Supply Chain Strategy Tools & Techniques

Supply Chain Strategy (Visioning & Diagnostics) Handbook
Strategic Questions, Tools and techniques

4
Infrastructure Questions
Physical Structure
– What facilities will be required (how
many and where)
– What will be the role of each facility
– What manufacturing will be
required
– How will product be distributed, I.e.
where will inventory be held, how
will service be maintained
– What bottlenecks exist in the
business and how will these be
reduced, eliminated, managed
– How can you optimise both
tax/fiscal flows and physical flows
Integration & Synchronisation
– How will the business interface with
customers
– How will the supply points be linked to
demand, e.g. global eye, VMI etc to
ensure economies of scale (EOS)
benefits are maximised.
– How will the decoupled part of the supply
chain be buffered from demand
fluctuations - with stock, leadtime, excess
capacity
– What will the drum beat be
– What will drive activity in the supply chain
-> orders / forecasts (or a combination)
– How will new products / events be
integrated with the ongoing supply chain
activity
– What mechanisms will be put in place to
control the proliferation of products
– How will constraints be handled
– What will operate to a pull signal (and
what will the signal be)
– What will operate to a push signal (and
what will the signal be)
Sourcing
– Are there further scale
opportunities at the industry level
– What supply chain activities should
you own, control or hand over to a
third party
– With whom will you partner in order
to achieve full EOS opportunities
– How will we use third party
providers / JV’s
– What are the high level processes
for supplier management
– What are the critical supply items
and how will these be sourced
– What type of relationship, with the
co-partners in the supply chain, will
be required
– How will customers be involved in
new product / event management?
– With which suppliers will we seek a
close partnership
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/supply-chain-strategy-tools-and-techniques-737

7
CAVEATS:
• It does not provide an answer to the clients problem but rather helps
define the scope of the problem
• The axis should be modified to reflect the clients view of the supply
chain and the key business metrics
CAVEATS:
• It does not provide an answer to the clients problem but rather helps
define the scope of the problem
• The axis should be modified to reflect the clients view of the supply
chain and the key business metrics
PURPOSE: It is used to highlight how each aspect of
Supply Chain Management can influence the
performance of the business in each of the key
dimensions of cost, cash, customer satisfaction and
growth.
PURPOSE: It is used to highlight how each aspect of
Supply Chain Management can influence the
performance of the business in each of the key
dimensions of cost, cash, customer satisfaction and
growth.
User notesUser notes
WHEN TO USE: Throughout an assignment but
probably most applicable at project kick off or when
explaining SCM to non SCM people
WHEN TO USE: Throughout an assignment but
probably most applicable at project kick off or when
explaining SCM to non SCM people
DEFINITION: The SCM matrix is a very simple
representation of Value Based Management. It simply
is used to articulate the relationship between key
aspects of the supply chain and the key business
metrics
DEFINITION: The SCM matrix is a very simple
representation of Value Based Management. It simply
is used to articulate the relationship between key
aspects of the supply chain and the key business
metrics
SUPPLY CHAIN MATRIX
Business Parameters
SupplyChainElements
Demand Management
Distribution
Manufacturing
NPI
Supply
SupplyChainIntegrators
Cost Cash Customer
Satisfaction
Growth
Impacts
Questions
InsightsPerformance Management
People capability and competencies
Organisation Design
Supporting Technology

10
HOW TO CREATE - ANALYSIS PLAN
STEP DATA REQUIRED SOURCE(S)
1. Define an issue on which a specific action
depends and phrase it as a “yes” or no” question
2. Establish a hypothesis, a statement of likely
resolution of the issue including the reasons for
answering “yes” or “no”
3. Develop an analysis statement that outlines the
“models” that will be explored in order to prove or
disprove the hypothesis
4. Identify the likely location or means of obtaining
data to accomplish the analysis
5. Develop end products (presentations) to
graphically represent the output of the analysis
• Identified issues and hypotheses • Project team

13
CAVEATS:
• This tool is mainly used to understand a company’s internal situation.
One must use other frameworks to understand how the company
fares vis-a-vis its competitors and what potential changes may occur
in the industry as a whole.
CAVEATS:
• This tool is mainly used to understand a company’s internal situation.
One must use other frameworks to understand how the company
fares vis-a-vis its competitors and what potential changes may occur
in the industry as a whole.
PURPOSE: To understand where companies deliver
value across their business systems. Can also be used to
determine where a company possesses strategic
advantage or disadvantage.
PURPOSE: To understand where companies deliver
value across their business systems. Can also be used to
determine where a company possesses strategic
advantage or disadvantage.
USER NOTES:USER NOTES:
WHEN TO USE: Potential -Assess internal baselineWHEN TO USE: Potential -Assess internal baseline
DEFINITION: Analysis of the business processes and
activities that companies undertake in order to deliver
value to customers in the form of products and/or services
DEFINITION: Analysis of the business processes and
activities that companies undertake in order to deliver
value to customers in the form of products and/or services
VALUE CHAIN/BUSINESS SYSTEM
SellMakeCreate
Service
Product &
Customer
Sell
Product
Distribute
Product
Manufacture
Product
Produce Raw
Material
Design
Product
Obtain
Technology
Ex:
Primary
Activities:
• :
• • • • • •
Critical
Success
Factors:
Strengths:
Weaknesses:
•
• • • • • •

16
HOW TO CREATE - SUPPLY CHAIN INSIGHT FRAMEWORK
Step Data Required Source(s)
1. Set the scene
• Introduce model
• Collect information
2. Strategic assessment
• Evaluate and challenge client to
examine if current strategy is optimal.
Does the company have the right
positioning.
• If sub-optimal strategy explore with
client the optimal strategy. Is a new
positioning more appropriate for the
business.
• Evaluate benefits and risks of changing
strategy
3. Process Assessment
• Identify critical “get rights” from optimal
strategy. Does the company focuses on
the right processes.
• Use maturity profiles and compare with
. (What is the level of maturity of the
processes)
• Best practice
• Direct competition
4. Define the level of maturity the company
should reach for each process.
• Interviews with client staff
• Experts from within PwC
• Industry experts outside the
firm
• Current operating paradigms

19
SCALE CURVE
PURPOSE: To determine benefits
driven by economies of scale.
PURPOSE: To determine benefits
driven by economies of scale.
REFERENCE MATERIALS: Northrop Documents, Barnett
Banks: Scale Economies Review, Jan - April 1992
REFERENCE MATERIALS: Northrop Documents, Barnett
Banks: Scale Economies Review, Jan - April 1992
WHEN TO USE: Strategy - Define
options; Develop and evalute options
WHEN TO USE: Strategy - Define
options; Develop and evalute options
DEFINITION: Evidence of economic
benefits from increased volumes
DEFINITION: Evidence of economic
benefits from increased volumes
10.0
5.0
1.0
0.5
0.1
1 2 3 4 5 6 7 8 9 10
■1A
■1A
■1A
■1A ■1A
▼1A
■1A
■1A
■1A ■1A
♦1A
■1A
▼1A
♦1A
1991 NAD F18 Estimate
NAD F18 Actuals
Competitor C
Competitor B
Key
SUPPORT LABOR SCALE EFFECT - CONVENTIONAL FIGHTER AIRCRAFT EXAMPLE
Ratio of
Support
Labor Hours
to Touch
Labor Hours
Total Annual Program Touch Labor Hours
(000)
NAD F18 base
hours
SLOPE = 67%

22
HOW TO CREATE - EXPERIENCE CURVE
STEPSTEP DATA REQUIREDDATA REQUIRED SOURCE(S)SOURCE(S)
1. Plot accumulated volume for
different years against unit cost
on a log/log scale (unit cost
should be deflated by using a
general index such as the GNP
deflator, or specific indices for the
various parts of cost such as
materials and labor)
2. Add a standard regression line to
the graph
1. Plot accumulated volume for
different years against unit cost
on a log/log scale (unit cost
should be deflated by using a
general index such as the GNP
deflator, or specific indices for the
various parts of cost such as
materials and labor)
2. Add a standard regression line to
the graph
• Yearly accumulated production volume
for the entire indicative and individual
competitors
• Unit cost data for the entire industry
and competitors (use price data if cost
data is not available)
• Yearly accumulated production volume
for the entire indicative and individual
competitors
• Unit cost data for the entire industry
and competitors (use price data if cost
data is not available)
• Government agencies
• Trade associations
• Internal company data
• Government agencies
• Trade associations

25
PRODUCT LIFE CYCLE ANALYSIS
CAVEATS:
• Any prediction is no guarantee
• Applying a PLC strategy can become a self-fulfilling prophecy.
The PLC concept is most useful as one source of evidence
• Growth is still possible in mature categories, particularly for
individual brands. Such growth often requires greater
investment or creativity than growth in younger categories
CAVEATS:
• Any prediction is no guarantee
• Applying a PLC strategy can become a self-fulfilling prophecy.
The PLC concept is most useful as one source of evidence
• Growth is still possible in mature categories, particularly for
individual brands. Such growth often requires greater
investment or creativity than growth in younger categories
PURPOSE: To predict sales growth, customer and
competitor behavior. To help prescribe appropriate
marketing and other strategies. To help allocate
resources among product categories
PURPOSE: To predict sales growth, customer and
competitor behavior. To help prescribe appropriate
marketing and other strategies. To help allocate
resources among product categories
REFERENCE MATERIALS:
• Capon, Noel. “The Product Life Cycle.” HBS Case
Services 9-579-072. Revised 1/81
• Dhalla, Nariman K. and Sonia Yuspeh. “Forget the
Product Life Cycle Concept.” Harvard Business
Review. Jan-Feb 1976, p.102-112
• Porter, Michael E. Competitive Strategy. The Free
Press. 1980, Chapters 8, 10, 11, and 12
• Smallwood, John E. “The Product Life Cycle: A Key
to Strategic Marketing Planning.” MSU Business
Topics, Winter 1973, p.29-35 (especially good for
how to use in forecasting)
REFERENCE MATERIALS:
• Capon, Noel. “The Product Life Cycle.” HBS Case
Services 9-579-072. Revised 1/81
• Dhalla, Nariman K. and Sonia Yuspeh. “Forget the
Product Life Cycle Concept.” Harvard Business
Review. Jan-Feb 1976, p.102-112
• Porter, Michael E. Competitive Strategy. The Free
Press. 1980, Chapters 8, 10, 11, and 12
• Smallwood, John E. “The Product Life Cycle: A Key
to Strategic Marketing Planning.” MSU Business
Topics, Winter 1973, p.29-35 (especially good for
how to use in forecasting)
WHEN TO USE: Potential - Develop Vision: Strategy -
Define options
WHEN TO USE: Potential - Develop Vision: Strategy -
Define options
DEFINITION: Traces sales trends for products from
introduction to termination over time
DEFINITION: Traces sales trends for products from
introduction to termination over time
POSITIONS ON PLC OF HOUSEHOLD DURABLES IN EARLY 1970s
Time
Introduction Growth Maturity Decline Termination
Saturation
Ranges & Ovens
B&W TV
Wringer
Refrigerators
Freezers
Automatic Washers
Room A/C
Color TV
Dishwasher
Compactor

28
HOW TO CREATE - SUPPLY CHAIN MODELLING
1. Hypothesise the strategic options
2. Determine how you will prove the
hypothesis
3. Identify the relationships to model
4. Collect data
5. Calibrate relationships
6. Run options
7. Sense check outputs
8. Test for sensitivities
• Client data
– chart of accounts
– management accounts
– contract data (for transport)
– production line data
– sales and marketing data
• External data
– Published industry data
– PwC data from previous
studies
– Synthesised data
• Volume (current and future)
• Supply chain flows (what, from
where and when)
• Manufacturing and distribution
economics
• Differential labour rates
• Technology options
• Transport options

31
CAVEATS:
• Need to consider whether done by product or by supplier
• Sometimes difficult to collect the data
• Does not provide a purchasing strategy - more an approach for
managing suppliers
CAVEATS:
• Need to consider whether done by product or by supplier
• Sometimes difficult to collect the data
• Does not provide a purchasing strategy - more an approach for
managing suppliers
PURPOSE: To matching the various strategies
suitable for managing suppliers to the providers of
products and services
PURPOSE: To matching the various strategies
suitable for managing suppliers to the providers of
products and services
WHEN TO USE: Potential - Develop vision and value
proposition: Strategy - Define options; Develop and
evaluate options
proposition: Strategy - Define options; Develop and
evaluate options
DEFINITION: The segmentation of company
purchases into four distinct categories.
DEFINITION: The segmentation of company
purchases into four distinct categories.
SUPPLIER SPEND ANALYSIS
Purchasing volume 10 mill
Number of items 4.370
Number of vendors 200
Ensure supply
continuity
Handle
efficiently
Form alliances
with suppliers
Take advantage of
market potential
Number of items 15,000
Number of items 250
Number of items 380
Total: Purchasing volume (total): 200 million
Number of parts (total): 20,000
Number of vendors (total): 598
Purchasing volume
Effect on net income
Low High
Technicalcomplexity/supplyrisk
HighLow

34
HOW TO CREATE - TRADE OFF ANALYSIS
1. Agree the factors in the trade off
2. Identify the relationship between
the variables and the common
dependent
3. Capture data regarding known
points in the relationship
4. Extrapolate relationships
5. Identify optimum operating point
6. Identify interrelated factors
• Management accounts• Cost data
• Performance data

37
CAVEATS:
• Requires us to be able to define best practice
• Does not explicitly say where a given business should be for each
process or business activity
• Maturity profiling is less appropriate when:
• an in depth analysis is required
• a quantitative approach is required
CAVEATS:
• Requires us to be able to define best practice
• Does not explicitly say where a given business should be for each
process or business activity
• Maturity profiling is less appropriate when:
• an in depth analysis is required
• a quantitative approach is required
PURPOSE: To help clients evaluate how well they are
performing a process compared with best practice.
PURPOSE: To help clients evaluate how well they are
performing a process compared with best practice.
WHEN TO USE: Strategy - Develop preferred OptionWHEN TO USE: Strategy - Develop preferred Option
DEFINITION: A document, for a given process or
business activity, that describes five states from
innocence to excellence which is used by a client to
assess process maturity
DEFINITION: A document, for a given process or
business activity, that describes five states from
innocence to excellence which is used by a client to
assess process maturity
MATURITY PROFILES
Innocence Awareness Understanding Competence Excellence
Activities • No clear responsibility
• Little or no use of
statistical methods
• Limited attention paid to
New Product and
Promotion forecasts
• Multi independent
forecasts created
• Lack of appropriate base
data or information on
which to build sales
forecast
• No relation to high level
business plans or
budgets
• Multiple forecasts but
within Business Group
definition of
responsibility
• Departmental process in
place
• Limited projection based
on history only
• Budget drives forecast
• Simple customer order
history available and
used for forecasting
• Some high level
comparisons to financial
budgets but significant
differences
• Some efforts to address
causes of low forecast
accuracy
• Single formal approach
used across Business
Groups; formal
ownership
• Forecast based on
history only
• Formal timefence for
inclusion of forecast
information in production
plan
• Forecast drives budget
• NPIs and promotions
informally included
• Forecasters understand
service stock
consequences arising
from different levels of
forecast accuracy
• Systematic forecast on
NPI launch, based on
similar products, short
term
• Forecasts consolidated
to provide company wide
view
• Formal hierarchy
validation of forecast
feasibility and outcome
• Key customers provide
forecast information
• Tools used and small
number of options
considered
• Simple link to inventory
management
• Formal training for all
forecasters
• Forecast process
responsibility at
Business Group level
• Evaluation of NPI and
promotions on product
portfolio, medium term
• High forecast accuracy
• Forecast includes trend
and market intelligence
in defined and
appropriate way
• Company's share sales
plan with customers and
gain 'buy in' and
commitment
• Performance against
forecast and key
business measures by
product stream
• Seamless forecast
drives production plan,
resource plan and
investment plan
• Forecasters understand
applicability of trend and
event forecasting
• Use of analytical
forecast tools, history,
market knowledge and
life cycle focus to
develop a demographic
market model based
projections combined
with customer order
trends
• All NPIs, phase outs,
promotions and other
commercial action fully
covered by forecast
(even low volume
products included)
• Formal process at
business level
• Clear definition and life
cycle orientated
integrated business
planning
• Full use of multiple
statistical methods / tool
• Considered a cross
functional activity, and a
starting point for cross-
functional planning
• A continuous process for
all drivers and users
• Forecasts integrated
with budget process
• Expected accuracy
generated with every
forecast

40
HOW TO CREATE - SUPPLY CHAIN MAPPING
1. Map supply chain flows
2. Add product related data
3. Add information on lead times and
service levels
4. Add inventory / stock information
5. Highlight areas with waste, e.g.
stocks duplicated at supplier and
customer location
• Management accounts
• Interviews with client staff
• Product flows, lead times,
inventories, product range,
processing times etc

43
CAVEATS:
• The words on the charts must be written by the client
• The consultant acts as a facilitator only
CAVEATS:
• The words on the charts must be written by the client
• The consultant acts as a facilitator only
PURPOSE: To rapidly get agreement from a range of
client staff as to what their vision should be
PURPOSE: To rapidly get agreement from a range of
client staff as to what their vision should be
proposition: Strategy - Define options
proposition: Strategy - Define options
DEFINITION: A pictorial representation of a vision that
is clear and unambiguous
DEFINITION: A pictorial representation of a vision that
is clear and unambiguous
VISIONING TEMPLATES
e.g. The Cover Story Vision
BIG HEADLINES
QUOTES
“ “
SIDE BARS
Cover BRAINSTORMS

46
1. Create a pro forma base case
for the project in question (break
even?)
2. Determine range of low to high
numbers for each of the
established variables
3. Replace base case numbers
with low and, then high case
numbers separately to
determined the overall outcome
range
1. Create a pro forma base case
for the project in question (break
even?)
2. Determine range of low to high
numbers for each of the
established variables
3. Replace base case numbers
with low and, then high case
numbers separately to
determined the overall outcome
range
HOW TO CREATE - SENSITIVITY ANALYSIS
• Financial projections - cost and
revenue
• Financial projections - cost and
revenue
• Company management,
accounting/finance department
• Company management,
accounting/finance department

49
Supporting Tools and Techniques
Supporting tools & techniques
– Customer insight and alignment
– Customer segmentation
– Logic trees
– Kano model
– Focus groups
– Conjoint analysis
– 7 S model
– SWOT analysis
– Financial analysis (NPV / IRR)
– Economic Value Add (EVA) analysis

52
CAVEATS: Requirements for Effective Segmentation:
• Measurability - the degree to which size and purchasing power
can be measured
• Substantiality - the degree to which the segments are large
and/or profitable enough
• Accessibility - the degree to which the segments can be
effectively reached and served
• Actionability - the degree to which effective programs can be
formulated for attracting and serving the segments
• Detailed customer data may not be available from the client.
External sources of data (e.g., Claritas, Simmons) can be used
to augment client-provided customer data
CAVEATS: Requirements for Effective Segmentation:
• Measurability - the degree to which size and purchasing power
can be measured
• Substantiality - the degree to which the segments are large
and/or profitable enough
• Accessibility - the degree to which the segments can be
effectively reached and served
• Actionability - the degree to which effective programs can be
formulated for attracting and serving the segments
• Detailed customer data may not be available from the client.
External sources of data (e.g., Claritas, Simmons) can be used
to augment client-provided customer data
PURPOSE: To better identify marketing opportunities. To
develop the right offering for each target market. To be
able to reach the target market in the most efficient manner
possible.
PURPOSE: To better identify marketing opportunities. To
develop the right offering for each target market. To be
able to reach the target market in the most efficient manner
possible.
WHEN TO USE: Potential - Assess External EnvironmentWHEN TO USE: Potential - Assess External Environment
DEFINITION: A division of a market into distinct groups of
buyers who might require separate products and/or
marketing mixes
DEFINITION: A division of a market into distinct groups of
buyers who might require separate products and/or
marketing mixes
CUSTOMER SEGMENTATION
THE CONVERTER MARKET CAN BE SEGMENTED USING TWO
VARIABLES: ECONOMIC RISK AND FABRIC INNOVATION
• Hold inventory
• Credit problem
• Basic fabrics
“Opportunistic” Strategy
• Specialty products
• Narrow customer base
Niche Strategy (specialized
product to narrow customer
base)
• Sell to manufacturers before
fabric purchase
• Established credit
• Broad customer base
• Basic fabrics
Low-Cost Strategy
• Sell to manufacturers before
fabric purchase
• Established credit
• Focused customer base
• Novel fabrics (“fashion
forward”)Differentiation Strategy
(specialized product to broad
customer base)
Economic Risk
• Inventory position
• Credit status
• Product mix
• Customer base
Fabric Innovation
• Percent novelties
• Order size
• Number of collections
High
Low High
Low

55
HOW TO CREATE - LOGIC TREES (ISSUES MAPS, HYPOTHESIS TREES)
1. Identify key issues and
define a starting point for
the hierarchy of viable
options
2. Identify a range of possible
outcomes
3. Develop the logic flow by
sorting the critical issues
defined to chart the path to
the options
4. Develop a hypothesis
• Internal company
information
• External market
research
• Senior management
interviews
• Literature searches,
secondary research

58
CAVEATS: Focus Group results are not statistically valid and should not
be taken as wholly representative of the attitudes or opinions of the larger
population from which participants are drawn. In addition, resistance from
participants may arise due to misconceptions over what focus groups are
or what they are used for. Clarify that they are not:
•Complaint sessions
•“Touchy feely”
•Unrelated to company’s operations or project goals
•Used to evaluate executives
CAVEATS: Focus Group results are not statistically valid and should not
be taken as wholly representative of the attitudes or opinions of the larger
population from which participants are drawn. In addition, resistance from
participants may arise due to misconceptions over what focus groups are
or what they are used for. Clarify that they are not:
•Complaint sessions
•“Touchy feely”
•Unrelated to company’s operations or project goals
•Used to evaluate executives
PURPOSE: To share perceptions or specific topics for
organization to get qualitative aspect from numbers of
people too large for individual interviews. To generate
ideas and consensus. To develop customer
requirements, stakeholder issues, or project objectives.
PURPOSE: To share perceptions or specific topics for
organization to get qualitative aspect from numbers of
people too large for individual interviews. To generate
ideas and consensus. To develop customer
requirements, stakeholder issues, or project objectives.
WHEN TO USE: Potential - Assess External EnvironmentWHEN TO USE: Potential - Assess External Environment
DEFINITION: A controlled and monitored discussion
involving a small group of people representative of a
larger population (e.g. customers, employees, etc.)
designed to determine group characteristics, reactions to
ideas, etc., which can direct further research efforts
DEFINITION: A controlled and monitored discussion
involving a small group of people representative of a
larger population (e.g. customers, employees, etc.)
designed to determine group characteristics, reactions to
ideas, etc., which can direct further research efforts
FOCUS GROUPS
Sample Questions:
To assess product/service:
• What characteristics do you want most in a product/service of this
type?
• How would you rate this product against those characteristics?
• What other attributes would you like this product to have?
To assess organization:
• What are some good things about working here?
• What have been the highest and lowest points in this organization?
• What must people do to get ahead in this organization?
To assess change readiness:
• Are there a lot of change initiatives going on right now?
• What would you change? What would make you believe this
change is necessary?
• What are the barriers to change?
Sample Questions:
To assess product/service:
• What characteristics do you want most in a product/service of this
type?
• How would you rate this product against those characteristics?
• What other attributes would you like this product to have?
To assess organization:
• What are some good things about working here?
• What have been the highest and lowest points in this organization?
• What must people do to get ahead in this organization?
To assess change readiness:
• Are there a lot of change initiatives going on right now?
• What would you change? What would make you believe this
change is necessary?
• What are the barriers to change?

61
1. Conduct focus groups with
internal employees as well as
customers to determine/validate
attributes to be used in survey
2. Design survey comparing pairs of
attributes or scenarios
3. Calculate conjoint scores for each
attribute or scenarios
4. Identify strategic opportunities
1. Conduct focus groups with
internal employees as well as
customers to determine/validate
attributes to be used in survey
2. Design survey comparing pairs of
attributes or scenarios
3. Calculate conjoint scores for each
attribute or scenarios
4. Identify strategic opportunities
HOW TO CREATE - CONJOINT ANALYSIS
• Understanding of the
product/service and its key
features
• Understanding of the
product/service and its key
features
• Interviews with company senior
management
• Industry research: analyst
reports, trade associations, etc.
• Interviews with company senior
management
• Industry research: analyst
reports, trade associations, etc.

64
CAVEATS:
• May be overly simplistic
CAVEATS:
• May be overly simplistic
PURPOSE: To identify market opportunities facing a
company, competitor issues, and key success factors to
leverage.
PURPOSE: To identify market opportunities facing a
company, competitor issues, and key success factors to
leverage.
WHEN TO USE: Potential - Assess External Environment,
Assess internal baseline
WHEN TO USE: Potential - Assess External Environment,
Assess internal baseline
DEFINITION: Determination of the strengths, weaknesses,
opportunities, and threats facing an organization
DEFINITION: Determination of the strengths, weaknesses,
opportunities, and threats facing an organization
SWOT ANALYSIS
Opportunities to Increase Revenue
• Leverage existing client relationships
• New areas of business
–Content management
–Digital asset management
–Internet applications
• Increased demand for current services
–Cost reduction
–Change management
–revenue enhancement
–new business opportunities
–infrastructure development
• Growth through acquisition or alliance
• Increased consultancy needs due to regulatory changes
Threats
• Competition aggressively targeting EMC
industry clients
• Building of resources slower than market
growth
• Limited ability to quickly recruit and effectively
deploy qualified consultants with deep industry
experience
• Potential conflicts of interest as client list
grows
• Shrinking client base due to industry
consolidation
Strengths
• Entertainment industry expertise and thought leadership
–EMC 2000
–Technology Forecast
–ETC
–Publications
• Functional experience
–Financial systems
–Strategy development
• Large, existing client base in entertainment
• Concentrated focus through EMC practice, marketing and
PR efforts
• Broad range of consulting services
• International network of partners and consultants
• Strong vendor relationships (e.g., Oracle, SAP) to leverage
• High visibility with CFOs gained through financial systems
projects
Weaknesses
• Not enough consultants with industry expertise and
functional experience to meet demand
• Minimum media client experience
• Internal competition for industry vs. functional
resources
• Limited visibility in the “business issues” market on
the CEO and COO level
• Inconsistent client management and consulting skills
• Limited ability to respond quickly
• No software package to leverage

67
1. Calculate Project/Firm Net
Operating Profit
2. Determine average invested
capital
3. Determine weighted average
cost of capital (WACC)
4. Subtract the Cost of Capital
Employed (average invested
capital x WACC) from the Net
Operating Profit
1. Calculate Project/Firm Net
Operating Profit
2. Determine average invested
capital
3. Determine weighted average
cost of capital (WACC)
4. Subtract the Cost of Capital
Employed (average invested
capital x WACC) from the Net
Operating Profit
HOW TO CREATE - SHAREHOLDER VALUE/EVA ANALYSIS
• Various financial statements
• Firm/unit capital base
• Firm/unit cost of capital
• Firm/unit risk factors (beta)
• Various operating and financial data
• Various financial statements
• Firm/unit capital base
• Firm/unit cost of capital
• Firm/unit risk factors (beta)
• Various operating and financial data
• Corporate balance sheets, Unit
balance sheets
• Ibbotsn Associates published
journal on “Cost of Capital
Quarterly”
• Stern Stewart
- Firm Cost of Capital book
• Financial Statements
• Corporate balance sheets, Unit
balance sheets
• Ibbotsn Associates published
journal on “Cost of Capital
Quarterly”
• Stern Stewart
- Firm Cost of Capital book
• Financial Statements

1
Flevy (www.flevy.com) is the marketplace
for premium documents. These
documents can range from Business
Frameworks to Financial Models to
PowerPoint Templates.
Flevy was founded under the principle that
companies waste a lot of time and money
recreating the same foundational business
documents. Our vision is for Flevy to
become a comprehensive knowledge base
of business documents. All organizations,
from startups to large enterprises, can use
Flevy— whether it's to jumpstart projects, to
find reference or comparison materials, or
just to learn.
Contact Us
Please contact us with any questions you may have
about our company.
• General Inquiries
support@flevy.com
• Media/PR
press@flevy.com
• Billing
billing@flevy.com

Supply Chain Strategy Tools & Techniques

Recommandé

Recommandé

Contenu connexe

Plus de Flevy.com Best Practices

Plus de Flevy.com Best Practices (20)

Dernier

Dernier (20)

Supply Chain Strategy Tools & Techniques