Technology sector

Technology companies are driving and living disruption. Are you a disruptor, or the disrupted?

Digital disruption is blurring the lines between traditional industries.

Markets and sectors are being dramatically reshaped as agile new entrants are putting increasingly empowered customers in control and realizing the benefits of these new business models.

We recognize that technology companies like yours are more comfortable with innovation. However, you must continue to build new digital business models to achieve growth and meet customer expectations.

This requires you to foster creativity, disrupt business as usual and tap into new markets while improving operational efficiency and managing risk. 

We work with you to:

  • Help build successful market growth strategies
  • Innovate and design new ecosystems and business collaborations
  • Consult on tax and regulatory matters
  • Help improve organizational and operational effectiveness
     
The better the question. The better the answer. The better the world works.

Case study – How a family enterprise transformed their business to become future-ready

The family enterprise’s business transformation journey to drive their next level of growth and expansion

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

Optimize for today? Build for tomorrow?

Getting ready to manage the scale and future growth of the business.

EY worked with one of India’s leading food and snacks brands to help gear up their business for future growth and expansion through transformation of their key business functions on the back of a robust technology infrastructure.

The organization operates in an industry which has been traditionally dominated by a few large Indian and multinational organizations but has seen a massive growth of regional homegrown players. The brand has been growing rapidly year-on-year with a market leading share in its segment. However, the client further wanted to make its key business functions future-ready and more efficient than ever before. They were cognizant of the need to build up their organizational capability and modernize yet simplify key aspects of their business in order to ensure sustained growth.

The scale and future growth of the business – EY India
The better the question. The better the answer. The better the world works.

An integrated business and technological transformation approach

Strengthening key functions and processes, with supply chain, Enterprise Resource Planning (ERP) and route-to-market being the major building blocks.

EY conducted a detailed diagnostic to understand the capability, build imperatives and simplify the processes. Key focus areas for the organization were:

  • Having a scalable route-to-market model to deliver best-in-class sales and distribution services.
  • Improving control of last-mile execution to ensure availability and visibility at the point of sale.
  • Establishing an integrated and centralized supply chain function to build an end-to-end digital supply chain planning capability. This helped in improving availability of products and measuring customer service levels with optimal inventory.
  • Building a robust technology backbone with a market leading ERP and best-in-class business processes at its core.

Based on the identified themes, EY worked on a 20-month-long transformation journey which significantly changed the way the client was functioning across its entire value chain.

The key initiatives of the transformation included:

  • Route-to-market transformation: focused on improving availability and visibility at the consumer point of sales across towns and cities, the initiative prioritized direct coverage expansion and range selling across urban and rural markets. This was further facilitated by significant distributor consolidation for scale and efficiency.
  • Supply chain planning: EY helped set up a centralized and integrated supply chain planning function. This included designing the supply chain organization structure, moving to a completely pull-based replenishment system to minimize stock-outs and deploying EY’s proprietary suite of Asterisk Supply Chain Planning Solutions. The institutionalization and sustainability of the solution was backed by change management to embed the capability and new ways of working in the organization.
  • Technology: EY’s subject matter experts with consulting and technology capabilities came together to design, implement, train and migrate the client’s existing ERP system to SAP S/4 HANA in a short span of seven months. This entire initiative also entailed redesign of the brand’s key transactional business processes to leading industry practices, enabling a fully-functional state-of-the-art integrated technology backbone.
Technological transformation approach – EY India
The better the question. The better the answer. The better the world works.

Positive impact on EBITDA margins with simplified business operations

The transformation was backed by right design and implementation coupled with strong change management.

Over a period of just 24 months, the client started to reap the benefits of the integrated business and technology transformation initiative. These were visible in the form of significant addition to the earnings before interest, taxes, depreciation, and amortization (EBITDA), enabling the client to improve its margins vis-à-vis its competition. This included:

  • Close to 3% addition to the top line on account of lower loss of sales.
  • Almost 4.5% addition to the top line in the pilot markets by implementing the route-to-market initiative.
  • 11% improvement in forecast accuracy and reduction of stock-outs at super stockists to below 3% without increase in inventory.
  • 58% increase in the number of outlets driven by 35% addition of frontline salesforce, completely on the back of distributor costs and no additional costs incurred by the client.

Some of the more qualitative benefits delivered included efficient, scalable and robust business processes, which were enabled and automated by an integrated technology backbone with a state-of-the-art ERP system. Another key benefit was consolidation of distributors for greater efficiency.

The overall transformation process helped the client to create a more resilient supply chain and scalable sales and distribution strategy backed by modern technologies, which are not only future-ready, but are also capable to better manage market volatility.

(Contributors include Rajan Sachdeva, Nikhil Arora, Sanjay Katyal, Aniruddha Devera Konda, Apurva Agarwal and Sumanth Viraktamath.)

EBITDA margins with simplified business operations – EY India

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