Driving Supply Chain Efficiencies With a Center of Excellence
A Real-World Example
Supply chain design technology needs to be supported with a thriving center of excellence to help inform better business decisions. But what does this look like in practice? Every supply chain is different, but here’s an anonymized Coupa customer example that we hope can shed some light on the value of a supply chain center of excellence.
The challenge: inventory management and production shutdowns
A global glass and ceramics corporation with multiple business units faced the challenge of maintenance-related production shutdowns and wanted to explore how to manage inventory levels to compensate for those periods.
In 2015, they started their journey into supply chain modeling with Coupa (LLamasoft at the time) to solve this specific issue. They began by running models on a quarterly basis to understand how the shutdowns would impact production, and how much they would need to produce ahead of time to maintain overall production levels.
Making the case for supply chain modeling
This proved successful, so the company expanded its modeling framework to include mid- to long-term capacity planning and demand forecasting, up to about three years into the future. But at the time, they only had one supply chain design modeler, so they realized they needed to add more people to the team and get more tactical.
As the modeling framework expanded and began to serve more business units, the supply chain leaders realized that running one tactical model for just each business partner was taking up about 7–10 days of each modeler’s time every month. When adding all those models together, the modelers were left with limited time and capacity to take on and solve new business problems.
To address this, the supply chain organization sought executive sponsorship. They wanted to expand their modeling capabilities and adopt automation to make the center of excellence more effective.
With executive sponsorship, they started working towards building out a digital twin of their supply chain. At the core of this was identifying data sources and building automated workflows to clean and gather data, which would then be used on demand to build models to solve business problems, and then collaborate by sharing results more broadly across the business. This helped them to reduce the time it took to bring forth recommendations to key stakeholders, from 7–10 days down to 2–3 days.
Prioritizing projects, automating supply chain design, and opening up access
The initial successes were made visible internally and helped gain executive sponsorship. These executive sponsors were instrumental in developing a steering committee comprised of senior stakeholders from different functions of the business. This steering committee helped direct new business problems to the COE and also helped prioritize them. As the modeling team streamlined the automation process, they were able to reduce model running time even further — to just one day. This automation allowed the modelers to focus on other tasks such as production planning and inventory modeling.
Another step these leaders took to help improve supply chain design efficiency and effectiveness was to enable business users to access the decision-making capability of these powerful models through Coupa Apps, which let them refresh pre-built models, run scenarios, and view the results with a click of a button. This process is sometimes called “democratizing design.”
One example of the success of these efforts? In a couple of months, the company achieved directionally accurate, corporate-level carbon emissions. It became a plug-and-play approach for running simpler models that created immense value across the business.
The value of a supply chain center of excellence (COE)
The steps outlined above formed the path this company took to establish and develop its supply chain design center of excellence (COE). A COE creates enormous value by helping companies optimize production planning, lower total costs in the supply chain, drive inventory optimization, measure their carbon footprint, and maintain or improve service levels.
This particular company found that by streamlining its process, it could drive more value and create more efficiencies. The success of the COE led the company to explore further ways to streamline its supply chain design process and deliver value to other parts of the organization.
1. Starting with a specific problem can help build momentum
In this case, the company started its journey with a very specific business problem about the impact of production shutdowns, which helped the leaders demonstrate value early on and use that success to build and expand.
2. Scaling up requires resources
As the company expanded its modeling framework and added more business units, it added more resources to handle the increased workload. But it needed more, which brings us to the next takeaway… .
3. Automation can help free up capacity and drive value
The company realized it needed to automate as many of its processes to free up its modelers' time for more complex projects and continue to drive more value for the organization.
4. A center of excellence (COE) can be valuable for specialized and integrated expertise
The COE helped provide the structure to prioritize business initiatives, collaboratively design solutions with the business, and increase efficiencies through process and data automation to deliver continuous value back to the business.
5. Driving value is key
Throughout this example, the focus was on driving value for the organization, whether through optimizing production planning, lowering total costs, or improving service levels. This helped guide decision-making and project prioritization.
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