the evolution of integrated supply chains into global operating models
TRANSCRIPT
Brad Householder, Principal
PwC Management Consulting
The Evolution of Integrated Supply
Chains into Global Operating Models
The Evolution of Integrated Supply Chains into Global Operating Models
Business pressures mount on the supply chain
Integrating beyond the supply chain:
Globally integrated operating models
Three keys to success
Stress continues to mount on supply chains
Lack of clarity and accountability for decisions
Complexity hinders ability to adapt to business and market changes
Multiple ineffective connections with suppliers and customers
Operating footprint and supply chain not appropriately aligned to future business
Tax risk through misalignment of operating, tax and legal models
Human capital is misaligned in low growth versus high growth regions
Slow or poor decision making due to insufficient and poor data
Increasing in scale creates duplication of functions and lack of agility
Management teams are caught in a squeeze
Mark
et
Capabilities
ShareholdersProfitable
Growth
Management Teams
Prioritisation
Mobilisation
Agility
Prioritization: Balancing an increasing list of “must-do’s”
Mark
et
Capabilities
Shareholders
ProfitableGrowth
Management Teams
New product or service development
35%
Organic growth in existing domestic market
30%
New M&A, JV, orstrategic alliance
20%
14%Organic growth in new geographic market
“But it’s allimportant”
% of CEOs citing their main opportunity for growth
Source: PwC’s 17th Annual Global CEO Survey
Mobilisation: Doing more with not enough
Mark
et
Capabilities
Shareholders
ProfitableGrowth
Management Teams
“How can we dobetter with whatwe have?”
Source: PwC’s 17th Annual Global CEO Survey
Agility: Making change the norm
Mark
et
Capabilities
Shareholders
ProfitableGrowth
Management Teams
Source: PwC’s 17th Annual Global CEO Survey
“…and tomorrowit will all change,so stay awake”
CEOs: Trends that will transform business over the next five years (%)
Moving beyond integrated supply chains:Globally integrated operating models
…nearly 50% higher Sales Growth
…and over 20% higher Profitability
50 60 70 80 90 100 110 120 130 140 150
Sales growth
Percentage of industry average
BICCs
Non-BICCs
Profitability
50 60 70 80 90 100 110 120 130 140 150
Percentage of industry average
Source: Strategic Supply Chain Management, 2nd Edition, McGraw-Hill
Best-in-Class Companies (BICC) achieve a stronger balance of performance across
key supply chain metrics, leading to…
Total
SCM Cost
On-Time
Deliv. to
Commit
Upside
Prodctn
Flex
Cash-to-
Cash
Cycle
Time
Inventory
DOS
BICCs
Non-BICCs
BICCs
Non-BICCs
Plan
DeliverMakeSource
Return
1990’s
Integrated Supply Chains
• Process integration
• Cross-functional collaboration
2000’s
Strategic Supply Chains
• Operational integration
• Cross-enterprise collaboration
2010’s
Globally Integrated Operating Models
• Business integration
• Engineered value chains
Strategic Supply
Chains achieve 50%
higher sales growth
and 20% higher
profitability*
* Source: Strategic Supply Chain Management, 2nd Edition, McGraw-Hill
Leaders are widening the gap by mastering higher levels of
business integration:
Moving beyond integrated supply chains:Globally integrated operating models
…nearly 50% higher Sales Growth
…and over 20% higher Profitability
50 60 70 80 90 100 110 120 130 140 150
Sales growth
Percentage of industry average
BICCs
Non-BICCs
Profitability
50 60 70 80 90 100 110 120 130 140 150
Percentage of industry average
Best-in-Class Companies (BICC) achieve a stronger balance of performance across
key supply chain metrics, leading to…
Total
SCM Cost
On-Time
Deliv. to
Commit
Upside
Prodctn
Flex
Cash-to-
Cash
Cycle
Time
Inventory
DOS
BICCs
Non-BICCs
BICCs
Non-BICCs
* Source: Strategic Supply Chain Management, 2nd Edition, McGraw-Hill
Three keys to success in globally integrating your operating model
Winning performance must start with coherent alignment to a “Way to Play”
Capabilities-Driven Strategy
Coherent alignment product & service offering, market needs, and internal capabilities to a clearly defined
“Way to Play”
Source: Strategy& (Formerly Booz & Co.) Part of the PwC global network
Integration is about driving coherence in fact-based, profit-driven decisions
Integrated Business Planning (IBP)
Align and synchronise data-driven trade-off priorities and decisions across the enterprise and value chain
to optimise enterprise profitability
Profit-focused decision-making
Agile adaptation is impossible without precisely tailored operating models
Segment-Tailored Operating Models
Distinct operating models “engineered” to different “ways to play” based on specific customer segment
characteristics
Questions?
Thank you!
For more information:www.pwc.com/strategicsupplychain
PwC’s 365 App on Apple iTunes
Or contact:Brad Householder, Principal
(508) 259-0432 (M)
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability,responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
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