VALUE CHAINIS YOUR VALUE CHAIN BUSINESS ALIGNED & OPTIMISED?OVERCOMING THE CONSTRAINTS OF THE PAST TO DESIGN AND REALISE THE FUTURECredentials and track record1Optimising the Value Chain configuration re-quires consideration of the four critical dy-namics that drive end to end performance. Leading companies are developing capabilities to continuously assess, adapt and innovate their Value Chains.Your progression is our obsessionAt EFESO, we are obsessed by helping our clients progress in the most meaningful and efficient way, combining continuous im-provement, transformation and disruption ap-proaches to yield the most effective and du-rable progression results.For more information check our website: www.efeso.comFounded in 1980, EFESO Consulting is a global management consultancy firm specialised in ensuring the Perfect Execution of the Progression Strategy across the Client ecosystem.Over 400 consultants, operating from 26 offices, working in over 75 countries and representing more than 40 different nationalities currently support more than 900 progression programmes working in tandem with our clients.Our people bring together hands-on experience and expertise spanning a wide range of sectors and func-tional capabilities. The success of the EFESO approach is reflected by the 90% client retention.Our progression motto “Improving your results today, securing your results for tomorrow” means achieving business results faster and, at the same time, developing the capabilities, leadership and culture to continue to improve faster than competition in the future.Value Chain models need to be transformed taking into account the benefits that digitalisation and syn-chronization can bring. Concurrent Digitalised Value Chain, the EFESO progression model for Value Chain Excellence, highlights five levels of maturity.Value Chain configuration is a key enabler to allow an organisation to progress to level three and beyond.“Advanced Value Chain configuration leads to Advanced Process / Capability Maturity, which in turn leads to Advanced Performance” Every Value Chain is under constant pressure to change and advance performance progression due to dynamic and concurrent markets as well as tough competition. In addition, Political, Economic, Socio-cultural, Technological, Environmental and Legal (PESTEL) macro-environment factors coupled with cyber, civil and natural disasters are impacting more than before the strategic planning and business decision making process.How can the leadership team be ef-fective to respond to these chal-lenges? The recent research by EFESO Consulting in association with Cranfield School of Management point to six ‘get rights’ to secure the success of strategic supply chain initi-atives. These are: Alignment with business strategy – vision led. Global and holistic thinking – end-to-end Value Chain. Realisation and acceptance of personal contribution towards change goals. Generating short term wins – piloting, proof of concept, delivering benefits and building credibility. Customer centricity - and actual service – ‘don’t drop the ball on service’ during change. Continuously adapt the Value Chain strategic initiative to changing circumstances.OurperspectiveonValue ChainconfigurationBASELINE NETWORKOPTIMIZED NETWORKOrganisations struggle to define what is needed to win - what must we change to deliver success? Lack of alignment across the organisation is often the weakest link of strategy ex-ecution. Therefore, achieving clear and sustained alignment between operations execution and the plans derived from business strategies is paramount.Prioritising and aligning an organi-sation’s capabilities is essential to achieve the strategy as well as contin-uously building and upgrading the or-ganisation’s resources and capabilities ensuring: Adoption, Leadership and Anchoring. Monitoring and control of the results.With the CEO and senior team, we all develop a collective vision on what is needed to win in their marketplace. Working concurrently, we identify, define, and prioritise the organisa-tional capabilities critical to successful strategy execution, as well as the full deployment in the organisation, taking into account configuration (footprint/network/policies), Capability / Process Ma turity and Performance. Advanced Value Chain configuration leads to Advanced Process/Ca pability Maturity, which in turn leads to Advanced Performance.3We know that the Value Chain configuration locks in 70-80% of an organisation’s cost structure, and that this con-figuration drives supply chain efficiency and customer satisfaction performance. To sustain competitive advantage in the current challenging environment, Value Chain configuration and its optimisation is a board responsibility.Leading companies are developing capabilities to continuously assess, adapt and innovate their Value Chains.Decisions on design may be short or long term and can be categorised as: Structure, i.e. the physical makeup of the supply chain. Policy, i.e. decisions on flow and operations.As detailed in the table below.STRUCTUREPOLICYSHORT TERM Should I open an inbound consolidation centre? Do I need to add some local DCs? Should I use overflow warehousing to cope with peak storage requirements? Should I use Co-packers to cope with peak production requirements? Can I be more agile if I use decoupling points? Should we pre-build to meet seasonal demand? Should large customers be served direct from the factory? What drop size is appropriate (FTL / LTL / Parcel)? Are my transport modes most cost effective? Where should I position inventory to achieve desired service levels? What is the correct service level (inventory cost / service trade-off)? What re-order policies are appropriate and what stock levels should I have (cycle and safety)? Which products should I make in large / infrequent batches, which should I make in small, frequent batches?LONG TERM How many DCs do I need to meet my growth plans, and when should I open them? When and where should I create additional production capacity? Which products do I make, which do I buy? Should I outsource production of these parts (vertical integration)? Should I invest in alternative transport modes to get cost benefits? Should we postpone the final product customisation? Should we acquire or merge with company XY? Can I profitably introduce this new product into new markets? Do I source components in low-cost but distant countries? Which products should I make to stock, which should I make to order? Should I have a multi-source flexible network? What is the optimal routing for my customer delivery profile?“EFESO consider Business Aligned Network Design (BAND) as a continuous business capability that must be developed to enhance results, with our role to accelerate and build the progression and internal competency” 4Value Chain Optimisation - EFESO solution overview“Overcoming the constraints of the past to design and realise the future” 5Delivering tangible business valueCLIENT SITUATION & APPROACHThe client is a Global Healthcare manufacturer who had a fragmented manufacturing footprint, reaching capacity in critical capability due to strong business growth. The business required a network strategy to: Eliminate waste and cost Improve service and time to market Increase business continuity to reduce risk.RESULTS Assessment of Business Needs translated into Supply Network Requirements taking into account trade barrier and automation impact. Optimisation of current end-to-end supply chain to deliver quick wins. Exhaustive evaluation (35 scenarios) to identify the optimum global supply chain footprint (10-year plan). Network modelling for cost to serve:• Joint workshops for qualitative assessments.• Overall customer service improvement with 10% operating cost savings plus 25% cash savings.Global End-to-End Network Design Configuration with Trade Barriers & AutomationCLIENT SITUATION & APPROACHThe client is a specialist equipment hire company with a nationwide supply chain infrastructure of multiple warehouses and regional trade branches for collection, delivery and returns processing. The business was growing organically, expanding into new regions and wanted validation of its supply chain strategy: To ratify the Business Case and ensure the recommended solu-tion was robust. To validate the Programme Governance Structure and identify the Critical Path. RESULTS Challenged and revised trade counter growth plans based on the relationship between branch location and sales Undertook detailed routing analysis (deliver, test, returns) to determine the optimal economic delivery radius Evaluation of product life cycles, hire patterns and seasonality Network modelling of the full sales, returns and maintenance Value Chain with potential to realise 17% cost saving through an optimised infrastructure Time plan of key infrastructure changes to maintain service throughout the implementation.Network Design for Sales PenetrationDelivery Routing OptimisationCLIENT SITUATION & APPROACHThe client is a Global consumer brand with a goal to double its share in a developing market. Brand penetration was poor. 35% of outlets served by direct sales resulting in a high cost to serve RTM The remainder of outlets were served via independent van sales who did not supply the full range required by the market.RESULTSEstablished a joint venture between the client and a sole distributor through: Analysis of outlet contribution to optimise the coverage mix between Direct to Store Sales (DSS), wholesale and other RTMs Solutions to deliver additional product / outlet listings, contrib-uting 10-15% more sales and £7m profit Understanding direct sales cost drivers and distributor synergies Using Network Design to optimise the number of stocking and replenishment locations Identifying 3 new locations to improve service and distribution coverage.CLIENT SITUATION & APPROACHThe client is a major food retailer. Competitive pressure was driving the need for an integrated supply chain to improve store service and supply chain synergies. Challenging issues were: Strategy adoption required from 50 stakeholders, largest player perceived to dominate others so one of the smallest stakeholders appointed work stream leader. Inefficient legacy network with no common service level agreement. No defined way of trading off cost and service.RESULTSUndertook Network Design modelling with store service set as the key objective: Single service agreement defined for whole organisation Single set of supply chain operational policies, delivering im-proved processes and availability (4.4% growth like for like) Improved lead-times and delivery frequency (33% improvement) Established a Logistics working party to embed a collaborative working environment.Route to Market (RTM)Manufacturer / Distributor CollaborationNetwork IntegrationRetailer Merger for Service Improvement6CLIENT SITUATION & APPROACHThe client is a Global Distributor of electronic equipment and electrical components with a high service level, multi-channel customer offer. Highly competitive sector and demand moving to lower cost regions putting capacity pressure on legacy network. Large and expanding multi-location SKU range with high infra-structure costs. Limited customer segmentation. RESULTS Defined product and customer segmentation criteria based on key cost drivers and service needs. Jointly developed operational and business scenarios. Network and inventory modelling undertaken reducing the number of warehouses from 9 to 4 and increasing capacity by 30%• Flow, inventory and space improvements reduce future oper-ating costs worth 2% of sales• Double digit reduction in future CAPEX requirements to ac-commodate growth• Standardised “ways of working” aligned to best in class.Business Aligned Network DesignNetwork / Inventory OptimisationCLIENT SITUATION & APPROACHA national food retailer grown in recent years through acquisitions. Potential distribution network synergies not been realised.Challenging issues were: Different product group characteristics. Predicted growth, stretching the capacity of the legacy assets. Multiple outlet formats with little understanding of the cost to serve differences.We used our standard approach with specific emphasis on: Segmentation analysis to identify customer needs and logistics product groups. Detailed understanding of the key supply chain cost drivers re-lated to the customer types and product groups. Developed a network model to evaluate multiple scenarios, re-taining Divisional visibility for stakeholder engagement.RESULTSDesigned a flexible logistics infrastructure to realise operational synergies and support the business expansion plans. 17%-20% reduction in operating cost Developed a 5-year migration plan and roadmap to seamlessly transition to 4 new warehouses.Network StrategyDistribution Centre Footprint Optimisation“The most structured and integrated strategic approach that I have experienced. This truly enabled us to optimise the Value Chain, fully aligned to business needs and priorities.”− Senior Vice President, Divisional General Manager7Copyright © 2018 EFESO ConsultingCALL US AT +33 1 53 53 57 00 OR LET US KNOW ABOUT YOUR CHALLENGE VIA INFO.MARKETING@EFESO.COMTokyoStockholmSingaporeSeoulShanghaiSão PauloSaint PetersburgRiyadhParisNew YorkNew DelhiMilanMexico CityLisbonIstanbulGothenburgGalwayCairoBirminghamBuenos AiresBudapestBrusselsBerlinBarcelonaAmsterdamAbu DhabiEFESO Consulting brings more than 35 years’ experience and thought leadership, supporting many of the leading global brands in both mature and emerging markets.EFESO Consulting is a group of over 400 experienced consultants representing 45 nationalities. It operates from 26 offices around the world with a strong presence in Europe, USA, South America, Middle East, Africa and Asia.An international scope and local delivery capability ensures that clients have access to the specialist skills they require whether at national, regional or global levels.Next >