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Supply Chain Strategy

At the top of the agenda


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From product development and sourcing through manufacturing and distribution, it’s never been more important to have all the moving parts of the supply chain synchronized. This requires a top-down strategy supported by all roles that touch the supply chain – which is to say, everyone. It also requires a commitment to developing the tools, technologies, people and processes that move a supply chain strategy from paper to reality.

We help clients in their efforts to deliver more value at every step across their end to end supply chains – from design and planning through sourcing, manufacturing, delivery and return. We do this by helping to define a global supply chain strategy that not only aligns with a company’s overall business strategy, but also provides a playbook and roadmap for execution. Learn more about the offering.

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Complex questions, profitable answers
As product options and customization add complexity to the supply chain, companies are turning to new business models in the search for profitable growth. But the paradox is that it’s hard to penetrate new markets in search of revenue without inviting new cost and inventory headaches along the way. Supply sources become more distant from their bases of demand, fuel costs mount and opportunities for labor arbitrage diminish. Quality and security become riskier. So complexity ends up breeding complexity.

With a sound supply chain strategy, a company can move past bottom-line cost containment and use the supply chain to spur top-line revenue growth. It can also answer questions such as: How do we fulfill shifting customer expectations? What should we own and what should we outsource? What tools, decisions and deployments will it take to make us as productive as possible? To begin, a company must understand how operational changes, financial value and overall business value influence each other. And above all, change on this scale needs senior sponsorship to prevent the necessary vision and authority from becoming too diluted.

How we can help

We help clients in their efforts to deliver more value at every step across their end to end supply chains – from design and planning through sourcing, manufacturing, delivery and return. We do this by helping to define a global supply chain strategy that not only aligns with a company’s overall business strategy, but also provides a playbook and roadmap for execution.

Our approach focuses on analyzing our client’s supply chain along three major dimensions: its business value from both financial and customer standpoints, the components and capabilities of its management and the leadership alignment and infrastructure to support organizational change.

Our services include:

  • Construction of an “as-is” baseline of supply chain operations
  • Identification of relevant third-party benchmarks and leading practices
  • Gap analysis to identify areas for improvement
  • Prioritization of needed improvements
  • Creation of a roadmap and business case for a new supply chain strategy

Our analysis is founded on time-tested tools like the Deloitte Integrated Supply Chain (DISC) framework, which accelerates analysis and enables explorations around tax alignment, sustainability and security management. DISC is based on the Supply Chain Council SCOR model and enhanced for a more holistic approach to supply chain analysis with the inclusion of strategy, technology, people and organization and performance management threads.

Bottom-line benefits

We help clients generate benefits such as:

  • Improved efficiency
  • Increased customer satisfaction
  • Reduced operating costs
  • Increased revenue due to higher fill rates and in-stock inventory
  • Profit maximization
  • Right-sized inventories
  • Improved asset and capacity utilization

Five ways to get more value now

We’ve helped create and implement supply chain strategies for companies around the world. Here are some of the lessons we’ve learned along the way.

Consider cross-functional impacts. Supply chain strategy is about more than just operations. It also calls finance, HR, tax and other functions to the table. For example, you can’t weigh the outcome of moving some operations to another country without considering the tax implications. Every department brings a useful perspective and set of values.

Stay flexible and balanced. An over-investment in fixed assets or fixed capacity can pin you down. An under-investment can leave you unable to meet pressing demand. The right mix of in-house and third-party assets – of fixed and variable costs – can provide necessary agility.

Take a broad view of benchmarks. There may be lessons worth learning outside your immediate industry or sector. Some industries are ahead of others and you could be among the first to “import” a proven leading practice.

Focus on information, not inventory. Your customers have custom requirements. To the extent possible, learn to assemble and deliver rather than to build, warehouse and sell. Even if this strategy applies only to the marginal “tail” SKUs and not your “A-movers,” it can enhance your reputation for responsiveness. Last-minute customization isn’t just for cars and PCs anymore.

Embrace sustainability. Not only is it here to stay, but green management is like green food: good for you. Make a serious effort to integrate sustainability into your supply chain strategy instead of tinkering on the margins – or worse, treating it like as PR gambit with no substance to back it up.

Supply Chain Strategy in action

  • A startup pharmaceutical manufacturer got U.S. Food and Drug Administration approval for a promising antiviral. The company faced raw material constraints, uncertainty about market size, potential surges in demand and changing government regulations. Deloitte helped develop and implement an end-to-end supply chain strategy. The startup shortened lead times from 25 to 5 months, generated revenue 18 months ahead of schedule and negotiated capital expenditure reductions of $24 million.
  • A sports apparel and equipment manufacturer was under growing pressure. Customers changed their orders closer to the end sale; wanted more customization and offerings and quicker order fulfillment with no backorders. Deloitte helped on global manufacturing and distribution strategy, supply chain flexibility and strategic sourcing. The client got a $48 million working capital improvement due to inventory. Annualized expenses were reduced by $14 to $18 million and gross margins improved 5 percent. Off-shore lead times were reduced by 66 percent.
  • A leading global beauty company with multi-billion dollar revenues and markets in over 100 countries asked Deloitte to help identify supply chain opportunities in manufacturing and distribution. Projects included closing and expanding facilities; outsourcing internal manufacturing categories to contract manufacturers and optimizing supply chain processes at multiple sites. The company transferred 23 million units of production capacity to third-parties and across regional borders with no negative impact on service, while achieving savings of over $20 million.

As used in this document, “Deloitte” means Deloitte & Touche LLP, which provides audit, assurance and risk management related services, Deloitte Consulting LLP, which provides strategy, operations, technology, systems, outsourcing and human capital consulting services, Deloitte Tax LLP, which provides tax services and Deloitte Financial Advisory Services (FAS), which provides financial advisory services. These entities are separate subsidiaries of Deloitte LLP. As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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