example of Impact - OPERATIONAL EFFICIENCY / EFFECTIVENESS
Streamlining a supply chaindetails
Client background and situation:
Consumer goods company selling home essentials (furniture, kitchenware, etc)
Consumer goods company selling home essentials (furniture, kitchenware, etc)
Needed to optimize their supply chain as it was core to the company's competitiveness and customer perceptions
Needed to optimize their supply chain as it was core to the company's competitiveness and customer perceptions
THe past
Prior approach & challenges:
Did not have a strong sense of demand and understanding of how to lower inventory to achieve better sales and more efficiencies
Customer expectations were increasing with purchase considerations driven by faster delivery and more variety (i.e. SKUs)
Had not examined end-to-end journey from suppliers to customers and how to minimize costly touchpoints
Did not have a strong sense of demand and understanding of how to lower inventory to achieve better sales and more efficiencies
Customer expectations were increasing with purchase considerations driven by faster delivery and more variety (i.e. SKUs)
Had not examined end-to-end journey from suppliers to customers and how to minimize costly touchpoints
solutions
Coppertree Partners approach:
developed current state assessment
Led end-to-end effort across planning, sourcing, making and delivering – starting with planning process and understanding customer base and demand
streamlined inventory
Conducted analysis of SKUs and streamlined as 15-20% of SKUs represented only 2-3% of overall revenues and were clogging up inventory unnecessarily
strengthend governance
Pushed on sales and supply teams to better coordinate promotions to avoid stockouts
innovated supply chain model
For sourcing proposed splintered supply chain because some products with high volume and relatively stable demand could be made overseas with longer lead times but unpredictable items and more made-to-order were easier to manage closer to US and could be produced upon customer orders
mitigated risks
Designed contingency plans in case of disruptions (i.e. labor, oil, unknown events)
increased efficiencies
For making products relied on lean six sigma approaches and pushed for more standardization and better utilization of machines. For delivery analyzed distribution footprint to reduce delivery times and closed those with low sales/ship ratios. Analysis conducted showed that outsourcing warehousing capacity when needed was better approach
Impact:
- Reduced cycle time by 25%
- Lowered cost of goods sold by 20%
Additional insights and takeaways
Success in your supply chain requires a strong understanding of your customer needs and seamless internal coordination. If speed is the top criteria for your customers then your supply chain should be built in such a way which may mean certain tradeoffs like sourcing and making items closer to home. Technology is revolutionizing this space in many ways – machine learning and advanced analytics can refine your demand forecasts to make predictions more accurate which should improve inventory allocation decisions. It can also help you predict the impact of various events from promotions to disruptions like bad weather. Technology here can also optimize human capital – alerting planners for instance when a decision needs to be made.
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