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Achieving Optimal Capital Productivity: Managing the Four Dimensions for Superior Supply Chain Performance

Explore a unique solution focusing on capital productivity, risk management, and resource allocation, targeting maximized ROA and service optimization. Learn practical strategies for balancing investment and risk, enhancing service levels, and reducing operational risks through a 4-D approach.

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Achieving Optimal Capital Productivity: Managing the Four Dimensions for Superior Supply Chain Performance

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  1. Capital Productivity – Managing the Four Dimensions ACHSE Supply Chain Seminar – 22 August ’03 Presented by Duncan MacCallum, Director

  2. TimeManagement RiskManagement The Goal:Minimised Time The Goal:Minimised Risk Allocating Resources Enabling Relationships MarketingManagement FundsManagement Building Advantage Targeting Outcomes The Goal:Optimised Service The Goal:Maximised ROA 4-D Capital Productivity Based Solution

  3. Unique 4-D Capital Productivity Based Solution - Conceptual • Managing Conflicting Demands Strategic View Implement service level policies within inventory investment constraints Operational View Plan and manage the supply chain business processes through managing the risk components

  4. Total investment = Area under the curve BalancedRisk-basedInvestment CurrentInvestment Investment per SKU Service Improvement 100% Availability / Service Level Unique 4-D Capital Productivity Based Solution • The First Step • Balancing Investment & Risk

  5. Total investment = Area under the curve BalancedRisk-basedInvestment Investment per SKU ReducedRisk-based Investment 100% Availability / Service Level Unique 4-D Capital Productivity Based Solution • The Second Step • Reducing the Risk

  6. Risk Model Using [Client] SS • Estimated monthly stock reduction – Local, ABCDE

  7. Risk Model Ignoring [Client] SS • Estimated monthly stock reduction – Imported, ABCDE

  8. Application of Savings to All DC’s • Local and imported ABCDE • Based on extrapolating mid-point results [Client] Total Stock $52.8M(1 Dec 02) Savings $11M - $14M • Assumptions: • Commercial neg. • [Client] resources • Process discipline • Timing to achieve Rebalanced Stock $27.2M - $30.2 Excluded Stock $11.6M

  9. ICS begins to influence orders 18 March 2003 Today 30 June 2003 1 2 3 4 5 6 Low High Typical Project Timeline 9 System, Data Configuration & Setup 6 weeks Project Planning & Preparation 2 weeks Commercials

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