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Supply Chain Strategy Profile
- 1. Supply Chain Strategy Keys to Increased Business Profitability A Profile of REM Associates of Princeton, Inc. Resources and Capabilities 20 NASSAU STREET, SUITE 244 PRINCETON, NEW JERSEY 08542
- 2. REM Associates Profile Ourbusiness operations strategy profile includes . . . . Business Supply Chain Strategy Profile of REM Associates The REM Associates Network Functional Areas of Consulting Client Industry Profile Partial Listing of Clients REM Associates Relevant Experience Our Approach to Clients: – Assessment – Issues and Concerns – Path Forward Overview of The Business Operations Strategic Planning Process. Copyright ® REM Associates Page 2
- 3. Business Supply ChainStrategy Today’s business management faces increasingly complex challenges from a variety of sources, including . . . . Business technology issues Political, regulatory, and external controls Sociological and cultural change Investment community emphasis on “real” earnings and growth. In addition, increasing business pressures require management focus, decision making, and action plans directed at . . . . Intensified product, service, and market competition Innovative pricing strategies A constantly changing government regulatory environment Greater emphasis on operational and working capital cost reduction Increasing the need for managing a company with in-depth understanding, improved knowledge, and skills not previously required in business management. Copyright ® REM Associates Page 3
- 4. Business Supply ChainStrategy Recent assignments found that inefficiencies in business operations waste as much as 25% of an organization’s operating costs. With profit margins of 3 to 4%, even a 5% reduction in waste can double a company’s profitability. Key drivers of this value creation include . . . . Revenue - capacity utilization, product speed to market, stock-outs, and service to customers Expenses - inventory carrying costs, production and distribution costs, transportation costs, logistics productivity, outsourcing, and asset utilization Capital Utilization - working capital (inventory turns, order cycle time) and fixed assets (plants/DC locations, fleet utilization, strategic outsourcing) By lowering costs and increasing asset utilization, business operations can free up cash. Copyright ® REM Associates Page 4
- 5. Business Supply ChainStrategy Supply Chain strategy deals with planning the intermediate and longer- term direction of the business, including . . . . Supply Chain mission Key strategic thrusts Supply Chain goals and objectives Action plans aimed at strategy implementation. Supply Chain re-engineering is directed at assessing and improving policies, procedures, and practices to improve costs, customer service, and business effectiveness, including . . . . Operations and process assessments Data and information flows and linkages Policies, procedures, and practices completeness, consistency, and effectiveness Organization structure and responsibilities – ownership. Copyright ® REM Associates Page 5
- 6. Profile of REMAssociates REM Associates, started in 1984, is now in its twenty-fourth year serving business clients . . . . Advice and counsel in “Business and Supply Chain Operations” Consumer and industrial companies as well as governmental organizations Strategic, tactical, and contingency planning Operations evaluations directed at improvements: – Profit improvement – Facility operations analysis and planning – Cost reduction and productivity improvement – ABC inventory costing and evaluation – Functional outsourcing – Customer service – Organization structure and performance. Copyright ® REM Associates Page 6
- 7. Profile of REMAssociates REM Associates represents a network of over sixty experienced professionals worldwide . . . . Senior experienced business personnel Most with over 25 years of experience Careers in both consulting and business operations Variety of business disciplines Broad range of industry backgrounds Strong inter-personal skills Commitment to positive results Support from analysis through implementation. Copyright ® REM Associates Page 7
- 8. The REM AssociatesNetwork REM Associates Network represents key business operations organizations and companies. A partial list includes . . . . Bernard J. Bernard J. La Londe & Joseph Joseph Brinmar Brinmar La Londe & Ohio State Andraski Andraski Associates Associates Ohio State University Group Group University Princeton Princeton REM Associates REM Associates CGR CGR Computer Computer Network Network Associates Associates Consulting Consulting Miami University Miami Gross Princeton Princeton University Gross Of University & University University of Ohio & Pennsylvania of Ohio Associates Associates Copyright ® REM Associates Page 8
- 9. The REM AssociatesNetwork REM Associates provides virtually turn-key management . . . . Setting Setting Policies, Goals and Goals and Operations Policies, Operations Procedures, Objectives Objectives Assessment Procedures, Assessment and Practices and Practices Organization Activity Activity Organization Strategy And Based Based And Planning Through Staffing Costing Costing Staffing Implementation Distribution Distribution Project Project Inventory Network Inventory Network Management Management Strategy Design Strategy Design Copyright ® REM Associates Page 9
- 10. Functional Areas ofConsulting REM Associates represents a broad range of supply chain and business operations skills and backgrounds . . . . Resource Resource Utilization Utilization Organizational Organizational Operations Operations Staffing Staffing Management Management Strategic Strategic Forecasting Forecasting Quality Quality and Tactical and Tactical And Product And Product Assurance Assurance Planning Planning Marketing Marketing Financial Financial Outsourcing Outsourcing Analysis and Analysis and and and Evaluation Evaluation Alliances Alliances Information Information Systems Systems Copyright ® REM Associates Page 10
- 11. Functional Areas ofConsulting Specifically, within supply chain operations and related functions, we are experienced in . . . . Supply Chain Management Sourcing and Purchasing Forecasting and Sales Planning Production and Inventory Management Warehousing & Distribution Operations Facilities and Network Design Transportation Operations and Management Customer Service and Order Processing and Related Systems Copyright ® REM Associates Page 11
- 12. Functional Areas ofConsulting We have worked for a number of manufacturers, distributors and distributor organizations. Our work has included . . . . Assessment, evaluation, and planning of supply chain functions Evaluation of supply/demand chain functions, linkages, and structure Assessment of forecasting, demand planning, and inventory management Development and positioning of organizational structures to support business operations strategy Diagnosis and evaluation of functions and personnel Development and specifications of operating systems requirements Development of effective performance measurements and benchmarking Assistance in implementation of recommendations and changes in operations directed at cost effective improvements. Copyright ® REM Associates Page 12
- 13. Client Industry Profile REMAssociates has worked with manufacturers, wholesalers, and distributors representing a wide variety of industries . . . . Consumer Products Consumer Products Industrial Products Industrial Products Food Chemical Products Retailing Clay Products Wholesaling Mining Pharmaceutical Precious Metals Electronics Paper Newspaper Manufacturing Manufacturing Tobacco Wines, Spirits, and Service and Service and Beverages Industry Associations Industry Associations Copyright ® REM Associates Page 13
- 14. Client Industry Profile Inaddition, our work and business relationships have been international in scope, including government clients and agencies such as . . . . Our international exposure has included countries such as . . . . United Kingdom Indonesia Mexico India Russia Argentina Pakistan China Panama South Africa Taiwan Costa Rica Malaysia Philippines Etc. Our state, city, public, and local government work has included . . . . The State of North Carolina The City of New York The State of Michigan The University of Missouri The County of Los Angeles Princeton University. Copyright ® REM Associates Page 14
- 15. Partial Listing ofClients A partial listing of our clients for whom we have worked in the past include . . . . Honeywell Corporation American Stores Corporation John Morrell and Company Anheuser-Busch companies, Inc. Kimberly-Clark Corporation Avon Products Company Kraft Foods Corporation Bankers Trust Company Land O’ Lakes Incorporated Becton Dickinson & Company Lea & Perrins Company Ben & Jerry’s Leiner Health Products Borden Company Merrill Lynch & Company Bristol-Myers Squibb Corporation Milton Hershey School Engelhard Corporation Nabisco Brands Incorporated G A F Corporation Pepsi-Cola Incorporated General Electric Company Philip Morris Company General Mills Company Princeton University GlaxoSmithKline plc R. C. Bigelow Tea Company Gulf & Western Corporation Sears Roebuck & Company Hermes of Paris Southland Corporation Hewlett-Packard Company USA Today Hoechst Celanese Corporation University of Missouri Home Base Companies Warner-Lambert Company John Hancock Life Insurance Co. W R Grace & Company Copyright ® REM Associates Page 15
- 16. REM Associates RelevantExperience The scope of our engagements range from single to multiple functions beginning with assessment and planning through implementation . . . . Assessment of existing functions, processes, facilities, and operations aimed at costs and productivity improvements Analysis and evaluation of functions, organization and structure, linkages, and positioning of supply/demand chain activities to support business goals Assessment and evaluation of forecasting , sales planning, and inventory management to support distribution costs and required levels of service Evaluation of customer service functions and activities to determine effective levels of service based on demand, cost, and business positioning Development of systems requirements and measures to monitor, control, and manage supply/demand chain activities Management of implementation programs to meet timetables and milestones directed at on time completion. Copyright ® REM Associates Page 16
- 17. REM Associates RelevantExperience A sampling of our client engagements includes . . . . For a Major West Coast Pharmaceutical Manufacturer: – Assessed business operations to: » Improve product and customer demand forecasting, including promotional activity » Reduce operational costs of functional activities » Improve service to all customers, including retail, wholesale, and military » Reduce inventories and related business investments at all levels, including raw materials, WIP, and finished goods. – Results of this work included: » Inventory reduction of over 35% » Improved customer service to over 96% » Increased major customer in-stock position to over 97% » Reorganized key management functions and responsibilities which significantly improved communications, decision making, and timeliness of management actions. Copyright ® REM Associates Page 17
- 18. REM Associates RelevantExperience In addition, a sampling of our client engagements includes . . . . A Large Consumer Product Company: – Assessed and evaluated supply chain functions, linkages, tasks, and activities – Developed an integrated supply chain strategy directed at reduced costs and increased customer service levels – Positioned sourcing, sales, manufacturing, and distribution to effectively support market and customer focus – Evaluated deployment of inventories based on forecasted demand pull to the marketplace in order to strengthen support services to customers – Recommended and planned implementation for an integrated supply chain strategy. A Fortune 100 Pharmaceutical Company: – Set up multi-country (14) teams for implementing production and resource planning – Worked with in-country company teams to implement planned changes – Evaluated and recommended operations improvements within countries – Monitored and directed progress toward program goals and objectives – Conducted and managed program reviews to make sure timelines were met – Completed almost two year program ahead of schedule. Copyright ® REM Associates Page 18
- 19. Our Approach toClients – 1. Assessment Our initial approach to clients begins with an assessment. In order to form a solid base of understanding, we determine critical characteristics of our client’s business in terms of . . . . Client operations size and basic structure Classes of products, facilities, and customers served Key business strategic issues and concerns Operations network including sales, distribution, customer service, and related functions Customer service goals and objectives Operations goals and objectives. Copyright ® REM Associates Page 19
- 20. Our Approach toClients – 2. Issues and Concerns In order to focus our response and meet client specific needs, we need to understand company issues and concerns. For example . . . . Present and planned business initiatives Specific operations issues: – Forecasting and sales demand planning – Inventory management – Warehousing and Transportation – Other operations related issues Current key projects within operating functions Priority, sequence, and timing of implementation of near and longer- term initiatives. Copyright ® REM Associates Page 20
- 21. Our Approach toClients – 3. Path Forward As a result of initial meetings, we form an understanding and plan a path forward in response to your needs, concerns, and plans . . . . Goals and objectives of REM Associates assistance Structure and content of a proposal to respond to your needs Requirement for site and/or functional visits Data needed in order to understand and scope the detail of work Point person for questions and clarification Timetable for decision making and program completion. Copyright ® REM Associates Page 21
- 22. Overview of TheSupply Chain Strategic Planning Process
- 23. Overview of TheSupply Chain Strategic Planning Process The logic of supply chain strategy relates directly to the flow of products, information, and costs through the business and to the customer . . . . Sourcing Manufacturing Sales & Distribution Customer Flows: Products Information Costs Revenue Copyright ® REM Associates Page 23
- 24. Overview of TheSupply Chain Strategic Planning Process There are several levels of business logistics between the product source and the customer . . . . Plant Customer Direct Distribution Large Chains Small Independents Sourcing Primary Secondary Tertiary Distribution Distribution Distribution Copyright ® REM Associates Page 24
- 25. Overview of TheSupply Chain Strategic Planning Process Strategic planning issues are generally of a broader scope than those of day-to-day operations issues . . . . Strategy Business Mix Market Definition Operations Customer Product & Service Mix Mix Mix Forecast Demand Service by Class Facility Service Characteristics of Customer Facility Size Operations by Product Variation Location Forecast Product Facility S K Us Area Type Uniqueness Copyright ® REM Associates Page 25
- 26. Overview of TheSupply Chain Strategic Planning Process The hierarchy of supply chain strategic planning begins with customers and service . . . . Customer Customer Service Service Goals and Goals and Objectives Objectives Inventory Order MIS Inventory Goals Processing Equipment Investment Deployment Strategies and Investment Strategies and Programs Programs Facilities Facilities Warehousing Transportation Transportation Strategies and Strategies and Investment Equipment Investment Programs Programs Investment MIS Systems and Human Organization Equipment Procedures Strategies and Resource Strategies and Investment Programs Investment Programs Copyright ® REM Associates Page 26
- 27. Overview of TheSupply Chain Strategic Planning Process A number of factors must be evaluated to determine the best cost and service mix in a strategic supply chain structure . . . . COST: SERVICE: Number of warehouses Order processing times Location of warehouses Customer service Shipment modes Operations Size of shipments Transportation Frequency of shipments Inventory service Stock vs. non-stock Shipment consolidation In-stock position Operating methods Delivery reliability Storage requirements Freight consolidation Regulatory requirements holding times Information systems INVENTORY: Stock vs. non-stock Frequency of replenishment In-stock position Transit times Variability of demand Inventory carrying costs Copyright ® REM Associates Page 27
- 28. Overview of TheSupply Chain Strategic Planning Process An effective supply chain strategy requires the balancing of conflicting management objectives . . . . Impact of Objectives on: Customer Logistics Objectives: Inventory: Service: Costs: High customer service Low warehousing costs Low transportation costs Reduced inventories Fast deliveries Reduced labor costs Desired results Copyright ® REM Associates Page 28
- 29. Overview of TheSupply Chain Strategic Planning Process The planning process must evaluate alternatives and recommend the most cost and service effective plan for total business logistics . . . . Product/ Identify Define Demand Strategic Market Chain Operating Operating Objectives Environment Alternatives SCREEN ASSESS Develop a Execute Develop a Develop Preferred Segmented Set of Business Operating Operations Implementation Strategic Success Operating Strategy and its Requirements Objectives Environment Implementation Plan Identify SCREEN Define Define Business Strategic Operating Strategic Deployment Mission Alternatives Objectives PHASE I PHASE II PHASE III Copyright ® REM Associates Page 29
- 30. ASSOCIATES MANAGEMENT CONSULTANTS 20 NASSAU STREET, SUITE 244 PO BOX 7345 PRINCETON, NEW JERSEY 08543-7345 Phone: 609-275-4444 Fax: 609-924-9668 E-Mail: REM.Murray@REMAssoc.com web: http://www.remassoc.com Copyright ® REM Associates Page 30