Supply chain collaboration across multiple tiers 1172008 Supplying

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. • 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

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

Outsourced business environment Supplying Your Business Advantage

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

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

Operational challenges • Work is outsourced but execution across the companies should be seamless OEM • 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 Contract Manufacturer • 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 Component Manufacturer • Need systems that operate across enterprises Supplying Your Business Advantage

Business issues Supplying Your Business Advantage

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

Operational control OEM Los Angeles Order forecast TIER 1 Contract manufacturer 1 China Order forecast TIER 2 Order forecast Contract manufacturer 2 Taiwan Order forecast Component manufacturer Dallas Demand for 1000 chips Demand for 2000 chips • Both Tier 1 suppliers order the same part from Tier 2 supplier • OEM does not want individual Tier 1 s 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 Total demand is 3000 chips Supplying Your Business Advantage

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

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

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

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

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

Introduction to Collaborative Planning Supplying Your Business Advantage

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

Oracle collaboration process E-Business planning solution: zero latency, real-time collaboration CUSTOMERS SUPPLIERS Ÿ 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 Tier 2 Tier 1 Portal Automated Exceptions Marketing Manufacturing Sales Mfg. Demand Hub & Multidimensional analysis Consensus forecast and production plan S&OP Process Single holistic plan Supply Planning Supply Chains built on INFORMATION instead of Inventory Business Intelligence Supplying Your Business Advantage

Collaborate with suppliers OEM Consensus forecast Plan • Supplier Sales Forecast – – Forecast • Order Forecast Constraint capacity Supply commit (capacity) Reduce shortages and improve supplier delivery performance Respond better to supplier exceptions – – Plan, Spreadsheet • Provide order forecasts to your suppliers Identify supply-demand mismatches 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 Supplying Your Business Advantage

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

Modeling & set up Supplying Your Business Advantage

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

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

Modeling – OEM (inventory Org) Supplying Your Business Advantage

Modeling – Contract Manufacturer - supplier organization Supplying Your Business Advantage

Modeling – Component manufacturer - Supplier Supplying Your Business Advantage

Users Supplying Your Business Advantage

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

Modeling – OEM users Supplying Your Business Advantage

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

ASL Supplying Your Business Advantage

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

Modeling – ASL Supplying Your Business Advantage

Security rules Supplying Your Business Advantage

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 Tier 1 to view supply commits from Tier 2 Supplying Your Business Advantage

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

Security rules Supplying Your Business Advantage

Process Supplying Your Business Advantage

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 (Tier 1) Supplying Your Business Advantage

Publish order forecasts by OEM Supplying Your Business Advantage

Review order forecasts by Tier 1 Supplying Your Business Advantage

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

Tier 2 and Tier 1 load commits Supplying Your Business Advantage

OEM and Tier 1 review commits Supplying Your Business Advantage

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

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