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 r...
7
CAVEATS:
• It does not provide an answer to the clients problem but rather helps
define the scope of the problem
• The a...
10
HOW TO CREATE - ANALYSIS PLAN
STEP DATA REQUIRED SOURCE(S)
1. Define an issue on which a specific action
depends and ph...
13
CAVEATS:
• This tool is mainly used to understand a company’s internal situation.
One must use other frameworks to unde...
16
HOW TO CREATE - SUPPLY CHAIN INSIGHT FRAMEWORK
Step Data Required Source(s)
1. Set the scene
• Introduce model
• Collec...
19
SCALE CURVE
PURPOSE: To determine benefits
driven by economies of scale.
PURPOSE: To determine benefits
driven by econo...
22
HOW TO CREATE - EXPERIENCE CURVE
STEPSTEP DATA REQUIREDDATA REQUIRED SOURCE(S)SOURCE(S)
1. Plot accumulated volume for
...
25
PRODUCT LIFE CYCLE ANALYSIS
CAVEATS:
• Any prediction is no guarantee
• Applying a PLC strategy can become a self-fulfi...
28
HOW TO CREATE - SUPPLY CHAIN MODELLING
Step Data Required Source(s)
1. Hypothesise the strategic options
2. Determine h...
31
CAVEATS:
• Need to consider whether done by product or by supplier
• Sometimes difficult to collect the data
• Does not...
34
HOW TO CREATE - TRADE OFF ANALYSIS
Step Data Required Source(s)
1. Agree the factors in the trade off
2. Identify the r...
37
CAVEATS:
• Requires us to be able to define best practice
• Does not explicitly say where a given business should be fo...
40
HOW TO CREATE - SUPPLY CHAIN MAPPING
Step Data Required Source(s)
1. Map supply chain flows
2. Add product related data...
43
CAVEATS:
• The words on the charts must be written by the client
• The consultant acts as a facilitator only
CAVEATS:
•...
46
STEPSTEP DATA REQUIREDDATA REQUIRED SOURCE(S)SOURCE(S)
1. Create a pro forma base case
for the project in question (bre...
49
Supporting Tools and Techniques
Supporting tools & techniques
– Customer insight and alignment
– Customer segmentation
...
52
CAVEATS: Requirements for Effective Segmentation:
• Measurability - the degree to which size and purchasing power
can b...
55
HOW TO CREATE - LOGIC TREES (ISSUES MAPS, HYPOTHESIS TREES)
Step Data Required Source(s)
1. Identify key issues and
def...
58
CAVEATS: Focus Group results are not statistically valid and should not
be taken as wholly representative of the attitu...
61
STEPSTEP DATA REQUIREDDATA REQUIRED SOURCE(S)SOURCE(S)
1. Conduct focus groups with
internal employees as well as
custo...
64
CAVEATS:
• May be overly simplistic
CAVEATS:
• May be overly simplistic
PURPOSE: To identify market opportunities facin...
67
STEPSTEP DATA REQUIREDDATA REQUIRED SOURCE(S)SOURCE(S)
1. Calculate Project/Firm Net
Operating Profit
2. Determine aver...
1
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Supply Chain Strategy Tools & Techniques

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This deck was developed to support supply chain visioning and strategic diagnostics. It provides checklists of key questions to ask in formulating a supply chain strategy, core frameworks, tools and techniques that facilitate the strategic thinking process.
See also "Supply Chain Performance and Metrics"

Publié dans : Business
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Supply Chain Strategy Tools & Techniques

  1. 1. Supply Chain Strategy (Visioning & Diagnostics) Handbook Strategic Questions, Tools and techniques
  2. 2. 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
  3. 3. 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 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
  4. 4. 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 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
  5. 5. 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: • • • • • • • 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
  6. 6. 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 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. 7. 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% USER NOTES:USER NOTES: 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
  8. 8. 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 • Internal company data 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
  9. 9. 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 USER NOTES:USER NOTES: 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
  10. 10. 28 HOW TO CREATE - SUPPLY CHAIN MODELLING Step Data Required Source(s) 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 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
  11. 11. 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 User notesUser notes WHEN TO USE: Potential - Develop vision and value proposition: Strategy - Define options; Develop and evaluate options WHEN TO USE: Potential - Develop vision and value 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 Purchasing volume 40 mill Number of items 15,000 Number of vendors 350 Purchasing volume 80 mill Number of items 250 Number of vendors 15 Purchasing volume 70 mill Number of items 380 Number of vendors 33 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 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
  12. 12. 34 HOW TO CREATE - TRADE OFF ANALYSIS Step Data Required Source(s) 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 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
  13. 13. 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. User notesUser notes 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 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
  14. 14. 40 HOW TO CREATE - SUPPLY CHAIN MAPPING Step Data Required Source(s) 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 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
  15. 15. 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 User notesUser notes WHEN TO USE: Potential - Develop vision and value proposition: Strategy - Define options WHEN TO USE: Potential - Develop vision and value 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 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
  16. 16. 46 STEPSTEP DATA REQUIREDDATA REQUIRED SOURCE(S)SOURCE(S) 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 • Internal company data • Financial projections - cost and revenue • Internal company data • Financial projections - cost and revenue • Company management, accounting/finance department • Company management, accounting/finance department 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
  17. 17. 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 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
  18. 18. 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. USER NOTES:USER NOTES: 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 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
  19. 19. 55 HOW TO CREATE - LOGIC TREES (ISSUES MAPS, HYPOTHESIS TREES) Step Data Required Source(s) 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 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
  20. 20. 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. USER NOTES:USER NOTES: 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? 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
  21. 21. 61 STEPSTEP DATA REQUIREDDATA REQUIRED SOURCE(S)SOURCE(S) 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. 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
  22. 22. 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. USER NOTES:USER NOTES: 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 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
  23. 23. 67 STEPSTEP DATA REQUIREDDATA REQUIRED SOURCE(S)SOURCE(S) 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 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
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