & Mix of Customers/Contracts Number & Mix of Suppliers Regulations Time Zones & Country Borders

Physicality Heavy Hazardous Hard Conditions Dimensions Rurality

Asset Intensity Infrastructure Requirements

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Supply Chains in Perspective

Physicality

Military Mining/Natural Resources

Chemicals/Plastics

Food & Beverage

Aerospace

Heavy Industry

CPG

Automotive

Mail Order Service Parts

Healthcare

Semi-Conductor

Bio/Pharma

Retail

Complexity

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RightChain ™ Planning Introduction

RCP Definition RCP Models RCP Cycles RCP Journey RCP Benefits

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated| All Rights Reserved)

What is RightChain ™ Planning? RightChain ™ Planning (RCP) is a formal and regularly repeating planning process connecting, optimizing, aligning, and reconciling the plans of traditionally independent business activities including sales, finance, operations, and logistics. The objective of RCP is to maximize the competitive, financial and service performance of the enterprise by continuously optimizing the deployment of enterprise resources including capital, equipment, inventory, facilities, people, and systems. RCP seeks to identify and implement the optimal mix of revenue, expense, and capital to ensure long-term growth in shareholder value. RCP allows the enterprise to better predict and more effectively respond to changing competitive, market, technological, and regulatory conditions. RCP is differentiated from S&OP as follows: RCP typically incorporates more dimensions of financial performance and has even heavier participation from finance. RCP includes more aspects of strategic plans and initiatives. RCP includes more aspects of product, customer, and supplier development & portfolios. RCP includes more aspects of risk management and heavier participation from business risk management. RCP utilizes more sophisticated modeling with larger modeling data bases.

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Planning Model

Strategy

Strategy

Organization

Data

Metrics

Analytics

Systems

Strategy

Strategy

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RCP Molecule Diagram

Demand Planning

Supply Planning

DP

SP

RCP

FP

LP

Financial Planning

Logistics Planning

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Planning Model

• Supplier Valuation & Portfolio Management • Supplier Development • Supplier Service Policy • Supplier Performance

• Customer Valuation & Portfolio Management • Customer Service Policy • Forecasting • Customer Development • PLCM • Customer Risk

• Commodity Pricing • Production Capacity • Supplier Risk

Demand Planning

Supply Planning

Financial Planning

Logistics Planning

• Competition • Budgeting • Pricing • Stock Market • Market Volatility • Trading Optimization

• Network Capacity • Carrier Capacity • Inventory Management • Deployment

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The Journey to Integrated Business Planning

True Demand

Forecast

Orchestrated

Demand

Logistics

Supply Chain

Value Chain

Planning Collaboration Logistics

SCI S&OP

ECR

CPFR

SIOP

ES&OP

Integrated Business Planning (IBP)

CRP

ERP

APS

MRP

MRPII

Systems

Optimization

BI/LSO/BDA

Simulation

Analytics

Balanced Scorecard

Command Center

TQM

Data Metrics

Data Warehousing

Data Visualization

Data Mining

2010s

1980s

1990s

2000s

PC

Internet

Wireless

Mobile/Cloud

Platform

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RightChain ™ Planning

Plan Review

Data Collection

Executive S&OP

Planning

Pre S&OP

Demand Planning

Demand Data

Identify Gaps

Review Plan

Performance Review

Supply Planning

Resolve Gaps & Conflicts

Challenge Plan

Supply Data

Logistics Planning

Finalize S&OP

Make Decisions

Logistics Data

Process Review & Revision

Develop ES&OP Agenda

Commit to Consensus Plan

Financial Data

Financial Planning

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Planning Activities

Demand Planning

Supply Planning

Logistics Planning

Financial Planning

Integrated Planning

Product Portfolio Management Customer Portfolio Management

Global Sourcing Optimization Supplier Portfolio Management

Logistics Network Optimization

Cost, Price & Rate Forecasting Currency & Trade Optimization

Integrated Scenario Simulation Consensus Decision Making Hour, Day Week, Month Qtr, Year Decision Horizon Optimization

Inventory Optimization

Collaborative Transportation Planning

Demand Orchestration

Supply Orchestration

Value Based Accounting

Product Capacity Planning

Logistics Capacity Planning

Demand Forecasting

Terms Optimization

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RightChain ™ Planning Enablers

Data

Systems

Analytics

Metrics

Team

Large Scale Optimization

Balance the Scales

Mad Skills

Data Integrity & Cleansing

Global Resource Visibility

High Speed Simulation

Span the Bridge

Super Structure

Automated Data Reconciliation

IBP DSS Filters

Animation & Visualization

Value Based Performance

Coordinated Calendars

Big Data Mining

Shadow Pricing

Aligned Accountability

Magical Meetings

Planning Execution Integration

Data Accuracy Measurement

Early Warning Systems

Command & Control

Conducive Culture

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RightChain ™ Planning Horizons Day Daily Operating Plan/ Schedule Day Metrics Day Decisions Day Data Day Analytics Day Team Week Weekly Operating Plan/ Schedule Week Metrics Week Decisions Week Data Week Analytics Week Team Month Integrated Operating/ Business Plan Month Metrics Month Decisions Month Data Month Analytics Month Team

Quarter Quarterly Operating/ Business Plan Quarterly Metrics Quarterly Decisions Quarterly Data Quarter Analytics Quarter Team

Year Annual Operating/ Business Plan Year Metrics Year Decisions Year Data Year Analytics Year Team

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Planning Framework

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Practice Maturity Ladder

5% of all companies 25% of all companies 5% of all companies 50% of all companies 25% of all companies

Leading

Advanced

Middle Class

Basic

Zero

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Planning Benefits

Profit increases by 3% to 5% of sales. Customer satisfaction moves to industry best-in class. Capital and asset utilization improves by 10% to 30%. Workforce culture transforms to team-based vs silo-based.

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Honda Results

1. This Honda BU is the single most profitable BU in the automotive industry. 2. RCP Honda facilitated Honda overtaking Toyota as the auto industry’s high rated customer service provider.

3. RCP Honda has resulted in a 40% reduction in inventory investment. 4. RCP Honda has resulted in a 20% reduction in operating expenses.

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Pratt & Whitney

1. RCP helps PW operate as the world’s most profitable aerospace BU. 2. RCP allows PW to offer their industry’s highest customer service.

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Disney

1. RC helped Disney reduce inventory levels by 33%. 2. RC helped Disney increase service levels from 82% to 94% 3. RC helped Disney cut mark downs in half. 4. RC helped Disney increase profit by 2% of sales. 5. RC increased retail sales per square foot by 10%.

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Terms of Collaboration

Cooperation Sharing

Consensus Integration Collaboration Synchronization Orchestration

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated| All Rights Reserved)

Coordination Terms cooperation: a situation in which people work together to do something sharing: to have or use something with others consensus: a general agreement about something : an idea or opinion that is shared by all the people in a group integration : the combining and coordinating of separate parts or elements into a unified whole collaborate : to work jointly with others or together especially in an intellectual endeavor synchronize : to cause to agree in time or to make happen at the same time and speed

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Supply Chain Integration Test

Is timely point-of-sale ( point-of-consumption) information used to provide early warning of rapid shifts in demand? Are agreed upon, accurate demand forecasts used to "pull" products/services through the supply chain from raw materials through manufacturing to distribution to customers, in the right amounts and in the right assortments, when needed? Do major customers regularly provide their demand projections and plans for growth? Are major suppliers regularly provided with business plans and demand projections? Does purchasing, manufacturing, product flow, inventory and transaction information move seamlessly throughout the supply chain? Is there an electronic link (e.g.. for demand measurements, forecasts, automatic replenishment, electronic funds transfer) with all major customers? Is there an electronic link (e.g... for forecasts, automatic replenishment, manufacturing resource planning (MAP) transmitted as purchase order, electronic funds transfer) with major suppliers? Is there an electronic link (e.g. for load planning, negotiating rates, electronic dispatching, delivery acknowledgments, electronic fund transfer) with major carriers? Have service and performance measurements been implemented between each stage of the supply chain to monitor supply chain performance? Are supply chain processes coordinated and managed horizontally across the organization to minimize hand-offs and reduce cycle times?

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Collaborative Planning, Forecasting & Replenishment Model & Wiring Diagram

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Collaborative Planning Concept Design

Production Capacity

Production Schedule

POS, Forecasts, Time Windows Delivery Schedule

Storage/Handling Capacity Operating Schedule

Lane Capacities

Lane Capacities

Transportation Schedule

Transportation Schedule

Manufacturer

Retailer

Wholesaler

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Operations Synchronization

PIck

PIck

PIck

Load

Load

Load

Stock

Stock

Stock

Deliver

Deliver

Deliver

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Value Chain Development Tracks

Inbound

Outbound

Delivery

Logistics Center

Customer

Supply

A&T

Metrics & Targets Service Policies & Contracting Inventory Optimization Sourcing & Supplier Management Transportation & Material Flow

MISSION

SUPPLY

LOGISTICS

Warehousing, Kitting, & Material Handling Outsourcing Value Chain Information Systems Security, Compliance & Risk Organization & Culture

INFRASTRUCTURE

ADMINISTRATION

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RightChain ™ Planning Framework ACTIVITIES

ENABLERS Data Metrics

Demand Planning Supply Planning Logistics Planning Financial Planning Integrated Planning

Analytics Systems Organization

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Demand Planning Best Practices

Product Portfolio Management Customer Portfolio Management Demand Shaping & Orchestration Best-Fit Consensus Demand Forecasting

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Total Supply Chain Cost to Sales Ratio vs. Number of SKUs

2004 2005 2006 2007 2008 2009

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Brand Gross Margin Pareto

10 brands yield 80% of total gross margin 47 brands yield 95% of total gross margin

3 brands yield 50% of total gross margin

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Gross Margin Pareto by Customer

2,867 customers yield 95% of total gross margin

989 customers yield 80% of total gross margin

225 customers yield 50% of total gross margin

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

SKU-Customer Gross Margin Pareto

94,718 SKU-Customers yield 95% of total gross margin

39,313 SKU-Customers yield 80% of total gross margin

10,156 SKU-Customers yield 50% of total gross margin

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Gross Margin Pareto Summary

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Diet Coke vs Mello Yellow Sales per Food Lion Store by Per Capita Income by Zip Code

Same chain Diet Coke sales per store increase significantly as per-capita income increases. Vice-versa for Mello Yellow sales.

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ACTIVE SKU Reconciliation

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

S&OP – Portfolio Management

Objective of This Analysis: Identify at different levels (Subsidiary, Business, Division) the current status of the SKUs in terms of: Quantity ($ Level and MOI), Sales CGM, etc.

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RCP with Customer/SKU Valuation

SERVICE LEVEL

SKU CLASS % OTIF

SAFETY STOCK PLANNING TYPE

CHANNEL CUSTOMER CLASS

VALUE ADDED SERVICES

PA SHIPPING FREQUENCY RETURN POLICY

A B C D A B C D A B C D A B C D A B C D A B C D A B C D A B C D A B C D

95% 97% 93% 95% 90% 92% 88% 90% 93% 95% 90% 92% 88% 90% 85% 87% 90% 92% 88% 90% 85% 87% 82% 84% 85% 87% 83% 85% 80% 82% 80% 82% 98% 100% 96% 98% 94% 96% 92% 94% 96% 98% 94% 96% 92% 94% 90% 92% 96% 98% 94% 96% 92% 94% 90% 92% 96% 98% 94% 96% 92% 94% 90% 92% 95% 97% 95% 97% 95% 97% 95% 97%

25 DAYS 27 DAYS 38 DAYS 59 DAYS 25 DAYS 27 DAYS 38 DAYS 59 DAYS 25 DAYS 27 DAYS 38 DAYS 59 DAYS 25 DAYS 27 DAYS 38 DAYS 59 DAYS 25 DAYS 27 DAYS 38 DAYS 59 DAYS 25 DAYS 27 DAYS 38 DAYS 59 DAYS 25 DAYS 27 DAYS 38 DAYS 59 DAYS 25 DAYS 27 DAYS 38 DAYS 59 DAYS

ONLY STOCKABLE ITEMS SOLD LESS THAN 6 MONTHS AGO ONLY STOCKABLE ITEMS SOLD LESS THAN 6 MONTHS AGO ONLY STOCKABLE ITEMS SOLD LESS THAN 6 MONTHS AGO ONLY STOCKABLE ITEMS SOLD LESS THAN 6 MONTHS AGO ONLY STOCKABLE ITEMS SOLD LESS THAN 6 MONTHS AGO ONLY STOCKABLE ITEMS SOLD LESS THAN 6 MONTHS AGO ONLY STOCKABLE ITEMS SOLD LESS THAN 6 MONTHS AGO ONLY STOCKABLE ITEMS SOLD LESS THAN 6 MONTHS AGO ONLY STOCKABLE ITEMS SOLD LESS THAN 6 MONTHS AGO

3 TIMES A WEEK

COLLABORATIVE LEVEL 3

D I S T R I B U I T O R S

A

CUSTOM

TWICE A WEEK

STATISTICAL FORECAST

B

LIMITED

STATISTICAL FORECAST

C

ONCE A WEEK

LIMITED

STATISTICAL FORECAST

D

ONCE A WEEK

LIMITED

5 TIMES A WEEK

COLLABORATIVE LEVEL 2

A

CUSTOM

C U S T O M E R S

3 TIMES A WEEK

STATISTICAL FORECAST

B

LIMITED

TWICE A WEEK

STATISTICAL FORECAST

C

LIMITED

STATISTICAL FORECAST

D

ONCE A WEEK

LIMITED

TWICE A WEEK

VIRTUAL WAREHOUSE

COLLABORATIVE LEVEL 1

RETAILERS

A

CUSTOM

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Forecasting Methodology

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

SKU Classification Matrix

Strategic Value

Strategic Value

High

Low High

Low High

Age

Age

Young

Old

Young

Old

Strategic Value

Strategic Value

Value

Low

Low High Young

Age

Age

Low High Young

Old

Old

Volume

Low

High

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Closed-Loop, Consensus Forecasting Utilize a cross-functional team to develop a single forecast for the long, medium, and short term.

Demand Signals Actual Demand Economic Indicators Industry Indicators

S M T W T F S Special Events

Model Modifications

Mathematical Model

Human Input

Actual Demand

Demand Forecast

Error Calculations

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Incorporate leading and lagging economic and industry indicators in top-down forecasts.

Industry Indicators

Economic Indicators

AFFC Market Share

Outstanding Orders

Historical Demand

Forecasting Toolkit

Trend Analysis

Management Judgement

Sales Forecast

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Forecasting Benefits Example Aerospace Industry

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Poor forecasting and its impact on POs

Forecast = Avg Demand over Last 2 Months

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Forecasting Honda

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

RightChain ™ Planning Framework ACTIVITIES

ENABLERS Data Metrics

Demand Planning Supply Planning Logistics Planning Financial Planning Integrated Planning

Analytics Systems Organization

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Global Sourcing Optimization Supplier Portfolio Management Supplier Risk Management Leadtime Management Supply Shaping & Orchestration Time Fence Optimization Suppler Integration Supply Planning Best Practices

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated| All Rights Reserved)

Capacity Planning Strategies The broad classes of capacity planning are lead strategy, lag strategy, match strategy, and adjustment strategy. Lead strategy is adding capacity in anticipation of an increase in demand. Lead strategy is an aggressive strategy with the goal of luring customers away from the company's competitors by improving the service level and reducing leadtime. It is also a strategy aimed at reducing stockout costs. A large capacity does not necessarily imply high inventory levels, but it can imply in higher cycle stock costs. Excess capacity can also be rented to other companies. Lag strategy refers to adding capacity only after the organization is running at full capacity or beyond due to increase in demand. This is a more conservative strategy. It decreases the risk of waste, but it may result in the loss of possible customers either by stockout or low service levels. Match strategy is adding capacity in small amounts in response to changing demand in the market. This is a more moderate strategy. Adjustment strategy is adding or reducing capacity in small or large amounts due to consumer's demand, or, due to major changes to product or system architecture.

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Sourcing Optimization

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Global Sourcing Strategy

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

Supplier Development Model

Leverage

Collaborate

Improve

Maintain

Relational Criticality

Supplier Performance

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RightChain ™ : Maximizing Financial & Service Performance with Supply Chain Strategy © RightChain ™ Incorporated (All Rights Reserved)

FY03 Lead Time Reduction – LT30 (10% MAR) Inbound Leadtime Optimization

L e a d T im e R e d u c t i o n P r o j e c t G o a l : 1 m o n t h l e a d t im e f o r c u r r e n t m o d e l p a r t s

Survey Top 106 suppliers for lead time reduction opportunities 1. Order Smoothing 2. Better Forecasting 3. Earlier Forecasting

1 . 2 . 3 .

D a t e : A u g u s t 3 , 2 0 0 1

A H M A t t e n d e e s : M r . H i r o s h i N a k a m u r a

T y p e o f M e e t in g :

C o n f e r e n c e C a l l M e e t in g a t S P P C M e e t in g a t S u p p l i e r O t h e r E x p la i n :

C a lh a c

4 . 5 .

V e n d o r N a m e :

V e n d o r C o d e : 0 1 4 0

V e n d o r A t t e n d e e s : M r . R e i j i M a t s u i

V i c e P r e s i d e n t

N a m e

T i t l e

M r . B o b D e S h i e l d s M r . S c h u y l e r A s a r i M s . C h e r y l K o n n o N a m e

S r . M a n a g e r

M a n a g e r

T i t l e

P r o c u r e m e n t S p e c i a l i s t I n v e n t o r y S u p e r v i s o r T i t l e

N a m e N a m e

M r . S t a n l e y W h i t t e m o r e

T i t l e

6 . C u r r e n t l e a d t im e f o r c u r r e n t m o d e l p a r t s : T h r e e m o n t h s 7 . N e g o t ia t e d l e a d t im e f o r c u r r e n t m o d e l p a r t s : T a r g e t t in g o n e m o n t h w i t h s o m e c o n d i t io n 8 . O r d e r p r o j e c t i o n r e q u i r e m e n t s f r o m A H M ? Y e s N o 9 . I f y e s , p l e a s e e x p l a i n w h a t t y p e i s r e q u i r e d ( w i t h d e t a i l s , i . e . 1 2 m o n t h s r o l l i n g , 3 m o n t h s f i r m , + / - 2 0 % v a r ia n c e f r o m u n f i r m t o f i r m ) : T B A

1 0 . I f o t h e r A H M r e q u i r e m e n t s a r e n e c e s s a r y , p l e a s e p r o v i d e d e t a i l s : T B A (M o s t p r o b a b l y ) 1 . C o m m i tm e n t f r o m A H f o r c o m p o n e n t s p a r t s p u r c h a s in g . 2 . P r i c e u p f o r c o v e r i n g a d d i t i o n a l e x p e n s e s .

4. EDI 5. EFT

1 1 . I f v e n d o r c a n p r o v i d e o n e m o n t h l e a d t im e n o w , w h y n o t p r e v io u s l y ? P l e a s e e x p l a in i n d e t a i l : B e c a u s e t h e r e a r e s o m e a d d i t i o n a l i s s u e s t o b e s e t t l e d a m o n g T 2 s u p p l i e r s , C a l h a c a n d A H .

1 2 . I f v e n d o r c a n n o t p r o v i d e o n e m o n t h l e a d t im e , p l e a s e e x p l a i n i n c o m p l e t e d e t a i l a s t o w h y n o t : ( P l e a s e m a k e a n a n s w e r w i t h u s i n g B O M s t r u c t u r e t o s h o w w h i c h w o r k - in - p r o c e s s i s c a u s i n g ) P r e s e n t s i t u a t io n ; T h e r e a r e T 2 s u p p l i e r s w h i c h h a v e c o m p o n e n t p a r t s c o m i n g f r o m t h e i r p a r e n t C o m p a n i e s i n J a p a n . T h u s i t t a k e s m o r e t h a n t h r e e m o n t h s l e a d - t im e a s i t ’ s c o m in g f r o m J a p a n . O n e o f s a m p l e i s P /N 3 8 9 2 4 - P 0 6 - A 0 2 : P l e a s e s e e a n a t t a c h e d s h e e t f o r d e t a i l . 1 3 . I f v e n d o r c a n n o t p r o v i d e o n e m o n t h l e a d t im e , c a n c u r r e n t l e a d t im e b e r e d u c e d ? Y e s T o h o w m a n y m o n t h s ? N o A d d i t io n a l c o m m e n t s : C a lh a c h a s u n d e r s t o o d A H ’ s n e e d s a n d t o h a v e in t e n t i o n t o c o l l a b o r a t e w i t h A H t o im p l e m e n t i t . . B u t t h e r e a r e i s s u e s t o b e s e t t l e d f o r t h e I m p l e m e n t a t i o n o f o n e m o n t h l e a d - t im e s y s t e m .

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Inbound Leadtime Optimization Benefits

Supplier On Time Delivery

88.0% 91.0% 94.0% 97.0% 100.0%

FY01 FY02 FY03 FY04 FY05 FY06 FY07 Measured in Pieces Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Percentage of Outstanding Orders Past Due Suppliers - Value Based

0% 10% 20% 30% 40%

FY02 FY03 FY04 FY05 FY06 FY07 Year 3 Year 4 Year 5 Year 6 Year 7 Year 1 Year 2

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Supplier Risk Cube

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RightChain ™ Planning Framework ACTIVITIES

ENABLERS Data Metrics

Demand Planning Supply Planning Logistics Planning Financial Planning Integrated Planning

Analytics Systems Organization

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Logistics Planning Best Practices

Network Optimization & Simulation Material Flow Optimization & Simulation Financial Inventory Performance Inventory Optimization Inventory Deployment Optimization Logistics Capacity Planning

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Disney Merchandise Sourcing Map

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RightChain ™ Global Supply Chain Strategy

Long Beach Consolidation – Haul 53s

Baseline

DLR/CA Consolidation – Rail 53s

DLR/CA Consolidation – Haul 53s

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RightChain ™ Global Supply Chain Strategy

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RightChain ™ Sourcing Optimization

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Collaborative Logistics Tour Example

Georgia-Pacific

Bangor

General Mills

Green Bay

Buffalo

Buffalo

Cedar Rapids

Wells

Cedar Rapids

Chicago

Chicago

Mechanicsburg

Georgia-Pacific General Mills

Bangor

Green Bay

Buffalo

Wells

Cedar Rapids

Annual Savings One-Way Shipments $3,821,000 Dedicated Tour $3,090,000 Shared Savings $ 731,000

Chicago

Mechanicsburg

Benefits Efficiency gain…19%

Driver turnover…under 10% Service reliability…over 99%

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Load Planning

207302

251391

206674

208236

207076

207076

208014

Honda

207302

208014

208169

206674

207076

207076

207076

208014

251391

208169

207076

207076

208236

251127

Rte. 101

48’ Trailer 25 cages

Total Parts Cube

Total Cube Assigned

Stop Number PHSHTO Lines

Total Cu.Ft

Cages Assign

Loose Req.

Loose Assign

Min Cube Req.

Totes Assign

1 7 2 2 2 2 3 2

1 2 3 4 5 6 7 8

251127 44.5756 2,739.50 53.30 2.0 207076 199.144 18,817.00 366.09 8.0 208236 76.2517 3,406.18 66.27 4.0 206674 75.7429 5,449.93 106.03 4.0 208169 98.3179 6,530.31 127.05 5.0 251391 63.7583 4,374.85 85.11 4.0 208014 116.98 7,711.16 150.02 6.0 207302 87.9914 4,330.05 84.24 5.0

11.13

16.05

61.19

66.11

115.44 166.50 415.80

516.92

14.45 34.74 42.25 26.30 38.78 24.94

20.85 50.11 60.94 37.93 55.93 35.97

114.57 134.86 142.37 126.42 188.96 125.06

120.97

150.23

161.06

138.05

206.11

136.09

762.76

1,038.1

21

308.03 444.27 1,309.23

1495.53

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RightChain ™ Inventory Optimization

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RightChain ™ Inventory Optimization

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Inventory Planning & Management Process

Current Inventory Levels

Sales Forecast

Manufacturing Capacity

Inventory Planning Toolkit

Capacity Utilization Plan

Inventory Master Plan

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RightChain ™ Planning Framework ACTIVITIES

ENABLERS Data Metrics

Demand Planning Supply Planning Logistics Planning Financial Planning Integrated Planning

Analytics Systems Organization

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Financial Planning Best Practices

Cost, Price, and Rate (CPR) Forecast Optimization Currency & Trading Optimization (CTO) Value Based Financial Performance Accounting Price Elasticity is a Regular Aspect of IBP Financial Metrics Side by Side with All other Metrics Econometric Modeling and Optimization

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Cost, Price and Rate (CPR) Forecasting

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CPR Forecasting Factors Cost Fuel Cost

Utility Cost Wage Rates

Price

Spot Pricing Contract Pricing

Rate Forecasting Interest Rates

Exchange Rates

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Global Trade & Currency Optimization

Backtesting Entry/Exit Optimization Entry/Exit Automation Trading Strategy Optimization Strategy Development Strategy Simulation Genetic Algorithms Real Time Market Updates

MultiCharts.com

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Annual Demand

Unit Inventory Value

Purchase Order Setup Cost

Inventory Carrying Rate

RightChain™ Finance

Outbound Mode

Number of DCs

Lot Size Inventory

Forecast Accuracy

Pipeline Inventory

No. of SKUs

Average Inventory Level

Leadtime

Safety Stock

Unit Inventory Value

DC Locations

Fill Rate

Average Inventory Value

Shortage Factor

Opportunity Cost of Capital

Capital Charges

Shareholder Value

Duties & Taxes

Selling Price

Revenue

Insurance

Inventory Carrying Rate

Obsolescence Loss & Damage

Annual Demand

Expense

Finance Customer Service Inventory Supply Transportation Warehousing Key

Unit Inventory Value

Storage & Handling

DC Performance

Unit Purchase Cost

Unit Landing Cost

Lot Size

Supplier

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Leadtime

Carrier Reliability

Inbound Mode

RightChain ™ Scoreboard

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RightChain ™ Golden Triangle

Balanced financial performance metrics incorporate revenue, expense, and capital. Examples of balanced financial metrics

Include: 1. EVA 2. ROIC 3. GMROI

Substitution

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Honda’s Supply Chain Finance

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RightChain ™ Planning Framework ACTIVITIES

ENABLERS Data Metrics

Demand Planning Supply Planning Logistics Planning Financial Planning Integrated Planning

Analytics Systems Organization

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Integrated Business Planning Best Practices

Horizon Optimization & Integration (HOI) Integrated Scenario Simulation (ISS) Consensus Decision Making (CDM) Collaborative Integrated Business Planning (CIBP)

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RightChain ™ Planning Concept for BP

Sales & Marketing

Finance & Strategy

Supply Chain Planning Platform

Monthly Supply Chain Plan

Supply Chain Performance

Manufacturing & Procurement

Supply Chain Logistics

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RightChain ™ Planning Concept for Alicorp

PLANEAMIENTO INTEGRADO

Planeamiento de la Producción

Planeamiento de la Distribución

Gestión de Materiales

Planeamiento de la Demanda

Ventas

MKT

Compras

Proveedor

Almacén

Producción

Distribución

Cliente

Consumidor

*Finanzas establece la rentabilidad de la compañía con las cifras objetivo y guía los planes para alinearlos con las estrategias de la empresa.

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RightChain ™ Planning Concept for Pratt & Whitney FLIOPS Process

Stress

Engines Spares

Manufacturing

Employees

Program 1

Procurement

Logistics

Demand

Capacity

FLIOPs

Inventory

Storage

Customers Shareholders

Program 2

I/T

People

OTD EBIT ROS AIV

Engines Spares

FLIOPS: Finance, Logistics, Inventory, and Operations Planning System

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RightChain ™ Planning Process for Pratt & Whitney

FLIOPS connects decision making across finance, logistics, inventory, and operations on a daily, weekly, monthly, quarterly, and annual basis.

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RCP Pratt Decision Flow

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RightChain ™ Replenishment Walt Disney World Food & Merchandise

N o

Event Calendar

Attendance Forecast

POS Data

RightChain™ SKUs

RightChain™ Forecasting

Forecasted Demand

RightChain™ Turns

RightChain™ Sourcing

Forecast Errors

Recommended Purchase Order

RightChain™ Lots

EDI PO

RightChain™ Replenishment

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Lowe’s and Whirlpool Collaborative Planning

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Collaborative Planning with Supply Chain Partners

Manufacturer

Wholesaler

Retailer

R&D

Marketing

Merchandising

Logistics

Logistics

Logistics

Planning

Planning

Planning

Systems

Systems

Systems

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RightChain ™ Planning Framework ACTIVITIES

ENABLERS Data Metrics

Demand Planning Supply Planning Logistics Planning Financial Planning Integrated Planning

Analytics Systems Organization

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RCP Data Best Practices

Big Data Analytics (BDA) Virtual/Cloud Data Warehousing (VDW/CDW)

Data Integrity & Cleansing (DIC) Data Mining & Pattern Recognition

A large-scale, cloud-based data warehouse is (1) fully populated with accurate and reliable data, (2) mined on a regular basis to surface and visualize patterns revealing and predicting problems and opportunities, and (3) supports large scale optimization and scenario simulation.

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RightChain ™ Planning Framework ACTIVITIES

ENABLERS Data Metrics

Demand Planning Supply Planning Logistics Planning Financial Planning Integrated Planning

Analytics Systems Organization

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RCP Metrics Best Practices

Constituent Based Coverage Metrics cover the concerns of employees, customers, shareholders, and the community. Value Based Indicators (VBI) Financial metrics include value based indicators incorporating revenue, expense and capital. Spanning Metrics Financial, productivity, utilization, cycle time, and quality indicators span all business activities. Control Towers and Command Centers Ownership and Accountability

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Total Value Chain Metrics

FSL

A&T

S

$x/yr

$x/yr

$x/yr

$x/yr

$x/yr

$x/yr $x/yr

Cost VCCT

X days X days

X days X days X days

X days

X days

X% X

X% X% X% X% X% X% X X X X X X

OTD% Flex/Risk

$x

$x

$x

$x

$x

$x

$x X days

Inv$ Inv

X days X days

X days X days X days

X days

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RCP Scoreboard

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RCP Command Center

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RightChain ™ Scoreboard

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RCP Metrics Ownership

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Parts Division FY 09 Tree RCP Target Tree

RCP Target Tree

Direct Charges $

$180.8

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RightChain ™ Planning Framework ACTIVITIES

ENABLERS Data Metrics

Demand Planning Supply Planning Logistics Planning Financial Planning Integrated Planning

Analytics Systems Organization

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RCP Analytics Best Practices

IBP Decision Support Filters Real Time Simulation Integrated Scenario Simulation Simulation Animation Shadow Pricing Big Data & Large Scale Optimization

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RightChain ™ Inventory Digital Twin

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