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SC Cost optimization
- 1. This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other intended recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Julia Runow Gartner Supply Chain Supply Chain Cost Optimization in the Age of Digital Business
- 2. 1 © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Organizations use a mix of conventional and unconventional techniques to optimize IT and business costs Supply Chain Cost Optimization in the Age of Digital Business IT Cost Optimization Supply chain software contracts Cloud software and services Digital Business Logistics as a profit center Industrie 4.0, IoT, Smart Factories Business Cost Optimization Logistics outsourcing Supply chain network optimization Shared services, CoEs and councils
- 3. 2 © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Conventional Techniques Outsource logistics and/or manufacturing, Rationalize supplier base Shift transportation modes Offshore manufacturing Pay for performance Renegotiate contacts Unconventional Techniques Logistics becomes a profit generator 3D printing in manufacturing or aftermarket supply chain Drones for asset inspection and smart factories Selling data and analysis Supply Chain Cost Optimization in the Age of Digital Business Goal: Reduce supply chain costs to free up resources and fund the growth of digital business
- 4. 3 © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner Helps You Optimize Supply Chain Cost Digital, Business and IT Cost Optimization Proposal and Contract Reviews Saved / reduced consulting spend $200,000 Saved £1,200,00 on 3PL contract Cost Benchmarking Uncovered 40 – 50% logistics cost saving opportunity Identified 30 – 50% inventory reduction opportunity Strategic Road Maps and Maturity Assessments Saved / avoided $500,000 on WMS implementation Saved/ avoided $2 million in spend on large supply chain transformation programs Get the best pricing and terms now Identify and prioritize opportunities Support implementation of initiatives and prioritize opportunities 1 2 3
- 5. 4 © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Get the Best Pricing and Terms Better Information Leads to Better Deals Everyone thinks they have the best deals ... Analysts with specific expertise Supply Chain Software Supply Chain Consulting & System Integration Services 3PL Services Consider more than price Buy only what you need Uncover hidden costs Shortlist the right software or service providers Appropriate service levels Select the right vendors Magic Quadrants Market Guides Toolkits for RFP and Selection Volume Price Bought more features or services than needed Paying for maintenance on equipment not used Fuel surcharges Missed latest discounts / price changes Paid for bundled functions / services not needed Needed a hybrid solution, not homogenous 1 2 3
- 6. 5 © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Cost Benchmarking Compare your performance to hundreds of peer organizations “This is extremely helpful for us and I would say possibly the most valuable benchmarking exercise for supply chain that we have seen till date.” “We were able to derive significant value within a short period of time without spending too much resources” Client Testimonials: Demand Forecast Perfect Order (OTIF) SCM Cost (Transportation, Warehousing and DC Costs) AP Inventory Total Inventory Obsolescence AR Supplier Quality Supplier On-Time RM Inv. Purchase Costs Direct Material Costs Finished Goods Inventory WIP Inventory Plant Utilization NPD Time Order to Ship Order to Delivery Cash-to-Cash Assess Diagnose Correct Tells You: Demand Visibility Balanced Excellence Outcome Tells You: Cash Efficiency Tells You: Operational Effectiveness Benchmark your supply chain – "lowest" cost is not necessarily "best“ Compare your results with your peer group Balance short and long term opportunities 1 2 3
- 7. 6 © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. SC Tools — Actionable Insights to Support Decision Making Maturity Assessments Self-Assess Your Supply Chain Maturity Self-Assess Your Supply Management Maturity Self-Assessment of Supply-Planning Maturity for Supply Chain Leaders Assess Logistics Capability and Market Attributes for Emerging Economies S&OP Maturity Self-Assessment for Supply Chain Leaders Decision Frameworks Choosing the Right European Country for Your Logistics Needs Applying Supply Chain Inventory Analysis Strategic Road Maps 2016 Strategic Roadmap for Integrating the Supply Chain 2016 Strategic Road Map for Demand-Planning Maturity Advancement from Stage 2 to Stage 3 Building a Hierarchy of Supply Chain Metrics for Your Organization Five Steps to Best Practices in Supply Chain Benchmarking: From Numbers to Action Developing Strategic Supply Chain Organizational Designs 1 2 3
- 8. 7 © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Aligning Cost Optimization with our Supply Chain Key Initiatives *Source: Gartner Market Research Study of Over 300 Supply Chain Executives Key Initiatives 1. Design and Align the Supply Chain Strategy 2. Optimize End-to-End Supply Chain Performance 3. Supply Chain and Operations Trends and Innovation 4. Supply Chain Network Design to Optimize Costs and Service 5. Supply Chain Organization and Talent 6. Supply Chain Partnering to Improve Costs and Innovation 7. Improve Customer Service and Fulfillment in Supply Chain 8. Improve Supply Chain Planning Maturity and Capabilities 9. Logistics Strategy, Performance and Network Optimization 10. Technology and Solutions for Supply Chain and Operations Align SC With the Business Strategy Performance Optimization Cost Reduction/ Optimization
- 9. 8 © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Key Initiative Supply Chain Cost Optimization Linkage 1 Design and Align the Supply Chain Strategy Supply chain maturity, segmentation and cost to serve 2 Optimize End-to-End Supply Chain Performance Supply chain benchmarks and metrics 3 Supply Chain and Operations Trends and Innovation 3D printing, advanced analytics, Industrie 4.0 4 Supply Chain Network Design to Optimize Costs and Service Make vs buy, network redesign, inventory optimization 5 Supply Chain Organization and Talent Shared services, CoEs, retained talent 6 Supply Chain Partnering to Improve Costs and Innovation Outsourcing, supplier segmentation and co-innovation 7 Improve Customer Service and Fulfillment in Supply Chain Customer logistics programs, optimal multi-channel fulfillment 8 Improve Supply Chain Planning Maturity and Capabilities Planning and scheduling improvements 9 Logistics Strategy, Performance and Network Optimization Transportation and warehousing costs 10 Technology and Solutions for Supply Chain and Operations Software and services proposals and contracts How the Key Initiatives Help Supply Chain Leaders Optimize Cost
- 10. 9 © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Supply chain cost optimization isn't a project, it's a discipline New opportunities and threats emerge as: – Business imperatives evolve – New technologies mature – Assets reach the end of their useful lives – New service and delivery options proliferate Supply Chain Cost Optimization is a Discipline Are you and your team maximizing your Gartner ROI? Digital Business IT Cost Optimization Business Cost Optimization
Notes de l'éditeur
- Presentation Title
- Careful with Unconventional – it add another disruption Digital Business – only Gartner’s definition which is pretty narrow.
- . We would submit that “Performance Optimization” is more reflective of how our clients view the goal. The 3 key goals we uncovered through our research last year leading us to change our 3 agendas to 10 key initiatives showed that three goals are: Cost reduction / Optimization. What we’ve seen is clients tune the cost based upon the outcome required to serve particular customer segments. Instead of spreading cost reduction generally across SC functions (logistics, manufacturing and sourcing) or within one function (logistics or sourcing) more sophisticated companies will drive costs down to a larger degree in certain SC segments and a lesser or not at all in other SC segments. For example, customers that are highly price sensitive and willing to trade-off customer service (additional services) or lead time require a low cost and efficient SC. For that SC segment an optimal approach to cost would mean driving costs down as much as possible. In contrast, another customer segment that is less price (willing to keep paying current price or even pay more) sensitive but require shorter lead time or more services requires an agile SC response. For that SC segment cutting costs would lead to a sub-optimal result. In particular, it can lead to lost sales – the customer segment requiring high service and willing to pay for it – don’t get served appropriately. The key point here is SC Segmentation. That approach aligns the right SC operational and corresponding costs to the right customer segment. Performance optimization. Optimal performance means aligning the metrics and incentives to drive the desired outcome. From a cost perspective this means looking at total SC costs – not measuring costs within an individual function only. A trap companies fall into is each SC function trying to reduce cost. If initiatives are done in isolation, the cost reduction in one SC function may negatively impact costs in another function or might have some other impact that negatively impacts overall performance. For example, shifting inbound shipments to less frequent shipments can enable a manufacturer or retailer to reduce transportation costs but results in high inventory levels and higher warehousing costs. Strategic Alignment. It is common for SC leaders to focus on cost reduction even if the way the company competes is not on low price. The root cause is lack of alignment between the corporate strategy (and the brand promise) and the SC strategy and the goals established within the SC organization. The strategic alignment impacts multiple aspects of SC from the design of the physical SC network to way functions / operations work.
- Cost savings initiatives SC NW Design Logistics SC Partnering
- Our analysts align their research and writing to 10 key initiatives that supply chain executives have told us are most important to them. Each key initiative is built on a foundation of key questions facing supply chain executives that drive our research and focus.