Supply chain collaboration across multiple tiers 1/17/2008 Supplying Your Business Advantage

Oracle APS & Demantra Specialists 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 Introducing Inspirage

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 FoundryContract Manufacturer OEM Distribution Assembly & Test Customer 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

Supplying Your Business Advantage OEM Contract Manufacturers Component Manufacturers 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 Sub assembly suppliers Subsidiaries TIER 1 TIER 2

Supplying Your Business Advantage OEM Contract Manufacturer Component Manufacturer 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

Business issues Supplying Your Business Advantage

OEM Austin Contract manufacturer China Component manufacturer Dallas Order forecast Supply commit TIER 1 SUPPLIER TIER 2 SUPPLIER OEM 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 Collaboration process

Supplying Your Business Advantage OEM Los Angeles Contract manufacturer 2 Taiwan Order forecast Component manufacturer Dallas Order forecast Contract manufacturer 1 China Order forecast Component manufacturer Dallas Order forecast 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 Demand for 1000 chipsDemand for 2000 chips Total demand is 3000 chips TIER 1 TIER 2 Operational control

Supplying Your Business Advantage Contract Manufacturers Component Manufacturers Authorized order forecasts Sub assembly suppliers Subsidiaries OEM 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

Supplying Your Business Advantage Contract Manufacturers Component Manufacturers Authorized supply commits Sub assembly suppliers Subsidiaries OEM 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

Supplying Your Business Advantage Contract Manufacturers Component Manufacturers Permissions Sub assembly suppliers Subsidiaries 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

Business issues - Users in the system Supplying Your Business Advantage Contract manufacturer-SITE1 Component Manufacturer –SITE1 Component Manufacturer –SITE 2 Order forecast 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

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 Business issues – OEMs operational control Supplying Your Business Advantage

Introduction to Collaborative Planning Supplying Your Business Advantage

Traditional collaboration  Response 1: Maintain Excess Inventory  Response 2: Reserve Production Capacity  Response 3: Expedite Everything! Long planning cycles Supply PlanningDemand Planning Distribution plans Sales Marketing Mfg. Fax Tier 2 Tier 1 CUSTOMERSSUPPLIERS Production plans Manufacturing plans Paper ? Manual reconciliation Supply Chains built on INVENTORY

Supplying Your Business Advantage Oracle collaboration process  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 CUSTOMERSSUPPLIERS Consensus forecast and production plan Supply Planning Demand Hub & Multi- dimensional analysis Automated Exceptions S&OP Process Single holistic plan Business Intelligence Sales Marketing Mfg. Manufacturing Portal Tier 2 Tier 1 E-Business planning solution: zero latency, real-time collaboration

Supplying Your Business Advantage 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 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 Forecast Supplier Constraint capacity Plan, Spreadsheet Supply commit (capacity) Consensus forecast OEM Plan Sales Forecast Order Forecast

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

Modeling & set up Supplying Your Business Advantage

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

Supplying Your Business Advantage 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

Users Supplying Your Business Advantage

Modeling – Users Supplying Your Business Advantage 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)

ASL Supplying Your Business Advantage

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

Supplying Your Business Advantage Modeling – ASL

Security rules Supplying Your Business Advantage

Security rules Supplying Your Business Advantage 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

Supplying Your Business Advantage Security rules Access given byCOMP MFROEM Order TypeSupply CommitsOrder forecast Order number Item Org Customer Customer Site SupplierCOMP MFR Supplier SiteXXXX Privilegeviewupdate Access given tocompany Assigned toCONTRACT MFR Effective from Date20-Nov-2006 Effective to Date

Supplying Your Business Advantage Security rules

Process Supplying Your Business Advantage

Process Supplying Your Business Advantage 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)

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 Tier1 review commits

Summary Supplying Your Business Advantage 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

Contact Information Supplying Your Business Advantage Sridhar Hoskote –