TMT case study

Well-known, LSE-quoted supplier of high speed packaging automation equipment for pharmaceutical, personal care, healthcare and food & beverage sectors.

Tech & Telco industry

Situation

Global telecoms group with revenues of some £45bn and EBITDA of £14bn.

Network and infrastructure operations included 180,000 installations in 25 countries around the globe.

Following a major acquisition, the project goals were to reduce global supply chain costs with regard to parts and logistics and deliver a significant reduction in working capital whilst maintaining or improving on service levels.

Approach

In a multi-country, multi-functional merger between 2 major organisations, it was key to build consensus and ensure that best practices from each party were adopted and combined with world class practices not yet adopted by either party.  To this end, the project was structured in 3 phases: Full Potential Analysis; Concept Development; and Implementation.

  • Full Potential Analysis: Analysis of key structures, processes and data, conducted remotely, concluded that significant potential was available in the following areas:
    • Restructuring supply base
    • Targeted improvements in prices, costs and terms for key products and services
    • Reengineering of the operating model (key structures and processes)
    • Quantification of improvement potential across all key performance areas including working capital, capex and opex
  • Concept Development: a multi-functional team was established, drawing from the two merged organisations, in order to promote buy-in to the new operating model being developed.  Key activities included:
    • End-to-end value stream mapping to identify costs, improvement potential and priorities
    • Standard data sets were generated across business units
    • OpCo’s were benchmarked against each other to highlight best-in-class performance
    • Suppliers were reviewed in terms of costs, terms and conditions, and performance
    • Key equipment was evaluated from a performance and total cost of ownership perspective
    • Options were developed and evaluated against set criteria to identify the optimum concept
  • Implementation: once a best practice supply chain model had been agreed based on service levels and total cost of ownership, a restructured supply chain function was formed to implement the new model.

Vendor selection and renegotiation provided the foundation of a new, unified way of working with suppliers once vendor selection had been finalised.

A revised dashboard provided transparency, enabled progress against performance targets to be monitored and formed the basis for continuous improvement activity in the future.

Roll-out to all OpCo’s globally ensured delivery of performance improvement targets.

Results

  • Opex reduction of 25% through revised operational practices and renegotiated terms with rationalised supply base
  • Working capital reduction of 33% within spares budget
  • Capex reduction of 27% through implementation of improved demand forecasting processes

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