Analytic Capabilities in Supply Chain – A use case to build homegrown Supply Chain Digital Transformation

Mike Lavaglio

Director, Planning & Analytics at Dexcom

Learning Objectives

This presentation will cover the importance of adding analytical capabilities on a Supply Chain team vs. leaning on IT teams to service Supply Chain teams. There is significant value decentralizing some of the IT/BI functions and moving those capabilities into Supply Chain to help improve turnaround time on model improvements, dashboards, reports, metrics, etc.


Key Takeaways: 



  • Importance of a clear Supply Chain digital transformation strategy and vision

  • Selling points to decentralize some of the BI/IT functions and bring into the Supply Chain team


"We are developing a sound value stream centered on governance metrics, and driving that value for both leaders and for our employees. "

Mike Lavaglio

Director, Planning & Analytics at Dexcom

Transcript

Hello, my name is Mike Lavaglio. Welcome to a presentation on Analytic Capabilities in Supply Chain: A Use Case to Build Homegrown Supply Chain Digital Transformation. Today’s agenda, we’re going to go through my background, a little bit of our journey, how we’re navigating through some organizational challenges, our org design, enabling the journey, and then a wrap up of how we’ve been able to grow this chain digital transformation within Dexcom.


My background, I’m currently the Director of Supply Planning and Advanced Analytics at Dexcom. My key areas of responsibility, centered around SNMP, and long range planning, master planning, master data management, and then into advanced analytics, growing our Supply Chain systems and solutions, and then some MRP design and accuracy.


Today, in terms of the digital transformation, our team is comprised of Supply Chain professionals that have backgrounds with data in data analyst, engineering, and scientists. It’s really enabled us to grow this transformation, as we build this team out, and we’ll go through that today.


My previous background, quite a diverse background, I would say, focus mostly on end to end. I was previously the Supply Chain manager at Stone Brewing Company. Prior to that, spent some time as both leader and as a practitioner across planning, procurement, and distribution in the cardiovascular space mostly at Abbott vascular and cell and other biosciences.


Even Dexcom, we were faced with just this tremendous growth, and we still are. We knew in order to move from startup to sort of the worldwide view of the world in terms of growth and servicing millions of patients around the world, we absolutely need to improve our digital transformation or ability to digitize the Supply Chain. What we’re doing is we’re building a world class analytic function [inaudible] centered on these five key areas.


Data warehouse is a big one. We’ve got to find the data, get the data, make it accessible, then got to build it, and automate it. No sense of having manual operations in this area. So, we’ve automated data pipelines so that we can respond quickly in making sure that we have access that data but we are refreshing it quickly, so that we get the most real time up to date data to our folks. That day has got to be accurate, it’s got to be configurable, so that they can play into our tools and solutions and building data models, predictive analysis, etc. Again, it’s got to be accessible. Everything that we’re delivering has to be actionable. It’s got to drive value to the user. It’s got to be tied to the organization.


We’ve got these data engineers, analysts, and scientists that are helping us build these capabilities, and advanced dashboards that are allowing leaders to make decisions and empower employees. Then, getting away from the reactiveness of the business moving definitely into prescriptive and predictive model so that we can predict and respond to the future issues for for the company.


Our vision is really been centered on three things, it’s been simpler, faster, and better. We’ve reduced the cost and complexity. We’ve unified demand supply. We’ve integrated a lot of the networks and really moving to this and then view. We understood the based on this growing business in a fairly new market, a lot of unknowns, but we knew we had to respond quickly. We respond to demand surges. We respond to manufacturing issues, you name it. We are building these tools to allow us to respond quickly and be fast, whether it’s fast to market, faster respond to the customer, or faster respond even internally. That’s what we’re centered on.


The last thing is empowering our planners and our folks, employees just be better. We got to have that collaboration. In light of where we are today, having that collaboration digitally is super important. That’s what we’re centered around. I hope homegrown transformation can [inaudible] with this from the bottoms up. We understand the network, we understand our customers in all the areas that impact the customer experience, and of course, our employee experience. So, we took this and understood where we want to be better, and we’ve been gaining visibility into different areas in order promising what happens in an intake of an order, where does it go? How does it get processed? What’s that experience for both our customer for our employees, and then of course, as it lands to the customer, what’s their experience been, and gaining all that visibility along the way.


Demand Management. How are we sensing our demand? How are we improving our accuracy? Looking at long range and short term, since inventory costs, excess obsolescence, and all those metrics are front and center for us. We are continuing to build our capabilities and measuring these areas.


SOP, another one. We are running a lot of scenarios, trying to make the right business decisions. With the focus on financially, how are you driving the business. Then, supply inventory planning and the buyer supplier collaboration are areas that we’re trying to integrate into our end to end digital transformation.


For us, again, it’s all about end to end visibility. At the end of the day, what we’ve grown to realize is, our customers are happy if our employees are happy. So, we got to make sure that we are empowering our employees with the right tools, so those in turn translate to good customer experience. We’re going a homegrown digital transformation that allows us to do a lot of things. We got to measure what we need to measure. There’s no more blind spots in our organization. We definitely will be able to measure so that we can improve, and continue down that path. We got to empower those employees. Gotta keep focusing on being better to serve the customer. And build, build, build. We are building new solutions, new capabilities, and we’re building a team. This, again, is enabling us to solve this end to end digital transformation strategy.


Then, fitting corporate business goals and continuous improvement. A lot of background there. What are we doing? How do we do it? Give us some details. What we’re really doing is we’re focused on where the right fit is from the organization standpoint. There are options that I’m sure everyone has some pros and cons that they’ve experienced or experiencing in the way that their their digital transformation is set up.


What we’ve done is, as we looked at this kind of homegrown digital transformation approach, we did a couple of different options. We could keep this capability, and what we would call a Centralized Business Intelligence Function—Central BI Function—where you’ve got central knowledge, but there’s some cons of that we felt was prohibitive of us moving into this digital transformation, which was you sometimes get a slow response from key into our customers. If we’re going to a centralized BI team with requests, how fast can I turn this request around? You think about it as an IT ticket kind of situation, that’s what we were experiencing. It was nothing wrong, it just wasn’t as fast as we could be, according to our vision. Same thing on the IT side. There was definitely an opportunity for us to centralize this within IT. There’s central knowledge and control, good access to data, but again, different skill sets, and we were slower to respond to key internal customer and external requirements.


What we end up doing was we essentially had a decentralized BI function with IT support. Because we have folks that are on our team close to the Supply Chain leaders and employees, where they get to work with them right next to each other, developing user requirements, understanding the visualizations are needed, and building these predictive models. Then, my team gets to go and work with IT and BI to build these things. We found that there’s a really quick response from our teams that drives value really fast. The more that these data engineers, analysts, and scientists are able to understand that business value, it just makes things a little easier and faster, where we can get some great value command a team. That’s what we’ve done. We’ve we’ve basically hired, and are continuing to hire, data engineers and analysts and scientists and keeping them within the Supply Chain function to help us deliver this quick, simple value.


So, how we’ve structured it. We’ve got Supply Chain advanced analytics. What we’re doing there is we’re basically creating that SME, Subject Matter Expert, to source model analyze and visualize data to manage the business. That is contained within our business, so Supply Chain has a Supply Chain advanced analytics team, but where we have handshakes, of course, with IT and our business intelligence teams are around data availability, accuracy, and modeling. It’s all centered around accurate and available data. Our team spent a lot of time finding how we can get data, making sure the data is accurate, and then driving that data access and availability into what we provide the value to Supply Chain leadership around predictive models, metrics, etc.


I think we’ve got a good handshake across the the teams and so far, everything has been working quite well and good orchestration of delivering business value to the customer and to our employees. The five year goal for us that we set out was hey, you know, today or a year or two ago, reusing about 10% of technology, 20% process, and the rest was all people right. We had tons of people grabbing data, pulling data out, doing pivot tables, you name it, and spending hours and hours and hours a day just to be able to get the data in the right state. We are flipping that around. Basically, flipping it on its head where we want to find, tune, and drive technology to be the core of what we do on a day to day basis. Still, of course, got to have good processes.


People doesn’t necessarily mean that we have a direction of people, this just means that as our business scales, we like to hire as many people. The people that we are hiring just have different skill sets. We are going to grow within our own skin and utilize our existing work force, and just empower them, and make them feel more confident in being able to use these tools to help grow the business. So, that’s what we’re centered on. We’re driving technology to help us close that gap and to make sure that our employees feel empowered to continue making a decision to make it today.


Our five year goal is really to see if we can automate 80% of the work that we do today, in some form of technology. We’ve created in this orchestration with IT, and we’ve essentially built a Supply Chain data warehouse that is definitely cross functional right in nature. We receive requests from different teams, we synthesize the data, and we’re enabling Supply Chain analytics to happen. It’s across multiple assets, multiple facets of the end to end Supply Chain.


Over a few months, we’ve been able to deliver hundreds of thousands of dollars of savings just from folks doing repetitive manual tasks. Those savings continue to grow, especially as you look at what we’ve been able to do from a revenue standpoint or allowing teams to go fix problems. So, this is just purely ours, and we’re seeing a lot more out there for us to go grab.


Now, you saw the orchestration between IT and BI and ourselves. This is how we’ve worked through the team. We’ve got data engineer, data scientists, and data analysts on our team. This is how they work well together. You get the engineer that’s enabling data access in relation and giving us that capturing that value. You’ve got a data scientist who’s discovering value. They are, in every day, understanding trends, looking at different aspects of the data, and unlocking what we feel is the true value in our digital transformation. Then, our data analyst is really helping the business make better decisions. They’re working with business partners, different users, grabbing all the requirements that back into the data scientists and data engineering worlds. Through all that, right, we are developing a sound value stream centered on governance metrics, and driving that value for both leaders and for our employees.


We’ve got tons of our automating opportunities here. We’re centered on Oracle. We’ve got other solutions. How we bring it all in? How do we automate it? Then, what are we doing on the backend? We are using different solutions to help automate a lot of the things that we do today. We look forward to continue down this roadmap, centered on sound data structure, and then, moving into sound software structure that gets us to that value. How we know how well we’re doing? It’s all good terms and good thought, but what does the maturity journey look like for us? And how do we provide the most value? So, we kind of see ourselves measuring.


Today, what we do is diagnostic, predictive, moving to prescriptive, and then cognitive at some point. We want to move in that direction. I think today we operate well within the simulation, the predictive area. What if this happens? We get ahead of some of the what if scenarios, move into some of the statistical forecasting, and we get sensitive in terms of how our models behave? How great would it be to really get into prescriptive and cognitive, and that’s what we’re going. I’m not going to claim that we are there yet, but that is the strategy. We are moving to that direction, where we let some of the machine learning artificial intelligence take over some of the manual operations, but it gives us that business value so that we can go answer that question, what will we do, instead of what’s going to happen or what should we do.


We want to get to a point where we are making these decisions with all the right data are in front of us, and we don’t have to question the data. We move right into what will we do when we make those decisions for the organization. You’ll see that kind of throughout our processes as we move in different areas end to end to make those decisions.


I like to wrap up in terms of how we’ve been able to get a homegrown digital transformation. First and foremost, we set the vision. It was simpler, faster, and better. We’ve created this journey and roadmap to get there. We had to also get that key stakeholder buy in. I mean, it was not a slamdunk that we are going to have a decentralized sort of team have this capability and sit in Supply Chain. I think you’ll find some organizations, maybe your organization, is maybe different or maybe you do align with ours. We had to get that key stakeholder buy in from each division, each group to make sure that they supported the strategy. That strategy was sold and showcase the ROI in mind and the value proposition that we’re providing. What I’ve don is we are going to continue measuring the ROI. We’re going to measure and retune as much as we need to. We want to keep this as a living, breathing document all centered around our strategy, all centered around that vision.


The other piece is hiring the right folks. We’ve been selective in making sure that we are hiring folks that want to make the impact. I think, in our experience, we’ve had some folks that come in and don’t see all the business value. I think if you get to see the business value, or you get to partner with a Supply Chain professional and practitioner, you understand that business value these reports and all this data is having on both the customer and the employee. We’re making the right hiring decisions and making sure that our team is centered around that realizing that value quickly.


That’s a wrap up. Hopefully, I was able to give you a sense of what our digital transformation has been. You can reach me at my email there. I really appreciate your time. Hope this helped. Have a good day.


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