Brad Householder discusses the evolution of integrated supply chains into globally integrated operating models. Pressure is mounting on supply chains due to lack of clarity, complexity, and misalignment. Management teams are squeezed between priorities. Moving beyond integrated supply chains, companies implement globally integrated operating models for nearly 50% higher sales growth and over 20% higher profitability. Three keys to success are having a coherent capabilities-driven strategy, integrated business planning for fact-based decisions, and segment-tailored operating models.

1. Brad Householder, Principal
PwC Management Consulting
The Evolution of Integrated Supply
Chains into Global Operating
Models

2. The Evolution of Integrated Supply
Chains into Global Operating Models
Business pressures mount on the supply chain
Integrating beyond the supply chain:
Globally integrated operating models
Three keys to success

3. Stress continues to mount on supply
chains
Lack of clarity and accountability for
decisions
Complexity hinders ability to adapt to
business and market changes
Multiple ineffective connections with
suppliers and customers
Operating footprint and supply chain not
appropriately aligned to future business
Tax risk through misalignment of operating,
tax and legal models
Human capital is misaligned in low
growth versus high growth regions
Slow or poor decision making due to
insufficient and poor data
Increasing in scale creates duplication of
functions and lack of agility

4. Management teams are caught in a
squeezeMarket
Capabilities
Shareholders
Profitable
Growth
Management
Teams
Prioritisation
Mobilisation
Agility

5. Prioritization:
Balancing an increasing list of “must-do’s”
Market
Capabilities
Shareholders
Profitable
Growth
Management
Teams
New product or service
development
35%
Organic growth in existing
domestic market
30%
New M&A, JV, or
strategic alliance
20%
14%
Organic growth in new
geographic market
“But it’s all
important”
% of CEOs citing their main
opportunity for growth
Source: PwC’s 17th Annual Global CEO Survey

6. Mobilisation:
Doing more with not enough
Market
Capabilities
Shareholders
Profitable
Growth
Management
Teams
“How can we do
better with what
we have?”
Source: PwC’s 17th Annual Global CEO Survey

7. Agility:
Making change the norm
Market
Capabilities
Shareholders
Profitable
Growth
Management
Teams
Source: PwC’s 17th Annual Global CEO Survey
“…and tomorrow
it will all change,
so stay awake”
CEOs: Trends that will transform
business over the next five years (%)

8. Moving beyond integrated supply chains:
Globally integrated operating models
…nearly 50% higher Sales Growth
…and over 20% higher Profitability
50 60 70 80 90 100 110 120 130 140 150
Sales growth
Percentage of industry average
BICCs
Non-BICCs
Profitability
50 60 70 80 90 100 110 120 130 140 150
Percentage of industry average
Source: Strategic Supply Chain Management, 2nd Edition, McGraw-Hill
Best-in-Class Companies (BICC) achieve
a stronger balance of performance across
key supply chain metrics, leading to…
Total
SCM Cost
On-Time
Deliv. to
Commit
Upside
Prodctn
Flex
Cash-to-
Cash
Cycle
Time
Inventory
DOS
BICCs
Non-BICCs
BICCs
Non-BICCs
Plan
DeliverMakeSource
Return
1990’s
Integrated Supply Chains
• Process integration
• Cross-functional collaboration
2000’s
Strategic Supply Chains
• Operational integration
• Cross-enterprise collaboration
2010’s
Globally Integrated Operating
Models
• Business integration
• Engineered value chains
Strategic Supply
Chains achieve 50%
higher sales growth
and 20% higher
profitability*
* Source: Strategic Supply Chain Management, 2nd Edition, McGraw-Hill
Leaders are widening the gap by mastering higher levels of
business integration:

9. Moving beyond integrated supply chains:
Globally integrated operating models
…nearly 50% higher Sales Growth
…and over 20% higher Profitability
50 60 70 80 90 100 110 120 130 140 150
Sales growth
Percentage of industry average
BICCs
Non-BICCs
Profitability
50 60 70 80 90 100 110 120 130 140 150
Percentage of industry average
Best-in-Class Companies (BICC) achieve
a stronger balance of performance across
key supply chain metrics, leading to…
Total
SCM Cost
On-Time
Deliv. to
Commit
Upside
Prodctn
Flex
Cash-to-
Cash
Cycle
Time
Inventory
DOS
BICCs
Non-BICCs
BICCs
Non-BICCs
* Source: Strategic Supply Chain Management, 2nd Edition, McGraw-Hill

10. Three keys to success in globally
integrating your operating model

11. Winning performance must start with
coherent alignment to a “Way to Play”
Capabilities-Driven Strategy
Coherent alignment product & service offering, market
needs, and internal capabilities to a clearly defined
“Way to Play”
Source: Strategy& (Formerly Booz & Co.)
Part of the PwC global network

12. Integration is about driving coherence in
fact-based, profit-driven decisions
Integrated Business Planning (IBP)
Align and synchronise data-driven trade-off priorities
and decisions across the enterprise and value chain
to optimise enterprise profitability
Profit-focused
decision-making

13. Agile adaptation is impossible without
precisely tailored operating models
Segment-Tailored Operating Models
Distinct operating models “engineered” to different
“ways to play” based on specific customer segment
characteristics

14. Questions?
Thank you!
For more information:
www.pwc.com/strategicsupplychain
PwC’s 365 App on Apple iTunes
Or contact:
Brad Householder, Principal
brad.householder@us.pwc.com
(508) 259-0432 (M)
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