Globalization: Driving Competitive Advantage Through Community Management

1
Globalization Driving Competitive Advantage
Through Community Management

• Jonathan D. Gatrell
• Senior Director
• Portfolio Strategy and Analysis
• Inovis
• 5.17.2007

2
Understanding economic regions

• 3 Key region types/models drive commerce and
  global supply communications
• Formal region
• Traditional single attribute defines the region
• Physical, Economic or Political
• Regional distribution and supply models
• Warehousing/DCs, Automotive/Manufacturing
  regions
• Transactional economic activity, order to
  fulfillment JIT
• Functional region
• A nodal relationship across and within a space
  which unites social and spatial activities
• A traditional hub and spoke model, independent of
  distribution.
• Transaction economic activity, order to cash
• Perceptual
• A region that exists conceptually, both extended
  and local conotations
• Transactional economic activities are bifurcated
• Extended supply chains Production activities
• Multi-channel commerce B2C transactions which
  drive B2B fulfillment activities

3
Transactional Scale

• MACRO
• Planning/Forecasting
• Bulk Fulfillment/High Value Orders
• Monthly/Quarterly
• MESO
• Multi-Modal Distribution
• DC Fulfillment/Medium Value Orders
• Weekly/Monthly
• Micro
• Cartage LTL Distribution
• JIT, Store and B2C fulfillment/Transactional
  Orders
• Hourly/Daily/Weekly

4
Validating Regions

• Regional infrastructures and economic maturation
  drive growth
• Carrying capacity of the infrastructure
  contains/encourages growth
• Availability of materials (speed-to-production)
• Proximity to end markets/consumers
  (speed-to-fulfillment)
• Spatial relativeness and available
  infrastructure produce transaction economies
• Global supply chains represent nodal
  economies/regions
• Interdependence on open governance and trade
• Labor availability and wage benchmarks shift
  economic and geographic focuses to underdeveloped
  economies

5
Globalization and the Supply Chain

• Globalization is not a trend, but a system
• Interdependence between regions, economic models
  and various levels of development required for
  global supply chains
• Integration and interoperability required for the
  global supply chain to win
• Successful global supply chains require uneven
  development
• Example Wage Structures (labor markets), Skill
  Sets, Technology Infrastructures
• Highly developed formal and functional regions
  initiate buying cycles and typically are core
  economic entities
• Underdeveloped regions typically support hub
  entities through primary and secondary sector
  activities

6
It Used To Be Simple Hub and Spoke
7
Community Enablement Drivers

• Customers are more demanding
• Supply chain complexity continues to increase
• Customer/consumer direct interactions
• More specialist and/or outsourcing
• Supply chain management key to success
• Consumer direct
• Make-to-order
• Global Advantage
• Technology breeding opportunity and threats

Source AMR Research
8
Business Communities

• Not just customer or supplier
• Growth in non-Supply Chain activities
• Financial (Payments/Payroll)
• Healthcare (Real-time Adjudication)
• Marketing (Rich Media, Promotions)
• Service (Returns, Warranty)
• Its YOUR community
• Leverage your rules
• Enforce your requirements
• Differentiate your execution
• Your community management strategy drives brand
  equity
• Contract manufacturers and quality
• Ability to fulfill/customer service

9
The Changing Context of Content

• New fulfillment and commerce models
• Multi-channel retail
• Direct to Consumer
• Content exchange is pervasive
• Transactional interactions (B2C and B2C)
• Bulk content growth
• Richer processes and document content
• Management and Governance required

10
Increasing Community Value
INTEROPERABILITY
ENABLEMENT
MANAGEMENT
EVENT DRIVEN
SENSORY
Communicate
Transaction
Awareness
Collaboration
Interdependence
SOLUTION
VALUE OF A COMMUNITY

• Deep synergy with partners, Self correcting
  systems

• Basic content sharing and events PO, ASN,
  Invoices, etc.

• EDI and machine-to-machine interaction for
  automation

• Full visibility into demand and supply
  compliance

• Synchronized fulfillment, logistics, demand and
  supply processes

CONTENT
MATURITY
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The New Hub and Spoke Model
Source Knox Marston (2006)
12
Where Losses Occur

• 20 of all orders across all industries are in
  error
• 26 for electronics manufacturers
• 62 for CPG/retail suppliers
• 43 result in deductions or overpayments
• Suppliers attribute 6 of selling, general, and
  administrative expenses to resolving invoicing
  issues
• Deductions account for nearly 10 of invoiced
  sales
• Lost sales represent 3.5 of annual revenues due
  to stock outs
• Cost to resolve item data and invoice errors
  ranges from 40-80

AMR 2006 GMA 2004 GS1 2006
13
What Does That Mean To You?
Leverage integrated solutions that standardize
document formats and synchronize product data for
streamlined information flow across the
order-to-payment lifecycle.
14
Automating and Extending Processes
15
Supply Chain Spending Priorities 2006-2008
16
Understanding Visibility
17
Why Invest in Visibility and EDI
18
What events require visibility?
19
Visibility Maturity Model
20
Collaborative Realities

• Compliance Initiatives Prevail
• Hub Specific Requirements
• Internal Policies and Governance
• Governmental requirements
• Well Defined Penalties
• Standards Based Communications
• AS1, AS2 and AS3
• New Processes and Document Roll Outs
• Automation through Integration
• Data Synchronization
• GS1
• EDI/XML
• Transformation Errors
• Content
• Configuration
• Communication Errors

21
Assembling The Right Solution Set
22
Optimizing Supply Chain Communications

• Business Activity Monitoring
• - Reconciliation tools
• Transaction lifecycle
• visibility and alerts
• - Real-time interactive alerts
• - Interactive reporting

Trading Community Management -Partner Enablement
-Partner management - Connectivity - Content
translation
Business Analytics - Historical reporting - Deep
transaction reporting - Online optimization
tools - Rich data export capabilities

• Process Automation
• Not just for the traditional
• supply chain
• - Internal operations support
• Supporting the Final
• Customer
• - Rule-based execution

23
Increasing Community Value Visibility
INTEROPERABILITY
ENABLEMENT
MANAGEMENT
EVENT DRIVEN
SENSORY
Communicate
Transaction
Awareness
Collaboration
Interdependence
SOLUTION
VALUE OF A COMMUNITY

• Deep synergy with partners, Self correcting
  systems

• Basic content sharing and events PO, ASN,
  Invoices, etc.

• EDI and machine-to-machine interaction for
  automation

• Full visibility into demand and supply
  compliance

• Synchronized fulfillment, logistics, demand and
  supply processes

CONTENT
MATURITY
24
Strategic payoff Execution Efficiency

• Automate more processes to be responsive to
  demand and supply needs
• Enable more partners, not just traditional supply
  chain
• Identify problems before impact your business
  visibility preempts execution breakdowns via
  early warning alerts
• Shrink the number of exceptions, out of stocks,
  chargebacks, negative supplier ratings
• Single version of the truth visibility of the
  complete picture
• Simplify and automate exception handling and
  resolution
• Improve the reliability, adaptability and
  timeliness of transaction and document flow
  across your trading network

Deep visibility Execution excellence
25
Globalization Driving Competitive Advantage
Through Effective Community Management

• Jonathan D. Gatrell
• Senior Director
• Portfolio Strategy and Analysis
• Inovis
• 5.17.2007