Today’s international business environment is more fluid and complex than ever before. Huge shifts in international trade and currency, changing consumer demand and a volatile investment community have resulted in a continuous focus on cost: business executives are under increasing pressure to maximize return on assets while delivering growth. Keeping your business’ supply chain under constant review is key.

Financial Accounting Advisory Services

Supply chain performance analysis:independent assessment of the efficiency of your end-to-end supply chain

Companies operating in multiple locations need to respond to regional variations in demand and risk, and assess their supply chain accordingly.

Geographic concentration of suppliers, inefficiency through global fragmentation and increasing cost of transportation or raw materials all add different challenges and pressures to the supply chain.

2012 2011 2010 Average (2012)

Rev

enue

per

full-

time

equi

vale

nt ($

m)

0.56

0.58

0.88

0.53

0.78

0.56

1.00

0.90

0.80

0.70

0.60

0.50

0.40

0.30

0.20

0.10

0.00

Through a four-stage process, we work with you to undertake a financial assessment, a performance comparison against competitors and examine the most significant key performance indicators (KPIs) for your supply chain. This is followed by a supply chain maturity assessment where, through structured questions of key stakeholders, we conduct a qualitative assessment, drawing on the knowledge of your internal teams. The final stage consists of a quantitative analysis, using EY custom-built tools, to investigate the performance of each part of your supply chain further.

We use this initial step to compare your company’s performance against immediate peers and provide a high-level context for the rest of the performance analysis. Using a mix of revenue, costs, profitability and working capital metrics based on your data, as well as competitors’ annual accounts, we will give you an overview of financial performance, year-on-year trends and comparisons with industry peers.

How does the supply chain performance analysis work?

Step 1High-level financial analysis

Why consider a supply chain performance analysis?

Client revenue per full-time equivalent (FTE) as compared with peers

If any of the following questions are on your business agenda, EY can help:

• How confident are you about the efficiency and cost effectiveness of your supply chain?

• Have market changes and expansion into emerging markets changed supply chain dynamics, and are you sure that your function is still fit for purpose?

• Are you over-reliant on one product type or market?

• Are your production levels, inventory holdings and sales forecasting efficiently linked?

• Do your competitors have better cash-to-cash metrics than you?

• Do you take advantage of the benefits offered by preferred suppliers?

Your company Competitor A Competitor B Competitor C Competitor D Competitor E

We will use comparisons based on similar industry or revenue bands to provide a detailed analysis of your key supply chain metrics and a suite of parameters with a range of responses split into top (TQ), median (Med) and bottom quartiles (BQ), with which your organization’s supply chain can be compared. This will start to pinpoint the areas within your supply chain that could benefit from improvement.

Total purchase value (spend, in thousands of US$) per procurement FTE

Percentage of orders delivered on time

We will use the results to identify areas of your supply chain that are significantly behind leading practice, where a large gap may exist between your current and desired future state, or to uncover conflicting views across the organization.

We will carry out further analyses to investigate the five dimensions of the end-to-end supply chain (buy, make, move, sell and inventory) in greater depth, highlighting your reliance on certain suppliers or customers. We will also do a geographical analysis of your supply chain and the performance of individual stock-line items.

Step 2 Supply chain comparison

Step 3 Maturity analysis

Step 4 Supply chain analytics

Example output: inventory radar

1,277

BQ1,941

Med3,595

TQ7,002

97.0%

BQ80.0%

Med90.4%

TQ95.0%

Process and policy

Current state

Future state

Leading practice

People and organization

Network

Operational strategy

Performance management

Technology and data

543210

Inve

ntor

y (0

00’s

)

Sales (000’s)

EY’s supply chain performance analysis is an integrated assessment of procurement, manufacturing, logistics, sales and inventory management that helps evaluate performance and identify potential risks.

It provides transparency on the overall supply chain structure and its perfor mance. In the short term, this will allow the identification of areas for further investigation and analysis, and understand and better manage immediate production and distribution risks. In the longer term, the analysis will help improve the competitiveness of your supply chain strategy.

We have streamlined the four-stage process to reduce the time you need to spend, while covering all the relevant issues rapidly. The methodology behind the supply chain performance analysis draws on the knowledge and experience of EY’s advisory practice and its work with hundreds of businesses worldwide.

Why use EY for a supply chain performance analysis?

EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

About EY’s Financial Accounting Advisory Services The changing accounting and reporting landscape provides challenges for multinational companies as they seek to respond to global market conditions and report their financial results while facing increased scrutiny from a range of stakeholders.

EY’s accounting, regulatory, compliance and information technology professionals combine technical experience with business and industry insights to help clients navigate complexity. Whether your focus is on managing highly technical accounting requirements or addressing governance and regulatory issues, having the right advisors on your side can make all the difference.

Our team uses proven and integrated methodologies to help you resolve your challenging business problems, deliver accurate financial reports in complex market conditions and make sustainable improvements for the longer term. We understand that you need services that are adapted to your specific industry issues, so we bring our broad sector experience and deep subject matter knowledge to your projects in a proactive and objective way.

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This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

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Contacts

Karsten Füserkarsten.fueser@de.ey.com+49 711 9881 14497

Gabor Lendvaiglendvai@uk.ey.com+44 20 7951 4321