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Plugging the $100 million gap - What’s the fix? - EY - Global

Plugging the $100 million gap

What’s the fix?

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Break down functional silos to facilitate centralized reporting for greater cross-functional, cross-geography visibility.

Because operations challenges differ from one organization to the next, there is no "one size fits all" solution to improving performance.

Organizations should consider some of the following focus areas after identifying the operating strategic focus of what work will need to get done and how:

  • Standardizing operating processes at the global level.
    Improving or sustaining the quality and transparency of information across the enterprise is a challenge. A key step in improving decision-making in the event of a supply chain stumble is to make the processes and governance around the changes to data a priority.
  • Leveraging supplier relationships to reduce cost and improve innovation and flexibility.
    Understanding operating drivers affecting how work gets done between your company and a select segment of suppliers can help drive top-line value and improve bottom-line performance.
  • Restructuring the supply chain for greater visibility.
    Managers should adopt an analytical perspective to examine and improve performance across the entire supply chain. A quick focus on inventory optimization strategies may yield working capital benefits and operating cost reductions.
  • Improving the customer experience.
    Executives need to look at supply chain operations from the perspective of the customer and look for systemic issues. Make cuts while staying focused on your customers' expectations.
  • Reliability and predictability not only in manufacturing, but also across the supply chain.
    Small improvements in process reliability can produce significant results: maintaining customer relationships and a strong brand and building a sustainably profitable business model. This demands disciplined execution using focused strategies to improve manufacturing throughput, cost and productivity by increasing production system reliability in current operations.
  • In-sourcing versus outsourcing trade-offs.
    Explore all non-core and core functions to identify opportunities for productivity improvements, cost reductions and increased strategic focus in select functions. A balanced focus on costs with aligned performance and operating management criteria will help ensure that short-term gains do not become long-term cost increases.
  • Planning for the unexpected.
    Everything starts with demand. Changes to sales orders or engineering specifications to an untimely malfunction of a machine during the manufacturing process can all result in delivery delays to the customer, brand damage and ultimately reduced shareholder value. Operations functions need to understand the pinch points that create uncertainty in the supply chain and will impact demand, and develop an integrated business plan that will enable supply chain operations to address the pinch points in a way that minimizes the impact on all stakeholders involved.

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