Our value chain programs are based on tangible benefits allowing our clients to realize a full return within the first year with contributions to profits and cash liquidity continuing for years afterwards. Program benefits always include:
- A 5:1 or greater payback in the first 12 months
- A 15% or greater improvement in contribution margin
- Double digit inventory turnover ratios
- 90% or greater order service levels
These benefits become inherited by the client team as they learn the methods of achieving best in class operating performances for the business based on goals of zero working capital and a continuous cost improvement roadmap.
All of our value chain programs are centered on the Company’s commercialization spectrum which provides the basis for long term growth. We define 4 aspects of commercialization as represented by the top row of the graphic below.
Whether a Company is launching new products or servicing established products continual optimization of this commercial strategy and tactics is critical in providing competitive response to ever-changing marketplace dynamics.
Our programs are based on a three step process of Assess, Transform and Sustain to improve value chain performance and the commercialization goals.
- Assess Performance – Initial modeling supports an evaluation of the Company’s value chain as it applies to profitability and growth goals. This evaluation determines risk potential and gaps between the operating capability and these goals.
- Transform the Operations – Based on the assessed performance and the business goals a roadmap will define actions and timelines required to close gaps and minimize risks in realizing the operating capabilities that will meet or exceed the profit and growth goals.
- Sustain & Continue Improvements – As the transformation steps are made the processes and systems are established that achieve success in execution through measurable improvements in performance. Improvements translate to financial benefits of reduced operating cost and working capital complemented by higher order service levels to maximize profits and contribute to free cash flow.
These three steps combine to provide performance by design, execution and sustained methods into the business and it’s long term growth goal of commercialization. By solidifying this type of market alignment with the value chain for product development, production and delivery a long term growth of market sales can be realized.
Rapid Opportunity Assessments are typically done as quickly as 3 weeks while larger assessments can take up to 6 months for a national multi-site operating Company. Areas typically covered in the operating performance assessment include:
- Sourcing Strategies & Methods
- Supplier Performance
- Procurement Management
- Warehouse & Inventory Management
- ERP & Advance Planning Systems
- Order Management Process & Systems
- Transportation and Logistics Process & Systems
- Manufacturing & Operational Excellence
- Key Performance Metrics, outlined in the “Sustain & Continue Improvement” section below
Technical Assessments are typically the longer 3 to 6 month time frame when advanced modeling tools are used to evaluate end to end performance of entire value chain operations and a proposed architecture. Recommendations for improvements will cover people, process and systems considerations and their correlation with contracts, 3rd party partners, suppliers, outsourcing, co-location, fulfillment and distribution strategies.
All assessment services will provide a roadmap of improvement activities with timelines, resources, estimated costs and benefits that will achieve the profitability and growth goals of the Company.
Transform the Operations
Transformation follows an assessment using the roadmap of activities and target benefits to achieve success. Transformation can be broken into scale categories as:
- Single Site, Single Functional Area focus for improvement within the Value Chain
- Single Site, Multiple Functions in an integrated approach to the Value Chain Improvement
- Multi-Site, Corporate Value Chain Improvement
All transformation programs complete the actions with resources following the roadmap plan with benefits based on a minimum 5:1 return in the first year, this is the primary success criteria and is reported upon throughout the program. Timeframes to make multi-site transformations can vary depending on the scope and goals of the program.
Sustain & Continue Improvements
This is a step that never ends for a Company to remain best in class. Sustaining the transformation requires the execution processes and systems are well defined with performing results, a continuous improvement culture is in place and the knowledge of what has transpired has been transferred as an inherent part of the operating. Establishing these systems typically involves a qualification and certification milestone especially in FDA and FAA regulated industries where documented and quantifiable performance is the basis of certifying processes. Key performance areas that are primary drivers in this stage include:
- Perfect Order & Supply Metrics for Service, Backlog, Excess & Obsolete
- Delivered Cost Metrics and Value Chain Expense
- Cash Conversion Cycle
- Working Capital & Inventory Turns
- Supplier Scorecard Rating Program
- Sourcing Total Cost of Ownership
- Manufacturing Productivity & Operating Cost
- Distribution Productivity & Operating Cost