re truly proud of
We are a new management consulting firm. Therefore the cases presented here are anonymised projects and programs that we recently have lead in previous consulting positions. They represent a selection that we are truly proud of, and at the same time serve as illustrative examples of the nature of our work.
A premium automotive OEM with a local industrial footprint, was planning a truly global expansion and needed to rethink the entire value chain strategy and setup to get themselves prepared for upcoming challenges.
The client needed to analyse and understand what implications the expansion would have on current value chain strategy, processes and organisation, and then determine how to address those.
Value Chain Strategy Definition
The engagement was split into five main areas, where the initial value chain strategy definition was guiding the direction of the other work-streams.
The client needed to analyse and understand what implications the global expansion would have on current value chain strategy, processes and organisation, and then determine how to address those.
The engagement successfully delivered the design and implementation of a global value chain, which in turn enabled on-time launch of a new manufacturing site and flawless delivery from the entire value chain organisation.
Value chain strategy definition where a new overall vision and mission was crafted and anchored with C-suite. This served as the guide when defining the supply chain strategy and principles, and to ensure alignment and harmonisation with overall business- and financial priorities.
Design of global supply chain setup and flows. Defining overall material flows with optimised modes of transport (train, truck, ocean, air) for different legs, cross-dock design and localisation, freight in terms and financing of material for long distance flows.
Design and setup of a new sales and operations planning (S&OP) process with corresponding governance model to balance supply and demand, but also to introduce more flexibility into the industrial system. In addition to the new S&OP setup, it included demand planning, ordering, scheduling and capacity management.
Detailed design and implementation of selected functional areas and specific processes, to enable the new industrial footprint in practice. Moving from the design phase into implementation implies getting into the details and making sure everything is set up in a proper way. This area covered e.g. sourcing of new logistics service provider, setting up a new customs management function, setting up and launching the newly designed cross-dock, defining and implementing a landed cost process to allow for proper calculations when evaluating potential suppliers and defining the new role of supply chain controllers.
Organisational design with governance structure and KPIs to support the global setup, including defining the split between local, regional and global functions.
The engagement saw the successful design and implementation of a global value chain, which in turn enabled the on-time launch of a new manufacturing site and flawless delivery from the value chain organisation.
– Industrial products
Creating differentiated value chains for industrial products – to improve competitiveness in contrasting market segments.
The company is a leading global manufacturer of industrial products, with a significant presence in all regions. However, the company was facing unsatisfactory margins and a lack of competitiveness in important and growing market segments.
An initial assessment to identify causes revealed a mismatch between the company’s industry and value chain strategy – and the actual market realities the company was operating in.
STRATEGY
The industry and value chain strategy was geared towards standardisation and synergies (a “one size fits all” philosophy), while the customer demands and products offered in the various market segments were actually quite different.
The mismatch between industry and market strategies lead to an unmanageable complexity and multiple “work arounds” throughout the entire value chain, and ultimately product costs that were too high to be competitive.
Misalignment between market & industry strategies lead to unmanageable complexity – products with too high cost – and a lack of competitiveness in key market segments.
To turn the situation around and improve competitiveness, management decided to revise its product strategy – and also redefine the supporting industry and value chain strategy.
A cornerstone of the new industry and value chain strategy was a holistic approach, where the “recipes for success” in each market segment reflected backwards throughout the entire value chain.
Design of global supply chain setup and flows. Defining overall material flows with optimised modes of transport (train, truck, ocean, air) for different legs, cross-dock design and localisation, freight in terms and financing of material for long distance flows.
Design and setup of a new sales and operations planning (S&OP) process with corresponding governance model to balance supply and demand, but also to introduce more flexibility into the industrial system. In addition to the new S&OP setup, it included demand planning, ordering, scheduling and capacity management.
This lead to the design and structuring of two distinct and different value chains:
One value chain was designed to deliver highly customised products, towards bigger customers who typically placed large but infrequent/irregular orders.
The second value chain was designed to deliver more standardised products and options, towards smaller customers who typically placed smaller orders on an annual cycle.
Functional strategies and goals were all aligned with the overall value chain strategy, affecting essentially all functions involved; sales, R&D/innovation, purchasing, manufacturing, logistics, sales and operations planning and aftermarket.
A complete organisational overhaul was made to support the realignment; in which functions were separated towards the two distinct value chains. Select subsets of functions were kept common across value chains in order to support synergy capture – where this did not conflict with the “recipes for success” per value chain.
To make the new strategy and organisation operational, a new operating and governance model was also defined, where each value chain was given new process designs, roles and responsibilities, as well as performance goals and KPIs.
A global industrial components manufacturer had experienced a long period of successful growth, both organically and via acquisitions.
PURCHASING ACTIVITIES
However, purchasing activities were scattered both geographically and in terms of focus and responsibilities; almost 2/3 of all purchasing personnel were distributed to some 150 locations worldwide. Further, there was no clear distinction between strategic, tactical and operational responsibilities; most purchasing personnel were generalists with limited specialised knowledge and experience. Consequently, when the company compared itself to best practice studies, their overall capability was regarded as below average.
OPPORTUNITY TO TRANSFORM
Hence, management saw an opportunity to transform purchasing into a more strategic function that could better leverage the company’s full purchasing into a more strategic function that could better leverage the company’s full purchasing scale – into further cost reductions as well as contributions to innovation.
A global leader in its market, but with a fragmented purchasing organisation unable to take a strategic role to support further profitable growth ambitions.
A revised and thoroughly anchored strategy for purchasing, combined with organisational redesign and ambitious training curricula – transformed purchasing into a strategic contributor.
UNDERSTANDING THE STARTING POINT
As a part of the change management ambition, significant emphasis was placed on thoroughly understanding the starting point in detail, including current activities, individual and collective capabilities, as well as spend analytics and comparisons to internal and external best practices.
OVERALL STRATEGY
A new overall strategy and role for purchasing was defined, fully in line with overall strategy and thoroughly anchored with purchasing and business stakeholders. This created a clear view of what value and impact purchasing was expected to deliver to the organisation.
ORGANISATIONAL STRUCTURE
A new operating model and (more centralised) organisational structure provided clarity as to how purchasing was to collaborate with stakeholders, as well as a clear separation between strategic vs. operational activities. Dedicated centers of excellence capabilities in strategic locations.
NEW APPROACH
To enable the transition to the new structure, a new approach to professional development was defined, including revised job descriptions, career paths and competence frameworks. A concept of individual competency assessments and development/training plans was rolled out globally to support the transition into new roles and jobs.
A much stronger strategic sourcing approach delivering significant savings.
Driving significant product cost improvement – via engineering and value chain complexity reduction for a commercial vehicles client.
A global manufacturer of commercial vehicles experienced unsatisfactory margins and a lack of competitiveness in key market segments.
HIGH DEGREE OF CUSTOMISATION
The company’s assessment of the situation was that this was primarily caused by too high product cost. A key underlying reason was a high degree of customisation of products, driving significant complexity in all parts of the supply chain.
MARKET DEMAND
Furthermore, the company’s approach to design modularisation was limited and existing modules/variants did not fully correspond to actual market demand. Combined, these factors contributed to significant complexity and excess cost in all parts of the value chain.
Unsatisfactory margins, caused by costly product designs and complexities in the industrial system
A cross-functional program organisation with top management sponsorship was established, including active involvement from R&D, purchasing, manufacturing as well as marketing and sales.
ANALYSIS
An in-depth internal cost and design analysis was performed, on product, system and component level. This generated immediate improvement ideas, but also served as a “baseline” for subsequent value engineering opportunities.
EXTERNAL BENCHMARKING
An external benchmarking analysis was performed, including all major competitors’ products. Products were systematically disassembled in a dedicated “tear-down” factory, where cross-functional teams analysed and compared design solutions from a cost and value perspective.
HIGH DEGREE OF ACCEPTANCE
While competitor benchmarking exercises were not entirely new to the company, the level of detail and structure of the analyses provided significantly more improvement ideas, and equally important – a very high degree of acceptance and ownership to realise these ideas and implement these solutions.
All of the best ideas were recorded, planned and prioritised for implementation. In total, the program delivered a 200% cost reduction compared to the original target, and more than half came from solutions that needed less than 6 months to reach full impact.
Additionally, program learnings were also actively used to define new technical design principles – for more efficient design work on new products.
A global industrial components manufacturer had experienced a long period of successful growth, both organically and via acquisitions.
PURCHASING ACTIVITIES
However, purchasing activities were scattered both geographically and in terms of focus and responsibilities; almost 2/3 of all purchasing personnel were distributed to some 150 locations worldwide. Further, there was no clear distinction between strategic, tactical and operational responsibilities; most purchasing personnel were generalists with limited specialised knowledge and experience. Consequently, when the company compared itself to best practice studies, their overall capability was regarded as below average.
OPPORTUNITY TO TRANSFORM
Hence, management saw an opportunity to transform purchasing into a more strategic function that could better leverage the company’s full purchasing into a more strategic function that could better leverage the company’s full purchasing scale – into further cost reductions as well as contributions to innovation.
A global leader in its market, but with a fragmented purchasing organisation unable to take a strategic role to support further profitable growth ambitions.
A revised and thoroughly anchored strategy for purchasing, combined with organisational redesign and ambitious training curricula – transformed purchasing into a strategic contributor.
UNDERSTANDING THE STARTING POINT
As a part of the change management ambition, significant emphasis was placed on thoroughly understanding the starting point in detail, including current activities, individual and collective capabilities, as well as spend analytics and comparisons to internal and external best practices.
OVERALL STRATEGY
A new overall strategy and role for purchasing was defined, fully in line with overall strategy and thoroughly anchored with purchasing and business stakeholders. This created a clear view of what value and impact purchasing was expected to deliver to the organisation.
ORGANISATIONAL STRUCTURE
A new operating model and (more centralised) organisational structure provided clarity as to how purchasing was to collaborate with stakeholders, as well as a clear separation between strategic vs. operational activities. Dedicated centers of excellence capabilities in strategic locations.
NEW APPROACH
To enable the transition to the new structure, a new approach to professional development was defined, including revised job descriptions, career paths and competence frameworks. A concept of individual competency assessments and development/training plans was rolled out globally to support the transition into new roles and jobs.
A much stronger strategic sourcing approach delivering significant savings.
Driving significant product cost improvement – via engineering and value chain complexity reduction for a commercial vehicles client.
A global manufacturer of commercial vehicles experienced unsatisfactory margins and a lack of competitiveness in key market segments.
HIGH DEGREE OF CUSTOMISATION
The company’s assessment of the situation was that this was primarily caused by too high product cost. A key underlying reason was a high degree of customisation of products, driving significant complexity in all parts of the supply chain.
MARKET DEMAND
Furthermore, the company’s approach to design modularisation was limited and existing modules/variants did not fully correspond to actual market demand. Combined, these factors contributed to significant complexity and excess cost in all parts of the value chain.
Unsatisfactory margins, caused by costly product designs and complexities in the industrial system
A cross-functional program organisation with top management sponsorship was established, including active involvement from R&D, purchasing, manufacturing as well as marketing and sales.
ANALYSIS
An in-depth internal cost and design analysis was performed, on product, system and component level. This generated immediate improvement ideas, but also served as a “baseline” for subsequent value engineering opportunities.
EXTERNAL BENCHMARKING
An external benchmarking analysis was performed, including all major competitors’ products. Products were systematically disassembled in a dedicated “tear-down” factory, where cross-functional teams analysed and compared design solutions from a cost and value perspective.
HIGH DEGREE OF ACCEPTANCE
While competitor benchmarking exercises were not entirely new to the company, the level of detail and structure of the analyses provided significantly more improvement ideas, and equally important – a very high degree of acceptance and ownership to realise these ideas and implement these solutions.
All of the best ideas were recorded, planned and prioritised for implementation. In total, the program delivered a 200% cost reduction compared to the original target, and more than half came from solutions that needed less than 6 months to reach full impact.
Additionally, program learnings were also actively used to define new technical design principles – for more efficient design work on new products.