Accelerating value through the supply chain
This is a global pharmaceutical company with manufacturing in the US, Europe, and Asia. They have a reputation for being high growth, innovative, and change orientated.
The CFO was new to the company and was undertaking a wide ranging review of operations. The business had enjoyed unprecedented recent growth and had ambitious expansion plans. However, the supply chain was struggling to fulfill orders on time and in a cost effective manner.
On closer inspection, the supply chain cost base seemed high, but there was a lack of granular data to understand the true cost, or total cost to serve at a product level. Without a deeper understanding of cost and dynamics, the organization would be unable to resolve current issues in a sustainable way and re-platform the supply chain for growth.
Proxima was asked to undertake an initial Health Check and recommend options to optimize the supply chain operationally and commercially.
We deployed a small team of commercial and operational supply chain experts to undertake a rapid four week review. The team analyzed a large amount of data, looking at commercial terms, operational processes and the supplier mix across 3PL, Air, Sea, Road, Import/ Export, Domestic and Outsourced Distribution. They also undertook stakeholder interviews, benchmarking and “should cost” modeling as well as end-to-end “walkthroughs”, following the product as it progressed through the client’s operation.
We then ran collaborative workshops with stakeholders to create a vision for change; identifying operational process improvements, building a supplier strategy, and profiling the financial opportunity. This was summarised into a report for the CFO and Chief Supply Chain Officer as a set of actionable ideas, a strategy and an implementation program.
The report was well received, validating some of the c-suite fears and identifying new opportunities that the organization had not considered. Above all it created a roadmap for the organization to optimize a key part of its operations.
Outcomes and Deliverables
The optimization process consisted of five key work streams to be driven by Proxima:
- Inbound freight globally into US; raising commercial focus and creating market tension while seeking to optimize the balance between air and sea according to total cost / benefit considerations
- Optimizing the incumbent outsourced distribution partnership through process improvement, visibility and data flows. This would subsequently be re-tendered to capture further benefit from the market
- A review of Outbound, looking into processes, rates and load balancing across LTL, TL and Small Parcel carriers as well as optimizing workflow through warehouses
- A Supply Chain structural review looking at how the relationships at the start of the manufacturing process could be harnessed to drive efficiencies through the business
- Increasing visibility of spend and data to allow the organization to understand cost to serve at high and line level