Branded Apparel Supplier Revamps Corporate Strategy
Realizes $300 million in growth
Background
A $1 billion company with a robust portfolio of brands needed a comprehensive corporate strategy to identify and prioritize high-growth initiatives among its brand assets, and to begin to add value through corporate functions.
Challenge
The challenge was to quickly identify these growth opportunities so analysis would be complete for the new management's first board meeting in a few months.
Solution
The KSA/client team met with management to quickly identify and screen growth prospects. Opportunities were narrowed during a lively two-day session using screening criteria.
Consultant/client teams (from divisions and corporate) were formed to perform more detailed analysis. The teams spent eight weeks assessing market opportunities, competitive activity, company capabilities, and investment requirements for each growth prospect.
Opportunities were reprioritized based on this in-depth analysis, and reviewed by the entire senior management team. Real-time decision making was used to finalize the overall growth strategy and corporate mandate.
Results
This initiative identified approximately $700 million in growth opportunities over three years. In the first year since project completion, the client realized $300 million of the identified growth, and has implemented several new corporate functions for more efficient operations.
Premier Brand Reduces Supply Chain Cost More Than 3% of Sales by Accelerating Logistics Strategy
Projects savings of $25 million to $30 million for 2006
Background
A leader in the design, marketing, and distribution of premium lifestyle products was experiencing pressure on its European logistics network.
Challenge
Tremendous growth in Europe (25% year-to-year), high distribution costs (processing, inventory, and expedited shipments), a struggling third-party logistics (3PL) provider, and increasing customer demand for value-added services were among some of its primary concerns.
There were significant cost benefits to be had from an integrated European structure. Additionally, the client's customer service levels were average to slightly below average and needed to improve to meet higher expectations. The client needed to accelerate the development of a comprehensive logistics strategy to support its European wholesale and retail growth and reduce costs. Flexibility and scalability of the European strategy, for both fashion and replenishment product, were key to successfully supporting a dynamic business environment.
Also necessary was the development of a tactical plan, aligned with the long-term strategy, to recognize current capacity constraints. Vendor management/compliance and 3PL partner selection were viewed as critical to long-term success.
Solution
The KSA/client team evaluated the client's current logistics network, 3PL partner, and support systems (IT and transportation) and recommended an alternative, integrated approach.
The team identified savings in vendor compliance, upstream capabilities, and sourcing shifts, and developed business processes and standards for calendar discipline, EAN-13/floor ready, and cost to serve. KSA provided project execution, organizational support, and program and change management assistance.
Results
Current capacity constraints were avoided and projected savings per unit for 2006 are 97 cents (a total of $25 million to $30 million in savings for 2006). This reduces supply chain costs by approximately 3.4% of sales. Expected results to customer service include:
- Seasonal delivery window reduced by 90 days.
- Replenishment service reduced by 10 to 12 days.
- Price ticketing increased threefold.
- Hanger application increased from 0% to 50% of shipped units.
- Security tagging increased from 0% to 60%.
- Customer-specific packaging increased from 0% to 40%.
Pharmaceutical company cuts overtime labor costs by one-third
Increases productivity by more than 20%
Background
This multi-billion dollar pharmaceutical company needed to increase efficiency without major capital expenditures.
Challenge
The client had invested heavily in distribution capabilities (facilities, equipment, and technology) in the past, but growing volume and SKUs meant it needed more from its human assets. Existing productivity objectives seemed to have little impact on motivating front-line management and associates to improve their performance.
Solution
After carefully analyzing the company's values, culture, and operations, KSA modified and applied its Team and Individual Performance Improvement Process Model to dramatically change the operational efficiency of the client's largest distribution center (DC). This approach balanced work-team brainstorming with on-the-floor process improvement; work measurement and goal setting with management coaching; and reinforcement of the company's values, including reward and recognition.
A powerful aspect of KSA's Performance Management Methodology is sharing the components of performance with management and associates and demonstrating how to practically improve them. When the employees understood the factors driving their performance and rewards, the culture shifted from associates feeling pushed to perform, to management feeling pulled by associates to help them perform.
Results
Within nine months of implementation, the client experienced a productivity increase of more than 20% and was able to reduce dependence on temporary labor. Overtime labor cost was reduced by 31%. Staff planning and balancing tools reduced idle time in some operations by as much as 80%. Process refinement and streamlining improved productivity and reduced inventory discrepancies by 17%. These improvements also increased the facility's throughput capacity and allowed the client to defer 11% of its planned material handling capital expenditures for two years.
This project has been rolled out to six of the company's DCs, with three more implementations planned for fall 2004. The client has asked KSA to explore similar opportunities in manufacturing operational improvement and production planning.
Multinational gift distributor decreases cycle time by up to three weeks with ERP implementation
Realizes 25% labor cost savings
Background
A major multinational gift manufacturer and distributor launched an effort to replace aging enterprise systems with a single, worldwide Enterprise Resource Planning (ERP) system. A previous attempt at a similar implementation had failed due to incompatibility with business processes. With KSA's assistance and facilitation, the client selected JD Edwards OneWorld to satisfy the company's current and future requirements. The JD Edwards implementation was to coincide with warehouse management and sales force automation systems implementations.
Challenge
Implementation of a new enterprise system presented the client with many challenges. Existing business processes were complex and supported by a 20-year-old customized legacy system. Previous attempts to implement new systems resulted in great expense with little value to the business, leading to increased anxiety and apprehension throughout the business community.
Enhanced and redefined skills and responsibilities were required to develop and support the future business model. The software implementation process was inherently complex due to improved and customized functionality requirements.
Solution
KSA developed and executed an implementation methodology to provide business value, while minimizing risk and cost. Based on KSA's analysis, a phased plan was devised to realize quick wins while providing a foundation for growth throughout the company. This analysis led to the selection of the purchasing process — from purchase order generation to landing the goods at warehouses around the world — as the first implementation target.
Results
In Phase I, JD Edwards' purchasing module was successfully implemented on time and on budget. Projected benefits span the purchasing and import/export departments. Purchasing process savings are projected to be 2% of total product cost, due to cancellation rebates and order aggregation discounts. Labor requirements are projected to decrease by 30% and cycle times by up to three weeks. An immediate savings of 25% of import/export labor costs was realized through the automation of several reporting functions.
KSA is working with the client's executive team to develop a plan to sell to major retailers. < back
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