Supply Chain Strategy Profile

Supply ChainSupply ChainStrategyStrategy

20 NASSAU STREET, SUITE 244

PRINCETON, NEW JERSEY 08542

Keys to Increased Business Keys to Increased Business ProfitabilityProfitability

A Profile of REM Associates of Princeton, Inc. Resources and Capabilities

Copyright Copyright ®® REM AssociatesREM Associates Page 2

REM Associates ProfileREM Associates Profile

Business Supply Chain StrategyBusiness Supply Chain StrategyProfile of REM AssociatesProfile of REM AssociatesThe REM Associates NetworkThe REM Associates NetworkFunctional Areas of ConsultingFunctional Areas of ConsultingClient Industry ProfileClient Industry ProfilePartial Listing of ClientsPartial Listing of ClientsREM Associates Relevant ExperienceREM Associates Relevant ExperienceOur Approach to Clients:Our Approach to Clients:–– AssessmentAssessment–– Issues and ConcernsIssues and Concerns–– Path ForwardPath Forward

Overview of The Business Operations Strategic Planning Process.Overview of The Business Operations Strategic Planning Process.

Our business operations strategy profile includes . . . .


Business Supply Chain StrategyBusiness Supply Chain Strategy

Intensified product, service, and market competitionIntensified product, service, and market competitionInnovative pricing strategiesInnovative pricing strategiesA constantly changing government regulatory environmentA constantly changing government regulatory environmentGreater emphasis on operational and working capital cost reductiGreater emphasis on operational and working capital cost reductionon

Today’s business management faces increasingly complex challenges from a variety of sources, including . . . .

In addition, increasing business pressures require management focus, decision making, and action plans directed at . . . .

Business technology issuesBusiness technology issuesPolitical, regulatory, and external controlsPolitical, regulatory, and external controlsSociological and cultural changeSociological and cultural changeInvestment community emphasis on Investment community emphasis on ““realreal”” earnings and growth.earnings and growth.

Increasing the need for managing a company with in-depth understanding, improved knowledge, and skills not previously required in business management.



Recent assignments found that inefficiencies in business operations waste as much as 25% of an organization’s operating costs. With profit margins of 3 to 4%, even a 5% reduction in waste can double a company’s profitability. Key drivers of this value creation include . . . .

By lowering costs and increasing asset utilization, business operations can free up cash.

Revenue Revenue -- capacity utilization, product speed to market, stockcapacity utilization, product speed to market, stock--outs, and outs, and service to customersservice to customersExpensesExpenses -- inventory carrying costs, production and distribution costs, inventory carrying costs, production and distribution costs, transportation costs, logistics productivity, outsourcing, and atransportation costs, logistics productivity, outsourcing, and asset utilizationsset utilizationCapital UtilizationCapital Utilization -- working capital (inventory turns, order cycle time) and working capital (inventory turns, order cycle time) and fixed assets (plants/DC locations, fleet utilization, strategic fixed assets (plants/DC locations, fleet utilization, strategic outsourcing)outsourcing)



Operations and process assessmentsOperations and process assessmentsData and information flows and linkagesData and information flows and linkagesPolicies, procedures, and practices completeness, consistency, aPolicies, procedures, and practices completeness, consistency, and nd effectivenesseffectivenessOrganization structure and responsibilities Organization structure and responsibilities –– ownership.ownership.

Supply Chain strategy deals with planning the intermediate and longer-term direction of the business, including . . . .

Supply Chain re-engineering is directed at assessing and improving policies, procedures, and practices to improve costs, customer service, and business effectiveness, including . . . .

Supply Chain missionSupply Chain missionKey strategic thrustsKey strategic thrustsSupply Chain goals and objectivesSupply Chain goals and objectivesAction plans aimed at strategy implementation.Action plans aimed at strategy implementation.


Profile of REM AssociatesProfile of REM Associates

Advice and counsel in Advice and counsel in ““Business and Supply Chain OperationsBusiness and Supply Chain Operations””Consumer and industrial companies as well as governmental organiConsumer and industrial companies as well as governmental organizationszationsStrategic, tactical, and contingency planningStrategic, tactical, and contingency planning

Operations evaluations directed at improvements:Operations evaluations directed at improvements:–– Profit improvementProfit improvement

–– Facility operations analysis and planningFacility operations analysis and planning

–– Cost reduction and productivity improvementCost reduction and productivity improvement

–– ABC inventory costing and evaluationABC inventory costing and evaluation

–– Functional outsourcingFunctional outsourcing

–– Customer serviceCustomer service

–– Organization structure and performance.Organization structure and performance.

REM Associates, started in 1984, is now in its twenty-fourth year serving business clients . . . .


Profile of REM AssociatesProfile of REM Associates

Senior experienced business personnelSenior experienced business personnel

Most with over 25 years of experienceMost with over 25 years of experience

Careers in both consulting and business operationsCareers in both consulting and business operations

Variety of business disciplines Variety of business disciplines

Broad range of industry backgroundsBroad range of industry backgrounds

Strong interStrong inter--personal skillspersonal skills

Commitment to positive resultsCommitment to positive results

Support from analysis through implementation.Support from analysis through implementation.

REM Associates represents a network of over sixty experienced professionals worldwide . . . .


BrinmarAssociatesBrinmar

Associates

MiamiUniversity

of Ohio

The REM Associates NetworkThe REM Associates Network

REM Associates Network represents key business operations organizations and companies. A partial list includes . . . .

MiamiUniversity

of Ohio

Bernard J.La Londe &Ohio StateUniversity

Bernard J.La Londe &Ohio StateUniversity

JosephAndraski

Group

JosephAndraski

Group

Gross&

Associates

Gross&

Associates

CGRAssociates

CGRAssociates

PrincetonComputerConsulting

PrincetonComputerConsulting

UniversityOf

Pennsylvania

REM AssociatesNetwork

REM AssociatesNetwork

PrincetonUniversity

PrincetonUniversity


The REM Associates NetworkThe REM Associates Network

REM Associates provides virtually turn-key management . . . .

Policies,Procedures,

and Practices

Policies,Procedures,

and Practices

ProjectManagement

ProjectManagement

SettingGoals and Objectives

SettingGoals and Objectives

OperationsAssessment

OperationsAssessment

InventoryStrategy

InventoryStrategy

ActivityBased

Costing

ActivityBased

Costing

OrganizationAnd

Staffing

OrganizationAnd

Staffing

DistributionNetworkDesign

DistributionNetworkDesign

StrategyPlanning Through

Implementation


Functional Areas of ConsultingFunctional Areas of Consulting

REM Associates represents a broad range of supply chain and business operations skills and backgrounds . . . .

OperationsManagementOperations

Management

FinancialAnalysis andEvaluation

FinancialAnalysis andEvaluation

ResourceUtilizationResource

UtilizationOrganizational

StaffingOrganizational

Staffing

InformationSystems

InformationSystems

ForecastingAnd ProductMarketing

ForecastingAnd ProductMarketing

QualityAssuranceQuality

Assurance

Outsourcingand

Alliances

Outsourcingand

Alliances

Strategicand Tactical

Planning

Strategicand Tactical

Planning



Specifically, within supply chain operations and related functions, we are experienced in . . . .

Supply Chain Management

Sourcing and Purchasing

Customer Service and Order Processing and Related Systems

Transportation Operations and Management

Warehousing & Distribution Operations

Facilities and Network Design

Production and Inventory Management

Forecasting and Sales Planning



Assessment, evaluation, and planning of supply chain functionsAssessment, evaluation, and planning of supply chain functions

Evaluation of supply/demand chain functions, linkages, and strucEvaluation of supply/demand chain functions, linkages, and structureture

Assessment of forecasting, demand planning, and inventory manageAssessment of forecasting, demand planning, and inventory managementment

Development and positioning of organizational structures to suppDevelopment and positioning of organizational structures to support business ort business operations strategyoperations strategy

Diagnosis and evaluation of functions and personnelDiagnosis and evaluation of functions and personnel

Development and specifications of operating systems requirementsDevelopment and specifications of operating systems requirements

Development of effective performance measurements and benchmarkiDevelopment of effective performance measurements and benchmarkingng

Assistance in implementation of recommendations and changes in oAssistance in implementation of recommendations and changes in operations perations directed at cost effective improvements.directed at cost effective improvements.

We have worked for a number of manufacturers, distributors and distributor organizations. Our work has included . . . .


Client Industry ProfileClient Industry Profile

REM Associates has worked with manufacturers, wholesalers, and distributors representing a wide variety of industries . . . .

ManufacturingService and

Industry Associations

ManufacturingService and

Industry Associations

Consumer ProductsConsumer Products

FoodFoodRetailingRetailingWholesalingWholesalingPharmaceuticalPharmaceuticalPaperPaperNewspaperNewspaperTobaccoTobaccoWines, Spirits, and Wines, Spirits, and BeveragesBeverages

Industrial ProductsIndustrial ProductsChemical ProductsChemical ProductsClay ProductsClay ProductsMining Mining Precious MetalsPrecious MetalsElectronicsElectronics


Client Industry ProfileClient Industry Profile

The State of North CarolinaThe State of North CarolinaThe State of MichiganThe State of MichiganThe County of Los AngelesThe County of Los Angeles

In addition, our work and business relationships have been international in scope, including government clients and agencies such as . . . .

Our state, city, public, and local government work has included . . . .

IndonesiaIndonesiaRussiaRussiaChinaChinaTaiwanTaiwanPhilippinesPhilippines

United KingdomUnited KingdomIndiaIndiaPakistanPakistanSouth AfricaSouth AfricaMalaysiaMalaysia

MexicoMexicoArgentinaArgentinaPanamaPanamaCosta RicaCosta RicaEtc.Etc.

Our international exposure has included countries such as . . . .

The City of New YorkThe City of New YorkThe University of MissouriThe University of MissouriPrinceton University.Princeton University.


A partial listing of our clients for whom we have worked in the past include . . . .

Partial Listing of ClientsPartial Listing of Clients

American Stores CorporationAmerican Stores CorporationAnheuserAnheuser--Busch companies, Inc.Busch companies, Inc.Avon Products CompanyAvon Products CompanyBankers Trust CompanyBankers Trust CompanyBecton Dickinson & CompanyBecton Dickinson & CompanyBen & JerryBen & Jerry’’ssBorden CompanyBorden CompanyBristolBristol--Myers Squibb CorporationMyers Squibb CorporationEngelhard CorporationEngelhard CorporationG A F CorporationG A F CorporationGeneral Electric CompanyGeneral Electric CompanyGeneral Mills CompanyGeneral Mills CompanyGlaxoSmithKline plcGlaxoSmithKline plcGulf & Western CorporationGulf & Western CorporationHermes of ParisHermes of ParisHewlettHewlett--Packard CompanyPackard CompanyHoechst Celanese CorporationHoechst Celanese CorporationHome Base CompaniesHome Base CompaniesJohn Hancock Life Insurance Co.John Hancock Life Insurance Co.

Honeywell CorporationHoneywell CorporationJohn Morrell and CompanyJohn Morrell and CompanyKimberlyKimberly--Clark CorporationClark CorporationKraft Foods CorporationKraft Foods CorporationLand OLand O’’ Lakes IncorporatedLakes IncorporatedLea & Perrins CompanyLea & Perrins CompanyLeiner Health ProductsLeiner Health ProductsMerrill Lynch & CompanyMerrill Lynch & CompanyMilton Hershey SchoolMilton Hershey SchoolNabisco Brands IncorporatedNabisco Brands IncorporatedPepsiPepsi--Cola IncorporatedCola IncorporatedPhilip Morris CompanyPhilip Morris CompanyPrinceton UniversityPrinceton UniversityR. C. Bigelow Tea CompanyR. C. Bigelow Tea CompanySears Roebuck & CompanySears Roebuck & CompanySouthland CorporationSouthland CorporationUSA TodayUSA TodayUniversity of MissouriUniversity of MissouriWarnerWarner--Lambert CompanyLambert CompanyW R Grace & CompanyW R Grace & Company


REM Associates Relevant ExperienceREM Associates Relevant Experience

Assessment of existing functions, processes, facilities, and opeAssessment of existing functions, processes, facilities, and operations aimed at rations aimed at costs and productivity improvementscosts and productivity improvementsAnalysis and evaluation of functions, organization and structureAnalysis and evaluation of functions, organization and structure, linkages, and , linkages, and positioning of supply/demand chain activities to support businespositioning of supply/demand chain activities to support business goalss goalsAssessment and evaluation of forecasting , sales planning, and iAssessment and evaluation of forecasting , sales planning, and inventory nventory management to support distribution costs and required levels of management to support distribution costs and required levels of serviceserviceEvaluation of customer service functions and activities to deterEvaluation of customer service functions and activities to determine effective mine effective levels of service based on demand, cost, and business positioninlevels of service based on demand, cost, and business positioninggDevelopment of systems requirements and measures to monitor, conDevelopment of systems requirements and measures to monitor, control, and trol, and manage supply/demand chain activitiesmanage supply/demand chain activitiesManagement of implementation programs to meet timetables and milManagement of implementation programs to meet timetables and milestones estones directed at on time completion.directed at on time completion.

The scope of our engagements range from single to multiple functions beginning with assessment and planning through implementation . . . .



For a Major West Coast Pharmaceutical Manufacturer:For a Major West Coast Pharmaceutical Manufacturer:–– Assessed business operations to:Assessed business operations to:

»» Improve product and customer demand forecasting, including promoImprove product and customer demand forecasting, including promotional tional activityactivity

»» Reduce operational costs of functional activitiesReduce operational costs of functional activities»» Improve service to all customers, including retail, wholesale, aImprove service to all customers, including retail, wholesale, and militarynd military»» Reduce inventories and related business investments at all levelReduce inventories and related business investments at all levels, including s, including

raw materials, WIP, and finished goods.raw materials, WIP, and finished goods.–– Results of this work included:Results of this work included:

»» Inventory reduction of over 35%Inventory reduction of over 35%»» Improved customer service to over 96%Improved customer service to over 96%»» Increased major customer inIncreased major customer in--stock position to over 97%stock position to over 97%»» Reorganized key management functions and responsibilities which Reorganized key management functions and responsibilities which

significantly improved communications, decision making, and timesignificantly improved communications, decision making, and timeliness of liness of management actions.management actions.

A sampling of our client engagements includes . . . .



A Large Consumer Product CompanyA Large Consumer Product Company::–– Assessed and evaluated supply chain functions, linkages, tasks, Assessed and evaluated supply chain functions, linkages, tasks, and activitiesand activities–– Developed an integrated supply chain strategy directed at reduceDeveloped an integrated supply chain strategy directed at reduced costs and increased d costs and increased

customer service levelscustomer service levels–– Positioned sourcing, sales, manufacturing, and distribution to ePositioned sourcing, sales, manufacturing, and distribution to effectively support market and ffectively support market and

customer focuscustomer focus–– Evaluated deployment of inventories based on forecasted demand pEvaluated deployment of inventories based on forecasted demand pull to the marketplace in ull to the marketplace in

order to strengthen support services to customersorder to strengthen support services to customers–– Recommended and planned implementation for an integrated supply Recommended and planned implementation for an integrated supply chain strategy.chain strategy.

A Fortune 100 Pharmaceutical CompanyA Fortune 100 Pharmaceutical Company::–– Set up multiSet up multi--country (14) teams for implementing production and resource plancountry (14) teams for implementing production and resource planningning–– Worked with inWorked with in--country company teams to implement planned changescountry company teams to implement planned changes–– Evaluated and recommended operations improvements within countriEvaluated and recommended operations improvements within countrieses–– Monitored and directed progress toward program goals and objectiMonitored and directed progress toward program goals and objectivesves–– Conducted and managed program reviews to make sure timelines werConducted and managed program reviews to make sure timelines were mete met–– Completed almost two year program ahead of schedule.Completed almost two year program ahead of schedule.

In addition, a sampling of our client engagements includes . . . .


Our Approach to Clients Our Approach to Clients –– 1. Assessment1. Assessment

Client operations size and basic structureClient operations size and basic structure

Classes of products, facilities, and customers servedClasses of products, facilities, and customers served

Key business strategic issues and concernsKey business strategic issues and concerns

Operations network including sales, distribution, customer serviOperations network including sales, distribution, customer service, and related ce, and related

functionsfunctions

Customer service goals and objectivesCustomer service goals and objectives

Operations goals and objectives.Operations goals and objectives.

Our initial approach to clients begins with an assessment. In order to form a solid base of understanding, we determine critical characteristics of our client’s business in terms of . . . .


Our Approach to Clients Our Approach to Clients –– 2. Issues and Concerns2. Issues and Concerns

Present and planned business initiativesPresent and planned business initiatives

Specific operations issues:Specific operations issues:

–– Forecasting and sales demand planningForecasting and sales demand planning

–– Inventory managementInventory management

–– Warehousing and TransportationWarehousing and Transportation

–– Other operations related issuesOther operations related issues

Current key projects within operating functionsCurrent key projects within operating functions

Priority, sequence, and timing of implementation of near and lonPriority, sequence, and timing of implementation of near and longerger--term initiatives.term initiatives.

In order to focus our response and meet client specific needs, we need to understand company issues and concerns. For example . . . .


Our Approach to Clients Our Approach to Clients –– 3. Path Forward3. Path Forward

Goals and objectives of REM Associates assistanceGoals and objectives of REM Associates assistance

Structure and content of a proposal to respond to your needsStructure and content of a proposal to respond to your needs

Requirement for site and/or functional visitsRequirement for site and/or functional visits

Data needed in order to understand and scope the detail of workData needed in order to understand and scope the detail of work

Point person for questions and clarificationPoint person for questions and clarification

Timetable for decision making and program completion.Timetable for decision making and program completion.

As a result of initial meetings, we form an understanding and plan a path forward in response to your needs, concerns, and plans . . . .

Overview of The Supply ChainOverview of The Supply ChainStrategic Planning ProcessStrategic Planning Process


The logic of supply chain strategy relates directly to the flow of products, information, and costs through the business and to the customer . . . .


Manufacturing Sales & Distribution Customer

Products

Information

Costs

Revenue

Flows:

Sourcing


There are several levels of business logistics between the product source and the customer . . . .


CustomerPlant

Primary

Distribution

Secondary

Distribution

Tertiary

Distribution

Direct Distribution Large

Chains

Small

Independents

Sourcing


Strategic planning issues are generally of a broader scope than those of day-to-day operations issues . . . .

Business Mix

Market

Definition

Customer

Mix

Product

Mix

Operations

& Service

Mix

Fore

cast

Dem

and

by P

rodu

ct

Fore

cast

V

aria

tion

Serv

ice

by C

lass

of

Cus

tom

er

S K

Us

Prod

uct

Cha

ract

eris

tics

Faci

lity

Size

Faci

lity

Loc

atio

n

Faci

lity

Serv

ice

Are

a

Strategy

Operations

UniquenessType



The hierarchy of supply chain strategic planning begins with customers and service . . . .

Facilities

InvestmentFacilities

Investment

MIS Equipment Investment

Inventory Investment

Transportation Equipment Investment

MIS Equipment Investment

Human Resource

Investment

Customer Service

Goals and Objectives

Customer Service

Goals and Objectives

Inventory Goals

Deployment Strategies and

Programs

Warehousing Strategies and

Programs

Transportation Strategies and

Programs

Systems and Procedures

Strategies and Programs

Organization Strategies and

Programs

Order Processing

Strategies and Programs



A number of factors must be evaluated to determine the best cost and service mix in a strategic supply chain structure . . . .

Number of warehousesNumber of warehousesLocation of warehousesLocation of warehousesShipment modesShipment modesSize of shipmentsSize of shipmentsFrequency of shipmentsFrequency of shipmentsShipment consolidationShipment consolidationOperating methodsOperating methodsStorage requirementsStorage requirementsRegulatory requirementsRegulatory requirements

Order processing timesCustomer serviceOperationsTransportation

Inventory serviceStock vs. non-stockIn-stock position

Delivery reliabilityFreight consolidation holding timesInformation systems

Stock vs. non-stockIn-stock positionVariability of demand

Frequency of replenishmentTransit timesInventory carrying costs

COST: SERVICE:

INVENTORY:



An effective supply chain strategy requires the balancing of conflicting management objectives . . . .

High customer serviceHigh customer service

Low warehousing costsLow warehousing costs

Low transportation costsLow transportation costs

Reduced inventoriesReduced inventories

Fast deliveriesFast deliveries

Reduced labor costsReduced labor costs

Desired resultsDesired results

Logistics Objectives:

Impact of Objectives on:

Inventory:

Customer

Service: Costs:



The planning process must evaluate alternatives and recommend the most cost and service effective plan for total business logistics . . . .


Product/

Market

Environment

Develop a Segmented Set of Strategic Success

Requirements

Define Business Operating

Mission

Identify Strategic

Deployment Alternatives

Develop Business

Operating Objectives

Identify Strategic

Operating Alternatives

Define Demand Chain Operating

Objectives

Define

Strategic

Objectives

Develop a Preferred

Operations Strategy and its Implementation

Execute

Implementation

Plan

ASSESS

PHASE I PHASE II PHASE III

Operating

Environment

SCREEN

SCREEN


A S S O C I A T E SMANAGEMENT CONSULTANTS

20 NASSAU STREET, SUITE 244PO BOX 7345

PRINCETON, NEW JERSEY 08543-7345Phone: 609-275-4444

Fax: 609-924-9668E-Mail: [email protected]

web: http://www.remassoc.com

Documents

Supply Chain Strategy Profile