Transform Business: Improve Cost of Service in Blue Chip Company through Supply Chain Segmentation and Value Engineering
Scope For This Project
- This project will cover the evaluation of current processes, identification of areas for improvement, and implementation of cost-saving measures.
- The focus will be on Star and Dog customers, streamlining production of low-volume high-price goods, negotiating better rates for high-volume goods, Supply Chain Segmentation, and Value Engineering.
Table of Contents
Methodology
- The project team will use a combination of market research, data analysis, and internal process evaluations to identify areas for improvement.
- They will also engage with suppliers, stakeholders, and customers to gather feedback and implement changes.
Scope For This Project
- Star and Dog Customers:
- Prioritize services for Star customers.
- Reduce or eliminate services for Dog custome.
Streamlining production of low-volume high-price goods:
- Improve the efficiency of the production process for low-volume high-price goods.
- Reduce costs.
- Negotiating better rates for high-volume goods:
- improve the overall efficiency of the supply chain by negotiating better prices for high-volume goods.
- Reduce the cost of inputs.
- Supply Chain Segmentation:
- Optimize supply chain processes.
- Negotiate better prices and terms with suppliers.
- Improve overall efficiency of the supply chain.
- Value Engineering:
- Analyze processes and products to identify cost-saving opportunities.
- Streamline processes.
- Find alternative materials.Reduce waste
Discovering the Latest Trends in Blue Chip Companies and Their Customers
- Customer Segmentation: Blue Chip companies are increasingly adopting customer segmentation strategies to better understand and prioritize their customers. Star customers receive more attention, resources, and investment while Dog customers are reduced or eliminated.
- Personalization: Blue Chip companies are investing in personalizing their offerings and experiences to meet the needs and preferences of Star customers. This includes customization of products, services, and communication channels.
- Data-Driven Decisions: Blue Chip companies are using data and analytics to inform their customer-related decisions. This includes tracking customer behavior, sentiment, and feedback to better understand their needs and preferences.
- Customer Experience: Blue Chip companies are placing a greater emphasis on improving the overall customer experience. This includes ensuring that customer interactions are seamless, efficient, and meet expectations.
- Customer Retention: Blue Chip companies are focusing on retaining Star customers through loyalty programs, incentives, and personalized experiences.
Digital Transformation: Blue Chip companies are investing in digital technologies to improve their customer-related processes and offerings. This includes the adoption of CRM systems, AI-powered customer service, and e-commerce platforms.
Uncovering Customer Trends : An Insightful Overview
- Convenience: Customers expect a seamless, convenient experience with Blue Chip companies, both in-person and online. This includes fast, easy access to information and products, as well as streamlined processes.
- Personalization: Customers expect a personalized experience that takes into account their unique needs, preferences, and history. This includes tailored recommendations, communication, and offers.
- Responsiveness: Customers expect prompt, effective responses to their inquiries and concerns. This includes real-time support and resolution of issues.
- Transparency: Customers expect transparency in their interactions with Blue Chip companies, including clear and honest communication, as well as access to information about products and services.
- Sustainability: Customers are increasingly concerned about the environmental and social impact of products and services. They expect Blue Chip companies to prioritize sustainability in their operations and offerings.
Data Privacy: Customers expect their personal data to be protected and used responsibly by Blue Chip companies. They demand transparency and control over how their data is collected, stored, and used.
Initial Assessment of Client Uncovers Opportunities for Improving Cost of Service
- Customer Expectation Gap: The gap between customer expectations and reality can negatively impact customer satisfaction and loyalty.
- Supply Chain Complexity: Our client has complex and global supply chains, which lead to inefficiencies and higher costs.
- Inefficient Processes: Outdated or inefficient processes can result in higher costs, longer lead times, and lower quality products or services.
- Decreased Margins: Pressure to reduce costs, increased competition, and changing customer preferences all contribute to decreased margins for client.
- Data Overload: The proliferation of data can lead to information overload and difficulties in decision-making and strategy.
The Effects of Not Implementing Cost-Reducing Strategies
- In general, not reducing costs can result in decreased profitability, decreased competitiveness, and lower customer satisfaction. These outcomes can impact the entire company, its employees, shareholders, and customers.
- It’s worth noting that while some individuals or departments may benefit from not reducing costs in the short term (e.g. through increased budget or power), this is likely to be outweighed by negative consequences in the long term.
- Overall, it’s in the best interest of a Blue Chip company to continuously strive to reduce costs and improve operations, in order to remain competitive and meet the changing needs of customers.
Data Collection: Key to Transforming Business and Improving Cost of Service
- Accurate forecasting and demand planning was achieved by collecting B2B, B2C and stock transfer data for a period of 24 months
- For more efficient data analysis and machine learning, the collected data was cleaned and organized.
Data Analysis Unveils Insights for Improving Cost of Service
- Star customers: Data showed that a few customers generate most of the company’s revenue. Focusing on providing excellent service to these “star” customers may retain their business and lower customer acquisition cost.
- Dog customers: Data showed that a few customers generate high costs for the company, due to low volume, high production costs, etc. By identifying these “dog” customers, the company can decide whether to discontinue service or make their business more profitable.
- Supply chain optimization: Data showed the company can reduce costs by optimizing its supply chain. For example, the data revealed that a high percentage of products come from high-cost suppliers or too much is spent on transportation/shipping. Optimizing the supply chain reduces costs and improves efficiency.
- Value engineering: The data may show that the company could reduce costs by re-engineering its products or services to make them more efficient and cost-effective. For example, the data may reveal that the company could reduce materials costs by using alternative components, or that it could streamline its manufacturing processes to reduce labor costs.
Unlocking the Importance of Data Analysis: Understanding its Impact on Reducing Cost of Service
- Provides insight into cost drivers
- Identifies areas for improvement
- Helps make informed decisions
- Targets efforts and resources effectively
- Results in significant and sustainable cost reductions.
Maximizing Business Potential: The Key Actions for Improving Cost of Service
- Customer Data Analysis: Utilize customer data of past 24 months to identify trends, preferences, and patterns, which can inform decision-making and strategy.
- Star and Dog Customer Management: we proposed strategies to effectively manage Star and Dog customers, including targeting high-value customers and minimizing costs associated with low-value customers.
- Streamlined Production: we recommended our client to implement lean production methodologies, such as just-in-time (JIT) and total quality management (TQM), to streamline production processes and reduce costs.
- Negotiating Rates for High Volume Goods: Utilize purchasing power and negotiate better rates for high volume goods to reduce costs.
- Supply Chain Optimization: Optimize the supply chain through segmentation, strategic sourcing, and logistics management to improve efficiency and reduce costs.
- Value Engineering: Engage in value engineering initiatives to identify and eliminate waste and inefficiencies, and improve quality while reducing costs.
- Technology Adoption: Adopt new technologies, such as artificial intelligence, robotics, and the Internet of Things (IoT), to improve operations and reduce costs.
Maximizing Business Efficiency: Our Recommendations for Improving Cost of Service
- Analyze customer data to identify star customers and provide excellent service to them. They can endorse your business to other potential customers, thereby lowering the cost of acquiring new clients
- We analyzed the company’s supply chain data of past 24 months to identify areas where costs can be reduced. We recommended to procuring products from suppliers with low costs, reducing transportation and shipping costs, and improving the efficiency of supply chain operations.
- Applied value engineering principles to identify and eliminate waste in the company’s operations. This can help reduce costs and improve efficiency.
- To Implement automation and optimization technologies to streamline processes and reduce manual labor costs. This will also increase efficiency and productivity.
- ToContinuously monitor and analyze data to identify opportunities for cost reduction and continuously improve operations.
A Timeless Approach to Data Analysis for Improved Cost of Service
- The process of conducting the preliminary analysis took 1 week, followed by 20 weeks of additional analysis aimed at optimizing shipping costs.
- An additional 4 weeks were required to present the findings and gain approval from the board
Our Results: Uncovering the Benefits of Reducing Cost of Service with Data-Driven Results
- Improved customer satisfaction: By focusing on providing excellent service to star customers, our client can retain their business and improve customer satisfaction.
- Better allocation of resources: By streamlining production, our client ensures that resources are used effectively and efficiently, leading to better utilization of production capacities.
- Enhanced competitiveness: By reducing costs, our client can improve their competitiveness and gain a competitive advantage over its competitors.
- More efficient supply chain: By optimizing its supply chain operations, our client reduced their costs and improve the efficiency of its operations. This led to better inventory management, lower transportation costs, and improved product delivery times.
- Increased market share: With improved profitability, better customer satisfaction, and enhanced competitiveness, our client can increase their market share and expand its customer base.
- Improved sustainability: By reducing costs, our client can reduce theri carbon footprint and become more environmentally sustainable. This can have a positive impact on the company’s reputation and help it to attract new customers.
Project Recap
- The client is a reputable and established Blue chip company.
- The client is seeking ways to lower the cost of service in order to enhance overall operations.
- Our objective was to solve client problems which consist of reducing cost of service to stay competitive, Streamline production and improve overall supply chain.
- We did analysis which allowed us to tailor make our suggestions
- We implemented our recommendations at client’s site
- We transformed clients business using supply chain and value engineering
About the Author
Vivek Sood: Sydney based managing director of Global Supply Chain Group, a strategy consultancy specializing in supply chains. More information on Vivek is available on www.linkedin.com/in/vivek and more information on Global Supply Chain Group is available www.globalscgroup.com
Vivek is the Managing Director of Global Supply Chain Group, a boutique strategy consulting firm specialising in Supply Chain Strategies, and headquartered in Sydney, Australia . He has over 24 years of experience in strategic transformations and operational excellence within global supply chains. Prior to co-founding Global Supply Chain Group in January 2000, Vivek was a management consultant with top-tier strategy consulting firm Booz Allen & Hamilton.
Vivek provides strategic operations and supply chain advice to boards and senior management of global corporations, private equity groups and other stakeholders in a range of industries including FMCG, food, shipping, logistics, manufacturing, chemicals, mining, agribusiness, construction materials, explosives, airlines and electricity utilities.
Vivek has served world-wide corporations in nearly 500 small and large projects on all continents with a variety of clients in many different industries. Most of projects have involved diagnostic, conceptualisation and transformation of supply chains – releasing significant amount of value for the business. His project work in supply chain management has added cumulative value in excess of $500M incorporating projects in major supply chain infrastructure investment decisions, profitable growth driven by global supply chain realignment, supply chain systems, negotiations and all other aspects of global supply chains.
Vivek has written a number of path breaking articles and commentaries that are published in several respected journals and magazines. Vivek has spoken at several supply chain conference, forums and workshops in various parts of the world. He has also conducted several strategic workshops on various aspects of supply chain management. He received his MBA with Distinction from the Australian Graduate School of Management in 1996 and prior to these studies spent 11 years in the Merchant Navy, rising from a Cadet to Master Mariner.
More information on Vivek is available on www.linkedin.com/in/vivek and more information on Global Supply Chain Group is available on www.globalscgroup.com
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