Deloitte - Supply Chain Strategy

Supply Chain StrategyLeveraging the backbone of your business as a source of competitive advantage

Content

Supply chain strategy 4

Our 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 16

Supply chain tools & methodologies 18

Why Deloitte? 19

Contacts 20

From product development and sourcing through manufacturing and distribution, it has never been more important to have all the moving parts of the supply chain synchronised. In an environment with increasing customer demands, smaller quantities, less inventory and slack capacity and significantly higher levels of uncertainty than ever before, more and more businesses are rethinking their supply chain end-to-end.

This requires a top-down strategy supported by all roles that touch the supply chain – which is to say, everyone. It also requires a commitment to developing the tools, technologies, people and processes that move a supply chain strategy from paper to reality.

Rather than engineering tightly coupled and inert supply chains, which are prone to failure when meeting the future, supply chain leaders are tailoring their supply chain to the rising tide of global uncertainty and business complexity.

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.

In the past, supply chain strategy has often been underestimated as a source of competitive advantage. Now, organisations are increasingly moving away from focusing their supply chain efforts on functional excellence to leveraging their supply chain as a strategic capability.

Not only have business leaders come to understand that their supply chain is the backbone of their business, it is also considered as an enabler for their business strategy. In times when customers have increasingly higher expectations and demands, supply chain agility and flexibility are key differentiators for gaining a competitive advantage.

When properly aligned, supply chain strategy is therefore not only about operationalising and supporting your business strategy; it is about leveraging the backbone of your business as a source of competitive advantage.

Supply chain strategy

Supply Chain Strategy Leveraging the backbone of your business as a source of competitive advantage 5

With our Supply Chain Strategy service offering we assist our clients in organising and managing their supply chain to optimise profit, cost, efficiency, flexibility, reliability and customer satisfaction. We therefore support our clients with the development and implementation of supply chain strategies and tactics by offering them subject matter expertise and knowledge on different subject areas ranging from the financial supply chain (Integrated Profitability Management and Working Capital Optimisation), Supply Chain Planning, Sourcing & Procurement, Network Redesign & Distribution, Business Model Optimisation (BMO) and Operational Excellence.

At Deloitte, we realise the importance of combining deep process and technology experience with practical business strategy. With worldwide access to a highly ranked range of capabilities across consulting, financial advisory services, tax and risk management, we take an integrated approach that helps us see ways companies can use their supply chain operations to deliver more value across the business.

Putting the right supply chain strategy forward can be a daunting task. In this paper, we’ll cut through the clutter by breaking often complex supply chain strategy into bite-sized pieces. It zeroes in on things that really matter—and gives an overview of services and solutions that really work.

Not only have business leaders come to understand that their supply chain is the backbone of their business, it is also considered as an enabler for their business strategy.

Supply ChainStrategy

OperationalExcellence

Deloitte’s supply chain strategy offerings

IntegratedProfitability &

Working CapitalOptimisation

Supply ChainPlanning

Sourcing &Procurement

NetworkRedesign &Distribution

BusinessModel

Optimisation

Our core offerings

6

Integrated profitability managementDeloitte can help you in realising your objectives to increase profit margins by focusing on cost reduction and revenue enhancement.

From a cost perspective we will concentrate our efforts on reducing customer driven, internally driven and supplier driven complexity. Our supply chain professionals can help your company with providing Cost-to-Serve transparency in order to facilitate profitability and portfolio complexity decisions at the granular level of products and customers. Cost-to-Serve in this respect is a collective term for methodologies that reveal the true cost of processes and activities in manufacturing (Cost-to-Make), logistics (Cost-to-

Fulfil), and selling (Cost-to-Sell), by using pragmatic activity based costing principles in a supply chain and commercial context. At the inbound side of the supply chain, this cost transparency could be called Cost-to-Own (or more commonly known as Total Cost of Ownership), which is an important lever to enhance cost efficiency and spend at supplier level.

From a revenue perspective we will positively impact revenue enhancement or market share growth through market and competition analyses, portfolio strategy, pricing optimisation and increasing sales and marketing analyses.

Integrated profitability management

Customer driven complexityInternally driven complexity

Customer

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 perspective

Company Supplier


Important subjects and tools are value-based management and value metrics, benchmarking, activity-based management, customer profitability analysis, cost management in supply chain relationships and balanced score cards.

In order to achieve sustained profits and a Return on Investment (ROI), this granular perspective will be combined with a functional and organisational perspective, focusing on Enterprise Cost Management and looking at processes, activities, and organisation. Both perspectives are depicted in the figure below.

Methodologies that align the supply chain at the granular level (individual products and customers), probably comprise the biggest opportunity for profit and cash flow improvement. The rationale is that over time, companies are adding significant amounts of complexity in terms of products and service offering policies. Not all of this complexity is being added in a profitable way. Therefore, it is not uncommon to discover as a result of a Cost-to-Serve initiative, that a significant portion of the profit potential - ranging from 30%-50% - is eroded by unprofitable products and offerings.

For companies with average supply chain maturity, integrated Cost-to-Serve initiatives often show potential to improve absolute EBIT% margin with a range of an additional 0,5% - 2,0%.

Businesses that invest in supply chain competences to ‘Provide Cost-to-Serve Transparency’ are leaders in an evolution towards a more advanced type of supply chain management in which business performance is improved by fine tuning the supply chain at a granular level. It is a clear example of what is commonly referred to as ‘the Financial Supply Chain’, and constitutes a transformation to a more mature type of supply chain function in the business, reaching out to, and facilitating the business performance improvement dialogue with the Finance and with the Sales & Marketing functions.

CustomerProfatibility /Cost-to-Serve

Granular Perspective

Taking a granular perspective:improving profitability from acustomer, product and supplierperspective.

Taking a functional and organisational perspective:looking at processess, activities and organisation.

Functional Perspective

Enterprise CostManagement (ECM)

AchievingSustained Profit

and ROI

Profitability improvement perspectives

Working capital optimisationIn 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. One of the few remaining areas which can deliver significant cash to the business in a relatively short period of time without a large restructuring program is working capital.

Working capital represents the liquidity a business requires for day-to-day operation. It reflects the excess of current assets over liabilities, comprising of accounts receivable and inventory minus accounts payable. When improving working capital in the organisation, people must look beyond the boundaries of their own operational processes and understand drivers of cost and complexity in the entire working capital chain: from sales order processing to receivables.

By examining this cycle as a whole, inefficient areas can be identified, processes optimised and cycle times 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 (DSO). Examples of key improvement levers are depicted 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.

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WorkingCapital

InventoryAccountsPayable

AccountsReceivable

Days payables outstanding (DPO) Days inventory outstanding (DIO) Days sales outstanding (DSO)

Receiveinvoice

DPO

Goodsreceiving

Issueinvoice

Working capital requirementCash conversion cycle

Days inraw materials

inventory

Days inWIP

inventory

Cash out Cash in

Days infinished goods

inventory

Days intransit

Pressure

Pressure

PressureDIO

DSO

• Extend payment terms, halt early payments• Align payment term master data• Optimise cash discounts against interest gains• Exploit opportunities to defer tax & duty payments

• Review production strategy (where to deploy inventory) and planning policies (MTO, MTS, SC decoupling)• Review safety stock levels and re-order points• Reduce uncertainty in supply and demand (forecast accuracy, supply reliability, supply lead times, change over times)• Reduce product portfolio complexity

• Improve collection process and overdue management• Focus on quality of products and processes (OTC) to ensure no barriers to timely payment• Align and optimise payment terms across territories and customers• Optimise pricing structures, identify factoring opportunities

Working capital improvement opportunities


Making it visible, urgent, happen and stick Deloitte has developed a structured and collaborative approach consisting of 4 phases which jointly lead to a successful implementation of sustainable Working Capital Reduction (WCR) in the organisation. To ensure that WCR remains top of mind within the organisation it is essential for supply chain, manufacturing and sales & marketing to think like a CFO. However, it has proven to be time-consuming, costly and often difficult to obtain a comprehensive

insight on your working capital position and – maybe even more important – to make it stick in your company. This triggered Deloitte to develop a visual, highly interactive dashboard, which provides instant insight in the most important working capital KPI’s down to detail level. The dashboard supports powerful “on-the-fly” analysis and navigation from top-level overview down to transaction details. Our WCR Cashboard is easy to use for any business executive and easily adjustable and expandable to your company’s specific needs.

Mak

e it v

isible

Make it stick

Make it happe

n

Make it urgent

WorkingCapital

Information and D

ata

Busin

ess Processess

Technology and Tools

Organisation and People

Make it Visible• Understand Working Capital baseline• Understand maturity of existing process, technology, and organisational capabilities• Perform transactional level analytics• Report Working Capital Performance

Make it Stick• Set up benefits tracking tool / WC Dashboard (KPIs, information requirements and reporting)• Secure ownership of changes in WC management• Track progress of initiative roll out team(s) (program mgt)• Determine key learning points and assess possibilities for ongoing improvements

Make it Urgent• Perform what-if scenario analyses to identify the most critical drivers of performance• Identify opportunities based on root cause analysis• Define improvement initiatives outlining rationale, key activities and risks• Define and launch quick hits• Build improvement roadmap

Make it Happen• Identify and suggest structural changes on WC based on prioritisation of initiatives and roadmap• Finalise and refine roadmap in differentiating quick wins, tactical improvements and strategic investments• Address WC ownership• Roll out pilot initiatives at target business units

Working Capital Management

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 planningIt has never been more important to knit your complex supply chain together. Good advanced supply chain planning can keep the pieces, and the numbers, in sync. Working from a clear top-down plan, you can focus and sequence your efforts – so that critical areas like demand forecasting and inventory planning get the attention they need to drive improvements elsewhere.

When forecasting works, roles and responsibilities can fall into place. When lines of communication are open, competing views of demand can be reconciled and news of change can reach the supply chain in time to make a difference. When inventory planning works, partners in the supply chain optimise all inventories – finished goods, critical components and raw materials – to effectively meet and respond to demand. And while large-scale transformation is often important, short-term actions can often drive big gains in working capital too.

In supply chain planning, we work with clients to develop strategies, define future solutions built on leading capabilities and implement process and technology solutions. We’re as strong in helping clients execute a plan as we are in crafting it.

Because of our experience and global reach, we don’t begin a project with a blank slate – rather, we know which improvement opportunities will drive most of the necessary work. These opportunities, along with relevant metrics & benchmarks, are captured in our Deloitte Integrated Supply Chain (DISC) method. This toolkit provides the foundation for designing leading capabilities into your supply chain and accelerates the time to benefit.

Our services include the following areas:•Supplychainplanningcapabilityassessmentand

opportunity identification•Integratedsupplychainplanningstrategy,visionand

conceptual design•Supplychainplanningprocess,technologyand

organisation design covering the following areas: - Sales and operations planning - Demand planning (including collaboration with

customers) - Product lifecycle planning - Supply planning (including collaboration with the

extended supply chain) - Inventory planning - Supply chain flexibility - Supply chain planning performance management

We help transform our clients’ business, generating benefits such as:•Reducedinventorylevels•Improvedcustomerservice•Reducedcostofgoodssold•Improvedforecastingability&responsiveness•Reducedplanningcycletimes

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Sourcing & procurementOur supply chain service assists our clients across all industries, private or public, to develop and implement strategies, tactics and infrastructures both within their own organisation and also across their extended supply chain of customers and suppliers.

A strategic approach to procurement is proven to enhance the effectiveness and efficiency of organisation’s operations as well as saving revenue through effective sourcing, transaction cost reductions and standardised procurement processes. Sourcing refers to the value added process of selecting suppliers and the respective cooperation scheme. It must be supported by advanced analytics and market intelligence, supplier performance information and a concrete and well-developed strategy. On the other hand, procurement refers to the transactional aspect of the relationship and should be streamlined as much as possible in order to achieve efficiency.

Deloitte can provide its clients with an integrated approach incorporating spend analysis, strategic sourcing, supplier management as well as procurement optimisation.

Spend analysisBefore implementing any sourcing & procurement initiatives, it is very important to analyse past, current and projected spending patterns. The analysis must span the entire enterprise and include data that is often collected from various departments and locations. Such an analysis of direct and indirect spend gives the company the information and decision-support required to develop supply strategies that are aligned with the objectives of the organisation and to identify and prioritise sourcing & procurement improvement initiatives. Strategic sourcingThe overall goal of strategic sourcing is to achieve large and sustainable cost reductions, long-term supply stability and minimisation of supply risk. The strategies to achieve such goals can be as wide as rationalising supplier base, leveraging spending across departments, business units and geographical regions, reconfiguring supply specifications, and / or developing strategic partnerships / alliances with selected suppliers.

Supplier managementActive supplier management is an integral part of strategic sourcing. Organisations are increasingly moving away from the traditional approach of selecting the “lowest cost supplier” to a “total cost of ownership” approach. This approach presupposes extensive knowledge of supplier performance and its impact on enterprise operations.

Procurement optimisationIn procurement optimisation, the main focus is on transactional efficiency and on squeezing process-related costs and inefficiencies throughout the purchasing cycle that begins with the identification of the need for the material / service and end with its receipt. Best practices suggest that the procurement process should be as lean as possible.


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Supply chain network redesign & distributionSupply chain network design aims to analyse and design the infrastructure of the supply chain network (inbound, production and outbound) which fits the supply chain strategy. The aim is to optimise both the level of service towards your customers as well as cost of the supply chain.

Most supply chains are a result of legacy operations and strategic choices, not designed to drive value for an organisation in the future. Whilst these supply chains are sometimes “good enough”, the rapidly changing 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.

Change can be due to a number of trends. The network might erode because of a shift in the customer base or the business model might change because of an increased focus on sustainability. Mergers and acquisitions might bring along new plants and warehouses. Or perhaps, new products and markets might lead to expansion of the network and an increased complexity. The combined effect of these changes may significantly impact the efficiency of the supply chain network and lead to a number of signals for improvement.

Erosion

•Shiftingcustomerbase,volumes,productmix•Changesinlaborcost,tariffs,duties,currencyexchange

Expansion & increased complexity

•Newproducts,markets,geographies•Supplierchanges•Competitivedynamicswithimpactonproductandserviceofferingpolicies

Acquisitions

•Mergersandacquisitions•Newplants,newwarehouses,newcustomers

Business model changes

•MakeorBuyandoutsourcingopportunities•Changesintechnologyororganisation•Integrationorregionalisationofsupplychainfunctions•SustainabilityandCorporateSocialResponsibility

Costs

•High,andaboveaverage,overalldistributioncoststructure

Signals for network improvement

Besides determining the physical aspects of the future network, there are a number of other considerations that will influence its design. Growth expectations, global or regional sales and brands, centralisation of planning, political stability, location of contract manufacturers and tax considerations are only a few of the aspects to take into account in the network design.

A network optimisation is a modelling-led activity that defines the physical ‘shape’ and high-level operational characteristics of a distribution network. It is different to operational modelling in that it looks over a longer time horizon (3-5 years) to provide answers to key strategic questions. It helps organisations create a robust solution that balances all of the strategic objectives, while considering all constraints and inputs to drive

profitable revenue growth, increased operating margin and increased asset turns. This balancing exercise can prove to be daunting as network challenges occur at every stage along the supply chain. A single decision often sub-optimises another objective. All in all, typical challenges for a network optimissation project are conflicting objectives and an ever changing environment.

Dependent on company objectives and constraints, a network design study can be used for different sections of the supply chain like upstream, downstream, or product segments. After analysing the current network and both defining and implementing the optimal supply chain network, we have realised up to 10% to 15% reductions in operating costs for our clients.


Provide DifferentiatedCustomer Service

Revenue Growth Asset Turns

Ext

ern

al

Intern

al

Increase Shareholder Value

Improve WorkingCapital Utilisation

Increase FixedAsset Utilisation

ReduceEnterprise-wide Costs

Operating Margin

Competitors

Market developments

Duties & taxes

Different costsbetween countries

Legal issues

Minimise Inventory

Reduce no. of suppliers

Maximise assetutilisation at sites

Minimisetransportation costs

Co-locate capacity toincrease responsiveness

Serve more profitablecustomers better

Decrease lead times

100% customersatisfaction

Marketing strategyand portfolio

Supply chainplanning model

Social impact

Organisational model

IT

Working methods

Network optimisation challenges

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Business model optimisationWith our Business Model Optimisation offering, we look at a company’s value chain to optimise the primary value creating activities in R&D, procurement, planning and manufacturing, sales and distribution and after sales service.

By taking a multi-country, very often regional or even a global perspective, we align organisation and processes, and optimise the way resources are deployed, decisions are made and how the business goes to market. Companies in the early stages of their lifecycle, with growth abundantly available, tend to focus on establishing their footprint in the market. For these businesses, the more decentralised and entrepreneurial business models are favourable.

As soon as businesses become more mature, in environments with less growth, they start concentrating on other shareholder value creation levers such as asset efficiency and operating margin. In this more mature stage, the more integrated, centralised and functionalised operating models are favourable.

Supply chain transformation initiatives are a proven way of reducing operational costs and increasing profits. Most successful companies have gained a competitive advantage by applying continuous supply chain improvements. These have resulted in streamlined processes, reduced stock levels, shorter lead times, better asset utilisation, improved productivity and better service levels.

R&D andMarketing

Purchasing Manufacturing DistributionSales &Service

Reven

u G

row

thO

peratin

g M

argin

Asset Effi

ciency

Shar

eho

lder

Val

ue

Cre

atio

n

IP company

Finance HR IT

CentralProcurementEntrepreneur

Mfg & PlanningEntrepreneur

Sales & Distribution Entrepreneur

Integration of business functions in the primary value chain

Support functions: support the activities of the primary value chain

(e.g. shared service operations)


But many of these projects fall short of their potential to leverage additional shareholder value. Why? Often they only invest in deep operational improvements, but ignore broader issues, such as structural tax planning. Or they focus on pre-tax gains instead of after-tax returns. Other companies concentrate on reducing the tax burden on their current operating model. But because these tactical approaches do not automatically follow a rise in profits, they are not effective in offsetting the marginal tax impact of new income.

Achieving world-class supply chain performance requires an integrated approach, where companies not only benefit from their operational improvements, but also retain more of their additional earnings. This can be facilitated by taking tax into account from the outset of the supply chain planning.

Business Model Optimisation initiatives do not necessarily have to be undertaken comprising the complete supply chain in aggregate. In practice we find constellations ranging from a procurement entrepreneur over a supply chain company to a full principal including the R&D, IP and intangibles.

Deloitte’s Business Model Optimisation (BMO) services focus on helping multinational companies integrate their operational and tax planning in a scalable and sustainable way to help business leaders make more effective decisions on an after-tax basis.

Third partySuppliers

ManufacturingSites

Value Add allocation

NationalSales Office

*ROW= Rest of the World

Current Model

Profit and Tax Implications

Regional BG/BUManagement

Costs

Third partySuppliers

Manufac-turing Sites

Value Add allocation

NationalSales OfficeStripped Risk

CentralEntrepeneur

Central Entrepreneur Model

Regional BG/BUManagement

Costs

Profit ROW

Profit CentralTax ROW

Tax Central

Before After

Concentratingsignificant

people functions,assets, risk

managementand value add

with the centralentrepreneur

AdditionalProfit Exponential

andsynergisticprofitincreases

Profit ROW

Profit CentralTax Savings

Tax Central

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Operational excellenceWhen businesses are maturing and going through the different phases of their lifecycle, value creation efforts are increasingly being made on improving operating margins and asset efficiency. On the road to enhanced business performance, these businesses strive for operational excellence.

Lean Six Sigma (LSS) is a structured and proven performance improvement methodology, which focuses on eliminating waste by improving cost efficiency, quality and reliability, and compliance safety. LSS is a business performance improvement program, which combines focus on the customer with a structured, data-driven approach, leading to measurable improvements.

Over the past decades, LSS has grown from a method used on the shop floor in manufacturing industries to the entire supply chain, to service industries such as healthcare and financial services, and even in the back office for managing IT and human resources.

By combining the principles of ‘Lean’ and Six Sigma, both waste and variation (defects) can be eliminated in product or service processes. Process inefficiencies or variations are identified using such tools as Value Stream Mapping or by calculating process capability. Having identified improvement opportunities, solutions can include increasing capacity through the application of Overall Equipment Effectiveness or enhancing equipment uptime through the introduction of Total Productive Maintenance. However, these tools and techniques used for performance management are only some, but not all, critical success factors of lean transformations.

ValueCreation

OperatingMargin

RevenueGrowth

LeanSix

Sigma

AssetEfficiency

• First mover in the market• Establish market footprint

• Cost efficiency• Quality and Reliability• Compliance safety/environment• Customer Focus

Lean Six Sigma in the Lifecycle of the Business


Not only do business leaders need to understand their business priorities (quality, cost reduction, flexibility, asset utilisation) and align their operational excellence strategy accordingly, they also need to develop business transformation capabilities such as portfolio, program and project management. These include creating transparency regarding the projects portfolio on site level, aligning projects with the site objectives and making the right choice when prioritising investments. The journey towards operational excellence requires strong leadership to drive projects and to embed change in a culture of entrepreneurship and accountability.

Although buy-in from top management is critical, all of the organisation’s employees play an important part in these improvements as the architects of the new process. This makes Lean Six Sigma more than just a set of improvement tools, but also a way to create a culture shift of the organisation as it provides the opportunity to create a common language in the business around performance improvement, and to create a platform for leadership and talent development. LSS is more than a methodology: it is a way of thinking.

We see that especially this culture shift creates a flow of continuous improvement, which enables organisations to continuously achieve successes in lowering costs and enhancing customer’s experience by improving efficiency, quality and lead time. The combination of Lean Six Sigma with integrated performance measurement enables organisations to further monitor the improvements and control the process performance.

As the world’s leading supply chain consulting firm1, Deloitte can not only help you to achieve operational excellence by supporting your employees in the Lean Six Sigma approach and implementation, but also to create the necessary preconditions to translate this operational excellence into enhanced business performance. We have a large number of Black Belts and Green Belts that can help your organisation to transform processes in a variety of industries including healthcare, financial services, local government, energy and manufacturing industries.

Leadership & culture

Bus

in

ess model

Tools & techniques

Performance Management

Strate

gy D

evel

op

men

t

Po

rtfolio

& P

rog

ram M

anagement

How to translate an operational excellence strategy intoenhanced business performance?

1 Source: Kennedy Consulting Research & Advisory; Supply Chain Management Consulting Marketplace 2010-2013

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Within Deloitte, we have a wide variety of tools and methodologies to execute complex supply chain transformations. A primary example is our Deloitte Integrated Supply Chain (DISC) method, which serves as a focal point for the supply chain practice area across global boundaries and provides a common language for large-scale, global supply chain engagements. Our DISC method is based on the Supply Chain Council SCOR® model and enhanced for a more holistic approach, integrating our supply chain-related offerings across each of the Strategy & Operations, Technology, and Human Capital service lines. Other tools include our Supply Chain Shareholder Value Map, IndustryPrint, CategoryPrintsTM and Lean Six Sigma.

Furthermore, Deloitte has established a Global Benchmarking Center (GBC) to provide executives with industry-relevant metrics and insight. Relevant supply chain data — gathered through benchmarking — can help provide executives with the context they need to identify and prioritise improvement opportunities. Through benchmarking, executives gain fact-based 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).

Here are some example supply chain metrics following the strategy/plan/source/make/deliver process taxonomy:•Strategy: Metrics surrounding the creation and

management of the overall supply chain strategy, including defining the organisation, establishing the budget, management oversight and the performance achieved by the overall supply chain network.

•Plan: Metrics driving customer service and working capital (including inventory levels across the supply chain) and address the functions of demand planning, supply planning, inventory management, distribution requirements planning.

•Source: Metrics on procurement effectiveness and efficiency — strategic sourcing, operations and management of suppliers, contracts and commodities.

•Make: Metrics on cost and staffing around manufacturing — production, material availability, quality assurance, maintenance, sanitation and engineering.

•Deliver/Return: Metrics on cost and staffing levels for order fulfillment, logistics, distribution, transportation and returns/recalls.

Supply chain tools & methodologies

Deloitte Integrated Supply Chain (DISC) method

Develop Plan Source Make Deliver Returns

Product Innovation & Development

Supply Chain Planning

Sourcing & Procurement

Manufacturing Operations

Logistics & Distribution

Reverse Logistics

Strategy

Process

Technology

People/organisation

Performance management


We help clients in their efforts to deliver more value at every step across their end-to-end supply chains – from design and planning through sourcing, manufacturing, delivery and return. We do this by helping to define a global supply chain strategy that not only aligns with a company’s overall business strategy, but also provides a playbook and roadmap for execution.

The supply chain has always been important; today it is critical. We understand the pressures and problems faced by managing the complexities of the supply chain. Our teams are equipped with the experience and skills required to tailor our services to meet the specific needs of our clients.

In summary, we offer leading edge supply chain advice to both the public and private sectors and can assist in undertaking all aspects of strategic and tactical assessment, design and implementation to improve your supply chain operations.

Our approach focuses on analysing our client’s supply chain along three major dimensions: its business value from both financial and customer standpoints, the components and capabilities of its management and the leadership alignment and infrastructure to support organisational change.

Key lessons we’ve learned along the way

Consider cross-functional impacts.Supply chain strategy is about more than just operations. It also calls finance, HR, tax and other functions to the table. For example, you can’t weigh the outcome of moving some operations to another country without considering the tax implications. Every department brings a useful perspective and set of values.

Stay flexible and balanced.An over-investment in fixed assets or fixed capacity can pin you down. An under-investment can leave you unable to meet pressing demand. The right mix of in-house and third-party assets – of fixed and variable costs – can provide necessary agility.

Take a broad view of benchmarks.There may be lessons worth learning outside your immediate industry or sector.

Some industries are ahead of others, and you could be among the first to “import” a proven leading practice.

Focus on information, not inventory.Your customers have custom requirements. To the extent possible, learn to assemble and deliver rather than to build, warehouse and sell. Even if this strategy applies only to the marginal “tail” SKUs and not your “A-movers,” it can enhance your reputation for responsiveness. Last-minute customisation isn’t just for cars and PCs anymore.

Embrace sustainability.Not only is it here to stay, but green management is like green food: good for you. Make a serious effort to integrate sustainability into your supply chain strategy instead of tinkering on the margins – or worse, treating it like as PR gambit with no substance to back it up.

Why Deloitte?

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ about for a detailed description of the legal structure 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 globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients 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 or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network 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.

Stefan Van ThienenPartner+ 32 476 22 01 [email protected]

Paul DelesalleDirector+ 32 476 49 50 [email protected]

Kobe NaesensManager+ 32 475 30 07 [email protected]

Isabelle HautecourtManager+ 32 473 30 27 [email protected]

ContactsIn case you want to know more about this topic, please do not hesitate to contact us:

For more info on this topic, you can find us on the web:

www.deloitte.com/be/supply-chain-strategy Deloitte Supply Chain Strategy website

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