A General Model of Supply Chain Visibility - Supply Chain Council

A General Model of Supply Chain Visibility 

Jonah McIntire & Lim Chin Chye 

© 2010 Supply Chain Council. ALL RIGHTS RESERVED. | < filename > | Slide 1 | 16 November 2010

Contents 

1 

Who is Haier 

2 

Supply Chain Innovations 

3 

Supply Chain Visibility 

4 

Q& A 


Who is Haier 

Haier is the World #1 Brand of Major Home Appliances 

The world leading business intelligence firm Euro-monitor International has ranked 

Haier #1 Brand of Major Appliances 2009 by brand shares (by global brand name), it 

also place Haier’s refrigeration appliances and Haier’s home laundry appliances #1 by 

global brand name. 


Who is Haier 

In the 50 Most Innovative Companies 2010 Listing by Business week 

• In April 2010, Business Week of US published The 50 Most Innovative Companies 2010 in 

the world, which included 5 Chinese companies, and Haier ranked No. 28 as the only 

Chinese home appliances brand. 


Who is Haier 

Historic growth of Haier’s Turnover (1984-2009) 

In year 2009, Haier Group achieved a global turnover of up to RMB124.3 

billion or USD18.2 billion , and the profit growth is 10 times the revenue 

growth. 


Who is Haier 

The Most Valuable Brand in China 

Historic growth of Haier Brand Value(1995-2009) 

Brand value 81.2 

billion RMB in 2009 

December 2 nd 2009,China’s Most Valuable Brands List for 2009 was 

released in New York. Haier is valued at RMB 81.2 billion RMB, topped 

all Chinese brands for the 8th consecutive year. 


Haier Global Presence 

Worldwide Network Overseas Global 

Trading Company 19 61 

Design Center 5 8 

Manufactory 24 29 

Industrial Park 4 16 

Sale Network 45800 58800 


Overview of Haier Supply 

Chain 

Products and solutions 

World Class Supply Chain 

Global Customers 

• Refrigerator, freezer, airconditioner, 

washing 

machines, TV, water 

heaters, kitchen 

appliances……. 

• Over 20,000 new products 

every year 

• 16 Industrial parks 

• 29 manufacturing plants 

• Over 800 suppliers 

• 24,000 employees 

• Products sold in 178 

countries 

• 58,880 sales and 

support partners 


Haier Global Manufacturing Networks 

Italy 

USA 

Algeria 

Tunis 

Jordan 

Syria 

Iran 

India 

Pakistan 

Bengal 

中国青岛 

China 

Qinqdao 

Cuba 

Nigeria 

Thailand 

Global MFG Sites 

16 Industrial Parks 

29 manufacturing plants 


Haier Supply Chain Innovation 

Strategic 

Objectives 

Supply Chain 

Operations 


Visibility 

1. Strategic Objectives 

2. Supply Chain Operations 

• Enterprise Innovations 

• Supply Chain Innovations 

• Process Innovations 

• Supply Chain Performance 

3. Supply Chain Visibility 

• Defining visibility as a process 

• A general visibility model 

• A visibility effectiveness model 


Strategic Objectives : Profitable Growth 

Supply Chain Excellence: Service Level, Returns, Employee Satisfaction 

Delivery to First Commit 

(DTFC) 

TAT (OTD) 

Inventory Turn(DOI) 

Upside, Downside 

Predictability Velocity Flexibility 

External : Customer 

Service Level 

Internal: 

Efficiency, Returns 

Reference to 

SCOR model 

Return on Assets 

• Predictability 

• Velocity 

• Flexibility 

• Gross Margin 

• Return on working capital 

• Return on Assets 

ROA 

ROA= (Rev-Cost) 

Asset 

100% 

ROWC 

© 2010 Supply Chain Council. ALL RIGHTS RESERVED. | < filename > | Slide 11 | 16 November 2010 

90% 

80% 

20 

70% 

15 

60% 

10 

5 

50% 

Return on 

working capital 

% ROWC= (Rev-Cost) 

(Inv+AR-AP) 

15 

14 

16 

18 

20 

22 

Supply 

Chain 

Excellence 

5 

10 

15 

20 

0% 

40 

% 

20% 

45 

40% 

60% 

50 

55 

80% 

60 

100% 

65 

GM= 

Customers 

Enterprise 

Employees 

Gross Margin 

GM 

(Rev-Cost) 

Rev 

% 

Profitable 

Growth 

Revenue 

Profit 

Mkt Share 

Customer, 

Employee’s 

Satisfaction

Suppliers 

Customers 

Haier Enterprise Innovations 

Enterprise and Business Model Transformations 

Leader in the era of “Internet of Things” 

Goals 

目标 

低 

Low Cost 

高 

High 

Quality 

1. Enterprise Transformation 

From Manufacturing to Services 

快 

High 

Speed 

Proposition 

定位 

On-demand 

Manufacturing 

and Delivery 

Virtual- physical 

networks 

Integration 

Model 

模式 

Customer Value 

Creation 

2. Business Model Transformation 

Inverted-Triangle 

Organization 

Autonomous 

Operating Units 



Inverted-Triangle Organization and Autonomous Operating 

Units 

Traditional 

Triangle 

Organization 

Management 

Give Orders 

users 

用户 1 

user1 

用户 2 

user2 

用户 3 

user3 

用户 4 

user4 

用户 5 

user5 

…… 

First Line Employees 

用户 n 

usern 

Supporting 

Platforms 

Supporting 

platforms 

users 

用户 1 

user1 

First Line Employees 

用户 2 

user2 

用户 3 

user3 

用户 4 

user4 

用户 5 

user5 

…… 

用户 n 

usern 

Provide 

Resources 

Management 

Haier’s 

Inverted-Triangle 

Organization 

• Internal Centric 

• Management Driven 

• Giving Orders 

• Being Managed 

• Internal Arguments 

Haier Organization 

Innovations 

同一目标、端到端、倒逼体系 


• External Focus 

• Customer Driven 

• Providing Resources 

• Self-driven 

• 2-ways Collaboration 

Common Goal, End to End, Mutual Commitment

Target 

Process 

People 

Strategic Processes 

Strategic Resources 

Strategic Objectives 

Strategy 

Goals 


Inverted-Triangle Organization and Autonomous Operating 

Units 

以创造客户价值为核心 , 以倒三角组织结构为基础 , 承接零库存下的即需即供模式 , 创新敏捷灵 

活的供应链资源平台 , 提升达成战略绩效的能力 , 建立 “ 人单合一 ” 双赢的文化 , 成为服务领先的 

精益供应链 . 

高增长 

高增值 

倒 

逼 

体 

系 

定 

单 

履 

约 

产 

能 

负 

荷 

一线经营体 

冰箱 SC 

DTFC:% 

09 10 11 12 


洗衣机 SC 

Autonomous 

Operating Units 

自主经营体 

STFC:% 

09 10 11 12 

中一中二特冰 

定单保障的资源与机制 


电热 SC 

ODC:% 

09 10 11 12 

定单 /JIT/ 生产 / 战略 

平台 

PL SC 长 

冰箱 SC 洗衣机 SC 。。。。 

定单支持平台 

生产支持平台 

采购支持平台 

零物耗平台 

流程创新平台 

战略创新平台 

09 10 11 12 


厨电 SC 

。。。。 

OTD: 天 

DOI: 天 

09 10 11 12 

定单保障的竞争力 


住宅 SC 

。。。。 

UMC: 元 / 台 

09 10 11 12 

。。。。 

质 

量 

零 

缺 

陷 

日 

清 

体 

系 

Self-Innovating 

Self-Driven 

Self-Operating 

自创新 , 自驱动 , 自运转 

倒逼资源 


BU SC 长 

资源保障

Haier Supply Chain Innovations 

Suppliers 

Factories /suppliers 

Collaborations 

Demand and Supply 


• End to End 

• Closed Loop 

• Collaborations 

Reference to 

SCOR model 


Customers 


Users

3.Order creation 

4.Planning 

5.Scheduling 

Haier Supply Chain Process Innovations 

2.Return to forecast 

4. 预排产 

备资源 

3. 周资源 

确定 

1.Demand Forecast 

2. 客户进销 

存分析 

Demand –Supply Collaboration 

1. 零售预 

测提报 

Year target 

Month Target 

Week target 

Demand Generation 

5. 零 

售需 

求提 

报 

6. 客 

户进 

销存 

分析 

7. 确 

认定 

单 

8. 订 

单满 

足方 

案 

9. 时 

序排 

产 

10. 时 

序配 

车 

Order Collaboration 

Plan/Schedule 

T Week 

T-1 

T-2 

11. 

时序 

发布 

6.Material 

Manufacturing 

12. 

时序 

交接 

7.Build 

Total Supply 

Chain Visibility 

13. 

时序 

生产 

14. 

时序 

拣配 

8.Ship 

Logistics 

15. 时 

序装 

车 

16. 

时序 

发货 

9.Deliver 

Domestic 

overseas 

L1/2 shops 

L3/4 shops 

Specialty shop 

Large Format 

Stores 

Hyper Marts 

Super Marts 

17. 

客户签收返单 

Retail 

Corporate contracts 

Overseas channels 

Proof of delivery 

End Users 

T-3 


Haier Supply Chain Performance 

Volume Growth Delivery Predictability Delivery Turn-around Time 

+23% 

+197% 

–32% 

30 

07 年 08 年 09 年 10 年 9 月 

Unit Volume 

Total SC Cost 

30 

08 年底 09 年中 09 年底 10 年 9 月 

Delivery to 1 st commit 

Inventory - Raw 

30 

08 年底 09 年中 09 年底 10 年 9 月 

Order to 

Delivery 

Inventory - FG 

30 

–16% 

30 

–75% 

30 

–43% 

08 年底 09 年中 09 年底 10 年 9 月 

Cost per unit 

08 年底 09 年中 09 年底 10 年 9 月 

Days of Inventory 

08 年底 09 年中 09 年底 10 年 9 月 

Days of Inventory 


Conclusions and Learning 

Business 

Objectives 

Haier achieve supply chain 

excellence through innovations 

and focus on customers needs. 


Operations 

Utilizing SCOR model enable 

supply chain collaborations and 

improve operations performance. 


Visibility 

Supply Chain Visibility is the 

foundation for operations and is 

absolutely critical to success. 


The Problem Being Solved is What’s the Problem 


Business Leaders Expect Visibility to be 

Impactful 

• The 2009 Supply Chain Officer’s study by IBM shows that Supply Chain 

Visibility is the top concern, but not the top priority, for SCOs… 

• Gartner identified six major competencies to focus on within supply chain 

execution, of which four (Global Trade Management, Inbound 

Logistics, Flow Management, and Labor Management) require 

decision making supported by SC visibility… 

• An AMR study in 2008 showed visibility as the most strategically important 

technology investment for supply chains with revenue over $1 

Billion USD 

• A 2008 academic study in Sweden showed an empirical improvement of 

~3% in ROA for 14 companies completing a visibility initiative 


Let’s spend 30 minutes on the 

following… 1. Defining visibility as a process 

2. A general supply chain visibility model 

3. A visibility effectiveness Model 

4. An example from the Haier Supply Chain 


Technology… 

• Is purchasable… 

• Is subject to technology cycles 

•Concerned with upgrade paths 

and interoperability, etc… 

Business Goal… 

• Defines a final, desirable state 

• Has inherent value 

• Can be achieved and lost 

What is supply chain visibility?? 

Strategy… 

• Provides guiding principles for 

how to use resources 

• Is difficult to evaluate 

independent of its 

implementation 

Process… 

• Renders inputs into outputs by 

doing work 

• Can be measured both as a 

black-box, and by sub-processes 


The Need for a Visibility Effectiveness 

Framework 

Total Supply Chain Effectiveness 

Cost 

Service 

Agility Resilience Reliability Responsiveness 

The Black Box of Visibility 

Processes 


Supply Chain Visibility Processes 

Capture 

Data 

Interconnect 

Data 

Extract into 

Intelligence 

Interrupt 

Decisions 

Information 

Materials 

Capital 


Processes 

Total Supply Chain 

Effectiveness 


Materials… 

Capture 

Data 

Supply Chain Visibility Processes 

• Cases, Capture Items, Pallets, Interconnect etc 

• Aggregates 

Data 

of weight, counts 

Data 

Capital… 

Extract • Accounts into payable / Interrupt receivable 

Intelligence 

• Past payments 

Decisions 

• Cost of capital 

Information… 

Information 

Materials 

Capital 

• Summary data 

• Sales levels 

• Sustained markup 


Processes • Conceptual objects 

• ForecastsTotal Supply Chain 

• Purchasing Agreements Effectiveness 

• Maximum Capacity 


Why Use a General Visibility Model? 

Capture 

Data 

Interconnect 

Data 

Extract into 

Intelligence 

Interrupt 

Decisions 

Scoping… 

Performance… 

• Who is the stakeholder list? 

Departments, locations, staff? 

• Where does visibility end and 

begin, what systems or tasks are 

involved? 

• Enables decoupling successful 

from unsuccessful processes 

• Enables measuring the visibility 

initiative below total impact 

• Enable cross-organization 

benchmarking and best-practices 


Tier 1 Supply Chain Visibility Processes 

Capture 

Data 

Interconnect 

Data 

Extract into 

Intelligence 

Interrupt 

Decisions 

Tier 1 Supply Chain Visibility Effectiveness 

Sensitivity 

The capacity to 

capture data as 

it appears in the 

supply chain 

Accessibility 


relevantly 

interconnect 

data and 

prepare for its 

later usage 

Intelligence 


extract data in 

ways which 

identify highvalue 

data and 

relationships 

Decision 

Interruption 


interrupt decisions 

so that different, 

and better, 

outcomes emerge 


A General Model of Visibility Effectiveness 

Supply Chain Visibility Effectiveness 

Tier 1 Visibility 

Effectiveness Metrics 

ROA 

Sensitivity Accessibility Intelligence 

Decision 

Interruption 

Assets 

Revenue 

The Cost-Benefit Space for Visibility Metrics 

Expense 

Tier 2 ROA Metrics 


Visibility Effectiveness: Draft Tier 2 Metrics 


ROA Sensitivity Accessibility Intelligence 

Decision 

Interruption 

Draft Tier 2 Metrics: 

• Sensory Completeness 

• Sensory Redundancy 

• Sensory Accuracy / Bias 

• Sensory Depth of Detail 

• Sensory Timeliness 

Qualitative Examples: 

• DC Manager “-We don’t see inbound 

deliveries except from specific 

suppliers…” 

• Buyer “My POs don’t show as “intransit” 

until a week after they ship…” 

• Accountant “Every quarter get’s 

closed improperly because we don’t 

know about goods delivered FOB on 

the last few days” 

• Stores Staff “The shipment has an 

ETA, but it is always 2-3 days earlier 

than actual delivery” 





Decision 

Interruption 


• Ease of Access / Use 

• Universality of Object Definitions 

• Longevity 


• Buyer “I can track WIP by PO#, but after 

the factory I have to use container #s, BOL 

#s, case #s, etc” 

• Accountant “Shipments from 2008 have 

actual freight cost, but 2009 records only 

show the assumed PO freight factor… 

cross-year comparisons are impossible” 

• Stores Staff “I can’t lookup all shipments 

to my store at once, I have to look for 

Warehouse shipments first and then storeto-store 

transfers next” 





Decision 

Interruption 


• Ease of Use 

• Analytical Accuracy 

• Analytical Re-Usability 

• Automation of Analysis 

• Analytical Relevance 


• Buyer “I think landed cost is rising, but I 

have to push large data sets to Excel to 

calculate rolling-window metrics” 

• Accountant “Landed-Cost is on a weekly 

Executive Dashboard, but the calculation 

ignores DC bypass shipments” 

• Stores Staff “I have to run four separate 

reports to calculate when out-of-stock 

items will be available again” 





Decision 

Interruption 


• Depth of procedural integration 

• User satisfaction with the 

decision-procedure, 

including the point of 

interruption… 

• Transparency to how the visibility 

intelligence is affecting or 

should effect the 

decision making process 


• Buyer “It would take a lot of time and 

effort to always consider chargeback 

trends when issuing new POs, so I only 

review them before seasonal POs” 

• Accountant “I run a report on all 

charge-backs that are pending, and then 

have to email each supplier-buyer pair 

individually. It would be better if the alerts 

were system-generated directly to the 

relevant parties” 





Decision 

Interruption 

Net Sales 

- 

Total Cost 

Net Profit 

÷ 

Net Sales 

Net Margin 

X 

Return on 

Assets 

Ave Current 

Assets 

+ 

Ave Fixed 

Assets 

Net Sales 

÷ 

Total Assets 

Total Asset 

Turnover 


Net Sales 

$1,548,093 

- 

Total Cost 

$1,408,905 

Ave Current Assets 

$946,473 

+ 

Ave Fixed Assets 

$638,081 

Net Profit 

$139,188 

÷ 

Net Sales 

$1,548,093 

Net Sales 

$1,548,093 

÷ 

Total Assets 

$1,584,554 

Net Margin 

9% 

X 

Total Asset Turnover 

98% 

EXAMPLE 

Return on 

Assets 

8.8% 

Visibility initiatives have an average, documented, ~3% increase in ROA 

* 

For this company, that would be one of the following… 

• Revenue increases by $4 Million USD (with no increase in cost) 

• Costs Reduce by $4 Million USD (with no decrease in revenue) 

• Assets Decrease by $40 Million USD (with no decrease on revenue) 

* SIMON JOHANSSON, Supply Chain Visibility: The value of information, Published 2008 


General Model of Visibility 

Capture 

Data 

Interconnect 

Data 

Extract into 

Intelligence 

Interrupt 

Decisions 

General Model of Visibility Effectiveness 

Information Sensitivity 




supply chain 

Materials 

Capital 

Accessibility 


relevantly 

interconnect 

data and 


later usage 

Intelligence 



ways which 


data and 

relationships 


Processes 

Decision 

Interruption 




Total and Supply better, Chain 

Effectiveness 



1.Producer and distributor of white-goods 

2.Domestic China business unit has a strategic 

emphasis on retailers in Tier 3 -4 markets 

3.90% of orders are in the MTO channel 

4.Ave 5 days of inventory ownership 

Production 

Parks 

DCs and 

Hubs 

Retailers 



Capture: 

• Customer profile, including valid 

delivery points and methods 

• Production or transport plans 

• Physical goods location and 

material packaging (case, pallet) 


Interconnect: 

• Data is combined in multiple systems, 

not just one platform 

• Order data → transport data 

• Transport data → production data 

• Material data → customer data 

• Customer data → labor planning data 

Factory 

OMS 

ETL 

BW 

C-Portal IHS Ecode GVS 

BCC 

Retailer 

CTI 

LES 

EAI 

MDM 

Ecode 

BarCode 

MPC 

U8 


Extract Intelligence: 

• Systems use the data interconnections 

to identify valuable information 

• Extraction of important data and data 

relationships in support of processes 

• Contrast, compare, incorporate 


Interupt Decisions: 

• Intelligence is applied to decisions 

• New, and better, outcomes emerge 

• EXAMPLE: How to contact a customer 

to arrange delivery 

• EXAMPLE: when to allow the driver to 

update an order to “delivered” on his 

handheld device 


Visibility Processes 

1- Capture 

2- Interconnect 

3- Extract Intelligence 

4- Interrupt Decisions 


Example Visibility Effectiveness Scorecard 

ROA 

As-Is Option A Option B 

Revenue 

Assets 

Costs 

Sensitivity 

Completeness 

Consistency 

Timeliness 

Accessibility 

Intelligence 

Ease of Use 

Ease of Access 

Accuracy 

Relevancy 

Re-Usability 

Decision Interruption 

Depth of Process Integration 

User Trust 

User Satisfaction 


What’s the Summary? 

1. We believe visibility is a process, not a 

technology, a goal, or a strategy… 

2. Being a process means it can be measured as 

a “black-box” for converting inputs to outputs… 

3. A general model of what happens in the “blackbox” 

has been proposed…At the highest level, 

data is the input and better decisions are the 

output from the visibility process 

4. We also have proposed a general model of 

measuring visibility effectiveness below the toplevel 

impacts on the supply chain 

5. Finally, we provided an example of application 

from the Haier domestic China supply chain 


General Model of Visibility 

Capture 

Data 

Interconnect 

Data 

Extract into 

Intelligence 

Interrupt 

Decisions 

General Model of Visibility Effectiveness 

Information Sensitivity 




supply chain 

Materials 

Capital 

Accessibility 


relevantly 

interconnect 

data and 


later usage 

Intelligence 



ways which 


data and 

relationships 


Processes 

Decision 

Interruption 




Total and Supply better, Chain 

Effectiveness 



Name Jonah McIntire 

Phone +86-216-386-8800, ext 3503 

Mobile +86-139-176-66237 

Email jmcintire@manh.com 

Role Head of EEM Services, APAC 

Name Lim Chin Chye 

Role Head of Global Supply Chain for 

Home Appliance 

www.supply-chain-visibility.com 

**A discussion website, not affiliated with 

either Manhattan Associates or Haier

A General Model of Supply Chain Visibility - Supply Chain Council

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