Supply Chain Audit Discussion Guide

1. Supply Chain AuditDiscussion Guide The Context Group

2. Supply Chain Issues • Offshore sourcing lengthens lead-times, reduces flexibility and makes control more difficult • Multiple sourcing locations create coordination challenges • Fast response to fashion change essential to drive sales • Customers expect faster delivery and better service • Finer customer segmentation, more seasons, more newness increases SKU count

3. Common symptoms • Customer service levels unacceptable • Sales lost to cancellations • Margins under pressure • Low inventory turns • High markdowns • Inaccurate forecasts • Customer invoice deductions • New products late to market • Excess expedited shipping costs • Inventory discrepancies • Limited flexibility to adjust orders, schedules or shipments

4. Supply Chain Improvement Opportunities • Capture lost sales • Reduce out-of-stocks • Fast response to opportunities • Reduce product cost • Materials • Manufacturing • Logistics • Reduce lead times • Replenishment • New products • Reduce inventories

5. Prepare Produce Deliver Supply Chain Process • Supply chain includes many processes from concept to market • Functional silos create barriers to flow • Different objectives and metrics • Batch vs continuous flow • Efficiency vs effectiveness focus • Information discontinuities Develop Plan Source Manufacture Distribute Transport

6. Process performance improvement • 3 essentials of superior process performance • Clear Strategy What is to be done • Optimized Process How it is to be done • Enabling Technology Maximize effectiveness • The essentials must be • Top down driven • Strategy determines process determines technology • Horizontally integrated • Seamless transition across intra- and extra-enterprise boundaries

7. Strategy • Create competitive advantage • Better, faster, cheaper, newer • Establish clear objectives • Business level • Process level • Resource allocation • Allocate for highest impact • Organization structure • Clear lines of responsibility and authority • Performance management • Scorecards

8. Process • Robust process design • Simplicity, reliability • Performance metrics • Time, quality, variability, cost • Continuous improvement • Eliminate waste of time, materials, manpower and money • Integration • Eliminate silos and bottlenecks

9. Technology • Eliminate process “friction” • Intra- and inter-enterprise collaboration • Shared access to common data • Tracking • Improved decision making • Architecture • ERP platform • Point solutions • Internet

10. Supply Chain Audit • High-level assessment of current SC performance • Benchmark key elements of SC processes • Supply Chain Scorecard • Identify capability and performance gaps • Identify improvement opportunities • Assess benefits of improvements • High/medium/low impact • Develop roadmap

11. Supply Chain Matrix

12. Supply Chain Scorecard • Evaluates current use of 80+ key management tools and best practices in Strategy, Process & Technology across the six core SC processes • 5-point scale • 0= not implemented • 4= Best Practice • Identifies possible improvement options • Estimates potential impact • Recommends priorities

13. Current Practice Assessment – Prepare (Partial example)

14. Current Practice Assessment – Source (Partial example)

15. Current Practice Assessment – Produce (Partial example)

16. Current Practice Assessment – Deliver (Partial example)

17. Summary – By Element

18. Summary – By Process

19. Project approach • Team of 2-3 TCG partners • 3-5 weeks • Data collection • Process walk-throughs • Interviews • Performance metrics • Scorecarding • Planning • Workshops • Documentation

20. Next Steps • Identify key issues and concerns • Define scope • Business units • Processes to be included • Focal areas • Agree timetable and budget