Week 2 B - Developing a Roadmap to Supply Developing a...

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Unformatted text preview: Developing a Roadmap to Supply Developing a Roadmap to Supply Chain Excellence Chain Excellence - 2 - Table of Contents Our Understanding of ABC’s Current Situation Project Overview: Objectives Scope Approach Key Deliverables Project Organization Professional Fees and Assumptions Why JGSM Consulting Proprietary & Confidential Our Understanding of ABC’s Current Situation- 4 - ABC has experienced strong financial performance in recent years Current Situation Current Situation 3YR Total Shareholder Returns (CAGR) (1998 - 2001) 26.2% 22.1% 15.0% 13.4% 6.3% 5.1% 2.3%-9.1%-20%-10% 0% 10% 20% 30% x y z A B C w w w b b b b d d d d m m m n n n v v v Total Returns Peer Avg 8.4% Relative Total Shareholder Return Indexed to S&P 500 (1982 - 2001) 50 100 150 200 250 300 1 9 8 2 1 9 8 4 1 9 8 6 1 9 8 8 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 2 2 Relative Performance S&P 500 ABC- 5 - Sustaining growth in shareholder return entails understanding and improving the levers which drive shareholder value. Current Situation Current Situation Improved Customer Service Reduced Supply Chain Operating Costs Optimized Supply Chain Assets Transportat ion / Distribution Costs COGS / Sales Perfect Order Revenue Growth Operating Margin Asset Utilization Total Shareholder Return Business Drivers Supply Chain Drivers Supply Chain Levers Working Capital DOS PPE Utilization Supply chain levers are critical drivers of shareholder value. - 6 - Knowing which supply chain levers to pull begins with an understanding of current performance and comparisons against leading companies. Operating Margin SG&A Trend 20% 25% 30% 35% 1997 1998 1999 2000 2001 SG&A (% of sales) ABC Peer Average COGS Trend 50% 55% 60% 65% 70% 1997 1998 1999 2000 2001 COGS (% of sales) ABC Peer Average Asset Utilization Asset Turnover Trend 0.5 0.8 1.0 1.3 1.5 1998 1999 2000 2001 Asset Turns (Gross Assets) ABC Peer Average FY 2001 - Days of Inventory 39 45 66 68 72 76 93 146 50 100 150 A B C Days Peer Avg 76 Current Situation Current Situation Source: OneSource- 7 - ABC’s strategy for growth relies heavily on the supply chain. Recognizing this, it has set aggressive targets for supply chain improvement. Improve margins Deliver preferred products Partner with customers to grow both sales and profits Invest in acquisitions Identifying and reducing major cost drivers across the supply chain to drive improvements in operating profit margins Building tighter integration across product development and manufacturing to ensure timely and effective product introductions Understanding and building the extended supply chain in which customers and suppliers synchronize operations for mutual gain Creating an efficient and flexible supply chain that can adjust quickly to and incorporate new acquisitions Current Situation Current Situation ABC’s growth strategy is tied to four key objectives: Supply chain excellence is pivotal to the achievement of these objectives: ABC has charged the Supply Chain Task Force to identify opportunities to reduce annual supply chain costs by $XXM in 5 years. Proprietary & Confidential Project Overview- 9 -...
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This note was uploaded on 05/11/2008 for the course NBA 5780 taught by Professor Peck,nathan during the Spring '08 term at Cornell University (Engineering School).

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Week 2 B - Developing a Roadmap to Supply Developing a...

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