Supply chain and operations

In Consulting

EY Supply Chain and Operations consulting services addresses the complex issues and opportunities to grow and protect your operations. With an understanding of your overarching strategy, we‘ll help redefine your end-to-end supply chain and operations to support your enterprise objectives.

Case study

The better the question. The better the answer. The better the world works.

How EY optimized the supply chain of a leading Indian MNC

EY helped a leading FMCG company optimize vendor costs, eliminate redundancies, and create a common sales and operations platform

The better the question. The better the answer. The better the world works.

How can we unlock synergies from two businesses post acquisition?

After acquiring several iconic brands, a leading FMCG company needed to capitalize on the synergistic benefits of the opportunity.

In 2018, one of India’s leading FMCG companies acquired a consumer business which housed several reputed brands. After the acquisition, the immediate priority for the company was to identify and tap into synergistic opportunities of the acquisition. Supply chain and procurement was one of the primary focus areas for cost, operation and capacity optimization. Both sets of businesses had many overlaps across the supply chain, including suppliers, locations, and raw materials. The company had to quickly identify all existing overlaps and eliminate redundancies.

How EY optimized the supply chain of a leading Indian MNC
The better the question. The better the answer. The better the world works.

We optimized the supply chain of the complete brand portfolio

The optimization covered three critical areas ꟷ procurement synergies, logistics and network optimization, and sales and operations planning.

As the company wanted to ensure that it leveraged the benefits of synergies from the acquired entities, it employed EY to optimize the complete supply chain. The core areas of supply chain optimization included:

  • Realizing procurement synergies and optimizing vendor costs.
  • Lowering of warehouse and freight costs by identifying logistics overlaps.
  • Integration of sales and operations planning across the complete brand portfolio. 

EY led three critical areas of supply-chain optimization: procurement synergies, logistics and network optimization, and sales and operations planning.

Procurement levers to extract synergistic value

To realize value from various synergistic opportunities in packaging, EY investigated several cost levers and their potential impact. The team deep dived into cost sheets and identified saving opportunities for major packaging material through index-linked buying. In addition, EY also consolidated vendor bases and leveraged scale across key categories for negotiation, besides leveraging different price floors which the two organizations had.

EY also conducted market assessments and index identification for synergistic raw material categories and alternate vendor and price discovery for high priority categories. It also developed a scientific price forecasting model for better indicative price visibility.

End-to-end network optimization from analysis to implementation

EY conducted an end-to-end investigation to identify network cost optimization opportunities. It included, sales gravity analyses, cost and service lever optimization runs, and network footprint implementation. The team also conducted center of gravity analysis for CFAs and hubs and determining cost baseline values and identified a list of several CFA locations and determined their associated cost savings.

The value drivers of the network optimization exercise included warehouse and freight lanes consolidation, price discovery and alternate vendor identification, and primary freight management. EY also piloted the 3PL logistics model in key regions.

Building a common sales and operations planning strategy

Since the two entities had different sales and operations planning approaches, the company needed a common governance model and tech-enabled process to establish visibility and control across the integrated entity’s complete value chain. EY’s intervention was targeted at bringing three crucial components of the sales and operations planning processꟷ demand planning, replenishment planning, and sales and operations planning meetings. These included overhaul to the company’s forecasting processes and reporting mechanisms, improving responsiveness of the entity’s replenishment planning approach, and establishing a formalized decision-making process.

Next generation supply chain operations - EY
The better the question. The better the answer. The better the world works.

An efficient supply chain led to lower costs and better value

The company realized lower supply chain costs, more operational efficiency, and better decision-making across the complete brand portfolio.

EY’s approach was premised on several value drivers spread across different cost or value measures across all three optimization categoriesꟷ procurement synergies, network and logistics, and sales and operations planning. It involved investigation of different pricing models, alternate vendor discovery, and rightsizing different logistics costs. As a consequence of the supply chain optimization, the company identified and started implementing synergies across the target areas.

Cost and value improvements which EY’s delivered for an Indian FMCG company

  • Procurement synergies

Identified procurement synergies of

~7-10%

across key packaging material categories

  • Network and logistics

Optimized network and logistics cost reduction helped in identifying opportunities of

~12-15%

in logistics spend

  • Sales and operations planning

Identified

~20%

inventory reduction potential

Supply chain Management of an Indian MNC – EY

What EY can do for you

Historically, companies sold products and services through linear value chains. With the supply chain of the future, digital ecosystems consisting of market networks will enable hybrid forms of cooperation and competition. At the same time, technology, demographics and government policies are shaping industries as never before. To improve performance and innovation in this Transformative Age, companies must radically restructure their supply chains and operations.

EY‘s Supply Chain Reinvention Framework is a suite of asset-backed solutions enabled by advanced technologies such as data analytics, blockchain, machine learning, robotics and artificial intelligence. This suite of solutions extends from end-to-end supply chain strategy, strategic architecture, operational excellence, and supply chain resilience. We can help you harness the creativity and intelligence of your entire supplier ecosystem, increase collaboration, and ultimately help serve your customers better.

Supply Chain Smart Maps

As part of our Supply Chain Smart Maps™ solution, we use Supply Chain Strategic Analyzer, our proprietary software platform for supply chain intelligence. With this advanced diagnostic tool, you can analyze the entire breadth of your supply chain to better align with your business priorities. Smart Maps™ provide insights through quantitative analytics, standardizing, and qualitative performance assessments. These insights can help you identify the critical areas to increase performance and achieve your full supply chain potential.

Integrated Digital Planning

EY‘s Integrated Digital Planning solution is enabled by the latest technologies, including artificial intelligence, machine learning, and cloud platforms, and is also supported by assets including VC Sync™, Working Capital Optimization, Cognitive Automation and “Lights Out” Planning. By taking advantage of our experience, assets and advanced technologies, the Integrated Digital Planning solution can help align your planning and decision-making at strategic, operational and tactical levels, and allow you to react faster to rapid changes in the marketplace.

Supply-side Optimization

A recent EY survey of procurement leaders indicated that more than half view digital as an immediate priority to enable cost savings, innovation, supply certainty and service. Supply-side success requires selecting the right suppliers with the right capabilities, engaged under the right commercial agreements to drive performance, and then actively managing this portfolio as the company and the supply base evolves. Our solution provides an end-to-end framework to deploy tailored processes and assets that will enable effective and efficient processes to optimize the supplier portfolio, manage commercial excellence, and conduct lights-out operations.

Smart Factory

Smart Factory is our people-centric solution for bringing together operations strategy, industrial Internet of Things (IoT), shopfloor operational excellence (OpEx) leading practices and analytics to drive sustainable performance improvement. Smart Factory can help you understand whether your practice standards are consistent from line to line, leverage manufacturing data to improve results, and check whether your digital strategy is translating into performance on the shopfloor. This solution combines our leading capabilities with the cloud-based EY Catalyst OpEx platform and our EY Smart Factory execution apps to help you gain insights and take the right actions toward.

Digital Fulfillment

Many of today‘s supply chains suffer from disparate and inefficient fulfillment processes in terms of performance, risk and cost. EY‘s Digital Fulfillment solution leverages innovative technology such as autonomous automated vehicles to carry out goods movements, AI equipment to safeguard execution of material flow, and analytics to generate heat maps for areas to improve inventory allocation. The Digital Fulfillment solution can help you address the traditional logistics challenges of efficiency, cost, accuracy and speed to market in an environment of ever-increasing complexity around delivery points and shortening lead times.

EY’s Asterisk Supply Chain Planning Solutions

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