CML2013-Semifinal-Dark horse

Dark Horse Team

Supply Chain Management Consulting Project for CoDRINK Company

Developed model represents significant cost reduction, can be rolled out to the entire CoDRINK company and even enhanced with other Accenture services to apply it in other industries • Starting pilot project in Ural region and including there Blue Water, Green Water, Milk and Yogurt will help to test the model that is suggested and lower costs due to the synergy of two supply chains • Rolling out the model to the whole supply chain will provide the synergy between supply chain of CoDRINK Russia and Milky Company • Solution may be expanded with other Accenture services and offered in other industries through marketing channels that do not require big costs 1

Pilot project will allow to reduce costs by 16%

2

Full integration into the whole chain will allow multiplication of synergy effects

3

The model is applicable for other clients and can be promoted without big marketing costs

-16% 8.850 storage

transpo rtation

Supply Chain 1

537

8.313

before

7.281 456 6.825

after

Supply Chain 2

• reduced fixed and variable costs • reduced personnel costs • client relationship improvement • full truck load

• Accenture is one of few consulting companies that can provide complex supply chain solution, from general expertise to IT solution implementation • It is recommended to make emphasis on online marketing because ROI is higher than that of offline marketing channels

Costs, th. rub 2

Graph analysis of existing supply chain routes of CoDRINK gives opportunity to distinguish 6 main areas of supposed logistics activity Graph of available transports routes

Vladivostok

Moscow

Novosibirsk

Chelyabinsk

Saint-Petersburg Voronezh

Pilot project

• It is evident that pilot project must be started in one of 6 main logistics regions • It is not recommended to start the pilot project in the main (Moscow) region because it is rational to start with smaller area 3

It is recommended to roll out pilot project in the Ural region and to choose products that represent 4 groups with similar supply and demand 1

Demand and supply in Ural region are almost equal - this situation is the closest to real market conditions…

…so Chelyabinsk and its neighbor cities are the optimal area to implement the pilot project

160

Demand

Syktyvkar

89

Supply

Perm 27

18 18

21

19

16

11 12

Novosibirsk Yekaterinburg Yvladivostok region region region

2

15

Saintpetersburg region

Yekaterinburg

19

Moscow region

Izhevsk

Surgut

Tyumen

Voronezh region

We choose 4 products out of 7 because they represent similar groups in terms of percentage of demand and supply in every city 13%

Chelyabinsk

37%

44%

35%

30%

30% 46%

11%

Izhevsk Kirov Perm Surgut Syktyvkar Tyumen Yekaterinburg

10%

6% 7% 13%

11%

20%

12% 20%

12%

11%

5% 15%

22%

14%

13%

Agua water

Blue water

26%

28%

Aqua water

Blue water

Still water

Green water

Soft milk

Yogurt

Milk

26% 25%

12%

14%

14%

Still water

Green water

Soft milk

Same distribution

6% 8% 7%

33%

7%

Yogurt





 

Milk

Same distribution

4

Through implementation of the pilot project we obtain significant cost reduction due to synergy of two supply chains Supply chain strategy with one regional center is suggested

The developed model will provide following benefits

Chelyabinsk

Moscow

• Double reduction of fixed costs after acquisition due to maintaining less warehouses Yekaterinburg

Syktyvkar

Izhevsk

Kurgan

Tyumen Surgut

Perm

Kirov

• We operate with 1 full truck instead of 2 half-loaded

Costs are significantly lowered

Transportation costs, mln. rub -17%

2,6

1,9 3,1

2,6

Storage costs, th. rub 54 159

1 quarter 2 quarter 3 quarter

• Transportation and warehouses exploitation costs are reduced by 17% and 15%

-15% 54 130

182

1 quarter 2 quarter

138

3 quarter 4 quarter

2,6

2,4

142

134

before

after

before

after

• Less personnel is needed

• It is easier to build business relationships

5

Using hierarchical structure of supply chain with Moscow as the federal centre we can effectively perform roll-out to entire CoDRINK company Federal center

Regional center

Optimal amounts of products are obtained using the following model

Other cities

… Vologda

Saint-Petersburg

Warehouse’s Inventories

Pskov

…

Voronezh

…

Khabarovsk

Orel Tula

<0

Chita

… Norilsk

Novosibirsk

… …

Moscow

Import from the region center warehouse

Perm Kazan

2014 Q1

Q2

yes

Kirov

Perm

Initiatives

Export to the region center warehouse if possible or destroying

no

Omsk

Chelyabinsk

>0

Does adding supply satisfy the rest of demand?

Magadan

Moscow

Demand

Store in the warehouse till the next quarter

2015 Q3

Q4

Q1

Q2

2016 Q3

Q4

Q1

Q2

Q3

Q4

Pilot project

Results roll-out Online marketing 6

Developed model can help to improve current situation and introduce new technological and management novelties to CoDRINK supply chain Oversupply in CoDRINK production should be eliminated by moving to demand driven model

Recommendations and possible opportunities for Accenture services implementation

Supple and demand th. cubic m

61,1 Aqua Water

10,1

Blue water

3,6

Green water

9,9

Milk Soft Milk

2,3 7,1

Still Water

19,2

Yogurt

Superior supply chain network design 45,0 3,0

2,5 8,6

0,8

6,2 16,9

8,9

7,1

Supply

Demand

â&#x20AC;˘ Due to high exceed of supply it is recommended to move to demand driven model â&#x20AC;˘ This implies not only logistics optimization, but improvement of production process that also can be done by Accenture services

Inclusion of outsource partner into our information chain Establishment of control mechanisms to proactively monitor the various components of the supply chain Information systems to connect and coordinate the supply chain as seamlessly as possible

cloud computing for supply chain management mobile devices for supply chain automate transportation systems (shipping tracking and monitoring) truck load optimization

Expanded model will provide the whole complex of measures for supply chain management that can be customized for needs of other clients 7

Current trends in the supply chain management and broad portfolio of Accenture services allow to apply expanded model to other companies and industries Current global trends in supply chain development* Relationship management

• Virtual integration • Customer relationship

Possible opportunities for Accenture services implementation Management consulting

Strategy Marketing and sales Operational efficiency and 6 sigma



Finance

Strategy & performance

• Agile strategy • Value-based management

Risk management Talent & organization Technologies

Planning & execution Talent & information

• Process integration • Demand management

Technology consulting System integration

Outsourcing of business processes

• Information visibility

Business Process Outsourcing IT outsourcing

   

Applications Outsourcing Infrastructure Outsourcing

Applicability to other cases and marketing of the solution Industries and companies • Consumer products • Industrial and machinery components • Mill products •Wholesale distribution •Retail etc.

Why Accenture?

Accenture is one of not many consulting companies that can provide complex supply chain solution from general expertise to IT solution implementation

*Game-changing trends in supply chain, University of Tennessee

Accenture services marketing In terms of costs and impact online marketing will be beneficial and costless promotion

• White • White papers papers • Online • Online articles articles •Case-studies • Case-studies • press • press releases releases • e-newsletters • e-newsletters • blogging • blogging • social • social content content 8

The strategy was developed by the “Dark Horse” team

Dmitry Vlokh

Alina Verbenchuk

GSOM SPbU Master in Corporate Finance

GSOM SPbU Master in International Business

• Changellenge >> Spb 2012 Winner • MCC Sky 2013 Semifinalist • EMC Company Scholar

• GSOM SPbU Case Club Leader • V. Potanin Foundation Scholar, Russian Economy Fund Scholar • MCC Sky 2013 Semifinalist

Oleg Sokolov

Dmitry Vladimirov

GSOM SPbU Master in Technology and Innovation Management

GSOM SPbU Master in Corporate Finance

• MCC Sky 2013 Semifinalist • V. Potanin Foundation Scholar • V. Potanin Foundation Grant

• MCC Sky 2013 Semifinalist • 1st National Scientific Congress ITMO – 2012 Participant

9