Supply chain collaboration

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• Supply chain collaboration
• across multiple tiers
• 1/17/2008

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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
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Agenda

• Outsourced business environment
• Business challenges in collaboration
• Introduction to Collaborative Planning
• Modeling the supply chain
• Leveraging Collaborative Planning
• Conclusions

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• Outsourced business environment

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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

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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
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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 systems that operate across enterprises

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• Business issues

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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
Component manufacturer Dallas
TIER 2 SUPPLIER
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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 2 Taiwan
Contract manufacturer 1 China
TIER 1
Order forecast
Order forecast
Component manufacturer Dallas
Component manufacturer Dallas
TIER 2
Demand for 1000 chips
Demand for 2000 chips
Total demand is 3000 chips
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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
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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
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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
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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
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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

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• Introduction to Collaborative Planning

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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
Long planning cycles
Mfg.
Supply Planning
Demand Planning
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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
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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 suppliers constraints
• Review constraints in your SOP process
• Reduce non-value added costs and exception
  overload
• User-configurable exceptions
• Automated exception handling via workflow

Supplier
OEM
Forecast
Sales Forecast
Consensus forecast
Plan, Spreadsheet
Plan
Order Forecast
Constraint capacity
Supply commit (capacity)
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Multi-tier collaboration
Full visibility and synchronization across the
extended supply chain
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• Modeling set up

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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
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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

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Modeling OEM (inventory Org)
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Modeling Contract Manufacturer - supplier
organization
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Modeling Component manufacturer - Supplier
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• Users

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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 OEMs Approved Supplier
  List
• Tier 2 supplier is on Tier 1s Approved Supplier
  List

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Modeling OEM users
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Modeling Supplier users (both contract and
component manufacturer users)
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• ASL

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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
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Modeling ASL
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• Security rules

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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

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Security rules
Access given by COMP MFR OEM
Order Type Supply Commits Order forecast
Order number
Item
Org
Customer
Customer Site
Supplier COMP MFR COMP MFR
Supplier Site XXXX XXXX
Privilege view update
Access given to company company
Assigned to CONTRACT MFR CONTRACT MFR
Effective from Date 20-Nov-2006 20-Nov-2006
Effective to Date
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Security rules
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• Process

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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)

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Publish order forecasts by OEM
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Review order forecasts by Tier 1
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Tier 1 loads publishes order forecast to Tier 2
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Tier 2 and Tier 1 load commits
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OEM and Tier1 review commits
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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

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Contact Information

• Sridhar Hoskote Sridhar.hoskote_at_inspirage.com