Definition of a Supply Chain strategy based on a holistic vision of the flows involved, aimed at increasing sales by better responding to customers’ service expectations, whilst optimizing costs and inventory through better flow organization.
The Supply Chain strategy identifies 3 main types of highly connected levers:
1. Customer service:
- What levels of service should be offered to the various customer segments, taking into account their specific requirements and the competitive environment? (Timeframe, availability, added value services, etc.)
- What level of responsiveness is required to bring new products and innovations to market?
2. The industrial and logistics network:
- Where should companies look for suppliers and set up their factories? What is the right concentration level, taking into account scale effects, and needs for responsiveness and proximity to markets?
- What density is required for the distribution center network? How many levels should be established between the industrial sites and the markets?
3. The Supply Chain models:
- Where should the decoupling point be positioned to optimize inventory and costs (make-to-order, configure-to-order, deploy-to-order, store and sell, etc.)?
- Should the models be differentiated according to customer and product segments?
However, the functional organization of companies often means that each lever is studied in isolation:
- The procurement department often builds its sourcing strategy around a focus on minimizing purchase prices without really taking into account the impacts on market responsiveness
- The industrial footprint is often defined by the industrial management department without considering the respective effects on inventory and customer service
- The service strategy is often overlooked, as neither the Supply Chain department nor the sales department can independently assess all of its impacts.
Coordinating cross-functional and iterative decision-making at executive committee level brings out innovative and impactful solutions. For example, the introduction of a “make-to-order” model in an industry that traditionally specialized in supplying stock locally within a short timeframe, managed to increase the market share while cutting inventory and costs.
The operational analysis of customer’s requirements had revealed that wholesale customers did not necessarily require deliveries within a short timeframe, but required instead an excellent level of service to ensure the availability of their product, as this was crucial to their competitiveness.
Therefore, establishing an offering based on a “make-to-order” model met this need by providing a solid guarantee of availability in return for a timeframe of several weeks to anticipate requirements. This offering enabled the entity in question to develop market shares within the segment. Furthermore, it also led to a very significant reduction in inventory requirements and the organization of deliveries direct from the factories, with considerable savings in transportation and handling costs accordingly.
How can Argon Consulting help you?
- Analyzing and identifying customer service requirements and the competitive positioning of the existing offering
- Identifying opportunities to develop the industrial and logistics network
- Developing analytical simulation models through which to assess the impact of the various strategic levers on inventory, service, industrial, and logistics costs, as well as to evaluate a variety of scenarios
- Coordinating a cross-functional, iterative, and quantitative decision-making process with the executive committee to develop a strategy aligned with the ambitions of the business
- Assessing the impacts of this strategy on the organizations, processes, and information systems
- Developing an implementation plan that prioritizes value creation and results in a feasible pace of change