Supply Chain Management

A competitive advantage can be derived from cash & margin efficiency, responsiveness to changes, and from sustainability.

Cash & Margin efficient supply chains differentiate delivery models and service levels. Sourcing, sales, planning, and manufacturing are well in sync to efficiently drive down costs during demand valleys and optimize revenue during demand peaks. The supply chain is lean and well organized to optimize the entire company, not only its parts. Its assets, people, processes, and tools are fit for current demand, but scalable for growth.

Responsive supply chains maintain service levels upon near-term turbulence to demand and constraints to supply. Demand and supply are well balanced and long-term plans are accurate enough to support investments, maintenance plans, and short-term planning to create a stable input to manufacturing.

Sustainable supply chains consider the longevity of profit, people, and the planet. Processes such as Sales & Operations planning are transparent and digital and are therefore sustainable for the people to repeat. Delivery performance and sales are not built around high inventories and over extended offerings. Furthermore, environmental aspects are considered from sourcing to delivery in order to maintain own place in the industry.

“We started from a rather low-performance level, but after half a year, we had made a substantial improvement and reached a 90% delivery accuracy level for the first time.”

Mats Jungar, CEO
Elematic

Read case Elematic

Case

Learn more about results and why to invest in Supply Chain Management.

Read case Elematic

Cash flow neutrality

A great aspect in Supply Chain initiatives is possibility for early payback. Therefore, a good mix of both cash releasing one-off improvements such as inventory replenishment optimization and continuous processes like S&OP or changes to delivery models that will permanently improve cost efficiency and responsiveness in the market are needed.

Robust processes & new tools

A successful supply chain project implements and yields tangible results from both one-offs, like changed delivery models, and continuous processes, like Sales & Operations Planning. To achieve this, all parties playing the instruments will be engaged as early as possible. On top, IT solutions need to fit to requirements and finally, multiple training rounds will ensure that the new process is there to stick.

People growth

In today’s fast changing environment, perhaps the most important impact of a supply chain project is the organization’s improved capability to renew similar transformations in the future. A project develops people’s change management skills, improves their supply chain know-how, breaks silos between functions, and of course instills a winning mentality into the organization.

See examples of what we have done with our customers with different kinds of supply chain related challenges.
Click the plus icon to see the situation behind the challenge, what did we do, and what was the outcome.

Challenge #1 Lost revenue, poor inventory turn and poor delivery performance

Project name
Working Capital Opportunities in Sales and Supply Chain

Situation
Several companies have hired us to quantify and highlight areas to optimize accounts payable, inventory and accounts receivable. Typically, working capital as a topic and its drivers are not widely enough understood outside finance to trigger optimizing actions.

Actions
During these projects, levers to optimize working capital components have been quantified, and key people in sales, customer service, central planning, material planning and procurement engaged to increase urgency and ownership for the improvement areas.

Outcome
List of improvement actions, implementation business case and a high-level road map.

Capacent has carried out over 300 Working Capital –projects, read case stories here.

Challenge #4 Lost revenue, lost Overall Efficiency in manufacturing and lack of flexibility towards customers

Project name
Sales & Operations Planning Implementation

Situation
A company’s Sales & Operations planning process not in use resulting in a reactive action taking and over planned capacity. Some of the root causes to poor process adherence were organization structure and a highly manual workflow due to misuse of ERP and a lack of a demand planning software.

Action
A new functional organization was designed with detailed descriptions of Supply chain, Manufacturing & Sales. On top new S&OP process was co-designed, people trained, demand planning software implemented to finally roll-out the new S&OP process.

Outcome
Increased delivery flexibility and stock turnover.

Read case Normet: Customer-driven demand planning to improve service and inventory levels for spare parts

Challenge #2 Cost competitiveness not on a safe level for market disturbances

Project name
Cost Reduction Opportunity Diagnostics in Manufacturing

Situation
A process industry company wanted to quantify variable & fixed cost optimization potential with existing assets. Their understanding of how investments impact cost base were well known, but optimization actions to performance not so.

Action
In cooperation with client management, manufacturing and maintenance organizations, overall plant efficiencies and individual process performances were analyzed, and the current management system mapped to highlight areas to reduce costs.

Outcome
List of improvement actions, implementation business case and a high-level road map.

Challenge #5 High variable costs and lost revenue

Project name
Operational Excellence Implementation in Manufacturing

Situation
A process industry player’s manufacturing sites had low Operational Efficiency and low material efficiencies. The main reason was the high variance in processes which then led to poor controllability. On top, people's responsibilities weren’t clear and visibility into performance was not optimal.

Action
Engaging a cross-section of the organization a new management system was designed including clarified success factors and processes, new Key Performance Indicators designed, and visual management applications. After the redesign, the new management system was then rolled-out to control performance in manufacturing and maintenance.

On top, task forces were led to ensure an impact on the selected KPIs.

Outcome
Increased revenue and reduced variables costs.

Challenge #3 Increasing unit prices, variable lead times and poor payment terms

Project name
Sourcing Maturity Assessment & Capability improvement

Situation
A machine manufacturer had updated their long-term group strategy and, in the process, noted challenges within their existing sourcing organization. Namely, sourcing's role was understood differently within the group and sourcing practices varied greatly between sites as the common direction was missing.

Action
Together with the client, a broad current state analysis was done by gathering data from ERP and from interviews to get a true understanding of how people see the issues. This input was used for a sourcing maturity assessment that helped clarify what worked well and to pinpoint where the focus should be put to improve.

The root cause for poor results was in time use. There was no split between strategic sourcing or operational sourcing, which in combination with poor transparency into upcoming demand resulted in a high operative workload.

To improve, a sourcing strategy was co-created to increase understanding within the group, operational and strategic sourcing duties were split between roles and finally, setup policies and processes to manage supplier portfolios were made to support the strategic sourcing managers.

Outcome

Maturity position, business case, and improvement road map.
Enhanced capability to negotiate better terms.

Challenge #6 Poor finished good stock rotation, products in wrong places and optimizable delivery performance

Project name
Supply chain design and implementation

Situation
The company wanted to reduce Working Capital tied to inventory. To achieve this, total flow and buffering strategy needed clarification, as too many products lay too far down stream.

Action
A bulk of finished goods were up-streamed in the flow into few service centers.

Outcome
Delivery performance was increased and around 500 M€ of cash was released.

Read case Outokumpu: Improved supply chain for better service with optimal inventory

Supply Chain Strategy
Once overall business strategy, competition, voice of the customer and key requirements for Supply Chain are known, the following questions should be answered:
1. Where to build inventory & capacity buffers?
2. How to establish a manufacturing network diverse enough?
3. Could risk levels be mitigated by increasing multi-sourcing & nearshoring?
4. Are our assets, processes and products standardized enough to reduce risk?
5. Is our partner Ecosystem wide enough to provide scale when needed?
Organization
To ensure its importance, equally to Sales or Manufacturing, Supply Chain needs to represented in the management team. The overall organization design needs to enable:
1. Proper execution of strategic objectives
2. Proper Sales & Operations Planning and Execution e.g. clear process owners per phase and roles per function
3. Clear split between central & local activities as well as clear division of long-term planning and short-term order handling roles in demand and supply planning.
4. Well run operative purchasing and strategic sourcing
Performance

The saying “What you measure, you get” is quite accurate, so once the organization is designed, it is time to make sure each function has a clear focus.

This focus then needs to be implemented as KPIs, targets, dashboards, and structures to teams and drivers for individuals. Teams and individuals need to pull for jointly decided success factors: responsiveness, cash & margin efficiency, and sustainability.
Offering & SKU optimization
Having a clear strategy, well designed organization and a good management system, is not enough. As it is commonly known growing organization can become stiff. Therefore, the complexity that a Supply Chain needs to process needs to be optimized. This requires decisions between top management, sales, R&D and manufacturing on:
1. What is the most sustainable and cash & margin efficient offering for the company,
2. What products are to be standardized and which are to be offered as standard modules? Can standard products be simplified and part -commonality increased?
3. Which products ought to be phased-out?
Once the one-off improvement is finished, a continuous product life cycle management process is needed to keep the ship lean.

Read more: How to improve competitiveness by reducing stock-keeping units?
Total Flow, Delivery Models & Replenishment
Once the production portfolio and SKU base are in healthy shape, lets next answer the following key questions:
1. Do we enforce a forecast-based push or a consumption-based pull flow in the supply chain?
2. What products are dedicated to which plant and how is distribution arranged in the network?
3. What delivery models do we offer to our customers and which SKUs are served in each?
4. What replenishment methods should we use and how to dimension the parameters?
Companies that design these topics smartly and decisively adhere to them have the basis to operate downstream efficiently.
Processes & Digitalization

Once the afore set-up is there and material flow-related aspects are clarified, it is logical to look at information flow.

There, Sales & Operations Planning, Sales & Operations Execution, replenishment and scheduling -processes and -workflow automatization are crucial to ensure that plans stay sustainably accurate both in the short & long term.

This way a supply chain can stay lean, be responsive enough to win more revenue during demand peaks, optimize costs & inventories during demand valleys and stay sustainably ahead of competitors.
Operational Excellence

While manufacturing merits its own management team representation, it is part of the overall supply chain and is highly dependent on success in the afore steps. After all, stable plans are prerequisite to stability in manufacturing.

Manufacturing & maintenance organizations that apply TPM, Lean, and Operational Excellence methodologies tend to have lower variance in their processes. Low variance is the key to highly utilized bottleneck departments and high material efficiencies in all processing steps. Stability is what guarantees optimal volumes at optimal fixed and variable cost levels.
Procurement

Utilization and material efficiency are now there, on-top, price, carbon footprint & risk levels need to be optimized and managed to ensure good responsiveness and further improve cash & margin efficiency.

Diligent application of portfolio purchasing models, well-defined tendering processes, and inclusion of carbon footprint in sourcing are some of the aspects that high-performing sourcing organization consider.

Supply Chain Strategy
Organization
Performance
Offering & SKU optimization
Total Flow, Delivery Models & Replenishment
Processes & Digitalization
Operational Excellence
Procurement

Supply Chain Strategy

Once overall business strategy, competition, voice of the customer and key requirements for Supply Chain are known, the following questions should be answered:

Where to build inventory & capacity buffers?
How to establish a manufacturing network diverse enough?
Could risk levels be mitigated by increasing multi-sourcing & nearshoring?
Are our assets, processes and products standardized enough to reduce risk?
Is our partner Ecosystem wide enough to provide scale when needed?

Organization

To ensure its importance, equally to Sales or Manufacturing, Supply Chain needs to represented in the management team. The overall organization design needs to enable:

Proper execution of strategic objectives
Proper Sales & Operations Planning and Execution e.g. clear process owners per phase and roles per function
Clear split between central & local activities as well as clear division of long-term planning and short-term order handling roles in demand and supply planning.
Well run operative purchasing and strategic sourcing

Performance

The saying “What you measure, you get” is quite accurate, so once the organization is designed, it is time to make sure each function has a clear focus.

This focus then needs to be implemented as KPIs, targets, dashboards, and structures to teams and drivers for individuals. Teams and individuals need to pull for jointly decided success factors: responsiveness, cash & margin efficiency, and sustainability.

Offering & SKU optimization

Having a clear strategy, well designed organization and a good management system, is not enough. As it is commonly known growing organization can become stiff. Therefore, the complexity that a Supply Chain needs to process needs to be optimized. This requires decisions between top management, sales, R&D and manufacturing on:

What is the most sustainable and cash & margin efficient offering for the company,
What products are to be standardized and which are to be offered as standard modules? Can standard products be simplified and part -commonality increased?
Which products ought to be phased-out?

Once the one-off improvement is finished, a continuous product life cycle management process is needed to keep the ship lean.

Total Flow, Delivery Models & Replenishment

Once the production portfolio and SKU base are in healthy shape, lets next answer the following key questions:

Do we enforce a forecast-based push or a consumption-based pull flow in the supply chain?
What products are dedicated to which plant and how is distribution arranged in the network?
What delivery models do we offer to our customers and which SKUs are served in each?
What replenishment methods should we use and how to dimension the parameters?

Companies that design these topics smartly and decisively adhere to them have the basis to operate downstream efficiently.

Processes & Digitalization

Once the afore set-up is there and material flow-related aspects are clarified, it is logical to look at information flow.

There, Sales & Operations Planning, Sales & Operations Execution, replenishment and scheduling -processes and -workflow automatization are crucial to ensure that plans stay sustainably accurate both in the short & long term.

This way a supply chain can stay lean, be responsive enough to win more revenue during demand peaks, optimize costs & inventories during demand valleys and stay sustainably ahead of competitors.

Operational Excellence

While manufacturing merits its own management team representation, it is part of the overall supply chain and is highly dependent on success in the afore steps. After all, stable plans are prerequisite to stability in manufacturing.

Manufacturing & maintenance organizations that apply TPM, Lean, and Operational Excellence methodologies tend to have lower variance in their processes. Low variance is the key to highly utilized bottleneck departments and high material efficiencies in all processing steps. Stability is what guarantees optimal volumes at optimal fixed and variable cost levels.

Procurement

Utilization and material efficiency are now there, on-top, price, carbon footprint & risk levels need to be optimized and managed to ensure good responsiveness and further improve cash & margin efficiency.

Diligent application of portfolio purchasing models, well-defined tendering processes, and inclusion of carbon footprint in sourcing are some of the aspects that high-performing sourcing organization consider.

We work hands-on with our customers to build the insights, visibility and tools needed to improve capabilities, empower people and achieve measurable profitability improvement, now and in the future.

Read more about our Changemakers toolbox, project framework, and pricing on How we work -page.

Working Capital Optimization

We help release cash from operations to finance your growth and strategic initiatives by optimizing your working capital.

Customer Profitability Management

We help you improve customer profitability to achieve your profit targets by smarter pricing and better cost efficiency.

Capacent Group

Capacent Group

Supply Chain Management

We help you turn your Supply Chain into a competitive advantage. hbspt.cta._relativeUrls=true;hbspt.cta.load(5411872, 'a1531ae8-dd8a-492e-b68d-d718da843f92', {"region":"na1"});