Supply Chain StrategyLeveraging the backboneof your business as a sourceof competitive advantage
ContentSupply chain strategy                                4Our core offerings                                   5     In...
Supply chain strategy      From product development and sourcing through                  In the past, supply chain strate...
Our core offeringsNot only have business leaders come tounderstand that their supply chain is thebackbone of their busines...
Integrated profitability management                            Fulfil), and selling (Cost-to-Sell), by using pragmatic    ...
Important subjects and tools are value-based                       For companies with average supply chain maturity,manage...
Working capital optimisation                                      Working capital represents the liquidity a business     ...
Making it visible, urgent, happen and stick                             insight on your working capital position and – may...
Supply chain planning                                       Because of our experience and global reach, we don’t     It ha...
Sourcing & procurement                                           Supplier managementOur supply chain service assists our c...
Supply chain network redesign & distribution                    Change can be due to a number of trends. The     Supply ch...
Besides determining the physical aspects of the future             profitable revenue growth, increased operating margin n...
Business model optimisation                                                     As soon as businesses become more mature, ...
But many of these projects fall short of their potential            Business Model Optimisation initiatives do notto lever...
Operational excellence                                        Over the past decades, LSS has grown from a method     When ...
Not only do business leaders need to understand their            We see that especially this culture shift creates a flow ...
Supply chain tools &methodologies      Within Deloitte, we have a wide variety of tools and           Here are some exampl...
Why Deloitte?We help clients in their efforts to deliver more value at        In summary, we offer leading edge supply cha...
ContactsIn case you want to know more about this topic, please do not hesitate to contact us:Stefan Van Thienen           ...
Deloitte - Supply Chain Strategy
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Deloitte - Supply Chain Strategy

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The brochure provides an overview of the different offerings by Deloitte\'s Supply Chain Strategy department

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Deloitte - Supply Chain Strategy

  1. 1. Supply Chain StrategyLeveraging the backboneof your business as a sourceof competitive advantage
  2. 2. ContentSupply chain strategy 4Our core offerings 5 Integrated profitability management 6 Working capital optimisation 8 Supply chain planning 10 Sourcing & procurement 11 Supply chain network redesign & distribution 12 Business model optimisation 14 Operational excellence 16Supply chain tools & methodologies 18Why Deloitte? 19Contacts 20
  3. 3. Supply chain strategy From product development and sourcing through In the past, supply chain strategy has often been manufacturing and distribution, it has never been more underestimated as a source of competitive advantage. important to have all the moving parts of the supply Now, organisations are increasingly moving away chain synchronised. In an environment with increasing from focusing their supply chain efforts on functional customer demands, smaller quantities, less inventory excellence to leveraging their supply chain as a strategic and slack capacity and significantly higher levels of capability. uncertainty than ever before, more and more businesses are rethinking their supply chain end-to-end. Not only have business leaders come to understand that their supply chain is the backbone of their business, it is This requires a top-down strategy supported by all roles also considered as an enabler for their business strategy. that touch the supply chain – which is to say, everyone. In times when customers have increasingly higher It also requires a commitment to developing the tools, expectations and demands, supply chain agility and technologies, people and processes that move a supply flexibility are key differentiators for gaining a competitive chain strategy from paper to reality. advantage. Rather than engineering tightly coupled and inert supply When properly aligned, supply chain strategy is chains, which are prone to failure when meeting the therefore not only about operationalising and future, supply chain leaders are tailoring their supply supporting your business strategy; it is about leveraging chain to the rising tide of global uncertainty and the backbone of your business as a source of business complexity. competitive advantage. It is clear that uncertainty and volatility are here to stay and that supply chain leaders will have to define and implement strategies to manage the associated risks. As a result, supply chain strategy is paving its way to the top of corporate agendas.
  4. 4. Our core offeringsNot only have business leaders come tounderstand that their supply chain is thebackbone of their business, it is alsoconsidered as an enabler for theirbusiness strategy.With our Supply Chain Strategy service offering we At Deloitte, we realise the importance of combiningassist our clients in organising and managing their deep process and technology experience with practicalsupply chain to optimise profit, cost, efficiency, business strategy. With worldwide access to a highlyflexibility, reliability and customer satisfaction. We ranked range of capabilities across consulting, financialtherefore support our clients with the development and advisory services, tax and risk management, we take animplementation of supply chain strategies and tactics by integrated approach that helps us see ways companiesoffering them subject matter expertise and knowledge can use their supply chain operations to deliver moreon different subject areas ranging from the financial value across the business.supply chain (Integrated Profitability Managementand Working Capital Optimisation), Supply Chain Putting the right supply chain strategy forward can bePlanning, Sourcing & Procurement, Network Redesign a daunting task. In this paper, we’ll cut through the& Distribution, Business Model Optimisation (BMO) and clutter by breaking often complex supply chain strategyOperational Excellence. into bite-sized pieces. It zeroes in on things that really matter—and gives an overview of services and solutions that really work.Deloitte’s supply chain strategy offerings Integrated Profitability & Working Capital Optimisation Operational Supply Chain Excellence Planning Supply Chain Strategy Business Sourcing & Model Procurement Optimisation Network Redesign & Distribution Supply Chain Strategy Leveraging the backbone of your business as a source of competitive advantage 5
  5. 5. Integrated profitability management Fulfil), and selling (Cost-to-Sell), by using pragmatic Deloitte can help you in realising your objectives to activity based costing principles in a supply chain and increase profit margins by focusing on cost reduction commercial context. and revenue enhancement. At the inbound side of the supply chain, this cost From a cost perspective we will concentrate our transparency could be called Cost-to-Own (or more efforts on reducing customer driven, internally driven commonly known as Total Cost of Ownership), which is and supplier driven complexity. Our supply chain an important lever to enhance cost efficiency and spend professionals can help your company with providing at supplier level. Cost-to-Serve transparency in order to facilitate profitability and portfolio complexity decisions at the From a revenue perspective we will positively impact granular level of products and customers. Cost-to-Serve revenue enhancement or market share growth through in this respect is a collective term for methodologies market and competition analyses, portfolio strategy, that reveal the true cost of processes and activities pricing optimisation and increasing sales and marketing in manufacturing (Cost-to-Make), logistics (Cost-to- analyses. Integrated profitability management Customer driven complexity Internally driven complexity Customer Company Supplier Pricing Cost-to-Serve Cost-to-Sell Cost-to-Fulfill Cost-to-Make Spend Cost-to-Own (TCO) Taking a granular perspective: improving profitability from a customer, product and supplier perspective G&A Taking a functional and organisational perspective6
  6. 6. Important subjects and tools are value-based For companies with average supply chain maturity,management and value metrics, benchmarking, activity- integrated Cost-to-Serve initiatives often show potentialbased management, customer profitability analysis, cost to improve absolute EBIT% margin with a range of anmanagement in supply chain relationships and balanced additional 0,5% - 2,0%.score cards. Businesses that invest in supply chain competencesIn order to achieve sustained profits and a Return to ‘Provide Cost-to-Serve Transparency’ are leaders inon Investment (ROI), this granular perspective will an evolution towards a more advanced type of supplybe combined with a functional and organisational chain management in which business performance isperspective, focusing on Enterprise Cost Management improved by fine tuning the supply chain at a granularand looking at processes, activities, and organisation. level. It is a clear example of what is commonly referredBoth perspectives are depicted in the figure below. to as ‘the Financial Supply Chain’, and constitutes a transformation to a more mature type of supply chainMethodologies that align the supply chain at the function in the business, reaching out to, and facilitatinggranular level (individual products and customers), the business performance improvement dialogue withprobably comprise the biggest opportunity for profit and the Finance and with the Sales & Marketing functions.cash flow improvement. The rationale is that over time,companies are adding significant amounts of complexityin terms of products and service offering policies. Notall of this complexity is being added in a profitable way.Therefore, it is not uncommon to discover as a result ofa Cost-to-Serve initiative, that a significant portion of theprofit potential - ranging from 30%-50% - is eroded byunprofitable products and offerings.Profitability improvement perspectivesGranular Perspective Functional Perspective Customer Achieving Enterprise Cost Profatibility / Sustained Profit Management (ECM) Cost-to-Serve and ROITaking a granular perspective: Taking a functional andimproving profitability from a organisational perspective:customer, product and supplier looking at processess,perspective. activities and organisation. Supply Chain Strategy Leveraging the backbone of your business as a source of competitive advantage 7
  7. 7. Working capital optimisation Working capital represents the liquidity a business In order to be ready for tomorrow’s new opportunities, requires for day-to-day operation. It reflects the excess businesses have to take action today. Businesses that of current assets over liabilities, comprising of accounts want to excel will need to have sufficient cash available receivable and inventory minus accounts payable. to get the most out of the presented occasions. One of When improving working capital in the organisation, the few remaining areas which can deliver significant people must look beyond the boundaries of their own cash to the business in a relatively short period of time operational processes and understand drivers of cost without a large restructuring program is working capital. and complexity in the entire working capital chain: from sales order processing to receivables. By examining this cycle as a whole, inefficient areas Working can be identified, processes optimised and cycle times Capital reduced. Working capital opportunities are tackled by a variety of improvements on three pillars: increasing Days Payables Outstanding (DPO) and reducing Days Inventory Outstanding (DIO) and Days Sales Outstanding Accounts Accounts (DSO). Examples of key improvement levers are depicted Inventory Payable Receivable in the figure below. A 360 degree view of the cycle is pivotal in delivering an integrated approach to free as much cash as possible in the short term and create sustainable improvements in the long term.Working capital improvement opportunities Receive Working capital requirement Cash out Cash in invoice Cash conversion cycle Goods Issue Pressure receiving invoice DPO DSO Pressure DIO Pressure Days in Days in Days in Days in raw materials WIP finished goods transit inventory inventory inventory Days payables outstanding (DPO) Days inventory outstanding (DIO) Days sales outstanding (DSO)• Extend payment terms, halt early • Review production strategy (where to • Improve collection process and overdue payments deploy inventory) and planning policies management• Align payment term master data (MTO, MTS, SC decoupling) • Focus on quality of products and processes• Optimise cash discounts against interest • Review safety stock levels and re-order (OTC) to ensure no barriers to timely gains points payment• Exploit opportunities to defer tax & duty • Reduce uncertainty in supply and demand • Align and optimise payment terms across payments (forecast accuracy, supply reliability, supply territories and customers lead times, change over times) • Optimise pricing structures, identify • Reduce product portfolio complexity factoring opportunities8
  8. 8. Making it visible, urgent, happen and stick insight on your working capital position and – maybeDeloitte has developed a structured and collaborative even more important – to make it stick in your company.approach consisting of 4 phases which jointly lead to This triggered Deloitte to develop a visual, highlya successful implementation of sustainable Working interactive dashboard, which provides instant insight inCapital Reduction (WCR) in the organisation. the most important working capital KPI’s down to detail level. The dashboard supports powerful “on-the-fly”To ensure that WCR remains top of mind within analysis and navigation from top-level overview downthe organisation it is essential for supply chain, to transaction details. Our WCR Cashboard is easy tomanufacturing and sales & marketing to think like a use for any business executive and easily adjustable andCFO. However, it has proven to be time-consuming, expandable to your company’s specific needs.costly and often difficult to obtain a comprehensiveWorking Capital ManagementMake it Visible Make it Urgent• Understand Working Capital baseline • Perform what-if scenario analyses to identify t i o n a n d Pe• Understand maturity of existing process, an i s a op l the most critical drivers of performance Org e technology, and organisational capabilities • Identify opportunities based on root cause• Perform transactional level analytics analysis ib l e• Report Working Capital Performance v is M • Define improvement initiatives outlining it ak e rationale, key activities and risks ak ss Proces e ine it M se us u rg • Define and launch quick hits ss B ent • Build improvement roadmap WorkingMake it Stick Capital• Set up benefits tracking tool / WC Make it Happen a Ma In at Dashboard (KPIs, information or D • Identify and suggest structural changes on f ma tio n a n d ke requirements and reporting) n WC based on prioritisation of initiatives and pe st it• Secure ownership of changes in WC ic k ap roadmap it h management M a ke • Finalise and refine roadmap in differentiating• Track progress of initiative roll out team(s) quick wins, tactical improvements and (program mgt) Te c l s h n o lo g y a n d To o strategic investments• Determine key learning points and assess • Address WC ownership possibilities for ongoing improvements • Roll out pilot initiatives at target business units In order to be ready for tomorrow’s new opportunities, businesses have to take action today. Businesses that want to excel will need to have sufficient cash available to get the most out of the presented occasions. Supply Chain Strategy Leveraging the backbone of your business as a source of competitive advantage 9
  9. 9. Supply chain planning Because of our experience and global reach, we don’t It has never been more important to knit your complex begin a project with a blank slate – rather, we know supply chain together. Good advanced supply chain which improvement opportunities will drive most of planning can keep the pieces, and the numbers, in sync. the necessary work. These opportunities, along with Working from a clear top-down plan, you can focus relevant metrics & benchmarks, are captured in our and sequence your efforts – so that critical areas like Deloitte Integrated Supply Chain (DISC) method. This demand forecasting and inventory planning get the toolkit provides the foundation for designing leading attention they need to drive improvements elsewhere. capabilities into your supply chain and accelerates the time to benefit. When forecasting works, roles and responsibilities can fall into place. When lines of communication are open, Our services include the following areas: competing views of demand can be reconciled and • Supply chain planning capability assessment and news of change can reach the supply chain in time to opportunity identification make a difference. When inventory planning works, • Integrated supply chain planning strategy, vision and partners in the supply chain optimise all inventories – conceptual design finished goods, critical components and raw materials • Supply chain planning process, technology and – to effectively meet and respond to demand. And while organisation design covering the following areas: large-scale transformation is often important, short-term - Sales and operations planning actions can often drive big gains in working capital too. - Demand planning (including collaboration with customers) In supply chain planning, we work with clients to - Product lifecycle planning develop strategies, define future solutions built on - Supply planning (including collaboration with the leading capabilities and implement process and extended supply chain) technology solutions. We’re as strong in helping clients - Inventory planning execute a plan as we are in crafting it. - Supply chain flexibility - Supply chain planning performance management We help transform our clients’ business, generating benefits such as: • Reduced inventory levels • Improved customer service • Reduced cost of goods sold • Improved forecasting ability & responsiveness • Reduced planning cycle times10
  10. 10. Sourcing & procurement Supplier managementOur supply chain service assists our clients across all Active supplier management is an integral part ofindustries, private or public, to develop and implement strategic sourcing. Organisations are increasingly movingstrategies, tactics and infrastructures both within their away from the traditional approach of selecting theown organisation and also across their extended supply “lowest cost supplier” to a “total cost of ownership”chain of customers and suppliers. approach. This approach presupposes extensive knowledge of supplier performance and its impact onA strategic approach to procurement is proven enterprise operations.to enhance the effectiveness and efficiency oforganisation’s operations as well as saving revenue Procurement optimisationthrough effective sourcing, transaction cost reductions In procurement optimisation, the main focus is onand standardised procurement processes. Sourcing transactional efficiency and on squeezing process-relatedrefers to the value added process of selecting suppliers costs and inefficiencies throughout the purchasing cycleand the respective cooperation scheme. It must that begins with the identification of the need for thebe supported by advanced analytics and market material / service and end with its receipt. Best practicesintelligence, supplier performance information and a suggest that the procurement process should be as leanconcrete and well-developed strategy. On the other as possible.hand, procurement refers to the transactional aspect ofthe relationship and should be streamlined as much aspossible in order to achieve efficiency.Deloitte can provide its clients with an integratedapproach incorporating spend analysis, strategicsourcing, supplier management as well as procurementoptimisation.Spend analysisBefore implementing any sourcing & procurementinitiatives, it is very important to analyse past, currentand projected spending patterns. The analysis mustspan the entire enterprise and include data that is oftencollected from various departments and locations.Such an analysis of direct and indirect spend givesthe company the information and decision-supportrequired to develop supply strategies that are alignedwith the objectives of the organisation and to identifyand prioritise sourcing & procurement improvementinitiatives.Strategic sourcingThe overall goal of strategic sourcing is to achievelarge and sustainable cost reductions, long-term supplystability and minimisation of supply risk. The strategiesto achieve such goals can be as wide as rationalisingsupplier base, leveraging spending across departments,business units and geographical regions, reconfiguringsupply specifications, and / or developing strategicpartnerships / alliances with selected suppliers. Supply Chain Strategy Leveraging the backbone of your business as a source of competitive advantage 11
  11. 11. Supply chain network redesign & distribution Change can be due to a number of trends. The Supply chain network design aims to analyse and design network might erode because of a shift in the customer the infrastructure of the supply chain network (inbound, base or the business model might change because production and outbound) which fits the supply chain of an increased focus on sustainability. Mergers strategy. The aim is to optimise both the level of service and acquisitions might bring along new plants and towards your customers as well as cost of the supply chain. warehouses. Or perhaps, new products and markets might lead to expansion of the network and an Most supply chains are a result of legacy operations increased complexity. The combined effect of these and strategic choices, not designed to drive value for an changes may significantly impact the efficiency of the organisation in the future. Whilst these supply chains supply chain network and lead to a number of signals are sometimes “good enough”, the rapidly changing for improvement. business environment and growing complexity of many businesses and their supply chain networks make a strong case to step back, define and then implement the optimal network configuration and operational characteristics. No network lasts forever as the only constant is change. Signals for network improvement Erosion • Shifting customer base, volumes, product mix • hanges in labor cost, tariffs, duties, currency exchange C Expansion & increased complexity • ew products, markets, geographies N • upplier changes S • ompetitive dynamics with impact on product and service offering policies C Acquisitions • ergers and acquisitions M • ew plants, new warehouses, new customers N Business model changes • ake or Buy and outsourcing opportunities M • hanges in technology or organisation C • ntegration or regionalisation of supply chain functions I • ustainability and Corporate Social Responsibility S Costs • High, and above average, overall distribution cost structure 12
  12. 12. Besides determining the physical aspects of the future profitable revenue growth, increased operating margin network, there are a number of other considerations and increased asset turns. This balancing exercise that will influence its design. Growth expectations, can prove to be daunting as network challenges global or regional sales and brands, centralisation occur at every stage along the supply chain. A single of planning, political stability, location of contract decision often sub-optimises another objective. All manufacturers and tax considerations are only a few of in all, typical challenges for a network optimissation the aspects to take into account in the network design. project are conflicting objectives and an ever changing environment. A network optimisation is a modelling-led activity that defines the physical ‘shape’ and high-level operational Dependent on company objectives and constraints, a characteristics of a distribution network. It is different network design study can be used for different sections to operational modelling in that it looks over a longer of the supply chain like upstream, downstream, or time horizon (3-5 years) to provide answers to key product segments. After analysing the current network strategic questions. It helps organisations create a robust and both defining and implementing the optimal supply solution that balances all of the strategic objectives, chain network, we have realised up to 10% to 15% while considering all constraints and inputs to drive reductions in operating costs for our clients. Network optimisation challenges Increase Shareholder Value Revenue Growth Asset Turns Operating Margin Provide Differentiated Improve Working Increase Fixed Reduce Customer Service Capital Utilisation Asset Utilisation Enterprise-wide Costs Marketing strategy Competitors and portfolio Co-locate capacity to Supply chain Market developments Minimise Inventory increase responsiveness planning model Reduce no. of suppliersExternal Internal Serve more profitable Duties & taxes customers better Social impact Maximise asset utilisation at sites Decrease lead times Organisational model Different costs Minimise 100% customer between countries transportation costs satisfaction IT Legal issues Working methods Supply Chain Strategy Leveraging the backbone of your business as a source of competitive advantage 13
  13. 13. Business model optimisation As soon as businesses become more mature, in With our Business Model Optimisation offering, we environments with less growth, they start concentrating look at a company’s value chain to optimise the primary on other shareholder value creation levers such as value creating activities in R&D, procurement, planning asset efficiency and operating margin. In this more and manufacturing, sales and distribution and after sales mature stage, the more integrated, centralised and service. functionalised operating models are favourable. By taking a multi-country, very often regional or even a Supply chain transformation initiatives are a proven global perspective, we align organisation and processes, way of reducing operational costs and increasing and optimise the way resources are deployed, decisions profits. Most successful companies have gained a are made and how the business goes to market. competitive advantage by applying continuous supply Companies in the early stages of their lifecycle, chain improvements. These have resulted in streamlined with growth abundantly available, tend to focus on processes, reduced stock levels, shorter lead times, establishing their footprint in the market. For these better asset utilisation, improved productivity and better businesses, the more decentralised and entrepreneurial service levels. business models are favourable. R&D and Sales & Revenu Growth Purchasing Manufacturing Distribution Marketing Service Integration of business functions in the primary value chain Shareholder Value Creation Operating Margin Central Mfg & Planning Sales & Distribution IP company Procurement Entrepreneur Entrepreneur Entrepreneur Asset Efficiency Support functions: support the activities of the primary value chain Finance HR IT (e.g. shared service operations)14
  14. 14. But many of these projects fall short of their potential Business Model Optimisation initiatives do notto leverage additional shareholder value. Why? Often necessarily have to be undertaken comprising thethey only invest in deep operational improvements, but complete supply chain in aggregate. In practice we findignore broader issues, such as structural tax planning. Or constellations ranging from a procurement entrepreneurthey focus on pre-tax gains instead of after-tax returns. over a supply chain company to a full principal includingOther companies concentrate on reducing the tax the R&D, IP and intangibles.burden on their current operating model. But becausethese tactical approaches do not automatically follow Deloitte’s Business Model Optimisation (BMO) servicesa rise in profits, they are not effective in offsetting the focus on helping multinational companies integratemarginal tax impact of new income. their operational and tax planning in a scalable and sustainable way to help business leaders make moreAchieving world-class supply chain performance requires effective decisions on an after-tax basis.an integrated approach, where companies not onlybenefit from their operational improvements, but alsoretain more of their additional earnings. This can befacilitated by taking tax into account from the outset ofthe supply chain planning. Current Model Central Entrepreneur Model Value Add allocation Value Add allocation Third party Suppliers Third party Central Suppliers Entrepeneur Regional BG/BU Regional BG/BU National Manufacturing Management National Manufac- Management Sales Office Sites Costs Sales Office turing Sites Costs Stripped Risk Profit and Tax Implications Before After Additional Concentrating Profit ROW Profit Exponential significant and people functions, synergistic Profit ROW assets, risk profit management increases and value add with the central Profit Central Tax ROW Tax Savings Profit Central entrepreneur Tax Central Tax Central *ROW= Rest of the World Supply Chain Strategy Leveraging the backbone of your business as a source of competitive advantage 15
  15. 15. Operational excellence Over the past decades, LSS has grown from a method When businesses are maturing and going through the used on the shop floor in manufacturing industries to different phases of their lifecycle, value creation efforts the entire supply chain, to service industries such as are increasingly being made on improving operating healthcare and financial services, and even in the back margins and asset efficiency. On the road to enhanced office for managing IT and human resources. business performance, these businesses strive for operational excellence. By combining the principles of ‘Lean’ and Six Sigma, both waste and variation (defects) can be eliminated Lean Six Sigma (LSS) is a structured and proven in product or service processes. Process inefficiencies performance improvement methodology, which focuses or variations are identified using such tools as Value on eliminating waste by improving cost efficiency, Stream Mapping or by calculating process capability. quality and reliability, and compliance safety. LSS is a Having identified improvement opportunities, solutions business performance improvement program, which can include increasing capacity through the application combines focus on the customer with a structured, of Overall Equipment Effectiveness or enhancing data-driven approach, leading to measurable equipment uptime through the introduction of Total improvements. Productive Maintenance. However, these tools and techniques used for performance management are only some, but not all, critical success factors of lean transformations. Lean Six Sigma in the Lifecycle of the Business Revenue • First mover in the market Growth • Establish market footprint Value Lean Creation Six Sigma Operating Margin • Cost efficiency • Quality and Reliability • Compliance safety/environment • Customer Focus Asset Efficiency16
  16. 16. Not only do business leaders need to understand their We see that especially this culture shift creates a flow ofbusiness priorities (quality, cost reduction, flexibility, continuous improvement, which enables organisationsasset utilisation) and align their operational excellence to continuously achieve successes in lowering costsstrategy accordingly, they also need to develop business and enhancing customer’s experience by improvingtransformation capabilities such as portfolio, program efficiency, quality and lead time. The combinationand project management. These include creating of Lean Six Sigma with integrated performancetransparency regarding the projects portfolio on site measurement enables organisations to further monitorlevel, aligning projects with the site objectives and the improvements and control the process performance.making the right choice when prioritising investments.The journey towards operational excellence requires As the world’s leading supply chain consulting firm1, 1 Source: Kennedy Consultingstrong leadership to drive projects and to embed change Deloitte can not only help you to achieve operational Research & Advisory; Supply Chain Managementin a culture of entrepreneurship and accountability. excellence by supporting your employees in the Lean Six Consulting Marketplace Sigma approach and implementation, but also to create 2010-2013 Although buy-in from top management is critical, all the necessary preconditions to translate this operationalof the organisation’s employees play an important part excellence into enhanced business performance. Wein these improvements as the architects of the new have a large number of Black Belts and Green Beltsprocess. This makes Lean Six Sigma more than just a set that can help your organisation to transform processesof improvement tools, but also a way to create a culture in a variety of industries including healthcare, financialshift of the organisation as it provides the opportunity services, local government, energy and manufacturingto create a common language in the business around industries.performance improvement, and to create a platform forleadership and talent development. LSS is more than amethodology: it is a way of thinking. How to translate an operational excellence strategy into enhanced business performance? n ce M a n a g e rf o rm a me Pe nt odel dership sm Lea es & in cu Bus Por t f lture o li o & P r o g m ent lo p ra m ve M De oo an ue T s y ls em & te c h niq ag eg t en ra t St Supply Chain Strategy Leveraging the backbone of your business as a source of competitive advantage 17
  17. 17. Supply chain tools &methodologies Within Deloitte, we have a wide variety of tools and Here are some example supply chain metrics following methodologies to execute complex supply chain the strategy/plan/source/make/deliver process taxonomy: transformations. A primary example is our Deloitte • Strategy: Metrics surrounding the creation and Integrated Supply Chain (DISC) method, which serves as management of the overall supply chain strategy, a focal point for the supply chain practice area across including defining the organisation, establishing the global boundaries and provides a common language for budget, management oversight and the performance large-scale, global supply chain engagements. Our DISC achieved by the overall supply chain network. method is based on the Supply Chain Council SCOR® • Plan: Metrics driving customer service and working model and enhanced for a more holistic approach, capital (including inventory levels across the supply integrating our supply chain-related offerings across chain) and address the functions of demand planning, each of the Strategy & Operations, Technology, and supply planning, inventory management, distribution Human Capital service lines. Other tools include our requirements planning. Supply Chain Shareholder Value Map, IndustryPrint, • Source: Metrics on procurement effectiveness and CategoryPrintsTM and Lean Six Sigma. efficiency — strategic sourcing, operations and management of suppliers, contracts and commodities. Furthermore, Deloitte has established a Global • Make: Metrics on cost and staffing around Benchmarking Center (GBC) to provide executives with manufacturing — production, material availability, industry-relevant metrics and insight. Relevant supply quality assurance, maintenance, sanitation and chain data — gathered through benchmarking — can engineering. help provide executives with the context they need • Deliver/Return: Metrics on cost and staffing levels for to identify and prioritise improvement opportunities. order fulfillment, logistics, distribution, transportation Through benchmarking, executives gain fact-based and returns/recalls. measures across different dimensions of performance, such as cost, quality, cycle time and customer service. Our supply chain benchmarks are particularly robust in client data from product industries (consumer business, process manufacturing and discrete manufacturing). Deloitte Integrated Supply Chain (DISC) method Develop Plan Source Make Deliver Returns Product Supply Chain Sourcing & Manufacturing Logistics & Reverse Logistics Innovation & Planning Procurement Operations Distribution Development Strategy Process Technology People/organisation Performance management18
  18. 18. Why Deloitte?We help clients in their efforts to deliver more value at In summary, we offer leading edge supply chain adviceevery step across their end-to-end supply chains – from to both the public and private sectors and can assistdesign and planning through sourcing, manufacturing, in undertaking all aspects of strategic and tacticaldelivery and return. We do this by helping to define a assessment, design and implementation to improve yourglobal supply chain strategy that not only aligns with a supply chain operations.company’s overall business strategy, but also provides aplaybook and roadmap for execution. Our approach focuses on analysing our client’s supply chain along three major dimensions: its business valueThe supply chain has always been important; today it from both financial and customer standpoints, theis critical. We understand the pressures and problems components and capabilities of its management andfaced by managing the complexities of the supply chain. the leadership alignment and infrastructure to supportOur teams are equipped with the experience and skills organisational change.required to tailor our services to meet the specific needsof our clients. Key lessons we’ve learned along the way Some industries are ahead of others, and you could be among the first to “import” a proven Consider cross-functional impacts. leading practice. Supply chain strategy is about more than just operations. It also calls finance, HR, tax and other Focus on information, not inventory. functions to the table. For example, you can’t Your customers have custom requirements. To weigh the outcome of moving some operations the extent possible, learn to assemble and deliver to another country without considering the tax rather than to build, warehouse and sell. Even if implications. Every department brings a useful this strategy applies only to the marginal “tail” perspective and set of values. SKUs and not your “A-movers,” it can enhance your reputation for responsiveness. Last-minute Stay flexible and balanced. customisation isn’t just for cars and PCs anymore. An over-investment in fixed assets or fixed capacity can pin you down. An under-investment Embrace sustainability. can leave you unable to meet pressing demand. Not only is it here to stay, but green management The right mix of in-house and third-party assets is like green food: good for you. Make a serious – of fixed and variable costs – can provide effort to integrate sustainability into your necessary agility. supply chain strategy instead of tinkering on the margins – or worse, treating it like as PR gambit Take a broad view of benchmarks. with no substance to back it up. There may be lessons worth learning outside your immediate industry or sector. Supply Chain Strategy Leveraging the backbone of your business as a source of competitive advantage 19
  19. 19. ContactsIn case you want to know more about this topic, please do not hesitate to contact us:Stefan Van Thienen Paul Delesalle Kobe Naesens Isabelle HautecourtPartner Director Manager Manager+ 32 476 22 01 03 + 32 476 49 50 08 + 32 475 30 07 44 + 32 473 30 27 85svanthienen@deloitte.com pdelesalle@deloitte.com knaesens@deloitte.com ihautecourt@deloitte.comFor more info on this topic, you can find us on the web: www.deloitte.com/be/supply-chain-strategy Deloitte Supply Chain Strategy website Deloitte – Supply Chain Strategy LinkedIn professional groupDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of memberfirms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ about for a detailed description of the legalstructure of Deloitte Touche Tohmatsu Limited and its member firms.Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globallyconnected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to helpclients succeed wherever they operate. Deloitte’s approximately 170,000 professionals are committed to becoming the standard of excellence.This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities(collectively, the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision ortaking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the DeloitteNetwork shall be responsible for any loss whatsoever sustained by any person who relies on this publication.© June 2011 Deloitte ConsultingDesigned and produced by the Creative Studio at Deloitte, Belgium.

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