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