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2016/06/22

Supply Chain Planning: A New Profitability Driver

As Downward Pressure on Economic Growth Continues, Supply Chain Leaders Summit held by FuturMaster attracts professionals’ attention 

FuturMasterOn June 2, 2016, the Supply Chain Leaders Summit hosted by FuturMaster was held in Shanghai. The summit, with the theme “Supply Chain Planning: A New Profitability Driver”, included seven keynote speeches and one high-level panel, with speakers coming from L’Oréal, Heineken, Danone, BearingPoint, etc. Hundreds of Supply Chain and Operations executives from more than 80 companies attended this summit, from domestic and overseas companies such as Prada, COACH, Lenovo, Boston Scientific, ZTE, Nestle, Nike, BSH, Groupe Rocher, etc.

China’s economic downturn has had an enormous impact on the real economy. Many companies have shown decreasing trends in turnover growth. In these challenging times, in order to maintain profitability growth and increase revenue, businesses are required to put the optimization of supply chain systems and improvement of operation processes as top priorities.

As the Founder and CEO of FuturMaster, Bo Zhou, mentioned in the opening keynote speech, companies need to launch more new products to keep up with the speed of company’s development. They should also manage the more complicated supply chain in order to attract new clients. Moreover, companies should improve the service level to maintain and further enhance the market share. Equally, they need to improve the utilization efficiency of the production facilities to meet the future demand with current capacity. Lastly, companies should cut the overall cost to increase profitability. Such status quo requires companies to put the efficiency demand of Supply Chain on a higher level.

Jan Bernstorf, Vice General Manager of BearingPoint China, agrees that the slowed economy in China has put great pressure on the industries. In a survey conducted by BearingPoint and Technical University of Munich, it is widely accepted that the planning accuracy is critical to productivity improvement, which further proved the indispensability of Supply Chain Planning.

Emmanuel Plazol, VP Operations & Director of L’Oréal in Asian and Pacific regions, strongly agrees with Dr. Zhou about his emphasis on the importance of Supply Chain Planning. L’Oréal and FuturMaster have collaborated for over a decade, and deployed a global demand management solution, aiming to enhance the quality and accuracy of forecasts and further improve inventory level and products quality. Currently over half of the revenue in L’Oréal are forecasted with such advanced management process and system, which brings more resilience to the changing demands in the cosmetic industry. Hammer Chen, CPD Supply Chain Director, L’Oréal China, added in his speech that since many companies within L’Oréal Group have adopted software provided by FuturMaster, it is very easy to align on a group level, and to communicate and share information across business divisions and regions. In his speech he also analyzed the characteristics, trends and new challenges in the cosmetics industry and the special traits of the Chinese market. He briefly introduced the “detail forecast to secondary level forecast” approach used in the deployment of the demand management solution, which sparked an in-depth discussion on channel inventory management.

April Duan, Planning and S&OP Capability Lead of Heineken Group, thinks highly of L’Oréal’s firm control of the consumer end, and she believes that information sharing is the most important yet most difficult part. Given that Heineken has little control of bars and supermarkets, it is harder for Heineken to control the consumer end. April Duan shared her experience, that is, through collaboration and information-sharing among partners, one can also control the consumer end. She emphasized, the support of a powerful information system is indispensable and discussed the importance of VMI (Vendor Managed Inventory). The depth and breadth of VMI depends on the mutual trust between companies and their partners, the level of knowledge sharing, and the maturity of both parties.

Danone Waters is another leader in the beverage industry. Jessie Cai, Supply Chain Planning Association Director of Danone Waters China, introduced Danone Group’s practice to promote supply chain excellence through “zero base” solution. In order to ensure that the operations are constantly aligned with the demand and the optimal configuration is obtained, Danone utilizes the intelligence tools to optimize investments and capacity resources allocation, to identify opportunities for optimization in each step of the supply chain including purchasing, production and delivery, and to evaluate the opportunities regularly, thus reduceing the cost for the group while ensuring the growth of service level and revenue.

Since its foundation, FuturMaster has focused on Supply Chain Planning. “Through this summit, we hope to show FuturMaster’s competence to the Chinese market and to share with the directors of Operation and Supply Chain who attended this summit that, under the “new normal” economy, what challenges and opportunities they are faced with, why would be so, whether they are temporary or permanent, and how to cope with them. Under the “new normal” economy, how to improve the service level and lower the cost to gain competitive advantages, boost business growth, expand market share and increase profitability.” From the perspective of Dr. Zhou, under the current circumstances, Supply Chain Planning system is becoming the focal point of business management. In other words, it is time that Supply Chain should require professional expertise and should exert influence on business operation and finance. This illustrates why this summit attracted so many professionals to participate and to have such heated discussions.

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