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.
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.
Deloitte’s BMO approach makes strategic tax planning an integral part of supply chain transformation initiatives, enabling companies to drive down their structural tax rate. This more sustainable planning approach of combining supply chain and tax optimisations can contribute substantially to profits.